EXHIBIT 10.7
May 20, 2005
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman
Ronco Marketing Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
This letter will serve as an agreement between the parties hereto and replaces
all prior agreements between the parties. This will confirm the understanding
and agreement between Copper Beech Equity Partners LLC, ▇▇▇▇▇▇▇▇▇▇▇ Equity
Partners LLC, Coll International LLC, Content Holding LLC (collectively referred
to herein as "The Venture Group") and Ronco Marketing Corporation (the
"Company") as follows:
1. The Company hereby engages The Venture Group and grants to The
Venture Group the right to act as its exclusive financial advisor in
connection with providing various financial advisory services in
connection with the negotiation and consummation of various debt
financing and equity financings (for the purposes of this Agreement,
"equity financings" shall mean offers and sales through a registered
broker dealer) for the Company (collectively, the "Funding")
required in connection with its merger with a public shell
corporation, and acquisition of various properties known as Popeil
Inventions, LLC and Ronco Inventions, LLC (collectively referred to
herein as the "Target"). The Company's merger with a public shell
corporation and acquisition of the Target shall be collectively
referred to as the "Transaction".
2. The Venture Group hereby accepts the engagement and in that
connection agrees to devote such business, time and attention to
matters on which the Company shall request its services as shall be
determined by The Venture Group in its reasonable discretion,
including, but not limited to:
(a) Perform a due diligence financial review of the Target to
understand the business, operations, financial condition and
prospects of the Target;
(b) Advise the Company regarding the corporate, legal and
financial structure of the Funding;
(c) Assist in the negotiation of documentation relating to the
Funding;
(d) Assist the Company in preparing business plans, financial
projections and other documents required in connection with
items (a) through (c) above;
(e) Assist with the preparation of a descriptive memorandum and
materials for meetings and presentation to investors
concerning the Company, which memorandum shall not be made
available to or used in discussions with prospective investors
in the Company until both it and its use for that purpose have
been approved by the Company; said materials will include, but
not be limited to an offering memorandum;
(f) Identify, screen and contact potential investors;
(g) Evaluate the terms and structure of the proposed Funding and
advise the Company as to the optimal capital structure to
maximize the likelihood of a successful consummation of the
Funding;
(h) Prepare financial analyses, where appropriate, of the rates,
terms, and prices paid for (as available) for various
financial securities, and of the operating performance,
financial condition and valuation of comparable publicly
traded companies;
(i) Regularly prepare and update financial models to evaluate the
operating performance, financial condition, and fair market
value of the Company as it pertains to the proposed Funding;
(j) Otherwise advise and assist the Company as mutually agreed to
by the parties to this Agreement; and
(k) Assist the Company during the due diligence.
3. In connection with The Venture Group's engagement, the Company will
furnish The Venture Group with any information concerning the
Company and the Target which The Venture Group reasonably deems
appropriate and will provide The Venture Group with reasonable
access to the Company and Target's (to the extent in the Company's
control) officers, directors, accountants, counsel and other
advisors and to Target to the extent within the Company's control.
The Company represents and warrants to The Venture Group that to the
best of its knowledge, all such information concerning the Company
and Target will be true and accurate in all material respects and
will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not
misleading in light of the circumstances under which such statements
are made. The Company will not furnish The Venture Group information
regarding Target, which it knows to be inaccurate without disclosing
such inaccuracy. The Company acknowledges and agrees that The
Venture Group will be using and relying upon such information
supplied by the Company and Target and their officers, directors,
agents and other representatives and any other publicly available
information concerning the Company and Target without any
independent investigation or verification thereof by The Venture
Group of the Company and Target or their business or assets provided
The Venture Group shall not use information that it knows to be
inaccurate. The Company further recognizes that in order for The
Venture Group to perform properly its obligations in a professional
manner it is necessary that The Venture Group be informed of and, to
the extent practiceable, participate in meetings and discussions
between the Company and any third party relating to the matters
covered by the terms of The Venture Group's engagement.
4. As compensation for the services to be rendered hereunder, but
subject to Sections 5 and 6 if this Agreement has been terminated,
The Venture Group shall be entitled to the following advisory fees:
(a) M&A Advisory Fee - Cash compensation equal to (i) a base fee
of $1,800,000 plus (ii) five percent (5%) of any cash or cash
equivalents of the Company in excess of $6,000,000 at closing
(pro forma for the Transaction and the Funding).
(b) Reverse Merger Advisory Fee - Should the Company choose to
enter into a reverse merger transaction, The Venture Group
will be entitled to purchase that number of shares of common
stock of the Company (pro forma for the reverse merger and the
financing required to close the transaction) equal to 3.3% of
the Company's fully-diluted equity ownership in aggregate, for
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a purchase price of $0.01 per share. The Venture Group
acknowledges that such shares will be subject to certain
transfer restrictions as specified in one or more separate
agreements with the Company and its placement agent or
underwriter, as the case may be.
(c) Debt Placement Fee - Two percent (2%) of the principal amount
of any funded term or asset-based debt financing arranged by
The Venture Group and provided for the purposes of funding the
Transaction shall be paid in cash upon closing of the
Transaction.
(d) Payment Instructions - The M&A Advisory Fee and Debt Placement
Fee will become payable by the Company in cash upon the
closing of the Transaction. The shares of common stock of the
Company which constitute the Reverse Merger Advisory Fee will
be issued upon completion of the Transaction. The allocation
of the compensation referenced in sections 4 (a) - 4 (c) above
amongst the members of The Venture Group is to be as follows:
i. To ▇▇▇▇▇▇▇▇▇▇▇ Equity Partners LLC: 177,778 shares of
common stock of the Company and $633,333.33 paid via Fed
Wire;
ii. To Content Holding LLC: 177,778 shares of common stock
of the Company and $1,233,333.33 paid via Fed Wire.
iii. To Coll International LLC.: 177,778 shares of common
stock of the Company and $633,333.33 paid via Fed Wire.
Any remaining cash compensation payable to The Venture Group in
excess of the collective cash disbursements referenced in Section 4
(d) (i) - (iii) herein will be distributed in equal amounts to each
member of The Venture Group by Fed Wire.
5. The Company agrees that The Venture Group shall be entitled to $700,000 as
expense reimbursement on a non-accountable basis. Additionally, the
Company shall reimburse The Venture Group promptly as requested for its
out-of-pocket fees and expenses including the reasonable fees and expenses
of legal counsel retained by The Venture Group to enforce this agreement
(except as it may pertain to those matters referenced in Section 9
herein), incurred during the term of its engagement hereunder. Upon any
termination of The Venture Group's engagement hereunder, the Company
agrees to pay such fees and expenses to The Venture Group upon demand
whether or not the proposed transaction is consummated. Additionally, the
Company indemnifies The Venture Group for all expenses incurred on behalf
of the Company with ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP, Velah Group LLP, Fulbright &
▇▇▇▇▇▇▇▇ LLP, Profit Planners Inc., & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq. All expenses
payable to those entities are to be paid directly, and are not included in
the $700,000 expense reimbursement referenced herein.
6. As The Venture Group will be acting on behalf of the Company in connection
with this engagement, the Company agrees to indemnify The Venture Group in
accordance with the indemnity agreement attached hereto as Exhibit A (the
"Indemnity Agreement"). The Venture Group represents and warrants to the
Company that the Venture Group has not engaged any agents in connection
with the services provided under this agreement.
7. The term of The Venture Group engagement hereunder shall extend from the
date hereof to the closing of the Transaction, provided that each of
Sections 4 through 6 and Sections 8 through 10 shall survive any
termination or expiration of this agreement.
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8. Any advice provided by The Venture Group under this agreement shall
not be publicly disclosed or made available to third parties without
The Venture Group's prior written consent (which shall not be
unreasonably withheld or delayed), other than to the Company's and
Target's attorneys, accountants, directors and other professional
advisors, nor may The Venture Group be otherwise publicly referred
to without its prior consent (which shall not be unreasonably
withheld or delayed), except to the extent such disclosure is
required under applicable law or by legal proceedings.
9. The Company represents and warrants to The Venture Group that there
are no brokers, representatives or other persons which have an
interest in compensation due to The Venture Group from any
transaction contemplated herein. The fees and expenses set forth in
Sections 4 and 5 herein represent all the fees and expenses payable
in connection with the services described herein that have been
performed directly or indirectly by The Venture Group or other
parties engaged by or working with The Venture Group or any of its
affiliates. Upon payment of the fees and expenses set forth herein
to The Venture Group and the other parties identified herein, the
Company's obligations with respect to the payment of fees and
expenses in connection with the services described herein that have
been performed directly or indirectly by The Venture Group or other
parties engaged by or working with The Venture Group or any of its
affiliates shall be deemed fully satisfied, and The Venture Group
shall allocate and distribute such fees and expenses as appropriate.
The Venture Group on behalf of itself and its affiliates agrees to
indemnify and hold harmless the Company, to the fullest extent
lawful, against any and all losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses and
disbursements (and any and all actions, suits, proceedings and
investigations in respect thereof and any and all legal and other
costs, expenses and disbursements in giving testimony or furnishing
documents in response to a subpoena or otherwise), including,
without limitation, the costs, expenses and disbursements, as and
when incurred, of investigating, preparing or defending any such
action, suit, proceeding or investigation (whether or not in
connection with litigation in which the Company is a party),
directly or indirectly, relating to, based upon, arising out of, or
in connection with, the payment of fees and expenses (or any other
claims for compensation) in connection with the services described
herein that have been performed directly or indirectly by The
Venture Group or other parties engaged by or working with The
Venture Group or any of its affiliates.
10. This Agreement may not be assigned by the Company or The Venture
Group without the prior written consent of the other; provided,
however, that the Company may assign this Agreement to any surviving
entity or entity created in connection with Company's acquisition of
Target. If any provision of this Agreement is determined to be
invalid or unenforceable in any respect, then such determination
will not affect such provision in any other respect or any other
provision of this Agreement, which will remain in full force and
effect.
11. This Agreement may not be amended or modified except in writing and
shall be governed by and construed in accordance with the laws of
the State of New York, without regard to principles of conflicts of
laws.
12. The Venture Group shall have the right to place advertisements in
form and substance reasonably acceptable to the Company in financial
and other newspapers and journals at its own expense describing its
services to the Company.
13. The Company acknowledges that The Venture Group is in the business
of providing financial advisory services (of all types contemplated
by this agreement) to others.
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Nothing herein contained shall be construed to limit or restrict The
Venture Group in conducting such business with respect to others or in
rendering such advice to others.
The Venture Group is delighted to accept this engagement and looks forward to
working with management of the Company on this assignment. Please confirm that
the foregoing correctly sets forth our agreement by signing the enclosed
duplicate of this Agreement in the space provided and returning it, whereupon
this letter shall constitute a binding Agreement as of the date first above
written.
AGREED AND ACCEPTED:
Ronco Marketing Corporation
By: ______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
AGREED AND ACCEPTED:
Copper Beech Equity Partners, LLC
By: ______________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇▇▇▇▇▇ Equity Partners LLC
By: ______________________________
Name:
Title:
Coll International, LLC
By: ______________________________
Name:
Title:
Content Holding LLC
By: ______________________________
Name:
Title:
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EXHIBIT A
INDEMNIFICATION PROVISIONS
Ronco Marketing Corporation (the "Company") agrees to
indemnify and hold harmless Copper Beech Equity Partners LLC, ▇▇▇▇▇▇▇▇▇▇▇ Equity
Partners LLC, Coll International LLC, Content Holding LLC, their affiliates and
their respective officers, directors, shareholders, employees, controlling
persons, and agents engaged by the Venture Group (collectively referred to
herein as "The Venture Group") to the fullest extent lawful against any and all
losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses and disbursements (and any and all actions, suits, proceedings
and investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise) (each a "Liability"), including, without
limitation, the costs, expenses and disbursements, as and when incurred, of
investigating, preparing or defending any such action, suit, proceeding or
investigation (whether or not in connection with litigation in which The Venture
Group is a party), directly or indirectly, relating to, based upon, arising out
of, or in connection with, its acting for the Company under the Agreement, dated
May 20, 2005, between the Company and The Venture Group to which these
indemnification provisions are attached and form a part (the "Agreement"),
except to the extent that any such Liability is found in a final judgment by a
court of competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from The Venture Group's gross negligence or willful
misconduct, and provided that Liabilities resulting from actions brought by the
Company against The Venture Group shall be covered by the final sentence of this
paragraph. The Company also agrees that The Venture Group shall not have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with the engagement of The Venture Group, except to
the extent that any such liability is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from The Venture Group's gross negligence or willful
misconduct.
The indemnification provisions shall be in addition to any
liability which the Company may otherwise have to The Venture Group or the
persons identified below in this sentence and shall extend to the following: The
Venture Group, its affiliated entities, partners, employees, and controlling
persons (within the meaning of the federal securities laws), and the officers,
directors, employees, and controlling persons of any of them. All references to
The Venture Group in these indemnification provisions shall be understood to
include any and all of the foregoing.
If any action, suit, proceeding or investigation is commenced,
as to which The Venture Group proposes to demand indemnification, it shall
notify the Company with reasonable promptness (but any failure by The Venture
Group to notify the Company shall not relieve the Company from its obligations
hereunder unless such failure shall materially and adversely affect the
Company); and the Company shall promptly assume the defense of such action,
suit, proceeding or investigation, including the employment of counsel
(reasonably satisfactory to The Venture Group) and payment of fees and expenses.
The Venture Group shall have the right to retain its own counsel of its own
choice, subject to approval of the Company, not to be unreasonably withheld, to
represent it and such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with the Company and any counsel
designated by the Company, but the reasonable fees and expenses of such counsel
employed by The Venture Group shall be at the expense of The Venture Group
unless (i) the employment of such counsel shall have been authorized in writing
by the Company in connection with the defense of such action, (ii) the Company
shall not have promptly employed counsel reasonably satisfactory to The Venture
Group, or its outside legal counsel shall have reasonably concluded and so
advised The Venture Group in writing that there may be one or more legal
defenses available to it which have substantial merit and which are different
from or additional to those available to the Company, in
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EXHIBIT A
INDEMNIFICATION PROVISIONS
Page 2
any of which events such reasonable fees and expenses shall be borne by the
Company to the extent incurred in connection with such defenses and the Company
shall not have the right to direct the defense of such action on behalf of The
Venture Group. The Company shall be liable for any settlement of any claim
against The Venture Group made with the Company's written consent, which consent
shall not be unreasonably withheld. The Company shall not, without the prior
written consent of The Venture Group, which consent shall not be unreasonably
withheld, settle or compromise any claim, or permit a default or consent to the
entry of any judgment in respect thereof, unless such settlement, compromise or
consent includes, as unconditional term thereof, the giving by the claimant to
The Venture Group of an unconditional release from all liability in respect of
such claim.
In order to provide for just and equitable contribution, if a
claim for indemnification pursuant to these indemnification provisions is made
but it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) that such indemnification may not be enforced in such
case, even though the express provisions hereof provide for indemnification in
such case, then the Company, on the one hand, and The Venture Group, on the
other hand, shall contribute to the losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses, and disbursements to
which the indemnified persons may be subject in accordance with the relative
benefits received by the Company, on the one hand, and The Venture Group, on the
other hand, and also the relative fault of the Company, on the one hand, and The
Venture Group, on the other hand, in connection with the statements, acts or
omissions which resulted in such losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses or disbursements and
the relevant equitable considerations shall also be considered. No person found
liable for a fraudulent misrepresentation shall be entitled to contribution from
any person who is not also found liable for such fraudulent misrepresentation.
Notwithstanding the foregoing, The Venture Group shall not be obligated to
contribute any amount hereunder that exceeds the amount of fees previously
received by The Venture Group pursuant to the Agreement.
Neither termination nor completion of the engagement of The
Venture Group referred to above shall affect these indemnification provisions
which shall then remain operative and in full force and effect.
Signature Page to Follow
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EXHIBIT A
INDEMNIFICATION PROVISIONS
page 3
AGREED AND ACCEPTED:
Ronco Marketing Corporation
By: ______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
ACKNOWLEDGED AND ACCEPTED:
Copper Beech Equity Partners, LLC
By: ______________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇▇▇▇▇▇ Equity Partners LLC
By:
------------------------------------
Name:
Title:
Coll International, LLC
By: ______________________________
Name:
Title:
Content Holding LLC
By: ______________________________
Name:
Title:
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