Exhibit 99.3
INTERMETRO COMMUNICATIONS,
INC.
Dated as of: December 14,
2006
Hunter World Markets,
Inc.
9300 Wilshire Boulevard
Penthouse Suite
Beverly Hills, CA 90212
Ladies and Gentlemen:
The undersigned, InterMetro
Communications, Inc. (the “Company”), hereby agrees
with Hunter World Markets, Inc. (“Hunter”) as
follows:
1. Placement .
The Company hereby engages Hunter to
act as its exclusive placement agent in an offering (the
“Offering”) on a “best efforts” basis
involving the issuance and sale of Common Stock (the
“Shares”) by a public company (“Pubco”)
into which all of the shares of the capital stock of the Company
have been transferred. The Offering will be through an escrow with
a financial institution approved by Hunter. The price per Share
shall be $1.00 based on a pre-money valuation of $50,000,000,
assuming the exchange of all of the Company’s outstanding
common stock, Series A preferred notes, and Series B preferred
stock in the Reverse Merger (as that term is below defined) and
assuming the cashless conversion or exercise of all derivative
securities that are vested as of the Closing excluding the Bridge
Warrants (as that term is below defined). The Shares will have most
favored nations price protection on a weighted average basis for
securities issued by Pubco for a two-year period after the Closing
except for securities issued (a) pursuant to the stock
compensation plans; (b) pursuant to strategic financings; and
(c) for acquisitions; provided that such most favored nations
price protection will only apply to Shares that have not been
subsequently transferred in a broker’s transaction (as such
term is defined in Rule 144). The Offering shall be for a minimum
amount of $10,000,000 and a maximum of $12,000,000. Concurrently
with the closing of the Offering, the shareholders of the Company
shall have transferred all their shares of capital stock to Pubco
in exchange for shares of Pubco (the “Reverse Merger”).
Hunter shall assist the Company in identifying and structuring the
acquisition of an appropriate public company. Such services are
referred to herein as the “Reverse Merger Services.”
Hunter shall be responsible for the cost of acquiring a controlling
interest in Pubco. Upon consummation of the Reverse Merger, the
shareholders of the Company will collectively own 87% of Pubco on a
fully diluted basis (meaning the exchange of all of the
Company’s outstanding common stock, Series A preferred notes,
and Series B preferred stock and assuming the cashless conversion
or exercise of all derivative securities that are vested as of the
Closing excluding the Bridge Warrants (as that term is below
defined)) prior to giving effect to the Offering. For avoidance of
doubt, based on a $1.00 per share purchase price, upon the Closing,
the former holders of securities of the Company will own
50 million shares of Pubco, (assuming the cashless exercise or
conversion of all derivative securities), the shareholders of Pubco
immediately prior to the Closing (including Hunter and its
affiliates) will own 6.5 million shares, and the investors in
the Offering will own 10 million shares.
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The Company shall file an SB-2
registration statement (“Resale Registration
Statement”) no later than thirty (30) days following the
closing of the Offering pursuant to the terms of a Registration
Rights Agreement. The Company will use its best efforts to have it
declared effective one hundred twenty (120) days after the
closing of the Offering (the “Closing”). The securities
to be included in the SB-2 registration statement are all of the
Shares and the shares of Common Stock issuable upon exercise of the
Bridge Warrants and Placement Agent Warrants (as such terms are
defined herein) unless Hunter advises the Company that a lesser
number shall be included. Any shares not so included will be
subject to demand rights on the part of the holder, which rights
shall be prior to any subsequent follow-on public offering of the
Company. No additional securities shall be included unless the
Company shall have first received Hunter’s prior written
consent. The Registration Rights Agreement will set forth
liquidated damage payments of 1% per month if the Resale
Registration Statement is not timely filed or declared effective
within the time period set forth in such Agreement.
All moneys raised in the Offering
shall be placed in a non-interest bearing account until the
minimum-funding amount is deposited. Upon Closing, proceeds shall
first be applied to pay off any interest and principal outstanding
under the Bridge Loan (as defined herein).
Hunter shall not be obligated to
sell any Shares, and this Offering by Hunter shall be solely on a
“best efforts basis.”
The initial term of this Agreement
shall commence on the date the Bridge Loan funds and continue until
December 31, 2006 unless terminated sooner by the mutual
written agreement of the Company and Hunter or pursuant to
Section 4(c). The period commencing on the date the Bridge
Loan funds ending on December 31, 2006 is referred to herein
as the “Placement Term.”
The Company shall prepare a Private
Placement Memorandum which shall be true and correct in all
material respects. The Offering shall be conducted pursuant to
Regulation D and/or Regulation S promulgated by the Securities and
Exchange Commission (the “SEC”) and shall be offered
and sold only to “Accredited Investors” as that term is
defined in Regulation D. The Offering is intended to qualify as a
Regulation D, Rule 506 and/or Regulation S transaction. The
purchase of the Shares shall be pursuant to the terms of a Share
Purchase Agreement among the purchasers of the Shares, on the one
hand, and the Company, on the other hand, on terms and conditions
acceptable to Hunter and the Company (the “Purchase
Agreement”).
2. Bridge Loan .
Hunter shall use its best efforts to
arrange a bridge loan (the “Bridge Loan”) of $600,000
pursuant to a promissory note (the “Note”) to be repaid
on the earliest to occur of (a) the Closing, (b) six
months from the date of the Note, or (c) the effective date of
the Agent Termination (as defined in Section 4(c)). The
Company shall pay a Bridge Loan Fee of $75,000 payable on the
maturity date of the Bridge Loan. The lender of the Bridge Loan
will receive three-year warrants (the “Bridge
Warrants”) to purchase 600,000 shares of Pubco or, if the
Offering does not close 600,000 shares of the common stock the
Company, adjusted to the number of shares of
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Company’s common stock which
would equal 600,000 shares of Pubco’s common stock as if the
Reverse Merger had occurred with a pre-Offering valuation of
$50,000,000. The exercise price of the Bridge Warrants shall be
$.60 (or adjusted to an equivalent exercise price per share of the
Company’s common stock as if the Reverse Merger had occurred
with a pre-Offering valuation of $50,000,000). The Bridge Warrants
will have a cashless exercise feature. Additionally, Hunter shall
receive out of the proceeds of the Bridge Loan a placement fee of
7% of the amount of the Bridge Loan.
3. Compensation .
As compensation for the Shares sold,
Hunter will receive the following: (i) 10% commission on the
total gross proceeds raised by Hunter; (ii) warrants to
purchase Shares equal to 40% of the Shares sold in the Offering
(the “Placement Agent Warrants”); and
(iii) $200,000 for the Reverse Merger Services.
The Placement Agent Warrants will
receive registration rights identical to the rights granted to the
Purchasers. The Placement Agent Warrants will be exercisable at
$1.50 per share and have a five (5) year term. The Warrants
will have a cashless exercise feature.
4. Exclusivity .
(a) During the Placement Term,
Hunter shall have the exclusive right to act as placement agent
except that, subject to Hunter’s approval of the investors,
the Company and its affiliates may sell Shares (subject to payment
of compensation to Hunter as set forth in
Section 3).
(b) Except as set forth in
subparagraph (a), the Company may not solicit, engage or
continue to work with any underwriters, third party finders,
brokers, or other consultants, during the Placement Term, without
express written approval of Hunter, it being understood that, upon
execution of this Agreement, the Company shall terminate any
agreements with underwriters (“Underwriters”) in
connection with a possible initial public offering (the
“IPO”). During the Placement Term, the Company shall
provide Hunter with the name and other pertinent information on any
potential investor.
(c) In the event that on or before
the expiration of the Placement Term, Hunter is ready and able to
close the Offering and the Company refuses or is unable to close
the Offering, Hunter shall be entitled to terminate this Agreement
on five business days notice (the “Agent Termination”)
and receive a payment of $500,000 from the Company due and payable
within three business days from the effective date of the Agent
Termination, it being understood that the Company shall have
reasonable approval rights with respect to Pubco. Notwithstanding
anything herein to the contrary, if, despite the good faith efforts
of the parties, an acceptable public vehicle is not available by
December 31, 2006, Hunter shall have the right to extend the
Placement Term to January 15, 2007.
5. Right of First Refusal
.
Provided that the minimum Offering
is completed, Hunter shall have the right of first refusal (the
“Right of First Refusal”) for any equity financing
entered into by the Company within twelve months from the date the
Resale Registration Statement becomes
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effective. The Right of First
Refusal shall not apply to (i) any strategic partner financing
whereby an investor brings qualitative value in addition to money
being invested, (ii) any financing related to an acquisition
transaction, or (iii) any underwritten public
offering.
6. Representations, Warranties
and Covenants of Hunter .
Hunter represents, warrants and
covenants as follows:
(a) Hunter has the necessary power
to enter into this Agreement and to consummate the transactions
contemplated hereby.
(b) The execution and delivery by
Hunter of this Agreement and the consummation of the transactions
contemplated herein will not result in any violation of, or be in
conflict with, or constitute a default under, any agreement or
instrument to which Hunter is a party or by which Hunter or its
properties are bound, or any judgment, decree, order or, to
Hunter’s knowledge, any statute, rule or regulation
applicable to Hunter. This Agreement, when executed and delivered
by Hunter, will constitute the legal, valid and binding obligations
of Hunter, enforceable in accordance with their respective terms,
except to the extent that (i) the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect and
affecting the rights of creditors generally, (ii) the
enforceability hereof or thereof is subject to general principles
of equity, or (iii) the indemnification provisions hereof or
thereof may be held to violate public policy.
(c) Hunter will not deliver any
documents related to the Offering to any person it does not
reasonably believe to be an Accredited Investor based upon
documentary evidence thereof, where appropriate.
(d) Hunter will not intentionally
take any action that it reasonably believes would cause the
Offering to violate the provisions of the Securities Act of 1933,
the Securities Exchange Act of 1934, the respective rules and
regulations promulgated thereunder (the “Rules and
Regulations”) or applicable “Blue Sky” laws of
any state or jurisdiction.
(e) Hunter shall use all reasonable
efforts to determine (i) whether the Investor is an Accredited
Investor and (ii) that any information furnished by the
Investor is true and accurate. Hunter shall have no obligation to
insure that any check, note, draft or other means of payment for
the Shares will be honored, paid or enforceable against the
Investor in accordance with its terms.
(f) Hunter is a member of the NASD,
and is a broker-dealer registered as such under the Securities
Exchange Act of 1934 and under the securities laws of the states in
which the Shares will be offered or sold by Hunter, unless an
exemption for such state registration is available to Hunter.
Hunter is in compliance with all material rules and regulations
applicable to Hunter generally and applicable to Hunter’s
participation in the Offering.
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7. Representations and Warranties
of the Company .
The Company represents and warrants
as follows:
(a) The execution, delivery and
performance of this Agreement has been or will be duly and validly
authorized by the Company and will be, a valid and binding
agreement of the Company, enforceable in accordance with its
respective terms, except to the extent that (i) the
enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to
time in effect and affecting the rights of creditors generally,
(ii) the enforceability hereof or thereof is subject to
general principles of equity or (iii) the indemnification
provisions hereof or thereof may be held to violate public policy.
The securities to be issued pursuant to the transactions
contemplated by this Agreement have been duly authorized and, when
issued and paid for in accordance with (x) this Agreement and
(y) the certificates/instruments representing such securities,
will be valid and binding obligations of the Company, enforceable
in accordance with their respective terms, except to the extent
that (1) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors
generally, (2) the enforceability thereof is subject to
general principles of equity, or (iii) the indemnification
provisions hereof or thereof may be held to violate public policy.
All corporate action required to be taken for the authorization,
issuance and sale of the securities has been duly and validly taken
by the Company.
(b) The outstanding capital stock of
the Company has been duly authorized and issued and the Company has
outstanding capitalization as disclosed in Amendment No. 8 to
the Registration Statement relating to the IPO (the “IPO
Registration Statement”), as adjusted for interest on the
Series A preferred notes through the date of this Agreement. The
Company is not a party to or bound by any instrument, agreement or
other arrangement providing for it to issue any capital stock,
rights, warrants, options or other securities, except for this
Agreement, the agreements described herein or in the IPO
Registration Statement, or as set forth in the Purchase Agreement.
All issued and outstanding securities of the Company, have been
duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission or
preemptive rights with respect thereto and are not subject to
personal liability solely by reason of being security holders; and
none of such securities was issued in violation of the preemptive
rights of any holders of any security of the Company.
(c) The Shares being offered in the
Offering and issuable upon exercise of the Bridge Warrants and
Placement Agent Warrants will be duly authorized and when issued
and paid for in accordance with this Agreement and proper exercise
of such warrants, respectively, and the certificates/instruments
representing such Common Stock, will be validly issued, fully-paid
and non-assessable; the holders thereof will not be subject to
personal liability solely by reason of being such holders; such
securities are not and will not be subject to the preemptive rights
of any holder of any security of the Company.
(d) The Company has good and
marketable title to, or valid and enforceable leasehold estates in,
all items of real and personal property necessary to conduct its
business (including, without limitation any real or personal
property to be owned or leased by the Company).
(e) There is no material litigation
or governmental proceeding pending or, to the best of the
Company’s knowledge, threatened against, or involving the
properties or business of the Company except as disclosed in the
IPO Registration Statement.
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(f) The Company is not aware of any
federal or securities violations by any of its current officers,
directors or consultants, nor does the Company believe that any of
its officers, directors or consultants are or were the subject of
any enforcement proceedings by the Securities Exchange Commission
or the National Association of Securities Dealers.
(g) The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware. The Company does not own
or control, directly or indirectly, an interest in any other
corporation, partnership, trust, joint venture or other business
entity except as disclosed in the IPO Registration Statement. The
Company is duly qualified or licensed and in good standing as a
foreign corporation in each jurisdiction in which the character of
its operations requires such qualification or licensing and where
failure to so qualify would have a material adverse effect on the
Company. The Company has all requisite power and authority, and all
material and necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory
officials and bodies (domestic and foreign) to the Company’s
knowledge to conduct its business (and proposed business), and the
Company is doing business in strict compliance with all such
authorizations, approvals, orders, licenses, certificates and
permits and all foreign, federal, state and local laws, rules and
regulations concerning the business in which it is engaged. The
Company has all power and authority to enter into this Agreement,
to carry out the provisions and conditions hereof, and all
consents, authorizations, approvals and orders required in
connection herewith have been obtained. No consent, a
