Exhibit 10.17
The Empire State Building
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confidential
April 21, 2005
Ovation Products Corporation
▇▇▇▇▇▇▇ ▇. Zebular, CEO and CTO
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Re: Financial Advisory Agreement
Dear ▇▇▇▇:
Pursuant to our discussion, we are pleased to confirm the arrangements under
which, Ardour Capital Investments LLC, ("Ardour" or "Advisor") is engaged by
Ovation Products Corporation (together with its subsidiaries and affiliates,
"Ovation" or "Company") to act as the Company's non-exclusive financial advisor
("Financial Advisor") with respect to assessing and accessing the capital
markets.
1. Upon both the Company and its board of director's approval and
request, Ardour, as Financial Advisor will introduce investors and
advise the Company as Placement Agent with respect to raising a
minimum of $4,000,000 and a maximum of $5,000,000 of equity capital
to fund operations. The Company may in its sole discretion change
the dollar amount of the offering. Such engagement shall be on a
best efforts/semi-exclusive basis. Ardour will assist the Company in
modifying its current Series C Preferred Stock Private Placement
Offering memorandum and will review the Company's current capital
structure, offering instrument and valuation range. In addition,
Ardour will assist in modifying Ovation's current PowerPoint
presentation for prospective investors and will identify and
introduce the Company to suitable institutional investors.
2. It is understood that Ovation is currently in the process of raising
approximately $400,000 in the form of Series C Preferred Stock plus
warrants. Ardour will use its best efforts to secure all, or a
portion of, this financing on a non-exclusive basis and will receive
consideration as outlined below for any such moneys raised.
3. Ovation reserves the right to terminate this agreement at any time
with thirty (30) days written notice.
4. For acting as the Company's Financial Advisor, the Company shall pay
Ardour a non-refundable retainer and success fee of the following:
(a) A one-time fee of $10,000 to be due on February 1, 2005 and a
retainer of $5,000 per month beginning on March 1, 2005 to be
accrued and paid upon the successful raising of $400,000 in new
capital or at the successful completion of the Company's $400,000
Series C Preferred Stock financing, whichever is earlier. This
retainer shall be viewed as a non-refundable deposit, but shall be
deducted from the total amount of the success fees due Ardour in
connection with the proposed offering stated above.
(b) As used herein, the term "Introduced Investor" means any person
(individual, corporation, trust, partnership, or other entity) who:
(i) was first introduced to the Company by Ardour, (ii) was first
introduced to the Company by any person who was first introduced to
the Company by Ardour, or (iii) is any affiliate of any of the
foregoing. It is understood that the Company has approached a number
of venture capital and other prospective investors in the past that,
other than its existing investors, these prospective investors have
not chosen to invest in Ovation. Notwithstanding Ovation's prior
contacts, it is understood that Ardour may contact such investor
prospects and that such contacted prospects (other than Ovation's
existing investors) will be considered as Introduced Investors. With
respect to private, non-venture capital investors, it is understood
that the Company will handle those introductions directly and that
Ardour will work on a non-exclusive basis and be compensated for its
introductions as Introduced Investors, except that warrant
compensation will be paid through options from Ovation's incentive
stock pool.
(c) With respect to each Introduced Investor who invests in equity
securities of the Company, the Company shall pay to Ardour the
following compensation:
1. Cash compensation in the amount of 5% of the total
consideration paid by such Introduced Investor for the
Company's securities; and
2. Warrants to purchase shares of the capital stock of Ovation
that are issued in any private placement of its equity
securities. The number of warrants to be issued shall equal
five percent (5%) of the number of shares of Ovation capital
stock purchased by Introduced Investors in the financing. The
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exercise price of such warrants shall equal the per share
purchase price paid by the Introduced Investors in the
financing. If more than one closing occurs, the exercise price
of such warrants shall equal the weighted average per share
conversion price for all such capital stock.
The term of the warrants shall expire on the earlier of: (a)
30 days prior to a registered public offering of the Company's
stock; (b) as of the sale or merger of the Company; or (c) ten
(10) years from the date of issue. The warrants shall be
exercisable by payment in full in cash or by so-called
"cashless exercise" provisions enabling Ardour to pay the
exercise price by reducing the number of shares to be issued
upon exercise of the warrants. Each warrant shall be deemed to
have a value of $.0001.
3. Notwithstanding any termination of this agreement (whether as
a result of the expiration of the term or as a result of the
termination by either party), if an Introduced Investor
invests in the Company within 12 months after the termination
of this agreement, then the Company shall pay to Ardour all
fees that would have been due and payable if said investment
had been consummated during the term hereof.
4. In the event that any Introduced Investor shall make a second
investment in the Company, the Company shall pay to Ardour
further commissions on such investment in cash and warrants
compared as set forth above in paragraphs 4c except that the
5% compensation payable in cash and warrants shall be reduced
to 2.5%.
(d) With respect to each new investor who is not an Introduced Investor
and who is not an individual (angel investor) and who has not been
introduced by Brimberg and Co., and who invests in the equity
securities of the Company while this Agreement is in effect or
within 60 days after termination of this Agreement (hereafter
referred to as "Non-Introduced Investor"), the Company shall pay to
Ardour the following compensation:
1. Cash compensation in the amount of 2% of the total
consideration paid by such Non-Introduced Investor for the
securities; and
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2. Warrants to purchase shares of the capital stock of Ovation
issued in any private placement of its equity securities. The
number of warrants to be issued shall equal three percent (3%)
of the number of shares of Ovation capital stock purchased by
Non-Introduced Investors in the financing, all other terms and
conditions of such warrants to be as set forth in paragraph
4.c.2 above; and
3. if Ardour has secured and closed a minimum of $150,000 of
financing for the Company from Introduced Investors by
February 28, 2005, the Company will issue to Ardour additional
warrants to purchase shares of the capital stock of Ovation
issued in any private placement of equity securities. The
number of warrants to be issued shall equal one percent (1%)
of the number of shares of Ovation capital stock purchased by
Non-Introduced Investors in the financing, all other terms and
conditions of such warrants to be as set forth in paragraph
4.c.2 above; and
4. If Ardour has secured and closed a minimum of $2,000,000 of
financing for the Company from Introduced Investors by
December 31, 2005, or if the Company has raised a total of $4
million during 2005 from any source, additional cash
compensation in the amount of 2% of the total consideration
paid by such Non-introduced Investor.
5. Upon the Company's request, Ardour shall also act as a mergers and
acquisition advisor ("M&A Advisor") during the term, upon such terms
with respect to remuneration as may be agreed in writing by Advisor
and the Company at the time of such request.
6. At the request of the Company, Ardour may act as the placement agent
or underwriter in connection with additional debt or equity
financings for the Company, upon such terms with respect to
remuneration as may be agreed in writing by Ardour and the Company
at the time of such request. It is understood that the Company is
considering a PIPE financing. Should the Company decide to pursue
such a financing, the Company agrees to offer the Ardour the
opportunity, exercisable within ten (10) days after written notice
is delivered by Ovation to Ardour, to undertake the PIPE financing
on the same terms and conditions as contemplated with Brimberg and
Company, or any other person or entity.
7. In addition to the fees payable hereunder and regardless of whether
any transaction or financing is proposed or consummated, the Company
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shall reimburse Ardour for al reasonable travel and out-of-pocket
expenses incurred by Ardour in connection with the performance of
its services hereunder, including without limitation, hotel, food
and associated expenses and long-distance telephone calls up to a
maximum of $10,000; any individual expenses over $1,000 shall
require the prior approval of the Company. Such expenses shall be
submitted by Ardour on a monthly basis, together with originals of
receipts and other documentation supporting all expenditures in
excess of $25, in accordance with Company policy, and will
reimbursed by Company promptly upon receipt.
8. In connection with Ardour's activities on the Company's behalf, the
Company will furnish Ardour with all information that it may
reasonably request and will provide Ardour reasonable access to the
officers, directors, accountants and counsel of the Company under
the direction of a Company representative.
9. The Company acknowledges that in rendering its services hereunder,
Ardour shall be solely using and relying on the information provided
by the Company. Ardour does not assume responsibility for the
accuracy or completeness of any such information. Any advice
rendered by Ardour pursuant to this agreement may not be disclosed
publicly without the prior written consent of Ardour.
10. The Company acknowledges that Ardour makes no commitment whatsoever
as to making a market in the Company's securities or to recommending
or advising its clients to purchase the Company's securities. Ardour
acknowledges that the Company shall have the absolute right in its
sole discretion to determine whether to proceed with any financing
or to accept any individual investor.
11. The Company agrees that Ardour has the right to place advertisements
in financial and other newspapers and journals describing its
services to the Company hereunder following review and approved by
the Company.
12. Ardour will act under this agreement as an independent contractor
with duties to the Company. Because Ardour will be acting on the
Company's behalf in this capacity, it is Ardour's practice to
receive and give mutual indemnification. A copy of Ardour's standard
indemnification form is attached to this letter agreement as
Appendix B, and is incorporated herein. It is expressly understood
and agreed to by the parties hereto that Ardour shall have no
authority to act for, represent or bind the Company or any affiliate
thereof in any manner, except as may be agreed to expressly by the
Company in writing from time to time.
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13. Any notice or communication permitted or required hereunder shall be
in writing and shall be deemed given upon receipt and shall be (i)
hand-delivered, (ii) sent postage prepaid by registered mail, return
receipt requested, or (iii) sent by confirmed facsimile, to the
respective parties as set forth below, or to such other address as
either party may notify the other in writing.
If the Company, to: Ovation Products Corporation
▇▇▇▇▇▇▇ ▇. Zebular, CEO and CTO
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If to the Advisor, to: ARDOUR CAPITAL INVESTMENTS
The Empire State Building
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Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive
Officer
Phone ▇▇▇-▇▇▇-▇▇▇▇
14. This letter agreement shall be binding upon and inure to the benefit
of each of the parties hereto and their respective successors, legal
representatives and assigns. No provision of this letter agreement
may be amended, modified or waived, except in a writing signed by
all of the parties hereto.
15. This letter agreement shall be construed in accordance with and
governed by the laws of the State of New York, without giving effect
to its conflict of law principles. Each of the Company and the
Advisor hereby (1) agrees that any legal suit, action or proceeding
arising out of or relating to this letter agreement and/or the
transactions contemplated hereby, including, without limitations,
any such legal suit, action or proceeding against any present or
former officer, employee or agent of the Advisor, each of whom is
intended to be a third-party beneficiary of the agreement contained
in this paragraph 13, shall be instituted exclusively in New York
State supreme Court, County of New York, or in the United States
District Court for the Southern District of New York, (2)
irrevocably waives any objection which it may have now or hereafter
to the venue of any such suit, action or proceeding, and (3)
irrevocably consents to the jurisdiction of the New York State
Supreme Court, County of New York and the United States District
Court for the Southern District of New York in any such suit, action
or proceeding. Each of the Company and the Advisor further agrees to
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accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York State
Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York and agrees that service
of process upon the Company mailed by means of registered or
certified mail, return receipt requested, to the Company's address
shall be deemed in every respect effective service of process upon
the Company in any such suit, action or proceeding, and service of
process upon the Advisor mailed by means of registered or certified
mail, return receipt requested, to the Advisor's address shall be
deemed in every respect effective service of process upon the Ardour
in any such suit, action or proceeding. If the Company is served in
any suit, action or proceeding arising out of this letter agreement
in accordance with this section and the Company fails to appear, for
any reason, and a default judgment subsequently issues against the
Company, the Company agrees that it will not dispute such default
judgment.
16. The parties hereby waive trial by jury in any action or proceeding
involving, directly or indirectly, a dispute concerning or arising
from this letter agreement.
If the terms of our engagement as set forth i this letter are satisfactory to
you, kindly sign and date the enclosed copy of this agreement and the
indemnification form thereto as Exhibit A and return them to us.
Very truly yours,
ARDOUR CAPITAL INVESTMENTS
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
ACCEPTED AND AGREED TO:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President & COO
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