EXHIBIT 10.1
LETTER AGREEMENT
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Managing Director
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Company
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
CONFIDENTIAL
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March 22, 2011
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Red Mountain Resources, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇▇▇▇,
This letter (the "Agreement") will confirm the engagement of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and Company LLC, a New York limited liability company ("▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇"), by
Red Mountain Resources, Inc., a Florida corporation ("RMR" or the "Company"), as
financial adviser to advise, consult with, and assist the Company in connection
with various potential transactions related to the roll up and acquisition of
certain assets from The ▇▇▇▇▇▇▇▇▇▇▇ Group, Inc.; Black Rock Capital, LLC; Texas
Midstream, LLC; Bamco Gas, LLC and other prospective entities (the "Acquired
Assets") and to advise the Company with respect to capital structure
alternatives and other matters designed to assist in generating interest from
institutional and retail investors for future capital raising and potential
future acquisitions. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ acknowledges that RMR is currently
undertaking a private placement of common stock of up to USD $25 million ("March
2011 Private Placement") and that RMR will pay certain selling agents of the
Company a selling commission. As such, the right of first refusal conditions, as
set forth in Section 4 of this Agreement, are not applicable to the March 2011
Private Placement.
1. Scope of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' Services. In connection with its engagement
hereunder, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ will assist the Company in various matters
including:
a. familiarizing itself to the extent it deems appropriate and feasible
with the operations, financial condition, management, and prospects of
the Company and the Acquired Assets;
b. conducting an examination of the documents and records pertaining to
the Company, interviewing Company personnel and consultants engaged by
the Company, and making such other reasonable investigations as
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ deems necessary and appropriate under the
circumstances;
c. performing financial analysis of the Company and the Acquired Assets,
including comparisons with other comparable oil and gas and midstream
companies and assets as ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ deems appropriate;
d. working with the Company to create financial projections for the
Company and the Acquired Assets;
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e. assisting the Company to develop and organize information for
presentation to potential investors, including marketing brochures
containing descriptions of the Acquired Assets;
f. providing advice relating to capital markets activities and general
market conditions;
g. advising the company on how to effectively access, attract and
communicate with US institutional investors; and,
h. providing such other financial advisory and investment banking
services as are normal and customary for similar transactions and as
may be mutually agreed upon by the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
2. Fees. In return for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' services, the Company will pay to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ the following fees:
a. An initial advisory fee of $30,000 (the "Engagement Fee"), payable in
cash upon the execution of this Agreement; and,
b. Monthly advisory fees equal to $10,000 per month (the "Advisory
Fees"), payable in cash commencing 30 days after the execution of this
Agreement and payable on the same day of each month thereafter until
termination of this Agreement.
3. Expenses. In addition to the foregoing and regardless of whether a
transaction is proposed or consummated, the Company will, upon request, promptly
reimburse ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ from time to time for all reasonable out-of-pocket
costs and expenses incurred by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in performing its obligations
under this Agreement, which costs and expenses shall include, but not be limited
to, travel and lodging expenses, direct identifiable communication charges,
courier services, fees and expenses of legal counsel to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
expenses incurred in performing due diligence, and all other expenses reasonably
incurred by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in performing its obligations under this Agreement,
provided that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall not exceed total expenditures equaling in
aggregate of $10,000 without the prior approval of the Company and receive prior
approval for any items over $5,000.
4. Right of First Refusal. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have the right of first
refusal during the term of this Agreement and for a period of twelve (12) months
following the termination of this Agreement (or at such earlier date that
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ declines to exercise its right of refusal on a bona fide offer
from the company to manage a transaction as contemplated herein) to act as
exclusive Manager, Placement Agent, financial advisor, or similar status
agreeable to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for any public or private issuance of debt,
equity, or equity-linked securities of the Company or the acquisition of any
Acquired Assets in which an investment bank or similar financial firm is
utilized. The Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ agree to enter into a mutually
acceptable engagement letter providing for such services and providing for the
payment to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for such services of reasonable and fair
compensation in accordance with industry standards. Provided however, this right
of first refusal shall not prevent Nucopia Partners and ▇▇▇▇▇▇▇ Advisors, Inc.
from assisting the company with other corporate work such as assistance in the
preparation of filings and other general corporate activities or from
participating, outside the United States, subject to any required regulatory
approvals, in financings managed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
5. Term of Engagement. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' engagement will commence on the date
hereof and will continue for a period of twelve (12) months after the date
hereof, unless extended by mutual written consent or earlier terminated as
provided below. Notwithstanding the term specified in the preceding sentence,
either the Company or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ may terminate this Agreement at any time,
with or without cause, by giving 30 days prior written notice to the other
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party. Anything to the contrary in this Agreement notwithstanding, neither the
expiration nor termination of this Agreement will affect (a) the matters set out
in this section or under the captions "Indemnification," "Confidentiality," and
"Miscellaneous" all of which shall survive expiration or termination of this
agreement or (b) Madison William's right to receive, and the Company's
obligation to pay, any and all fees and expenses due hereunder, regardless of
whether or not any transaction shall be consummated prior to or subsequent to
the effective date of expiration or termination of this Agreement, all as more
fully set forth in this Agreement. It is expressly agreed that following the
expiration or termination of this Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ will continue to
be entitled to receive fees as described above that have accrued prior to such
expiration or termination but are unpaid, as well as reimbursement for expenses
as contemplated above.
6. Company Information. In connection with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' activities as
financial advisor, the Company will furnish ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ such information
concerning the Company as ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ reasonably determines to be
appropriate with respect to a transaction ("Information"). The Company shall
afford ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and its representatives full and complete access to its
books and records and will use commercially reasonable efforts to afford ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ full and complete cooperation of management, employees, independent
accountants, legal counsel, and other advisors and consultants to gather the
Information. The Company recognizes and confirms that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (a) will
use and rely on the Information and information available from generally
recognized public sources in performing the services contemplated by this
Agreement, without independently verifying the accuracy and completeness of the
same, (b) does not assume responsibility for the accuracy or completeness of the
Information or such other information, and (c) will not make an appraisal of any
assets or liabilities of the Company.
7. Confidentiality. In connection with this engagement, it is contemplated that
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ will receive from the Company certain information the Company
considers confidential. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall use this confidential information
solely for the purpose of providing services to the Company and will not
disclose to any party (other than ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' officers, directors,
employees, affiliates, and counsel who have a need to know such information,
herein "Representatives") any such confidential information, except with the
prior written approval of the Company; provided, however, that the foregoing
restrictions shall not apply to any information that: (i) is disclosed pursuant
to the distribution of Information as permitted by the Company, (ii) the Company
consents to having disclosed in connection with the transaction, (iii) is
publicly available when provided or thereafter becomes publicly available other
than through disclosure by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or its Representatives, or (iv) is
required to be disclosed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ by judicial or administrative
process in connection with any action, suit, proceeding, or investigation; and
provided, further, however, that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall, if permitted under
applicable law or regulation, give the Company notice of any such requirement
immediately upon the becoming aware of same and shall not disclose such
information except only to the extent required after the maximum time permitted.
Information shall be deemed "publicly available" if it becomes a matter of
public knowledge or is contained in materials available to the public or is
obtained by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ from any source other than the Company or its
representatives, provided that such source was not to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' actual
knowledge subject to a confidentiality agreement with the Company.
8. Indemnification. The Company acknowledges that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ will be
acting on behalf of the Company and will require indemnification by the Company.
The Company further acknowledges that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' indemnification
provisions attached hereto as Schedule A are incorporated by reference herein or
are made a part hereof for all purposes as though set forth entirely herein.
9. Announcements. If a transaction is completed, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ may arrange,
at its own expense, publication of a customary announcement in such newspapers,
electronic media, periodicals, and other publications as it may choose stating
that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ acted as financial advisor to the Company with respect to
a transaction provided the content of the announcement is approved in advance by
the Company.
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10. Miscellaneous. This Agreement (a) will be governed by and construed in
accordance with the laws of the State of Texas, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof,
(b) incorporates the entire understanding of the parties with respect to the
subject matter hereof and supersedes all previous agreements should they exist
with respect thereto, (c) may not be amended or modified except in a writing
executed by the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and (d) will be binding upon and
inure to the benefit of the Company, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the other Indemnified
Parties (as hereinafter defined) and their respective successors. The Company
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ agree to waive trial by jury in any action, proceeding or
counterclaim brought by, or on behalf of, either party with respect to any
matter whatsoever relating to, or arising out of, any transaction or the
engagement of, or performance by, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ hereunder. The Company
acknowledges that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, in connection with its engagement hereunder,
is acting as an independent contractor with duties owing solely to the Company
and that, except as otherwise contemplated by Schedule A hereto, nothing in this
Agreement is intended to confer upon any other person any rights or remedies
hereunder or by reason hereof. If it becomes necessary for one party to
institute legal proceedings against the other party to enforce this Agreement,
the prevailing party is entitled to recover, from the losing party, its legal
fees, expert witness costs, and other expenses incurred in connection with such
proceedings.
11. Counterparts. This Agreement may be executed in one or more counterparts, by
different parties on separate counterparts, each of which, when so executed,
will be deemed to be an original copy of this Agreement, and all such
counterparts, when taken together, will be deemed to constitute one and the same
agreement. This Agreement shall be effective and binding once one or more
counterparts are executed by each party hereto. This Agreement may be executed
by facsimile signature or electronic exchanges of documents bearing a scanned
signature and delivered by facsimile or electronic transmission. The parties
agree that a facsimile, scanned, imaged, electronic, or other copy of a
signature constitutes a legal and valid signature and has the same effect as an
original signature.
If this Agreement reflects our mutual understanding, please execute two
copies in the space indicated below and return one to us.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ AND COMPANY LLC
By ___________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Managing Director
Accepted and agreed to as of the date set forth above:
RED MOUNTAIN RESOURCES, INC.
By _____________________________________
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
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EXHIBIT A
Indemnification
Recognizing that services of the type contemplated in this Agreement sometimes
result in litigation and that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' role is advisory, the Company
agrees to (i) indemnify and hold harmless ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and its affiliates,
and their respective past, present and future officers, directors, shareholders,
partners, members, managers, employees, agents, representatives, advisors, and
controlling persons (collectively, the "Indemnified Parties"), from and against
any losses, claims, damages and liabilities (or actions in respect thereof),
joint or several, related to or arising in any manner out of any transaction,
proposal or any other matter (collectively, the "Matters") contemplated by the
engagement of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ hereunder, this Agreement, or any actions taken
or omitted to be taken by an Indemnified Party or the Company in connection with
this Agreement, and (ii) promptly reimburse the Indemnified Parties for all out
of pocket expenses (including, without limitation, reasonable fees and expenses
of legal counsel) as incurred in connection with the investigation of,
preparation for, defense of, pursuit of, compromising of, or settling of any
action, suit, dispute, inquiry, investigation, or proceeding, pending or
threatened, brought by or against any person, related to or arising in any
manner out of this Agreement, any Matter contemplated by the engagement of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ hereunder, or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' services hereunder, or any
action or proceeding arising therefrom (collectively, "Proceedings").
Notwithstanding the foregoing, the Company will not be liable in respect of any
losses, claims, damages, liabilities or expenses that a court of competent
jurisdiction shall have determined by final judgment resulted primarily from the
gross negligence or willful misconduct of such Indemnified Party. The Company
further agrees that it will not, without the prior written consent of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, settle, compromise or consent to the entry of any judgment in any
pending or threatened Proceeding in respect of which indemnification or
reimbursement may be sought hereunder (whether or not ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or any
Indemnified Party is an actual or potential party to such Proceeding), unless
such settlement, compromise or consent contains an unconditional release of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and each other Indemnified Party hereunder from all liability
arising out of such Proceeding reasonably satisfactory in form and substance to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. It is further acknowledged that promptly after receipt by an
Indemnified Party of a notice of the occurrence of an indemnified claim, such
Indemnified Party shall give notice to the Company and the Company may assume
the defense of such claim; provided, however, that any failure by an Indemnified
Party to notify the Company will not relieve the Company from its obligations
hereunder except if and only to the extent that the Company's defense of such
action, proceeding or investigation is actually prejudiced by the Indemnified
Party's failure to so notify the Company. However, if the Indemnified Party is
advised by its counsel that an actual or potential conflict of interest may
exist that makes representation by counsel chosen by the Company inadvisable,
the Indemnified Party shall be entitled at the Company's expense to employ its
own counsel.
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The Company agrees that if the foregoing indemnification or reimbursement were
for any reason not to be available to any Indemnified Party or insufficient to
hold it harmless or fully indemnified as and to the extent contemplated by this
Agreement, then the Company will contribute to the amount paid or payable by
such Indemnified Party in respect of losses, claims, damages and liabilities in
such proportion as is appropriate to reflect the relative benefits to the
Company and its equity holders on the one hand, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ on the
other, in connection with the Matters to which such indemnification or
reimbursement relates or, if such allocation is not permitted by applicable law,
not only such relevant benefits but also the relative faults of such parties as
well as any other relevant equitable considerations. No person found liable for
a fraudulent misrepresentation shall be entitled to contribution from any person
who is not also found liable for such misrepresentation. Notwithstanding the
foregoing, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall not be obligated to contribute any amount
hereunder that exceeds the amount of fees received by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ pursuant
to the Agreement.
The Company further agrees that no Indemnified Party will have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company or
any person or entity asserting claims on behalf of or in right of the Company
for, or in connection with, or related to, or arising out of, this Agreement,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' engagement hereunder, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' services hereunder,
any transaction or proposed transaction, or any actions taken or omitted to be
taken by an Indemnified Party or the Company in connection with this Agreement,
except for losses, claims, damages, liabilities, or expenses that a court of
competent jurisdiction shall have determined by final judgment resulted
primarily from the gross negligence or willful misconduct by such Indemnified
Party. The indemnity, reimbursement and contribution obligations of the Company
will be in addition to any liability which the Company may otherwise have and
will be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company or an Indemnified Party.
The indemnity, reimbursement and contribution provisions set forth herein shall
apply to any services provided by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in connection with this
engagement prior to the date hereof and to any modifications of this Agreement
and will remain operative and in full force and effect regardless of (i) any
withdrawal, termination or consummation of or failure to initiate or consummate
any Matter referred to herein, (ii) any investigation made by or on behalf of
any party hereto or any person controlling (within the meaning of Section 15 of
the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended) any party hereto, (iii) any termination or the
completion or expiration of this Agreement or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' engagement
hereunder and (iv) whether or not ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ will, or will not be called
upon to, render any formal or informal advice in the course of such engagement.