Services Agreement - Josephberg Grosz & Co. Inc. and Celsion Corp.
Josepnberg Grosz & Co. Inc.
Investment Bankers
810 Seventh Avenue * New York, NY 10019
(212) 974-9926 Fax (212) 397-5832
Dir: (212) 333-0825 e-mail: Gaelynberg@aol.com
July 31,1998
Dr. Augustine Cheung, Chairman
Mr. Spencer Volk President, CEO
Celsion Corporation
10220-1 Old Columbia Road
Columbia MID 2 1046-1705
Gentleman:
I. The purpose of this letter is to set forth the terms of our agreement
(the "Agreement") with respect to the compensation which Josephberg Grosz & Co.,
Inc. or their designees ("JGC") are to receive for assisting and advising
Celsion Corporation or related entities, direct or indirect (the "Company"), in
obtaining a capital infusion of equity, debt, bridge financing, merger and
acquisitions, letter or line of credit, lease financing or other types of
financing transactions. (the "Financing") Financing does not include business
the Company is doing in the ordinary course of business such as but not limited
to obtaining licenses from institutions and marketing arrangements with
potential users of the Company's products or technology.
Financing does not include any transactions done with the following
parties or their contacts with whom the Company is or has been dealing:
1. Ryan, Lee & Company or another retail lead syndicator
2. K. Greenberg
3. LBC Capital Corporation
4. Sucsy, Fischer and Company
5. Gilford Securities
Our focus will be on providing Financing to the Company as follows:
$1,000,000 in the months of August and September and $8,000,000-$10,000,000 over
the next twelve months.
II. To assist the Company in obtaining Financing, the Company agrees to
engage JGC as its nonexclusive agent with respect to all Financing sources,
direct or indirect, (except as exempted from the definition) (the "Investor").
When such Financing from any Investor (other than a Financing in the nature of
one described in paragraphs III & IV below) is provided, JGC will be compensated
by the Company, in full, at the closing of the Financing, by receiving a total
fee of 10% (8% cash; 2% stock).
<PAGE>
Dr. Augustine Cheung
July 31, 1999
Page Two
The total gross dollar value received or to be received (including any form of
equity, bridge, stock, convertible securities or subordinated debt Financing) by
the Company pursuant to such financing up to $5,000,000 (i.e. $5,000,000
Financing provided; JG Capital, Inc. receives a cash fee of 8%, to be $400,000
and a fee of 2% in the form of common stock of the Company to JG Partners, L.P.
at the same valuation and price as the Investor). On any dollar amount in excess
of the first $5,000,000 provided, JGC will receive a total fee of 8% (6% cash,
2% stock). In addition, JGC will have the right to invest in the Company by
receiving, at the closing of the Financing, a five yew warrant Such warrant
shall give JGC or its designees the right, at anytime over a five year period,
to purchase securities on a cashless basis in the Company equal to 10% of the
total shares issued to the Investor at the same price, the same type securities
and the same rights as the Investor (i.e. $5,000,000 Financing provided, JGC's
designees receive warrants to purchase shares of the same type securities and at
the same price and valuation as the Investor at the time of Financing at anytime
over a five yew period). Any and all securities and/or warrants and securities
underlying such warrants to be received by JGC and its designees shall have
appropriate piggy-back and registration rights and in any case become free
trading under rule 144 holding period. For any Financing (except as exempted
from the definition) not introduced directly or indirectly by JGC to the
Company, JGC will receive from the Company, a total fee of 3% (1-1/2% cash;
1-1/2% stock) at the closing of the Financing. Notwithstanding the previous
sentence. JGC shall receive the 3% fee on any Investors that invest through LBC
Capital Corporation with JGC Investor.
III. For senior debt, credit facilities, guarantees; lease financing and
letter or line of credit Financing, JGC's cash fee, if such is provided by an
Investor introduced by JGC, directly or indirectly, shall be 3.0% of the total
dollar value received or made available to the Company.
IV. In the event the Company enters into a merger, acquisition or joint
venture with an Investor or entity introduced by JGC or entities or Investors
negotiated with on behalf of the Company by JGC, directly or indirectly, JGC
will be compensated by the Company, in full, at the closing thereof in
accordance with the 5/4/3 Formula, (i.e. by receiving a cash fee of 5% of the
first $1,000,000 of Value received by the Company or the Investor, whichever is
applicable, 4% of the second $1.000,000, and 3% of all Value received in excess
of $3,000,000). While not all inclusive, Value shall include total cash, notes,
debt, stock, consulting. non-compete, earn-out, sales and royalty agreements.
V. The fees in paragraphs II, III and IV above are totally independent of
one another and are based upon the type or types of transactions JGC arranges.
VI. In addition, upon obtaining such Financing (i.e., the fees in
paragraphs 11), JGC shall receive, at closing, a non-accountable 1% cash expense
reimbursement, (i.e,, $5,000,000 total ]Financing provided or made available,
JGC receives 1% to be $50,000). In addition, JGC shall be reimbursed for all
reasonable out-of-pocket travel expenses from the date of the execution of this
Agreement until its termination which have been approved by the Company in
advance.
<PAGE>
Dr. Augustine Cheung
July 31, 1998
Page Three
VII. Upon the execution of this Agreement, the Company agrees to pay JG
Capital, Inc. $8,000 in cash and 57,000 shares of stock to JG Partners.. L.P. in
the form of common stock of the Company.
VIII. This Agreement may be terminated or amended by the Company in its
sole discretion on two days notice on September 21, 1998 or anytime thereafter
with ten days prior written notice, Termination of this Agreement shall not
release the Company of its obligation to compensate JGC or its designees for its
services rendered if any Investor enters into a transaction with or provides
Financing to the Company as long as the transaction (transactions) or Financing
(Financings) was provided by such Investor within two years after termination of
this Agreement.
IX. It is understood and agreed that you shall have the right to accept
or reject in your judgement the terms of any Financing or transaction proposed
by any Financing Sources, Investors, strategic partners and/or corporations
presented to you. If such Financing is provided by the Investor to the Company
and accepted, the Company agrees to represent to the Investor prior to the
closing of the transaction or Financing that the fees due and payable to JGC as
they apply to this Agreement will be paid to JGC at the closing of the
transaction and/or Financing.
X. This Agreement shall be governed and construed in accordance with the
laws of the State of New York. In the event of any dispute between us regarding
the subject matter of this Agreement, such dispute shall be submitted to
arbitration before a single arbitrator in New York City in accordance with the
rules of the American Arbitration Association. Any decision or award shall be
final and binding upon the parties hereto. All legal fees and expenses shall be
paid to the prevailing party by the losing party.
XI. JGC represents that to its knowledge it is in full compliance with
all regulatory laws that govern its business and agrees to indemnify the Company
against any liabilities against the Company that arise out of a breach of this
representation.
Sincerely,
Josephberg Grosz & Co, Inc.
By: /s/ Richard A. Josephberg 8/5/98
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Richard A. Josephberg Date
Chairman
AGREED AND ACCEPTED:
Celsion Corporation
By: /s/ Spencer J. Volk 8/6/98
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Name: Spencer J. Volk Date
Title: President & CEO