Exhibit 10.1
(LittleBanc Logo) [g22454littlebanc.gif]
February 5, 2010
Mr. Mark A. Libratore
President
Liberator Medical Holdings, Inc.
2979 SE Gran Park Way
Stuart, FL 34997
INVESTMENT BANKING AGREEMENT
Dear Mark:
We are pleased to reconfirm our mutual understanding regarding the retention of
Littlebanc Advisors, LLC (“Littlebanc”), securities offered through Wilmington
Capital Securities, LLC, by Liberator Medical Holdings, Inc., together with its
subsidiaries, successors and assigns (collectively, the “Company”), subject to
the terms and conditions of this agreement (the “Agreement”).

  1.   Purpose of Engagement. Littlebanc will assist the Company as its
financial consultant in connection with raising capital, renegotiations with
current debt and equity holders and negotiation of subordination agreements. For
purposes of this Agreement, a “Transaction” shall mean: (i) any offer or private
sale of, investment or transaction in, or series of investments or transactions
in, the Company’s capital stock (whether outstanding or newly issued shares),
convertible securities, options, warrants, or other rights to acquire the
Company’s capital stock, or assets, or any other capital raise of any nature.  
      Littlebanc and the Company agree and acknowledge that this Agreement
should not be construed as a firm commitment or guarantee of any Transaction. It
is acknowledged and agreed that the decision to consummate a Transaction shall
be in the Company’s sole and absolute discretion.     2   Term. The term of this
Agreement shall be for a period commencing on of the date hereof and expiring on
the earlier of six (6) months from the date hereof or the final closing of a
Transaction, unless sooner terminated or extended pursuant to the following
sentences (the “Term”). On or after six (6) months from the date hereof,
Littlebanc or the Company may terminate this Agreement upon thirty (30) days
prior written notice to the other party. Unless terminated by either party in
writing, this Agreement shall automatically renew for successive six month
periods. Notwithstanding any termination or expiration of this Agreement, the
provisions of Paragraphs 5, 6 and Exhibit A, which is attached hereto and
incorporated herein, shall survive such termination or expiration.

1.   Role of Littlebanc. Littlebanc will act as the Company’s financial
consultant with respect to:

  a)   Using its reasonable efforts to identify and introduce the Company to a
single or a small number of fundamentally oriented institutional financial
investor(s) (“Investor(s)”) and market the Transaction to such potential
Investor(s).     b)   Evaluating Transaction proposals on behalf of the Company
and providing guidance with respect to the Transaction structure and valuation;

 

--------------------------------------------------------------------------------

 

Liberator Medical Holdings, Inc.
February 5, 2010
Page 2 of 7
 

  c)   Assisting in any discussions or negotiations of any Transaction, as
requested by the Company, including renegotiations with current debt and equity
holders and negotiation of any subordination agreements that may be necessary;  
  d)   Coordinating due diligence, documentation and Transaction closing; and,  
  e)   Providing any other services related to a Transaction that may be
appropriately requested by the Company.

2.   Compensation. In consideration for our services described above, Littlebanc
shall be entitled to receive, and the Company agrees to pay Littlebanc, the
following compensation:

  a)   Transaction Fee. If the Company consummates a Transaction with any of the
Littelbanc Investors, the Company shall pay to Littlebanc a transaction fee (the
“Transaction Fee”) comprised of:

  (i)   A cash fee equal to 5 % of Consideration (as defined in Exhibit A); and
    (ii)   One share of five (5) year warrants for every 20 shares purchased by
an Investor in the Transaction (the “LB Securities”) issued by the Company to
Littlebanc or its designees, at an exercise price equal two dollars and fifty
cents ($2.50) per share.     (iii)   The Company shall pay Littlebanc its cash
fee by wire transfer at the closing of the Transaction payable to Wilmington
Capital Securities, LLC, and shall deliver securities earned by Littlebanc or
its designees as soon as practicable after closing of a Transaction.

  b)   Multiple Closings. In the event there are multiple partial closings prior
to the final closing of the Transaction, the Company shall issue to Littlebanc,
or its designees, the percentage of cash and securities set forth in
Sections 5(a)(i), (ii) payable with respect to the amount of each closing as
soon as practicable after each such closing.     c)   Other. In the event that
any portion of the Transaction(s) includes instruments or arrangements not
contemplated by this Agreement, then the Company agrees to negotiate with
Littlebanc in good faith the amount of Transaction Fees that will be due
Littlebanc under such circumstances. No fee payable to any other financial
advisor by the Company or any other company in connection with the subject
matter of this engagement shall reduce or otherwise affect any fee payable
hereunder to Littlebanc. All fees due to Littlebanc hereunder shall have no
offsets, and are non-refundable and non-cancelable, except as described in
Paragraph 5(b).

3.   Reimbursement of Expenses. In addition to the fees described in
Paragraph 2, above, the Company agrees to reimburse Littlebanc, promptly upon
submission of an invoice from time to time, all reasonable, out-of-pocket
expenses incurred by Littlebanc (including travel, databases, fees and
disbursements of counsel, and of other consultants and advisors retained by
Littlebanc) in connection with a Transaction. Littlebanc shall not incur any
expense associated with the Transaction in an amount greater than $500 without
the prior approval of the Company.

 

--------------------------------------------------------------------------------

 

Liberator Medical Holdings, Inc.
February 5, 2010
Page 3 of 7
 
We look forward to formalizing our business relationship. If the foregoing and
the attached Exhibit A correctly set forth our agreement, please execute the
enclosed copy of this letter in the space provided and return it to us.

            Very truly yours,
                       

            WILMINGTON CAPITAL SECURITIES, LLC
      By:   /s/ Ronald Dorushkin         Name:   Ronald Dorushkin       
Title:   Chief Executive Officer     

Confirmed and agreed to this 5 day of February, 2010
Liberator Medical Holdings, Inc.

                                   

By: /s/ Mark A. Libratore          
Name: Mark A. Libratore
Title: President

 

--------------------------------------------------------------------------------

 

Liberator Medical Holdings, Inc.
February 5, 2010
Page 4 of 7
 
EXHIBIT A

(A)   Consideration. For purposes of this Agreement, “Consideration” shall mean
the value of the Transaction and shall include the aggregate value of all cash,
securities, the assumption, satisfaction or forgiveness of debt in access of the
fair market value of the collateral for that debt and minority interest
obligations, and any other forms of payment made, received or to be received,
directly or indirectly, by the Company (or any of its subsidiaries), its
shareholders, or a third party, as the case may be.. Consideration shall
expressly include amounts actually received under the terms of any “earn-out”
provision, payments made pursuant to a non-competition agreement, vested rights
to receive periodic payments and all other rights that may be at any time
(i) transferred or contributed to the Company (or any of its subsidiaries), its
affiliates or shareholders in connection with an acquisition of equity or assets
of the Company, (ii) transferred or contributed by the Company (or any of its
subsidiaries), its affiliates or shareholders in any transaction involving an
investment in or acquisition of any third party, or acquisition of the equity or
assets thereof, by the Company (or any of its subsidiaries) or any affiliate
thereof or (iii) transferred or contributed to the Company (or any of its
subsidiaries), its affiliates or shareholders and any other parties entering
into any joint venture or similar joint enterprise or undertaking with the
Company (or any of its subsidiaries) or any affiliate thereof. The aggregate
value of all such cash, securities and other property shall be the aggregate
fair market value thereof as determined by Littlebanc and the Company, or by an
independent appraiser jointly selected by Littlebanc and the Company, the cost
of which shall be split 50/50 between Littlebanc and the Company.   (B)  
Representations of the Company. The Company hereby represents and warrants that
any and all information supplied hereunder to Littlebanc in connection with any
and all services to be performed hereunder by Littlebanc for and on behalf of
the Company shall be, to the best of the Company’s knowledge, true, complete and
correct as of the date of such dissemination and shall not fail to state a
material fact necessary to make any of such information not misleading. The
Company hereby acknowledges that the ability of Littlebanc to adequately provide
services as described herein is dependent upon the prompt dissemination of
accurate, correct and complete information to Littlebanc. The Company further
represents and warrants hereunder that this Agreement has been duly and validly
authorized by all requisite corporate action; that the Company has the full
right, power and capacity to execute, deliver and perform its obligations
hereunder; and that this Agreement, upon execution and delivery of the same by
the Company, will represent the valid and binding obligation of the Company
enforceable in accordance with its terms. The representations and warranties set
forth herein shall survive the termination or expiration of this Agreement.  
(C)   Indemnification.

  1)   The Company hereby agrees to indemnify and hold Littlebanc, its officers,
directors, principals, employees, shareholders, affiliates, and members, and
their successors and assigns, harmless from and against any and all loss, claim,
damage, liability, deficiencies, actions, suits, proceedings, costs and legal
expenses or expense whatsoever (including, but not limited to, reasonable legal
fees and other expenses and reasonable disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or proceeding,
including any inquiry or investigation, commenced or threatened, or any claim
whatsoever, or in appearing or preparing for appearance as witness in any
proceeding, including any pretrial proceeding such as a deposition)
(collectively, “Losses”) arising out of, based upon, or in any way related or
attributed to any breach of a representation, warranty or covenant by the
Company contained in this Agreement.     2)   Littlebanc agrees to indemnify and
hold the Company, its officers, directors, principals, employees and affiliates,
and their successors and assigns, harmless from and against a payment of fees as
a result of the Investment Banking Agreement between Ladenburg Thalman and the
Company of August 28, 2008, particularly Article 6 thereto should the Company be
found to owe Ladenburg Thalman a fee for any Transaction associated with this
Agreement.

 

--------------------------------------------------------------------------------

 

Liberator Medical Holdings, Inc.
February 5, 2010
Page 5 of 7
 

  3)   If either Littlebanc, or the Company, as the case may be (the
“Indemnified Party”), receives written notice of the commencement of any legal
action, suit or proceeding with respect to which either of them is or may be
obligated to provide indemnification pursuant to this Section (C), the
Indemnified Party shall, within thirty (30) days of the receipt of such written
notice, give the other party written notice thereof (a “Claim Notice”). Failure
to give such Claim Notice within such thirty (30) day period shall not
constitute a waiver by an Indemnified Party of its right to indemnity hereunder
with respect to such action, suit or proceeding as long as no default has been
entered. Upon receipt by the Company or Littlebanc of a Claim Notice with
respect to any claim for indemnification which is based upon a claim made by a
third party (“Third Party Claim”), the Company or Littlebanc, as the case may
be, may assume the defense of the Third Party Claim with counsel of its own
choosing, as described below. The Indemnified Party shall cooperate in the
defense of the Third Party Claim and shall furnish such records, information and
testimony and attend all such conferences, discovery proceedings, hearings,
trial and appeals as may be reasonably required in connection therewith. The
Indemnified Party shall have the right to approve its own counsel in any such
action. Neither the Company nor Littlebanc, as the indemnifying party, shall
satisfy or settle any Third Party Claim for which indemnification has been
sought and is available hereunder, without the prior written consent of the
Indemnified Party, which consent shall not be delayed and which shall not be
required if the Indemnified Party is granted a release in connection therewith.
The indemnification provisions hereunder shall survive the termination or
expiration of this Agreement.

    IN NO EVENT SHALL EITHER PARTY OR ANY PARTY’S OFFICERS, DIRECTORS,
EMPLOYEES, SHAREHOLDERS, PARTNERS, AGENTS OR REPRESENTATIVES BE LIABLE TO THE
OTHER PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL
DAMAGES, INCLUDING WITHOUT LIMITATION LOSS OF GOODWILL, LOST PROFITS, LOST DATA
OR LOST OPPORTUNITIES, IN ANY WAY RELATING TO THIS AGREEMENT, EVEN IF A PARTY
HAS BEEN NOTIFIED OF THE POSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES OCCURRING,
AND WHETHER SUCH LIABILITY IS BASED ON CONTRACT, TORT, NEGLIGENCE, STRICT
LIABILITY, PRODUCTS LIABILITY OR OTHERWISE. I N NO EVENT WILL EITHER PARTY’S
LIABILITY IN THE AGGREGATE FOR ANY LOSSES FOR ANY MATTER ARISING BETWEEN THE
PARTIES HEREIN, EXCEPT FOR THIRD PARTY CLAIMS ARISING UNDER THIS INDEMNIFICATION
PROVISION UNDER THIS AGREEMENT, EVER EXCEED THE TOTAL FEES RECEIVED BY
LITTLEBANC, SECURITIES OFFERED THROUGH WILMINGTON CAPITAL SECURITIES, LLC UNDER
THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION, WHETHER BASED ON CONTRACT,
TORT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY OR OTHERWISE.       For
purposes of this Agreement, each officer, director, shareholder, member, and
employee or affiliate of an Indemnified Party and each person, if any, who
controls an Indemnified Party (or any affiliate) within the meaning of either
Section 15 of the Securities Act of 1933, as amended, or Section 20 of the
Securities Exchange Act of 1934, as amended, shall have the same rights as the
Indemnified Party with respect to matters of indemnification hereunder.   (D)  
Confidentiality. Littlebanc agrees that all non-public information pertaining to
the prior, current or contemplated business of the Company is a valuable and
confidential asset of the Company. Such information shall include, without
limitation, information relating to customer lists, bidding procedures,
intellectual property, patents, trademarks, trade secrets, financing techniques
and sources and such financial statements of the Company as are not available to
the public. Littlebanc, its officers, directors, employees, agents and members
shall hold all such information in trust and confidence for the Company and
shall not use or disclose any such information for other than the Company’s
business. Such confidentiality does not apply (i) where such information is
publicly available or later becomes publicly available other than through a
breach of this Agreement, (ii) where such information is subsequently lawfully
obtained by Littlebanc from a third party or parties, (iii) if such information
is known to Littlebanc prior to the execution of this Agreement or (iv) as may
be required by law.

 

--------------------------------------------------------------------------------

 

Liberator Medical Holdings, Inc.
February 5, 2010
Page 6 of 7
 

(E)   Independent Contractor. It is expressly understood and agreed that
Littlebanc shall, at all times, act as an independent contractor with respect to
the Company and not as an employee or agent of the Company, and nothing
contained in this Agreement shall be construed to create a joint venture,
partnership, association or other affiliation, or like relationship, between the
parties. It is specifically agreed that the relationship is and shall remain
that of independent parties to a contractual relationship and that Littlebanc
shall have no right to bind the Company in any manner. In no event shall either
party be liable for the debts or obligations of the other except as otherwise
specifically provided in this Agreement.   (F)   Amendment. No modification,
waiver, amendment, discharge or change of this Agreement shall be valid unless
the same is evidenced by a written instrument, executed by the party against
which such modification, waiver, amendment, discharge, or change is sought.  
(G)   Notices. All notices, demands or other communications given hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person or transmitted by facsimile transmission or on the third calendar day
after being mailed by United States registered or certified mail, return receipt
requested, postage prepaid, to the addresses herein above first mentioned or to
such other address as any party hereto shall designate to the other for such
purpose.   (H)   Entire Agreement. This Agreement contains all of the
understandings and agreements of the parties with respect to the subject matter
discussed herein. All prior agreements, whether written or oral, are merged
herein and shall be of no force or effect.   (I)   Severability. The invalidity,
illegality or unenforceability of any provision or provisions of this Agreement
will not affect any other provision of this Agreement, which will remain in full
force and effect, nor will the invalidity, illegality or unenforceability of a
portion of any provision of this Agreement affect the balance of such provision.
In the event that any one or more of the provisions contained in this Agreement
or any portion thereof shall for any reason be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision had never been
contained herein.   (J)   Construction; Venue. This Agreement shall be governed
by and construed in accordance with the laws of the State of Florida. The
Company agrees that the sole and exclusive venue for any matters arising
hereunder shall be the court of competent jurisdiction in Palm Beach County,
Florida, and agrees to waive any objections to such venue. EACH OF LITTLEBANC
AND THE COMPANY HEREBY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING, SUIT
OR CLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR IN
ANY WAY RELATING TO THIS AGREEMENT.   (K)   Binding Nature. The terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties, and their respective successors and assigns.   (L)   Counterparts.
This Agreement may be executed in any number of counterparts, including
facsimile signatures, which shall be deemed as original signatures. All executed
counterparts shall constitute one Agreement, notwithstanding that all
signatories are not signatories to the original or the same counterpart.   (M)  
Attorneys’ Fees and Court Costs. If any party to this Agreement brings an
action, directly or indirectly based upon this Agreement or the matters
contemplated hereby against the other party, the prevailing party shall be
entitled to recover, in addition to any other appropriate amounts, its
reasonable costs and expenses in connection with such proceeding, including, but
not limited to, reasonable attorneys’ fees and expenses and court costs.   (N)  
Computer Virus. During the course of this engagement, Littlebanc may exchange
electronic versions of documents and emails with you using commercially
available software. Unfortunately, the technology community is occasionally
victimized by the creation and dissemination of so-called viruses, or similar
destructive electronic programs. Littlebanc takes the issues raised by these
viruses seriously and has invested in document and email scanning software that
identifies and rejects files containing known viruses. Littlebanc also updates
its system with the software vendor’s most current releases at regular
intervals.

 

--------------------------------------------------------------------------------

 

Liberator Medical Holdings, Inc.
February 5, 2010
Page 7 of 7
 

    By utilizing this virus scanning software, Littlebanc’s system may
occasionally reject a communication you send. Littlebanc in turn may send you
something that is rejected by your system. This infrequent occurrence is to be
expected as part of the ordinary course of business.       Because the virus
protection industry is generally one or two steps behind new viruses, Littlebanc
cannot guarantee that its communications and documents will always be virus
free. Occasionally, a virus will escape and go undetected as it is passed from
system to system. Although Littlebanc believes its virus protection measures are
excellent, it can make no warranty that its documents will be virus free at all
times.       Please inform Littlebanc immediately in the event a virus enters
your company’s system via any electronic means originating from Littlebanc.
Through cooperative efforts, disruption to communications can be minimized.  
(O)   Information Disclosure. Littlebanc may disclose any information when it is
believed necessary for the conduct of its business, or where disclosure is
required by law. For example, information may be disclosed for audit or research
purposes, or to law enforcement and regulatory agencies to do such things as
prevent fraud. Information may also be disclosed to affiliates as well as to
others that are outside Littlebanc. Littlebanc may make other disclosures of
Information as permitted by law.   (P)   Legal Services. Littlebanc is not, in
any manner, providing legal services or legal advice to the Company.
Furthermore, the Company agrees and acknowledges that Littlebanc is not an
advisor as to tax, accounting or regulatory matters in any jurisdiction.   (Q)  
Securities Trading and Other Activities. Littlebanc is a full service securities
firm engaged, directly or indirectly, in various activities, including
securities trading, investment management, financing and brokerage activities.
The Company agrees and acknowledges that in the ordinary course of these
activities, Littlebanc and its affiliates may actively trade the debt or equity
securities (or related derivative securities) of the Company and other companies
which may be the subject of the engagement contemplated by this Agreement for
its own account and for the accounts of its customers and may at any time hold
long and short positions in such securities. The Company further agrees and
acknowledges that Littlebanc and its affiliates also may from time to time
perform various investment banking and financial advisory services for other
clients and customers who may have conflicting interests with respect to the
Company or the Transaction and nothing herein shall in any way limit
Littlebanc’s, or its affiliates’, ability to provide such services.   (R)   No
Fiduciary Duties. The Company represents that it is a sophisticated business
enterprise that has retained Littlebanc for the limited purposes set forth in
this Agreement, and the parties acknowledge and agree that their respective
rights and obligations are contractual in nature. Each party disclaims any
intention to impose fiduciary obligations on the other by virtue of the
engagement contemplated by this Agreement.   (S)   USA Patriot Act. If
necessary, the Company agrees to provide Littlebanc with information and
supporting documentation to enable Littlebanc to comply with the requirements
under Title III of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA
Patriot Act”) (Public Law 107-56).   (T)   Marketing. Littlebanc shall have the
ability to publicize (i.e., use of the Company logo in its marketing materials)
its role in providing the Company with the services noted herein.