ATHENA CAPITAL PARTNERS, INC. LETTER HEAD
CONFIDENTIAL
April 10, 2003
Mr. Richard Gabriel, CEO and
Hector Gomez, M.D., Ph.D., Chairman
DNAPrint Genomics 900 Cocoanut
Avenue Sarasota, FL 34236
Gentlemen:
This letter agreement (the "Agreement") shall confirm the
engagement of
Athena Capital Partners, Inc. ("Athena") by
DNAPrint Genomics (the "Company") as
the Company's exclusive investment banking
agent to:
1.
Arrange and negotiate a private placement of securities, issued by
the
Company and/or any of its subsidiaries or affiliates, in the form
of
common stock, convertible preferred stock, convertible debt, debt
with
warrants, or any other equity-linked securities (the "Securities").
The
current plans are to raise $2.0 to $3.0 million at a pre-money
valuation of $10.0 to $15.0 million.
2.
Obtain grant money from various governmental entities. The current
plan
is raise $500,000 to $1.0 million.
3.
Provide advisory services related to merger & acquisition
activity, as
requested by the Company.
The above-mentioned services are subject to
the following terms and conditions:
1. Exclusive Authorization. Subject to the terms and conditions of
this
Agreement, the Company hereby appoints
Athena to act on a best efforts basis as
its exclusive agent (except as it relates
to the co-management relationship
discussed in paragraph 7 and the public
sale of registered securities discussed
in paragraph 8) during the Authorization
Period (as hereinafter defined) in all
the Company's investment banking
activities, including the effort to privately
place the Securities (the "Transaction") in
an amount and on terms and
conditions satisfactory to the Company.
Athena hereby accepts such agency and
agrees on the terms of this Agreement to
use its best efforts during
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the Authorization Period to arrange the
sale of the Securities through such a
private placement to potential investors
(the "Investors"). The Company
understands that Athena shall not have any
obligation hereunder to purchase any
of the Securities or to provide financing
of any kind to the Company. In
addition, the Company agrees that it will
not hold Athena liable or responsible
in the event that the Transaction is not
consummated for any reason whatsoever,
including, but not limited to, an adverse
change in the financial or security
markets, insufficient demand for
instruments similar to the Securities, or a
lack of interest by Investors in the
Transaction. During the Authorization
Period, the Company shall be prohibited
from (i) directly or indirectly offering
any of the Securities (or instruments
substantially similar to the Securities)
for sale to, or soliciting any offer to
purchase any of the Securities (or
instruments substantially similar to the
Securities) from, or otherwise
contacting, approaching or negotiating with
respect thereto with, any person,
and (ii) authorizing anyone other than
Athena to act on its behalf to place the
Securities (or instruments substantially
similar to the Securities). The Company
shall promptly refer to Athena all offers,
inquiries and proposals relating to
any placement of the Securities (or
instruments substantially similar to the
Securities) made to the Company at any time
during the Authorization Period.
2. Authorization Period. Athena's engagement hereunder shall
become
effective on the date this engagement
letter is executed (the "Execution Date")
and, unless earlier terminated or extended
in writing by the Company and/or
Athena, shall expire in twelve (12) months
from the Execution Date (the
"Termination Date"; the period from the
Execution Date through the Termination
Date being hereinafter referred to as the
"Authorization Period").
3. Offering Materials. In connection with its engagement hereunder,
the
Company shall prepare a Confidential
Offering Materials, and such amendments or
supplements thereto as the Company may
reasonably deem to be necessary or
appropriate to effectuate the sale of the
Securities (the Confidential Offering
Material, as the same may be amended or
supplemented from time to time, is
referred to herein as the "Offering
Materials") and Athena shall cooperate and
assist the Company in the preparation of
the Offering Materials, which shall
include: a business plan, comparable
analysis, valuation analysis, etc. Prior to
any distribution thereof, the Offering
Materials shall be subject to Athena's
and the Company's review and approval.
4. Fees and Disbursements.
(a) As compensation for Athena's services hereunder, the Company
shall
pay Athena fees and issue and deliver
warrants to Athena as follows:
(i) upon the
execution of this Agreement, a retainer, payable in
warrants of the Company (no cash), in such amount that
represents $80,000 of the value of the Company (determined by
a 20 day moving average). This Retainer shall be
non-refundable, except as described below. Upon a closing of a
Transaction, one-half of the value of the Retainer (i.e.
warrants representing $40,000 in value) shall be credited
against the warrant portion of the fees payable to Athena
pursuant to subparagraph 4(a)(iii) below;
(ii)
upon the closing of a Transaction, a transaction fee (the
"Transaction Fee") payable in cash to Athena in an amount
equal to 6% of the Aggregate
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Consideration (as defined below) paid for the Securities by
Investors; provided, however, that the Transaction Fee shall
be an amount not less than, in any circumstance, $165,000 (the
"Minimum Fee"). If the Aggregate Consideration is less than
$1.0 million then the Minimum Fee shall be 16.5% of the
Aggregate Consideration; and
(iii) upon
the closing of a Transaction, the Company shall issue to
Athena warrants for a nominal price to purchase such number of
shares of the common stock of the Company equal to 4% of the
Aggregate Consideration (as defined below) paid for the
Securities by Investors, which warrants would be exercisable
for a period of five (5) years from the date of such closing,
at an exercise price per share equal to that paid by Investors
in the Transaction. The terms of the warrants shall be set
forth in a warrant agreement in form and substance
satisfactory to Athena and the Company, which shall contain
terms substantially identical to those applicable to the
Securities issued to Investors in the Transaction, including,
without limitation, anti-dilution provisions, registration
rights, and cashless exercise. The Company, at its option, may
elect to pay this portion of the fee in cash instead of
warrants.
(iv)
upon the receipt of grant money (as discussed in item 2 of the
introductory paragraph of this engagement letter), the Company
shall issue to Athena warrants for a nominal price to purchase
such number of shares of the common stock of the Company equal
to $35,000 of the value of the Company, which warrants would
be exercisable for a period of five (5) years from the date of
such closing, at an exercise price per share equal to that
paid by Investors in the Transaction. The terms of the
warrants shall be set forth in a warrant agreement in form and
substance satisfactory to Athena and the Company, which shall
contain terms substantially identical to those applicable to
the Securities issued to Investors in the Transaction,
including, without limitation, anti-dilution provisions and
registration rights.
(v)
fees for merger &
acquisition advisory services will include a
monthly retainer plus a success fee equal to a percentage of
the "Transaction Value". For purposes of this Agreement the
Transaction Value shall mean the market value of the stock of
the target plus the book value of the target's debt (the
target's enterprise value). Athena and the Company will
negotiate in good faith to arrive at a reasonable fee.
(vi)
Fees for the public sale of registered securities during the
Authorization Period, are discussed in paragraph 8 below.
(b) In addition to the fees payable to Athena hereunder and
regardless
of whether the sale of any of the
Securities is consummated, the Company shall
reimburse Athena, upon request made from
time to time, for all of Athena's
out-of-pocket expenses incurred in
connection with this engagement, including
the fees, disbursements and other charges
of Athena's legal
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counsel. The Company acknowledges that
Athena has a monthly administrative
charge (the administrative charge includes
small dollar charges for items such
as long distance telephone calls, regular
mail postage, photocopies, etc. It
does not include charges such as fedex
charges or charges for operator assisted
conference calls) of $200, in addition to
specific direct reimbursable charges.
All expenses greater than $500 per month
will be pre-approved by Company.
(c) The Company shall pay to Athena all fees and issue and
deliver
warrants to Athena as described in Section
4 of this Agreement in the event that
at any time prior to the expiration of 12
months after the Termination Date any
of the Securities (or instruments
substantially similar to the Securities) are
sold to any Investor identified and/or
contacted during the Authorization
Period.
(d) The Company shall pay to Athena all fees and issue and
deliver
warrants to Athena as described in Section
4 of this Agreement in the event that
at any time prior to the expiration of 12
months after the Termination Date
substantially all of the assets of the
Company are sold to any Investor
identified and/or contacted during the
Authorization Period.
(e) If a Transaction has been consummated and one or more
Additional
Transactions (for purposes of this
Agreement "Additional Transactions" shall
mean the sale of securities other than the
Securities contemplated in this
engagement letter) are consummated by the
Company (or any affiliate or
subsidiary thereof) within 12 months from
the closing date of the initial
Transaction with any Investor identified
and/or contacted during the
Authorization Period, Athena shall be
entitled to receive (i) an additional fee
(the "Additional Fee") in an amount equal
to 6% of the Aggregate Consideration
paid by the Investors in connection with
any such Additional Transactions,
payable in cash upon the closing of any
such Additional Transactions and (ii)
warrants equal to 4% of the Aggregate
Consideration paid by the Investors in
such Additional Transactions, issuable and
deliverable to Athena upon the
closing of any such Additional
Transactions. Such warrants shall be exercisable
for a period of five years from the date of
such closing, at an exercise price
per share equal to that paid by the
Investors in the Additional Transactions.
The terms of the warrants shall be set
forth in a warrant agreement in form and
substance satisfactory to Athena and the
Company, which shall contain terms
substantially identical to those applicable
to the Securities issued to
Investors in the Transaction, including,
without limitation, anti-dilution
provisions, registration rights, and
cashless exercise.
(f) The definition of "Aggregate Consideration" for purposes of
calculating Athena's fee shall be deemed to
include the cumulative fair market
value of all cash and other consideration
paid for the Securities (or
instruments substantially similar to the
Securities) by the Investors during the
Authorization Period, as well as any
amounts paid in escrow and amounts payable
in the future. The fair market value of any
non-cash consideration will be the
value determined by the Company and Athena
at or prior to the date of the
applicable Transaction. The portion of
Athena's fee relating to any future
payments shall be calculated and paid when
and as such future payments are made;
provided, however, that the Minimum Fee
payable to Athena pursuant to this
paragraph 4 shall be as described in
paragraph 4 regardless of the timing of
future payments, if any.
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(g) All fees described above, and the reimbursement of Athena's
out-of-pocket expenses are payable by the
Company as outlined above. The Company
will pay Athena, at a rate equal to twelve
percent (12%) per year, a monthly
late payment charge (the "Late Payment
Charge") on the unpaid balance of any
fees or expenses not timely paid in full.
With respect to any unpaid portion of
the Transaction Fee or the Additional Fee,
the Late Payment Charge will be
computed from the date of the closing of
the Transaction or the Additional
Transaction, as applicable, until payment
in full with respect to the unpaid
portion of any of Athena's out-of-pocket
expenses, the Late Payment charge will
be computed from thirty (30) days after the
issuance of Athena's invoice until
payment in full of such out-of-pocket
expenses.
5.
Representations and Covenants. The Company represents and covenants
as
follows:
(a) The Company shall make available to Athena and/or shall agree
to
have professionally prepared at the
Company's expense, all financial statements,
projections, appraisals, surveys, title
abstracts, performance summaries and
other information which, by mutual
agreement, shall be necessary or appropriate
for the proper marketing of the Securities
and the completion of the financing
contemplated hereby.
(b) During the Authorization Period, the Company shall not use,
distribute or refer to any Offering
Materials (as hereinafter defined) without
mutual prior consent, except for internal
use among the Company's personnel and
representatives and disclosure for the
Securities and Exchange Commission.
(c) All materials to be given to any potential investor in
connection
with the offering or placement of the
Securities shall be approved by both the
Company and Athena (all such materials, as
so approved, together with the
Offering Materials, being referred to
herein as the "Offering Material"). The
Company represents, warrants and agrees
that the Offering Material as of the
date thereof was, and will be as of the
closing date of each sale of Securities
(a "Closing Date"), true, complete and
co
