BURNHAM HILL PARTNERS A DIVISION OF PALI CAPITAL INC.
EXHIBIT
10.15
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▇▇▇▇ PARTNERS
A
DIVISION OF PALI CAPITAL INC.
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▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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TEL ▇▇▇-▇▇▇-▇▇▇▇
FAX
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November
28, 2007
▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
President
and Chief Executive Officer
▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Dear ▇▇.
▇▇▇ ▇▇▇▇:
This
letter Agreement (the “Agreement”) confirms
the engagement of ▇▇▇▇▇▇▇ Hill Partners (“BHP”), a division of
Pali Capital, Inc., by RedRoller Holdings, Inc. (the “Company”) to act (i)
as its exclusive financial advisor in connection with a strategic transaction,
which may include a merger or acquisition, partnership or strategic alliance in
which funds are invested or similar type transaction (a "Strategic
Transaction") and (ii) as exclusive placement agent in connection with
any equity or debt financing through a transaction or transactions exempt from
registration under the Securities Act of 1933, as amended and in compliance with
the applicable securities laws and regulations or a registered direct offering
pursuant to an effective registration statement filed with the Securities
Exchange Commission. (a “Financing”).
As part
of BHP's engagement, at the Company's request, BHP will use its commercially
reasonable best efforts to:
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(a)
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assist
the Company in analyzing and evaluating the business, operations and
financial position of each suitable prospect for a Strategic
Transaction;
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(b)
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assist
the Company with its due diligence efforts related to a Strategic
Transaction;
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(c)
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assist
the Company in its investment related activities and, as appropriate,
provide introductions to companies, such as research firms, which
introduction could prove beneficial to the
Company;
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(d)
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assist
the Company in structuring and negotiating a Strategic Transaction; be
available at the Company's request to meet with its Board of Directors to
discuss a Strategic Transaction and its financial implications;
and
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(e)
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assist
the Company with ongoing financial advisory, integration and consulting
services in connection with a Strategic Transaction through the
Authorization Period (as defined
below).
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In
connection with BHP's engagement hereunder, the Company shall compensate BHP as
set forth below:
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(a)
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In
connection with the closing of a Strategic Transaction, a transaction fee
shall be paid to BHP based upon a percentage of the total Aggregate
Consideration (as defined below) of such Strategic Transaction, calculated
as follows (the “Transaction
Fee”):
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Aggregate
Consideration
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Percentage
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Up
to $50,000,000
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Three
percent of such amount; plus
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Between
$50,000,000 and $100,000,000
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Two
percent of such amount; plus
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In
excess of $100,000,000
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One
and one-half percent of such
amount.
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For
purposes of this Agreement, the term “Strategic Transaction” shall be defined to
include a variety of possible business alternatives referred to in the opening
paragraph of this letter up to and including the sale (whether in one or a
series of transactions) of all or a substantial amount of the assets or the
capital stock of the Company. This could also include the sale of a minority
position in the capital stock of the Company by the current owners acting as a
group, a third party or any combination thereof, or any other form of
disposition which results in the effective sale of the principal business and
operations of the Company. In connection with fees earned by BHP
related to a Strategic Transaction not involving the sale of securities, BHP
shall be responsible for paying a finder’s fee up to an amount equal to fifty
percent (50%) of the aggregate fee pursuant to a separate finder’s
agreement.
For
purposes of this Agreement, the term “Aggregate Consideration” shall mean the
total fair market value (at the time of closing) of all consideration (including
cash, securities, property, all debt remaining on the Company’s financial
statements at closing and other indebtedness and obligations assumed by the
purchaser and any other form of consideration) paid or payable, or otherwise to
be distributed, directly or indirectly, to the Company or the Company’s
stockholders in connection with a Strategic Transaction.
In
connection with the closing of a Financing, the Company shall pay BHP i) a fee
equal to seven percent (7.0%) of the gross proceeds received by the Company in
an equity or equity linked financing and ii) a fee equal to four and one half
percent (4.5%) of the gross proceeds received by the Company in any
non-convertible debt financing (the “Placement
Fee”). In addition, the Company shall issue 5-year warrants
equal to seven percent (7.0%) of the number of shares issued (or, in the case of
convertible securities, the number of shares issuable on an as converted basis)
in such financing to BHP and/or its designees or assignees (the “Placement Warrants”).
The Placement Warrants shall be exercisable at 110% of the purchase price of the
common stock issued, or, in the case of convertible securities, 110% of the
conversion price of the securities issued. The shares underlying the
Placement Warrants shall have standard piggyback registration rights, be
exercisable pursuant to a cashless exercise provision, be non-redeemable and be
included, assuming the lead investment banker concurrence, in any registration
statement covering the shares issued pursuant to any financing activity under
this Agreement. In connection with the issuance of non-convertible debt, the
number of Placement Warrants due shall be calculated using the five day average
closing price prior to the debt issuance for determining a notional conversion
price.
In
connection with BHP’s engagement under this Agreement for services to be
rendered relating to ongoing strategic corporate advice, expected to be prior to
any potential Strategic Transaction, BHP or its registered designees or assigns
shall be issued 75,000 common stock purchase warrants (the “Advisory Warrants”).
The Advisory Warrants shall be exercisable at 110% of the closing stock price on
November 27, 2007, have a five year term, shall be exercisable through a
cashless exercise provision, shall be non-redeemable and shall have piggyback
registration rights
In
addition to the above, the Company agrees to reimburse BHP for reasonable
out-of-pocket expenses (which amount shall not exceed $10,000 without the prior
approval of the Company) incurred in connection with this Agreement. All fees
and expenses hereunder are payable in cash, unless otherwise noted, and shall be
a condition to closing of any Strategic Transaction or Financing. The
Company also agrees to pay documented and reasonable legal fees incurred by BHP
in connection with its activities under this Agreement.
Other
than the payment of a tail fee for a period of twelve months following the
reverse merger due to the Company’s placement agent in the reverse merger
transaction which closed on November 13, 2007 which amount may not exceed two
percent (2.0%) of gross proceeds raised for equity or equity linked
financing and one percent (1.0%) for non-convertible debt financings,
no other placement fees other than pursuant to this Agreement shall be paid by
the Company during the Authorization Period without BHP’s written
consent.
In
connection with a proposed Financing or Strategic Transaction ,under this
Agreement,, the Company will furnish BHP with reasonable information, available
without undue effort or expense, concerning the Company, which BHP deems
appropriate to facilitate a potential Financing or Strategic Transaction and
will provide BHP with access to its officers, directors,, accountants, counsel
and other representatives (collectively, the “Representatives”), it
being understood that BHP will rely solely upon such information supplied by the
Company and its Representatives without assuming any responsibility for the
independent investigation or verification thereof. All non-public information
concerning the Company that is given to BHP will be used solely in the course of
the performance of our services hereunder and will be treated confidentially by
us for so long as it remains non-public. Except as otherwise required by law,
BHP will not disclose any information to any third party without the consent of
the Company. If we are requested to render an opinion from a financial point of
view regarding any aspect of this Agreement, the nature, scope and fees
associated with our analysis as well as the form and substance of our opinion
shall be such as we deem appropriate and will be covered under a separate letter
agreement.
BHP’s
engagement relating to a Strategic Transaction and Financing shall expire
eighteen (18) months from the date hereof (the “Authorization
Period”). BHP will continue to be entitled to its full fees provided for
herein in the event that for the twelve (12) month period following the
expiration of the Authorization Period the Company enters into a Strategic
Transaction or completes a Financing with any party BHP had significant
discussions with regarding a Strategic Transaction with or Financing for the
Company (the “Tail
Period”).
At any
time during either the Authorization Period or the Tail Period, BHP, at the
Company’s request, shall assist the Company in identifying and facilitating a
larger bracket investment bank to pursue an underwritten public offering of the
Company’s securities (an “Underwriting”);
provided, however, that in the event the Company engages another investment
banking firm for purposes of an Underwriting, BHP shall maintain the right, but
not the obligation, to participate in the Underwriting as a member of the
syndicate and/or selling group in its sole discretion and, subject to its
participation, shall be entitled to receive the same percentage of the total
economics as a co-lead of such engagement as consideration related to the
Underwriting.
Notice
given pursuant to any of the provisions of this Agreement shall be given in
writing and shall be sent by overnight courier or personally delivered (a) if to
the Company, to the Company’s Chief Executive Officer at the address listed
above; and (b) if to BHP, to its offices at 590 Madison Avenue, 5th floor, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Managing Director.
No advice
or opinion rendered by BHP, whether formal or informal, may be disclosed, in
whole or in part, or summarized, excerpted from or otherwise referred to without
our prior written consent, which may not be unreasonably withheld. In addition,
BHP may not be otherwise referred to without its prior written consent. Since
BHP will be acting on behalf of the Company in connection with its engagement
hereunder, the Company has entered into a separate letter Agreement, dated the
date hereof, providing for the indemnification by the Company of BHP and certain
related persons and entities.
BHP is
currently a division of Pali Capital, Inc., a registered broker
dealer. This Agreement shall remain in full force and effect as to
BHP and the Company, and shall be deemed fully assigned, in the event that BHP
or a successor entity becomes an independent entity registered as a broker
dealer. Each of BHP and the Company agrees that the other party has
no fiduciary duty to it or its stockholders, officers and directors as a result
of the engagement described in this Agreement. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to conflicts of law principles thereof. This Agreement may not be amended
or modified except in writing signed by each of the parties hereto.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement
or the indemnification, which shall remain in full force and
effect.
We are
delighted to accept this engagement and look forward to working with you on this
assignment. Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
Agreement.
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Very
truly yours,
▇▇▇▇▇▇▇
Hill Partners
By:
/s/ ▇▇▇▇▇
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇
▇▇▇▇▇▇▇
Title: Managing
Director
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Accepted
and agreed to as of the date first written above:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇
Name: ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
Title: President
and Chief Executive Officer
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TO: ▇▇▇▇▇▇▇
▇▇▇▇ Partners
A division of Pali Capital
Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇
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Date: November 28,
2007
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In
connection with your engagement pursuant to our letter Agreement of even date
herewith (the “Engagement”), we
agree to indemnify and hold harmless ▇▇▇▇▇▇▇ Hill Partners, a division of Pali
Capital Inc. (“BHP”) and its
affiliates, designees, the respective directors, officers, partners, agents and
employees of BHP and its affiliates, and each other person, if any, controlling
BHP or any of its affiliates or successor in interest (collectively, “Indemnified
Persons”), from and against, and we agree that no Indemnified Person
shall have any liability to us or our owners, parents, affiliates, security
holders or creditors for, any losses, claims, damages or liabilities (including
actions or proceedings in respect thereof) (collectively “Losses”) (A) related
to or arising out of (i) our actions or failures to act (including statements or
omissions made, or information provided, by us or our agents) or (ii) actions or
failures to act by an Indemnified Person with our consent or in reliance on our
actions or failures to act, or (B) otherwise related to or arising out of the
Engagement or your performance thereof, except that this clause (B) shall not
apply to any Losses that are finally judicially determined to have resulted
primarily from your bad faith or gross negligence or breach of the letter
Agreement. If such indemnification is for any reason not available or
insufficient to hold you harmless, we agree to contribute to the Losses involved
in such proportion as is appropriate to reflect the relative benefits received
(or anticipated to be received) by us and by you with respect to the Engagement
or, if such allocation is judicially determined unavailable, in such proportion
as is appropriate to reflect other equitable considerations such as the relative
fault of us on the one hand and of you on the other hand; provided, however,
that, to the extent permitted by applicable law, the Indemnified Persons shall
not be responsible for amounts which in the aggregate are in excess of the
amount of all fees actually received by you from us in connection with the
Engagement. Relative benefits to us, on the one hand, and you, on the other
hand, with respect to the Engagement shall be deemed to be in the same
proportion as (i) the total value paid or proposed to be paid or received or
proposed to be received by us or our security holders, as the case may be,
pursuant to the transaction(s), whether or not consummated, contemplated by the
Engagement bears to (ii) all fees paid or proposed to be paid to you by us in
connection with the Engagement.
We will
reimburse each Indemnified Person for all expenses (including reasonable fees
and disbursements of counsel) as they are incurred by such Indemnified Person in
connection with investigating, preparing for or defending any action, claim,
investigation, inquiry, arbitration or other proceeding (“Action”) referred to
above (or enforcing this Agreement or any related engagement Agreement), whether
or not in connection with pending or threatened litigation in which any
Indemnified Person is a party, and whether or not such Action is initiated or
brought by you. We further agree that we will not settle or compromise or
consent to the entry of any judgment in any pending or threatened Action in
respect of which indemnification may be sought hereunder (whether or not an
Indemnified Person is a party therein) unless we have given you reasonable prior
written notice thereof and used all reasonable efforts, after consultation with
you, to obtain an unconditional release of each Indemnified Person from all
liability arising there from. In the event we are considering entering into one
or a series of transactions involving a merger or other business combination or
a dissolution or liquidation of all or a significant portion of our assets, we
shall promptly notify you in writing. If requested by BHP, we shall then
establish alternative means of providing for our obligations set forth herein on
terms and conditions reasonably satisfactory to BHP.
If
multiple claims are brought against you in any Action with respect to at least
one of which indemnification is permitted under applicable law and provided for
under this Agreement, we agree that any judgment, arbitration award or other
monetary award shall be conclusively deemed to be based on claims as to which
indemnification is permitted and provided for. In the event that you are called
or subpoenaed to give testimony in a court of law, we agree to pay your expenses
related thereto and for every day or part thereof that we are required to be
there or in preparation thereof. Our obligations hereunder shall be in addition
to any rights that any Indemnified Person may have at common law or otherwise.
Solely for the purpose of enforcing this Agreement, we hereby consent to
personal jurisdiction and to service and venue in any court in which any claim
which is subject to this Agreement is brought by or against any Indemnified
Person. We acknowledge that in connection with the Engagement you are acting as
an independent contractor with duties owing solely to us. YOU HEREBY AGREE, AND
WE HEREBY AGREE ON OUR OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ON BEHALF OF OUR SECURITY HOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF THE ENGAGEMENT,
YOUR PERFORMANCE THEREOF OR THIS AGREEMENT.
The
provisions of this Agreement shall apply to the Engagement (including related
activities prior to the date hereof) and any modification thereof and shall
remain in full force and effect regardless of the completion or termination of
the Engagement. This Agreement and any other Agreements relating to the
Engagement shall be governed by and construed in accordance with the laws of the
state of New York, without regard to conflicts of law principles
thereof.
| Very truly yours, | |||||
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Accepted
and Agreed:
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▇▇▇▇▇▇▇
▇▇▇▇ Partners
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RedRoller Holdings, Inc. | ||||
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By:
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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By:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
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Name:
▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
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Title:
Managing Director
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Title: President
and Chief Executive Officer
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