New York, NY 10017
Exhibit
4.5
X.X.
Xxxxxxxxx, Towbin
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Dated
as
of August 9, 2007
Xx.
Xxxx
Xxxxxxxxxx
President
and Chief Executive Officer
Nutrition
21, Inc.
0
Xxxxxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Dear
Xxxx:
This
letter (“Letter Agreement”) represents our understanding of the basis upon which
X.X. Xxxxxxxxx, Towbin, LLC, a Delaware limited liability company (“CEUT”), is
engaged to provide financial advisory and investment banking services to
Nutrition 21, Inc. (the “Company”). This letter solely relates to such financial
advisory and investment banking services and not to any potential investment
in
the Company by CEUT.
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1.
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The
Company hereby retains CEUT to act as its lead financial advisor
with
respect to a best efforts offering to place with investors preferred
stock
and warrants in a private placement (the “Securities”). The Company will
not offer any of the Securities for sale to, or solicit any offers
to buy
from, any person or persons, whether directly or indirectly, otherwise
than through CEUT, provided, however, that under no circumstances
shall
CEUT be liable for failure to obtain or produce the proposed financing.
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2.
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As
part of our engagement, CEUT will provide the Company with the following
services:
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a.
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Identify
and contact potential investors;
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b.
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As
necessary, with management of the Company, meet with potential investors
approved by the Company and provide them with such information furnished
by the Company as may be appropriate;
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c.
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Assist
the Company in negotiating with identified potential investors;
and
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Assist
the Company and the Company’s legal counsel in preparing
documents
related to the
transaction and having such documents executed in order to close
the
transaction and any other agreements as may be
necessary.
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Xx.
Xxxx
Xxxxxxxxxx
Page
2
August
9,
2007
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As
compensation for the services rendered by CEUT hereunder, subject
to the
provisions of Appendix A, the Company agrees to pay CEUT at closing
for
the sale of Securities (i) a cash fee equal to the sum of (a)
5.5% of the
gross proceeds raised from investors up to and including $13
million
and
(b) 4.0% of the gross proceeds raised from investors above $13
million and
(ii) common stock warrants (the “Warrants”) equal in number to 0.5% of the
number of shares of common stock that the Securities sold at
the closing
convert into and with an exercise price equal to $1.2158. The
Warrants
shall have a term of five years, will have an exercise price
equal to the
selling price of the Securities to investors hereunder, will
not be
exercisable for the first six months of the term, shall have
a net
exercise feature and shall otherwise contain terms and conditions
customary for instruments of this nature. The Company also agrees
to
reimburse CEUT for its counsel and out-of-pocket expenses for
any
transaction related to this Agreement, including, without limitation,
any
transactions pursuant to paragraphs 1 hereof. CEUT’s out-of-pocket
expenses, excluding those related to legal counsel, will be limited
to an
aggregate of $15,000 without approval from the Company, which
shall not be
unreasonably withheld.
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4.
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CEUT
and the Company have entered into a separate letter agreement, dated
the
date hereof, providing for the indemnification of CEUT by the Company
in
connection with CEUT’s engagement hereunder, the terms of which are
incorporated into this agreement in their entirety.
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5.
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The
Company recognizes and confirms that CEUT in acting pursuant to this
engagement will be using publicly available information and information
in
reports and other materials provided by others, including, without
limitation, information provided by or on behalf of the Company and
that
CEUT does not assume responsibility for and may rely, without independent
verification, on the accuracy and completeness of any such information.
The Company agrees to furnish or cause to be furnished to CEUT all
necessary or appropriate information for use in its engagement and
hereby
warrants that any information relating to the Company that is furnished
to
CEUT by or on behalf of the Company, will be true and correct in
all
material respects and not misleading.
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6.
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The
term of this engagement shall extend until the earlier of (i) closing
of
the placement transaction and (ii) six (6) months from the date of
this
agreement, and shall automatically renew thereafter on a month-to-month
basis until terminated in writing by either party. Any such termination
shall not (except as provided herein) affect the compensation or
indemnification provisions set forth herein, all of which shall remain
in
full force and effect. In addition, the Company shall be responsible
for
any fees as outlined above for any offering undertaken by the Company
in
lieu of the contemplated transaction described herein with any investors
contacted by CEUT that is concluded within nine (9) months of the
date of
termination of this agreement, with the exception of an offering
associated with the spin-off of the Company’s pharmaceutical development
business.
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7.
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Notwithstanding
its engagement as placement agent hereunder, CEUT may not, without
its
prior written consent, be quoted or referred to in any document,
release
or communication prepared, issued or transmitted by the Company (including
any entity controlled by, or under common control with, the Company
and
any director, officer, employee or agent
thereof).
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8.
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Following
completion of this engagement, CEUT shall have the right to place
advertisements in financial and other newspapers and journals at
its own
expense describing its services to the Company
hereunder; subject to prior written approval of the Company, which
will
not be unreasonably
withheld.
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Xx.
Xxxx
Xxxxxxxxxx
Page
3
August
9,
2007
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9.
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This
Agreement is governed by the laws of the State of New York, without
regard
to such state’s rules concerning conflicts of law, and will be binding
upon and inure to the benefit of the Company and CEUT and their respective
successors and assigns. The Company and CEUT agree to waive trial
by jury
in any action, proceeding or counterclaim brought by or on behalf
of
either party with respect to any matter whatsoever relating to or
arising
out of any actual or proposed transaction or the engagement of or
performance by CEUT hereunder. The Company also hereby submits to
the
jurisdiction of the state and federal courts located in New York
County,
New York in any proceeding arising out of or relating to this Agreement,
agrees not to commence any suit, action or proceeding relating thereto
except in such courts, and waives, to the fullest extent permitted
by law,
the right to move to dismiss or transfer any action brought in such
court
on the basis of any objection to personal jurisdiction, venue or
inconvenient forum. This agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but
all of
which shall constitute one and the same
agreement.
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CEUT
will
act under this Agreement as an independent contractor with duties solely to
the
Company.
The
Company acknowledges that CEUT and its affiliates may have and may in the future
have investment banking and other relationships with parties other than the
Company, which parties may have interests with respect to this placement.
Although CEUT in the course of such other relationships may acquire information
about the placement, potential purchasers of the Securities or such other
parties, CEUT shall have no obligation to disclose such information to the
Company or to use such information on behalf of the Company. Furthermore, the
Company acknowledges that CEUT may have fiduciary or other relationships whereby
CEUT may exercise voting power over securities of various persons, which
securities may from time to time include securities of the Company or of
potential purchasers of the Securities or others with interests in respect
of
the placement. The Company acknowledges that CEUT may exercise such powers
and
otherwise perform its functions in connection with such fiduciary or other
relationships without regard to its relationship to the Company
hereunder.
Please
note that CEUT is a full service securities firm engaged in securities trading
and brokerage activities, as well as providing investment banking, financing
and
financial advisory services. In the ordinary course of our trading, brokerage
and financing activities, CEUT or its affiliates may at any time hold long
or
short positions, and may trade or otherwise effect transactions, for our own
account or the accounts of customers, in debt or equity securities or senior
loans of the Company.
Xx.
Xxxx
Xxxxxxxxxx
Page
4
August
9,
2007
If
the
foregoing correctly sets forth the understanding and agreement between CEUT
and
the Company, please so indicate in the space provided for that purpose below,
together with the enclosed duplicate original, and return one (1) of these
originals to us, whereupon this letter shall constitute a binding agreement
as
of the date hereof.
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Sincerely,
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X.X.
Xxxxxxxxx, Towbin, LLC
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By:
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Xxxxxxx
X. Xxxxxx
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Managing
Director
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Approved
and agreed to
as of
August 9, 2007:
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By:
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President
& Chief Executive Officer
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Appendix
A
The
fee
payable pursuant to Paragraph 3 of the Letter Agreement between CEUT and the
Company shall be allocated as follows:
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A.
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70.0%
of the cash compensation and 50.0% of the warrant compensation per
paragraph 3 of the Letter Agreement to CEUT;
and,
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B.
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30.0%
of the cash compensation and 50.0% of the warrant compensation per
paragraph 3 of the Letter Agreement to Life Science Group, Inc.
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CEUT
represents that the fee allocation outlined above was agreed upon by CEUT and
Life Science Group, Inc. The Company and CEUT understand and acknowledge that
the Life Science Group Inc. will be performing certain financial advisory
services for the Company. In addition, the Company agrees that the provisions
of
the Indemnification Agreement between CEUT and the Company, the provisions
relating the “tail” in paragraph 6 and the reimbursement of out-of-pockets
expenses shall extend to Life Science Group, Inc.
August
9,
2007
X.X.
Xxxxxxxxx, Towbin, LLC
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Ladies
and Gentlemen:
In
connection
with the engagement of X.X. Xxxxxxxxx, Towbin, LLC, a Delaware limited liability
company (“CEUT”),
to
advise and assist
Nutrition 21, Inc. (the “Company”) with the subject matter
in the
letter agreement dated
the
date hereof between CEUT and the Company, the Company agrees that it will
indemnify and hold harmless CEUT and its affiliates and their respective
directors, officers, agents and employees and each other person controlling
CEUT
or any of CEUT’s affiliates (collectively, the “Indemnified Parties”), to the
full extent lawful, from and against any losses, expenses, claims or proceedings
(collectively, “losses”) (i)which may arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement for the registration of the securities being offered
pursuant to the letter agreement as originally filed or in any amendment
thereof, or in any preliminary prospectus, the final prospectus or any issuer
free writing prospectus or in any amendment thereof or supplement thereto,
or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) related to or arising out of (A) oral
or
written information provided by the Company, its employees or other agents,
which information either the Company or CEUT provide to any actual or potential
buyers, sellers, investors or offerees, or (B) any other action or failure
to
act by the Company, its directors, officers, agents or employees or by CEUT
or
any Indemnified Party at the Company’s request or with the Company’s consent, or
(iii) otherwise related to or arising out of the engagement or any transaction
or conduct in connection therewith and resulting primarily from the Company’s
negligence, bad faith or willful misconduct, except that these clauses (i)
and
(ii) shall not apply with respect to (x) any losses that are finally judicially
determined to have resulted primarily from the gross negligence or willful
misconduct of such Indemnified Party, or (y) any amount paid in settlement
of
claims without the Company’s consent, which consent will not be unreasonably
withheld.
In
the
event that the foregoing indemnity is unavailable to any Indemnified Party
for
any reason
(other
than as a consequence of a final judicial determination of willful misconduct,
bad faith or gross negligence of such Indemnified Party),
then
the Company agrees to contribute to any losses related to or arising out of
the
engagement or any transaction or conduct in connection therewith as follows.
With respect to such losses referred to in clause (i) of the preceding
paragraph, each of the Company and CEUT shall contribute in such proportion
as
is appropriate to reflect the relative benefits received (or anticipated to
be
received) by CEUT, on the one hand, and by the Company and its security holders,
on the other hand,
from the
actual or proposed transaction arising in connection with the engagement. With
respect to any other losses, and for losses referred to in clause (i) of the
preceding paragraph if the allocation provided by the immediately preceding
sentence is unavailable for any reason, each of the Company and CEUT shall
contribute in such proportion as is appropriate to reflect not only the relative
benefits as set forth above, but also the relative fault of each of the Company
and CEUT in connection with the statements, omissions or other relevant
equitable considerations. Benefits received (or anticipated to be received)
by
the Company and its security holders shall be deemed to be equal to the
aggregate cash consideration and value of securities or any other property
payable, issuable, exchangeable or transferable in such transaction or proposed
transaction, and benefits received by CEUT shall be deemed to be equal to the
compensation paid by the Company to CEUT (whether in cash or otherwise) in
connection with the engagement (exclusive of amounts paid for reimbursement
of
expenses or paid under this agreement). Relative fault shall be determined
by
reference to, among other things, whether any alleged untrue statement
or omission or any other alleged conduct relates to information provided by
the
Company or other conduct by the Company (or its employees or other agents),
on
the one hand, or by CEUT, on the other hand. CEUT and the Company agree that
it
would not be just and equitable if contribution were determined by pro rata
allocation or by any other method of allocation that does not take account
of
the equitable considerations referred to above. Notwithstanding anything to
the
contrary above, in no event shall CEUT be responsible for any amounts in excess
of the amount of the compensation actually paid by the Company to CEUT (in
cash
or otherwise) in connection with the engagement (exclusive of amounts paid
for
reimbursement of expenses or paid under this agreement).
Promptly
after CEUT receives notice of the commencement of any action or other proceeding
in respect of which
indemnification or reimbursement may be sought hereunder, CEUT will notify
the
Company thereof; but the omission so to notify the Company shall not relieve
the
Company from any obligation hereunder unless, and only to the extent that,
such
omission results in its forfeiture of substantive rights or defenses. If any
such action or other proceeding shall be brought against any Indemnified Party,
the Company shall, upon written notice given reasonably promptly following
CEUT’s notice to the Company of such action or proceeding, be entitled to assume
the defense thereof at its expense with counsel chosen by the Company and
reasonably satisfactory to the Indemnified Parties; provided, however, that
any
Indemnified Party may at its own expense retain separate counsel to participate
in such defense. Notwithstanding the foregoing, such Indemnified Party shall
have the right to employ separate counsel at the Company’s expense and to
control its own defense of such action or proceeding if, in the reasonable
opinion of counsel to such Indemnified Party, (i) there are legal defenses
available to such Indemnified Party or to other indemnified parties that are
different from or additional to those available to the Company, or (ii) a
conflict or likely conflict exists between the Company and such Indemnified
Party that would make such separate representation advisable; provided, however,
that in no event shall the Company be required to pay fees and expenses under
this indemnity for more than one counsel in any one legal action or group of
related legal actions. The Company agrees that it will not, without the prior
written consent of CEUT, which consent shall not be unreasonably withheld or
delayed, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters that
are the subject of CEUT’s engagement (whether or not any Indemnified Party is a
party thereto) unless such settlement, compromise or consent includes an
unconditional release of CEUT and each other Indemnified Party from all
liability arising or that may arise out of such claim, action or
proceeding.
The
Company further agrees that no Indemnified Party shall have any liability
(whether direct or indirect, in
contract or tort or otherwise) to the Company or any of its affiliates,
creditors or security holders for or in connection with the engagement or any
actual or proposed transactions or other conduct in connection therewith except
for losses incurred by the Company that are finally judicially determined to
have resulted primarily from the gross negligence or willful misconduct of
such
Indemnified Party or have resulted from a breach of the engagement between
the
Company and CEUT.
The
foregoing agreement is in addition to any rights CEUT may have at common law
or
otherwise and shall be binding on and inure to the benefit of any successors,
assigns, and personal representatives of the Company and each Indemnified Party.
This agreement is governed by the laws of the State of New York, without regard
to such state’s rules concerning conflicts of laws. Each of the parties hereto
also hereby submits to the jurisdiction of the state and federal courts located
in New York County, New York in any proceeding arising out of or relating to
this agreement, agrees not to commence any suit, action or proceeding relating
hereto except in such courts, and waives, to the fullest extent permitted by
law, the right to move to dismiss or transfer any action brought in such court
on the basis of any objection to personal jurisdiction, venue or inconvenient
forum. Solely for purposes of enforcing this agreement, each party hereby
consents to personal jurisdiction, service of process and venue in any court
in
which any claim or proceeding that is subject to this agreement is brought
against the other party. Any right to trial by
jury
with respect to any claim or proceeding related to or arising out of the
engagement, or any transaction or conduct in connection therewith or this
agreement is waived. This agreement shall remain in full force and effect
notwithstanding the completion or termination of the
engagement.
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Very
truly yours,
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Nutrition
21, Inc.
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By:
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Xxxx
Xxxxxxxxxx
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President
& Chief Executive Officer
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X.X.
Xxxxxxxxx, Towbin, LLC
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By:
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Xxxxxxx
X. Xxxxxx
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Managing
Director
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