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Exhibit 10.53
CONFIDENTIAL
Empire Asset Management Company
2 Rector
Street, 15th Floor
New
York, NY 10006
May
12, 2008
Neonode,
Inc.
Biblioteksgatan
11, 1st floor.
SE-111
46 Stockholm, Sweden
| Attention: |
Mr.
Mikael Hagman,
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Chief
Executive Officer
Mr.
Hagman:
Reference
is made to that certain letter agreement dated February 19,
2008 (the “Engagement Letter”) between Empire
Asset Management Company ("Empire") and Neonode, Inc., a
Delaware corporation (“Neonode” or the
“Company”) pursuant to which the Company engaged
Empire to act as its financial advisor and exclusive placement
agent during the Term. Capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the
Engagement Letter.
This
letter agreement shall serve to confirm the Company’s
request and Empire’s acceptance to act as the
Company’s financial advisor with respect to a
transaction pursuant to which the Company shall offer (the
“Warrant Offering”), for a period expiring May 15,
2008, subject to extension as may be agreed by the Company and
Empire (the “Warrant Offering Term”), to holders
(the “Warrantholders”) of an aggregate of
5,614,453 warrants issued by the Company (the “Exercise
Warrants”), each exercisable to purchase one share of
the Company’s common stock, par value $0.01 per share
(the “Common Stock”) at current exercise prices
ranging from $2.83 to $16.65 per share (i) to reduce the
exercise price per Exercise Warrant to the closing sale price
per share of the Common Stock on May 14, 2008 plus $0.01, for
those Warrantholders agreeing to exercise the Exercise
Warrants for cash only (the “Exercise
Warrantholders”) or (ii) to facilitate the transfer of
Exercise Warrants by Warrantholders who do not wish to
exercise all of such Exercise Warrants to third parties
located by the Placement Agent (the “Transferee
Warrantholders”), with such Transferee Warrantholders
simultaneously exercising such Warrants for cash at the
reduced exercise price. The specific terms of the Warrant
Offering will be described in certain transaction documents
and disclosure materials (collectively and as may be amended
and supplemented, the “Disclosure Materials”) that
the Company and Empire will negotiate in good faith prior to
the commencement of the Warrant Offering.
The
Warrant Offering (also referred to herein as the
“Private Placement”) will be made in accordance
with an exemption from the registration requirements of the
Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (collectively, the
“Act”) provided by Regulation D under the Act
(“Regulation D”) and the qualification and
registration requirements of applicable state and foreign
securities or blue sky laws and regulations. Investors in the
Private Placement will be persons who qualify as
“accredited investors” under Regulation
D.
1.
Engagement .
Neonode hereby engages Empire during the Warrant Offering Term (as
hereinafter defined) as its exclusive financial advisor with
respect to the Private Placement. In such capacity, Empire will
provide the Company with financial advice and assistance in
connection with the Private Placement, which may include assisting
the Company in planning the Private Placement, reviewing with the
Company and its counsel all preliminary and final Disclosure
Materials and subscription documents, and working with the Company
in identifying potential Transferee Holders and using
Empire’s reasonable efforts to assist in locating such
Transferee Holders. Empire reserves the right to retain other
properly licensed and registered broker-dealers to act as
sub-agents on Empire’s behalf and to retain foreign
representatives to act on Empire’s behalf for offers to
non-United States persons (as defined for purposes of the Act). All
documents to be used in the Private Placement, including, without
limitation, the Disclosure Materials, will be reviewed by, and
subject to the approval of, Empire and its counsel prior to their
use in making offers or sales pursuant to the Warrant Offering. The
Company will be responsible for updating, amending and
supplementing the Disclosure Materials prior to the closing of the
Private Placement as required by applicable laws. The Company
represents and agrees that it will not during the Term, directly or
indirectly, take any action to offer any of the securities for sale
to, or solicit any offers to buy from, any person or persons
otherwise than through Empire as its exclusive placement agent in
connection with the Private Placement. In order to coordinate the
efforts of Empire and the Company to most efficiently execute the
Private Placement, the Company will promptly inform Empire of any
inquiries received by the Company (or its directors, officers,
employees, agents or shareholders) from a third party in respect of
the Private Placement and will not initiate any discussions in
respect of the Private Placement with such third party without
first consulting with Empire. Neonode will furnish to Empire all
documents and information regarding Neonode and its business,
operations, financial matters and shareholders that Empire may
reasonably request in connection with it services hereunder. Empire
shall have no authority to bind Neonode to any specific terms of a
Private Placement or other obligation and Neonode shall have the
right to reject any proposed terms for a Private Placement or
refuse to consummate the Private Placement without incurring any
obligation to Empire except as provided in this
agreement.
2.
Success Fee .
The Company agrees to pay Empire as compensation for its services
under this engagement, the following fees in connection with the
Private Placement
(a)
a
cash fee equal to 10% of the gross proceeds received at any
closing of the Private Placement through the exercise of
Exercise Warrants by Exercise Warrantholders and Transferee
Warrantholders; and
(b)
5
year warrants to purchase a number of shares of common stock
equal to 10% of the gross number of shares (i) that are issued
upon exercise of the Exercise Warrants at an exercise price
equal to the reduced exercise price of said warrants and (ii)
that are issuable upon exercise of any new warrants that are
issued to Exercise Warrantholders and Transferee
Warrantholders at an exercise price equal to the exercise
price of the new warrants The foregoing warrants shall contain
the same provisions (including, without limitation,
anti-dilution protections and registration rights) that are
applicable to the Exercise Warrants and new warrants, as the
case may be. The foregoing warrants shall be issued to Empire
and/or its designees.
Unless
otherwise specified in this Agreement, compensation which is
payable to Empire pursuant to this Agreement shall be paid by
the Company to Empire upon the closing of the Private
Placement.
3.
Intentionally Omitted .
4.
Expenses .
Neonode shall bear all of its expenses in connection with the
Private Placement. In addition, if the Private Placement is
consummated, Empire will be entitled to withhold at the initial
closing from the amount otherwise due to the Company a
non-accountable expense allowance equal to Thirty Five Thousand
Dollars ($35,000). Lastly, upon the reasonable determination by
Empire that a FINRA Rule 2710 filing is required in connection with
the registration statement relating to the resale of the securities
sold in the Private Placement, the Company will pay all filing
fees, costs and reasonable legal fees in connection with such
filing to be prepared by the Empire’s counsel. If the Private
Placement is not consummated for any reason, Empire will be
entitled, upon presentation of a written accounting therefor in
reasonable detail, to prompt reimbursement of its actual,
out-of-pocket expenses related to the Private Placement, including
but not limited to fees and expenses of our legal counsel, travel
expenses, and due diligence related expenditures. The provisions of
this paragraph shall survive the closing and any termination of the
Private Placement.
5.
Term .
The term of this agreement (“Term”) shall commence on
the date hereof and shall until expiration or termination of the
Warrant Offering Term .
In addition, upon consummation of the Warrant Offering, the term of
the Engagement Letter shall automatically be extended for a one
year period commencing upon the closing of the Warrant Offering.
The foregoing proviso and the provisions of paragraphs 4,
7
and
8 and Exhibit A to this agreement shall survive any termination of
this agreement.
6.
Further Representations and Covenants of Neonode
.
(a)
The
Company represents and agrees that (i) it has the corporate
power and authority to enter into and perform this agreement
and all corporate action necessary for the authorization,
execution, delivery and performance of this Agreement has been
taken, (ii) this agreement constitutes a legal, valid and
binding obligation of Neonode enforceable in accordance with
its terms, (iii) the execution and performance of this
Agreement by the Company and the offer and sale of the
securities in the Private Placement will not violate any
provision of the Company’s charter or bylaws or any
agreement or other instrument to which the Company is a party
or by which it is bound and (iv) any necessary approvals,
governmental and private, will be obtained by the Company
before the closing of the Private Placement.
(b)
The
Company represents and warrants that the Disclosure Materials
will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein or previously made,
in light of the circumstances under which they made not
misleading. The Company will advise Empire immediately of the
occurrence of any event or any other change known to the
Company which results in the Disclosure Materials containing
an untrue statement of a material fact or omitting to state a
material fact required to be stated therein or necessary to
make the statements therein or previously made, in light of
the circumstance under which they were made, not
misleading.
(c)
The
Company acknowledges and agrees that Empire’s
obligations to commence the Private Placement may be subject
to execution of a Placement Agency Agreement on customary
terms and incorporating the principal terms hereof. In the
absence of such Placement Agency Agreement, the Company agrees
that Empire may rely upon, and will be named as a third party
beneficiary of, the representations and warranties, and
applicable covenants, set forth in any subscription agreement
or similar agreement that the Company executes with investors
in the Private Placement. The Company will, at the closing of
the Private Placement, furnish Empire with a favorable opinion
of its outside counsel in form and substance reasonably
acceptable to Empire and its legal counsel. In addition, at
the closing of the Private Placement, the Company will provide
Empire with the same certificates of the officers of the
Company as are furnished to the investors and such other
certification, opin
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