“Aggregate Consideration”: the total consideration (before any offset for the Transaction Fee or any fees payable in connection with the Transaction) paid to, received or to be received by the Company or Target, as applicable, and its current or former equity holders (or equivalent), management, employees and creditors, directly or indirectly, in connection with or in anticipation of a Transaction (including amounts paid or to be paid in escrow), including, without limitation, (a) cash, notes, stock, other securities and other property of any type paid, received or to be received as consideration, including amounts paid to holders of options and other similar securities, (b) indebtedness, capitalized leases and similar obligations (whether or not incurred in connection with the Transaction) of the Company or Target, as applicable, or its equity holders directly or indirectly assumed, repaid, refinanced, restructured, redeemed, decreased, extinguished or retired, including indebtedness for borrowed money, pension liabilities and guarantees, (c) the mutually agreeable net present value of deferred and future payments, including any contingent, retention or multi-stage payments, amounts paid from escrow and earnout payments and other consideration whether or not related to future earnings or operations (as determined by the Company and Advisor in good faith at the time of the closing of a Transaction, but which, if applicable, shall not be less than the Deferred Payments Floor set forth herein) (“Deferred Payments”), (d) amounts paid under consulting agreements, above-market employment contracts, non-compete and severance agreements, employee benefit plans and reimbursement for taxes and similar arrangements (including such payments to management), (e) in a Transaction structured as an asset sale, the value of any assets retained by the Company or the Target, as applicable, or the sellers, (f) dividends, stock repurchases or distributions, (g) the total amount of any employee or executive retention-based payments, compensation or bonuses agreed to with such employee(s) or executive(s) in connection with such Transaction, (h) the total amount of any employee or executive performance-based payments, bonuses or compensation agreed to with such employee(s) or executive(s) in connection with such Transaction (as determined by the Company and Advisor in good faith at the time of the closing of a Transaction but which, if applicable, shall not be less than the Performance Payments Floor set forth herein) (“Performance Payments”), (i) post-closing purchase price adjustments, (j) in the case of a partnership, joint venture or similar structure, the gross value of all cash, securities, assets and other consideration contributed, invested, committed or otherwise made available by the Company or any other parties to such partnership, joint venture or similar structure and (k) if the Transaction takes the form of a recapitalization, restructuring or similar transaction, the fair market value of equity securities of the company retained by the Company’s or Target’s, as applicable, equity holders upon consummation of such Transaction (such securities and all other securities received by such equity holders being deemed to have been paid to such equity holders in such Transaction); provided, that, (a) if the Transaction involves the sale of less than 100% of the assets or equity interests of the Company or the Target, as applicable, then Aggregate Consideration shall be calculated on a fully-diluted basis as if 100% of the assets and equity interests were sold, and if the Transaction involves the sale of assets or other non-cash consideration (in whole or in part), then the value of such assets or other non-cash consideration shall be the fair market value thereof as reasonably agreed by the parties (and if so not agreed, as independently valued); (b) if any cash, assets or securities of the Company or Target, as applicable, in connection with a Transaction are transferred after the date of the closing of a Transaction or are retained after such closing, Aggregate Consideration will be increased to reflect the fair market value of any such cash, assets or securities; (c) notes, stock, other securities and other property will be valued at their cash or fair market value at the time of closing of a Transaction; (d) if the Transaction provides for the retention of certain assets by the seller, then the value of such retained assets shall be included in the Aggregate Consideration; (e) current assets retained shall be valued using book value and all other retained assets shall be valued at fair market value; (f) if more than one Transaction is consummated, Advisor shall be compensated based on the Aggregate Consideration from, as applicable, all Sale Transactions and the New Money from all Financing Transactions; (g) if any Aggregate Consideration is deferred, the portion of the Transaction Fee attributable thereto shall be paid when earned by, released and/or paid to the Company or Target, as applicable; (h) the Company shall make reasonable best efforts to covenant in the definitive documentation in connection with a Transaction that the applicable counterparty(ies) in such Transaction shall, at the sole option of Advisor, (i) deduct from any amounts payable to the Company or Target, as applicable, or its current and former equity holders (or equivalent), management, employees and creditors in connection with such Transaction the amount of any Transaction Fee payable to Advisor hereunder and to pay such amount directly to Advisor, and (ii) allow the Advisor with the reasonable opportunity, in manner that does not unreasonably interfere with the businesses and operations of the applicable counterparty(ies) to a Transaction to review all the books and records used in calculating the Transaction Fee and all components thereof, and if Advisor identifies an underpayment and communicates such underpayment in writing to the applicable counterparty(ies) by submitting to the applicable counterparty(ies) supporting documentation, the applicable counterparty(ies) shall promptly issue a wire transfer of immediately available funds to Advisor for the full amount of such underpayment; (i) if applicable, the Transaction Fee paid at the closing of a Transaction shall be subject to the Minimum Transaction Fee and the Transaction Fees paid with respect to any Transaction shall be subject to the Minimum Transaction Fee; (j) if the parties do not agree on the estimates of Deferred Payments and/or Performance Payments in connection with the calculation of a Transaction Fee, Advisor may choose, in its sole discretion, to receive additional Transaction Fee payments in connection with such Deferred Payments and/or Performance Payments as and when they are actually earned by, released and/or paid to the Company or Target, as applicable, or its current or former equity holders (or equivalent), management or employees, as applicable; (k) if applicable, the amount of Deferred Payments for the purposes of calculating the Transaction Fee shall be subject to the Deferred Payments Floor set forth herein and, if applicable, the amount of Performance Payments for the purposes of calculating the Transaction Fee shall be subject to the Performance Payments Floor set forth herein; and (l) if applicable, if, in connection with the termination or abandonment of a proposed Transaction, the Company receives any termination, topping, break-up or other similar fee or payment in relation to such termination or abandonment, then Advisor shall be paid an amount equal to the Break Up Fee set forth herein of such fee or payment promptly following the Company’s receipt thereof.
“Applicable Law”: laws, statutes, regulations, rules, ordinances, codes, judicial decisions, and legally binding provisions, whether federal, state, local, or international in nature, as may be in effect from time to time, that are applicable to the subject matter hereof or to the parties' rights, obligations, or performance hereunder.
“Capital Commitment”: capital commitment accepted by Fund from an Investor per an executed subscription agreement between Fund and Investor.
“Company Actions” or “Fund Actions”: Company shall commit reasonable time and resources to a Transaction and shall assist Advisor with the Services, including, (a) informing Advisor of any external discussions regarding a Transaction; (b) providing information regarding and access to the Company as Advisor may reasonably request; (c) representing that all information and materials made available to Advisor is complete and correct in all material respects to the best of the Company’s knowledge; and (d) as a condition to the closing of a Transaction and upon request by Advisor, providing information to Advisor as required by Applicable Law and Advisor’s rules, policies and procedures, which information the Company hereby represents and warrants is and shall be true, correct and complete when provided.
a. All payments hereunder shall be exclusive of taxes or governmental charges and be made in lawful currency of the United States. With written notice from Advisor, Company shall promptly provide and allow the Advisor to audit the books and records pertaining to a Transaction Fee.
b. Within 15 days of an invoice from Advisor, Company shall reimburse Advisor for its reasonable expenses incurred in connection with the Services.
c. Neither Company nor its management or equity holders shall, directly or indirectly, initiate discussions about a Transaction or contact, solicit or deal with any party already introduced to the Company by Advisor, except with the prior written consent of Advisor.
d. Advisor shall rely, without independent verification, on the accuracy and completeness of information furnished, reviewed or discussed by or on behalf of the Company or any potential Transaction party. Advisor shall not be responsible or liable for the accuracy or completeness of such information and shall not be liable for any inaccuracies or omissions therein. Company will promptly notify Advisor in writing of any material inaccuracy or misstatement in, or material omission from, any information delivered to, or discussed with, Advisor, or any materials provided to any interested party.
e. Any advice rendered or materials prepared by, or communication from, Advisor hereunder is intended solely for the use of the board and executive leadership of the Company in evaluating a Transaction, may not be relied upon by any other person for any other purpose and may not be disclosed by the Company to any third party without Advisor’s written consent (other than to the Company’s advisors and agents who have a need to know in connection with a Transaction, provided that such Company advisors and agents agree to the confidentiality with respect to such information set forth herein, that neither Advisor nor any of its affiliates have any duty, liability or obligation to them in connection therewith and that the Company shall be responsible for any breach by them of the provisions hereof).
f. In connection herewith, Company may disclose certain of its proprietary or confidential materials to Advisor which is and will remain the property of Company. Without Company’s written consent, Advisor agrees not to disclose such materials to any person other than the Advisor Group. If disclosure is required pursuant to a valid and enforceable judicial or government order, Advisor will, promptly upon receipt of a written notice seeking such materials, provide written notice to the Company concerning the request and reasonably cooperate with the Company if it elects to legally contest and avoid such mandated disclosure.
g. This Agreement may be terminated (i) by a party upon 30 days’ prior written notice or (ii) upon the final closing of Fund; provided, that, Advisor shall be entitled to receive the Transaction Fee if, during the 12 months following the termination of this Agreement, as applicable, (i) a Transaction is consummated by Company or (ii) Fund or any entity managed by Fund accepts Capital Commitments from Investors with the exception of excluded investors agreed to by Company and Advisor in writing (“Excluded Investor”).
h. Any advice from Advisor is intended solely for the use of the Company to evaluate a Transaction. Except for Company’s third-party advisors who have a need to know, advice rendered or materials prepared by Advisor may not be disclosed to any third party without Advisor’s prior written consent.
i. Company agrees that Advisor is an independent contractor only providing services for the Company. Advisor is not an agent or fiduciary and Company waives any claim of such a relationship. This Agreement does not give rights or benefits to equity holders, creditors or third parties. Advisor is not assuming any responsibility for Company's decision whether to pursue, endorse or support any business strategy, or to effect, or not to effect, any Transaction, which decision shall be made by the Company in its sole discretion. Company shall be solely responsible for the terms, conditions and structure of a Transaction and ensuring that any Transaction complies with applicable law.
j. Advisor is not responsible for conducting any due diligence, and the Company is solely responsible for ensuring Transactions comply with applicable laws, rules and regulations.
k. Company acknowledges that (i) Advisor and its registered representatives and affiliates, (ii) registered representatives and affiliates of Finalis; and (iii) other users of the products and services of Finalis or its respective affiliates (collectively, the “Advisor Group”) provide products and services to a range of persons, that the Advisor Group and certain of its respective employees, affiliates and investment funds in which they may have financial interests or with which they may co-invest, may acquire, sell or trade or otherwise effect transactions in debt, equity, other securities and financial instruments of, or investments in, Company or any other party that may be involved in the matters contemplated hereby or have other relationships with such parties. All rights in respect of such securities, financial instruments and investments shall be exercised by the holder of the rights in its sole discretion. The Advisor Group may have had, and may currently or in the future have, financial advisory, investment banking or consulting relationships with parties involved in the matters contemplated hereby from which conflicting interests or duties may arise. Although the Advisor Group in the course of such other activities and relationships or otherwise may have acquired or may in the future acquire information about the Company, a Transaction or such other parties, or that otherwise may be of interest to the Company, the Advisor Group shall have no obligation to, and may not be contractually permitted to, disclose such information, or the fact that the Advisor Group is in possession of such information, to the Company. To enable Advisor to bring relevant resources to bear on its engagement hereunder from among its affiliates, the Company agrees that Advisor may share information obtained from the Company and other parties hereunder with members of the Advisor Group and may perform the Services in conjunction with such members.
l. After the announcement or closing of a Transaction, Advisor may place announcements on its website and in publications describing the Services in connection therewith with the Company’s identifying marks. If requested by Advisor, Company shall include in any press release announcing the Transaction a mutually acceptable reference to Advisor’s role as advisor to Company with respect to such Transaction.
m. This Agreement is made in the State of New York, and all proceedings arising out of or related hereto shall be governed by the laws of the State of New York and shall be brought in any federal or state court of competent jurisdiction in New York, New York. Each party irrevocably waives any right to trial by jury in any proceeding related to or arising under this Agreement.
n. Each party hereto has all requisite power and authority to enter into this Agreement which constitutes a legal, valid and binding agreement of each party and inures to permitted successors and assigns. Each party is, and at all times has been, in material compliance with any and all requirements of any federal, state or local law.
o. Representative and Finalis shall be deemed included within the meaning of “Advisor” and “Advisor Group” for all purposes hereunder (except that Advisor, Representative and Finalis are separate persons, and their respective rights, titles, obligations, liability, duties and interests hereunder are separate and not joint and several). If, in the sole judgment of Finalis, it is required under applicable law, rule or regulation that any Services, Transaction or other matter contemplated hereunder be conducted through a registered broker-dealer or FINRA member, then, with no further action required by any party, the applicable rights and interests of the Representative will be hereby automatically assigned and transferred to Finalis, and Finalis shall have assumed all duties of the Representative and be acting through the Representative per this Agreement. The Representative will manage the Transaction and the Services whether they remain with Representative or are assigned to Finalis hereunder. Should any Transaction have to be conducted by a U.S. registered broker-dealer, in the sole judgment of Finalis, then (i) all billings will be made by, and all payments hereunder remitted to, Finalis and (ii) the Company acknowledges and agrees to make changes as Finalis may require to any materials to be circulated to Transaction counterparties or make disclosures to comply with any laws, rules or regulations.
p. This Agreement is the complete agreement of the parties regarding the subject matter hereof. This Agreement may not be amended except in a writing of the parties. The invalidity or unenforceability of any provision hereof shall not affect the validity or enforceability of any other provision hereof. There shall be no construction of any provision against Advisor because this Agreement was drafted by Advisor. This Agreement may be executed in any number of counterparts and may be delivered by email or electronic transmission. To the extent that the Company is comprised of more than one entity, its obligations hereunder are joint and several.
q. In the event the Company proposes to close a Transaction, and the Company is not to be the surviving or resulting entity, the Company shall make provision in any applicable definitive documentation for the Company’s obligations hereunder to be expressly assumed by the other party or parties to the Transaction.
r. The parties agree to the Indemnification Provisions.
“Finalis”: Finalis Securities LLC, a Delaware limited liability company, broker-dealer registered with the U.S. Securities and Exchange Commission and a member of FINRA.
“Financing Transaction”: a Transaction for less than 50% of the equity of the Company or Target, as applicable.
“FINRA”: Financial Industry Regulatory Authority, Inc.
1. As material consideration to enter into this Agreement, the Company agrees (i) to indemnify and hold harmless Advisor and its affiliates and their respective agents, officers, directors, employees, contractors, representatives and members (along together with Advisor, each of the foregoing being an “Indemnified Person”) to the fullest extent lawful, from and against any and all losses, claims, damages, or liabilities incurred by Indemnified Persons (whether joint or several, direct or indirect, or from any investigation or action by a government agency or self-regulatory organization) arising from or relating to this Agreement, a Transaction (including, without limitation, the dissemination of any related information or representations) or any actions or inactions taken by an Indemnified Person in connection with this Agreement (a “Claim”); and (ii) to reimburse Indemnified Persons for all expenses, fees and charges incurred in connection with investigating, preparing, pursuing, defending, or settling a Claim (including without limitation any shareholder or derivative action); provided, however, that the Company will not be liable to indemnify an Indemnified Person pursuant to this paragraph to the extent that an arbitrator (or panel of arbitrators) or a court of competent jurisdiction will have determined by a final non-appealable judgment that such Claim resulted from the gross negligence or willful misconduct of such Indemnified Person.
2. The Company will not settle, compromise or consent to the entry of a judgment in any pending or threatened action, claim, suit, dispute or proceeding against an Indemnified Person unless such settlement, compromise or consent includes a release of the Indemnified Persons satisfactory to Advisor and such Indemnified Person.
3. The Company further agrees that neither Advisor nor any other Indemnified Person will have any liability (whether direct or indirect, in contract, tort or otherwise) to the Company, or anyone claiming liability on behalf of the Company, arising from or relating to this Agreement, a Transaction, or any actions or inactions taken by Indemnified Persons in connection with this Agreement, except to the extent that an arbitrator (or panel of arbitrators) or a court of competent jurisdiction will have determined by a final non-appealable judgment that losses, claims, damages, liabilities or costs incurred by the Company resulted from the gross negligence or willful misconduct of such Indemnified Person. Notwithstanding anything to the contrary herein, in no event will the aggregate amount to be contributed by all Indemnified Persons towards all claims, Company losses, claims, damages, liabilities or costs incurred exceed the actual fees received by Advisor pursuant to the Agreement in the preceding three months of the date of a claim.
4. In the event that an Indemnified Person is requested or required to appear as a witness or subpoenaed to produce documents in any action in which the Company or any of its affiliates is a party to and an Indemnified Person is not, the Company will reimburse such Indemnified Person for all expenses, fees and charges incurred by it in preparing for and appearing as a witness or producing documents.
5. The rights accorded to Indemnified Persons hereunder will be in addition to any rights that any Indemnified Person may have at common law, by separate agreement or otherwise. If any provision of these indemnification provisions is determined to be invalid or unenforceable, such determination will not affect any other indemnification provision herein, which will remain in full force and effect. Each Indemnified Person is an intended beneficiary hereunder. These Indemnification Provisions will remain in effect indefinitely notwithstanding any expiration, completion or termination of this Agreement.
6. IN NO EVENT WILL ANY INDEMNIFIED PERSON BE LIABLE OR OBLIGATED IN ANY MANNER FOR ANY CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES OR LOST PROFITS ARISING UNDER OR RELATING TO THIS AGREEMENT, A TRANSACTION, OR ANY ACTIONS OR INACTIONS TAKEN BY AN INDEMNIFIED PERSON IN CONNECTION WITH THIS AGREEMENT OR A TRANSACTION. THE COMPANY AGREES NOT TO SEEK OR CLAIM ANY SUCH DAMAGES OR LOST PROFITS UNDER ANY CIRCUMSTANCES.
7. Notwithstanding the above, indemnification hereunder shall not exceed the maximum level permitted under applicable federal, state or other laws, and any indemnification shall not waive any non-waivable rights that a party may have under applicable federal, state or other law.
“Investor”: an investor that has been introduced to Fund by Advisor.
“Minimum Transaction Fee”: the minimum amount of a Transaction Fee paid for any Transaction.
“New Money”: the total proceeds received by Company or Target, as applicable, in a Financing Transaction minus any amount of the total Financing Transaction received from the existing equity holders of the Company or the Target, as applicable.
“Representative”: the registered representative of Finalis on the signature pages of this Agreement.
“Retainer”: a non-refundable cash retainer which shall not be credited against any Transaction Fee and be paid regardless of whether a Transaction is consummated.
“Sale Transaction”: a Transaction for greater than or equal to 50% of the equity of the Company or Target, as applicable.
“Services”: Advisor’s services shall be customary for engagements of this type, including, as applicable: (a) analysis, evaluation, pursuit and consummation of a Transaction, (b) preparing materials concerning Company or Target, as applicable, for the Transaction, (c) at Company’s written request, contacting Targets, distributing relevant materials to Targets, and organizing management meetings and visits, (d) assisting Company in reviewing potential Transaction terms, (e) using best efforts to identify to Fund potential investors in the Fund, which shall be sophisticated and financially qualified institutional investors to whom solicitation may lawfully be made and/or (f) structuring and negotiating a Transaction, and such other financial advisory and investment banking services as may be agreed upon by Advisor and Company in writing; provided, however, that Advisor’s services do not include accounting, legal, regulatory, insurance or tax advice, and Company must rely on its own advisors for such advice.
"Target“: potential candidates for a Transaction.
“Transaction”: as applicable, (a) an offering of limited partnership interest in Fund, (b) as applicable, a financing, investment, sale, reorganization, merger, direct or indirect acquisition, joint venture, partnership, spin-off, tender or exchange offer, recapitalization, debt, equity and/or hybrid capital raise involving Company, and/or an acquisition by Company, in each case including with or into a Target, and (c) such other transaction and financial and investment banking matters as to which Company and Advisor may agree in writing.
“Transaction Fee”: upon the closing of a Transaction, as a cost of such Transaction, prior to or concurrently with the consummation of such Transaction, a non-refundable cash fee directly from the gross proceeds of such Transaction, which amount shall not be reduced by any expenses due to Advisor.
“Wire Instructions”: unless otherwise specified in writing by Finalis, all Transaction Fees are required to be delivered to the following bank account:
Bank: Webster Bank, N.A.
Address: One Jericho Plaza, Suite 304, Jericho, NY 11753
Beneficiary: Finalis Securities LLC
Account Number: 7462861652
Routing Number (ACH + wires): 021913655