XXXXXXX XXXXXX
& COMPANY [Logo]
Investment Banking Agreement
Xx. Xxxxxxx Xxxx May 11, 2000
President
XXxxxxxx.Xxx, Inc.
0000 X.X. Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Xx. Xxxx:
In keeping with our recent conversations, Xxxxxxx Xxxxxx & Company
Financial Services, Inc. ("BFC") an Iowa Corporation, would be pleased to
serve as Investment Banker to XXxxxxxx.Xxx, Inc. (the "Company") in
connection with the plan to secure on a best efforts basis a $250,000
bridge loan (the "Bridge Loan") and place on a best efforts basis
1,000,000 - 2,000,000 shares of the Company's common stock and warrants
through an institutional offering (the "Offering"), together the Bridge
Loan and the Offering are referred to as (the "Engagement"). The initial
term of the Engagement shall be for three months on an exclusive basis,
and the proposed terms are outlined below.
The Services of BFC
In its role as Investment Banker, BFC shall provide, the following
services:
- Evaluate the Company's capital requirements for funding future growth
and expansion;
- Assist in the structure of the securities to be offered;
- Analyze the impact of business decisions, policies, and practices on
the value of the Company's securities;
- Bring business opportunities to the attention of the, Company and
evaluate opportunities in general, whether or not such opportunities are
(originated by BFC; and
- Evaluate the potential of an initial public offering for Executive
Xxxxxxxx.xxx and in the event that it is determined that an initial
public
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Leasing NASD Financial Services SIPC Investment Banking
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
000-000-0000
000-000-0000 FAX
offering is wanted, BFC shall have first right of refusal to act as
underwriter of said initial public offering.
Compensation
In connection with services to be provided, as outlined above, the
Company shall pay t0 BFC fees in the following manner:
-BFC shall receive upon the execution of this agreement an investment-
banking fee equal to 45,000 shares of restricted stock of the Company
with standard piggyback registration rights.
-BFC shall receive an additional 45,000 shares of restricted common stock
of the Company upon the completion of the Bridge Loan. (please see the
Attached Addendum A for the terms of the financing)
- BFC shall receive a placement fee equal to 7.5% of the principal amount
funded in the common stock offering at the time of the funding. (please
see the attached Addendum B for the terms of the Offering) In addition,
BFC shall receive a warrant to purchase shares of common stock of the
Company equal to 80,000 shares per $1,000,000 raised at a strike price of
$2 per common share, The Warrants shall be exercisable for a period of
five years from the date of issue and when issued shall contain standard
terms and conditions associated with Engagements of this type, including
but not limited to standard piggyback registration rights.
- The Company shall be responsible for all of BFC's out of pocket
expenses associated with the Engagement, however the expense are not to
exceed $ 1,000 per month unless approved by the Company in advance.
Termination
Upon termination, if not previously paid, BFC shall be entitled to the
compensation earned and all out-of-pocket expenses. In addition, the
Company agrees that if BFC directly or indirectly introduces the Company,
during the term of this agreement to any person(s) or entity that within
one year from the date of this agreement, provides any equity or debt
financing to the Company or any affiliate thereof, the Company shall pay
the placement agent fee and warrants as stated in this agreement.
Notices
Except as otherwise specifically agreed, all notices and other
communications made under this agreement shall be in writing and when
delivered in person or by facsimile transmission, shall be deemed given on
the same, day if delivered on a business day during normal business hours,
or on the first business day following delivery in person or by facsimile
outside normal business hours, or on the date indicated on the return
receipt requested. All notices sent shall be sent to the representatives of
the party to be notified at the addresses indicated respectively below, or
at such other addresses as the parties to be notified may from time to time
by like notice hereafter specify:
If to the Company: Xx. Xxxxxxx Xxxx, President
Xxxxxxxx.Xxx, Inc.
0000 X.X. Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
If to Xxxxxxx Xxxxxx & Co. Xx. Xxxxxxx Xxxxx, Vice President
Xxxxxxx Xxxxxx & Company Financial
Services,Inc
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Indemnification and Contribution
Recognizing that transactions of the type contemplated by this Investment
Banking Agreement sometimes result in litigation, and that BFC's role is
limited solely to those services provided for herein, the Company agrees to
indemnify BFC (and its directors, officers, shareholders, partners, agents,
finders, employees, and controlling persons) to the fall extent permitted
by law against any and all claims, losses and expenses as incurred
(including all reasonable fees and disbursements of BFC and its counsel and
all of BFC's and its counsel's reasonable travel and other out-of-pocket
expenses) in connection with the investigation of and preparation for any
such pending or threatened claims and any litigation or other proceeding
arising therefrom (such fees, disbursements and expenses to be reimbursed
quarterly as incurred) arising out of BFC's engagement hereunder.
If indemnification were for any reason not to be available with respect to
any matter, the Company agrees to contribute to any settlement, loss or
expenses so arising, in such proportion so that BFC is responsible for that
portion represented by the percentage that BFC's cash fees hereunder bears
to the total aggregate consideration payable in the proposed settlement for
an action, suit, claim, loss or otherwise and the Company shall be
responsible for the balance. The foregoing agreement shall be in addition
to any rights that any indemnified party may have at common law or
otherwise. However, BFC shall be solely responsible for any settlement
attributable to direct misrepresentation, direct negligence or malfeasance
by BFC.
In like manner, BFC shall indemnify the Company, and hold it harmless, from
any and all loss, damage, liability or expense, including cost and
reasonable attorney's fees, to which it may become subject, or which it may
incur by reason of or in connection with any misrepresentations or
misstatements of facts that BFC, or any of its representatives, may
willfully make, knowing such statements to be false.
Representations and Warranties
All communication and information provided by the Company to BFC, whether
written or oral, with respect to operations and profitability are true
and accurate. BFC may rely on the accuracy thereof.
The financial statements of the Company together with the related
schedules and notes as set forth in the Registration Statement or the
Prospectus present fairly the financial position of the Company and the
results of its operations and the changes in its financial position at
the respective dates and for the respective periods for which they apply,
such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied, throughout the
periods indicated except as otherwise stated therein.
Except as may be reflected in or contemplated by the Registration
Statement or the Prospectus, since the dates as of which information is
given in the Registration Statement or the Prospectus, (I) there has not
been any material adverse change in the condition, financial or
otherwise, of the Company or in its business taken as a whole; (ii) there
has not been any material transaction entered into by the Company other
t5han transactions in the ordinary course of business; (iii) the Company
has not incurred any material obligations, contingent or otherwise, which
are not disclosed in the Prospectus; (iv) there has not been any change
in the capital stock or long-term debt (except current payments) of the
Company; and (v) the Company has not paid or declared any dividends or
other distributions on its common stock,
The Company is not in default, which default has not been waived, in the
performance of any obligation, agreement or condition contained in any
debenture, note or other evidence of indebtedness or any debenture or
loan agreement of the Company, Except with respect to such defaults which
have been waived in writing or for which consents have been obtained in
writing, the execution and delivery of this Agreement and the
consummation of the transactions herein contemplated, and compliance with
the terms of the, Agreement will not conflict with or result in a breach
of any of the terms, conditions or provisions of, or constitute a default
under, the certificate of incorporation, as amended, or bylaws of the
Company, any note, indenture, mortgage, dew of trust, or other agreement
or instrument to which the Company is a party or by which it or any of
its property is bound, or any existing law, order, rule, regulation,
writ, injunction, or decree of any government, governmental
instrumentality, agency or body, arbitration tribunal or court, domestic
or foreign, having jurisdiction over the Company or its property.
The Company is duly incorporated and validly existing and is in good
standing as a corporation under the laws of the state of Georgia with
authorized and outstanding capital stock as set forth in the Registration
Statement and the Prospectus, and with full corporate, power and the
authority to own its property and conduct its business, present and
proposed, as described in the Registration Statement and Prospectus, the
Company has full corporate power and authority to enter into this
Agreement, The Company is duty qualified and in good standing as a
foreign corporation in each jurisdiction in which it owns or leases real
property or transacts business requiring such qualification, except where
the failure to so qualify or to be in good standing would not result in a
material adverse effect on the Company.
The Stock and Stock Warrant have been duly and validly authorized and,
when issued and delivered against payment therefore as described in the
Agreement or in the Warrants as applicable, will be validly issued, fully
paid and nonassessable. The Stock and Warrant Stock, upon issuance, will
not be subject to the preemptive rights of any shareholders of the
Company, The Warrants, when sold and delivered, will constitute valid and
binding obligations of the Company enforceable against it in accordance
with the terms thereof A sufficient number of shares of common stock have
been reserved for issuance upon exercise of the Warrants. The Stock and
Warrants conform to all statements with regard thereto in the
Registration Statement and Prospectus.
Confidentiality
In connection with the Engagement, BFC shall have access to confidential
materials of the Company. BFC, its shareholders, employees and agents
shall keep all such information strictly confidential in whatever form so
received, and shall execute a confidentiality agreement if so requested
by the Company, and BFC agrees that the Company shall be entitled to
equitable and injunctive relief including damages in the event 13FC
breached any of its confidentiality obligations to the Company.
If the foregoing correctly sets forth our entire understanding, please
sign and return the enclosed copy of this Agreement.
Very truly yours,
Xxxxxxx Xxxxxx & Company Financial Services, Inc.
/s/ Xxxxxxx Xxxxx
Xxxxxxx X. Xxxxx
Vice President
AGREED AND ACCEPTED THIS 11th DAY OF May, 2000
Xxxxxxxx.Xxx, Inc.
By: /s/ Xxxxxxx Xxxx
Xxxxxxx Xxxx, President
ADDENDUM A
Type: Xxxxxxxx.Xxx, Inc. Bridge Loan Financing
Amount: $250,000
Coupon: 12% per annum
Structure: The note, including principal and accrued interest will
repaid within six months of the funding. The lender will also receive
75,000 shares of restricted common stock to be issued at the closing.
Default: If the entire proceeds are not paid within six months of
closing then the lender will have the option to convert the note into an
additional 500,000 shares or restricted stock.
Timing: Expected to close within thirty days of the date of this
agreement, funding will be done by BFC on a best efforts basis.
Compensation: 45,000 shares of restricted stock to be issued at the
closing.
Agreed and Accepted this 11th day of May, 2000 by:
/s/ Xxxxxxx Xxxx /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxx, President Xxxxxxx Xxxxx, Vice President
ADDENDUM B
Type: Xxxxxxxx.Xxx, Inc. Common Stock Unit Offering
Amount: $2-4,000,000 Mini-Max
Price: $2.00 per unit
Structure: Each unit will consist of one share of common stock
of the Company and one warrant to purchase the common stock of the
Company at $2.00 per share. The warrants are non-callable and expire
five years from the closing of the offering.
Registration Rights: The Company will issue to investors at the closing
one registered share for each unit purchased. The Company agrees to file
a new registration agreement within 120 days to include all warrants
resulting from the unit Offering.
Timing: Expected to close within 30 days of the date
effective registration of the current SB-2 filing. Funding will be done
by BFC on a best efforts basis.
Compensation: 7.5% of the proceeds to be paid at the closing and
the warrants as stated in the investment banking agreement.
Agreed and Accepted this 11th day of May, 2000 by:
/s/ Xxxxxxx Xxxx, /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxx, President Xxxxxxx Xxxxx, Vice President
