EXHIBIT 10.1
December 14, 1999
Xx. X. X. Xxxxxxxxx
Chairman and CEO
Xxxxxxxxx Resources, Inc.
0000 Xxxxxxxxxx Xxxx. Xxxxx 000
Xxxxx Xxxx, XX 00000
Dear Xx. Xxxxxxxxx:
This letter agreement (the "Agreement") confirms the understanding and agreement
between Xxxxx, Xxxxxxx & X'Xxxx, LLC ("COO") and Xxxxxxxxx Resources, Inc.
("Xxxxxxxxx" or "the Company") whereby the Company engages COO as a
non-exclusive financial advisor in connection with the raising of capital
through a private placement of equity or other securities (the "Offering"),
which private placement will be in an amount and on terms satisfactory to the
Company in its sole judgment (Offering or other financing hereinafter
collectively a "Transaction"). We hereby confirm COO's interest in offering in a
private placement, as a non-exclusive placement agent, on a "best-efforts"
basis, a minimum of $6 Million of Xxxxxxxxx'x securities, the proceeds of which
will be used to purchase Fraser Downs (and its subsidiaries and affiliates) and
to provide the company with working capital, upon the terms and conditions set
forth herein.
1. In connection with the Offering COO will: (a) advise Xxxxxxxxx with
respect to the form and structure of the Offering; (b) revise and expand, if
necessary, with the assistance of the Company, its existing acquisition plan,
business plan and write a private placement or information memorandum as
necessary; (c) identify and make initial contacts with institutional investors;
(d) act as placement agent and assist in negotiations with investors and (e)
provide any other financial advisory and investment banking services in
connection with the Offering as may be mutually agreed. COO will exercise all
reasonable efforts to complete the Offering successfully on terms satisfactory
to Xxxxxxxxx.
2. COO will be a financial advisor and placement agent to the Company for
an initial period of ninety days commencing on the date of the Agreement,
provided however, that either party may cancel the Agreement at any time upon
thirty (30) days written notice to the other party. Otherwise, this engagement
and the terms hereunder will be renewed automatically, on a month-to-month
basis, until a Transaction is successfully completed or until the engagement is
terminated. Within thirty (30) business days after the effective date of any
termination (the "Termination Date"), COO shall deliver to the Company a list of
all parties (the "Covered Parties") which COO has contacted or discussed a
Transaction prior to receipt of the notice of termination and shall, upon
request, return to the Company any confidential information provided to COO by
Xxxxxxxxx. The provisions concerning confidentiality, indemnification,
compensation and the Company's obligations to pay fees and reimburse expenses
contained herein and the Company's obligations contained in the Indemnification
Provisions (as hereinafter defined) will survive any termination. COO agrees not
to use any confidential information about the Company provided to it by
Xxxxxxxxx for any purposes other than in connection with a transaction and
related matters.
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3. As compensation for the services provided hereunder, the Company agrees
to pay the following fees and commissions:
(a) In consideration for COO's financial advisory services, the Company
will pay COO a non-refundable advisory fee of 25,000 freely-tradable
shares of the Company's common stock for the first four months of the
engagement, commencing upon the execution of the Agreement.
(b) Upon the closing of a Transaction (or upon a sale of the Company's
securities to a Covered Party within twelve months after the
Termination Date): (i) 9% of the gross proceeds raised in a
Transaction (or sale to a Covered Party) in the form of equity or
equity-linked securities; (ii) 3% of the gross proceeds raised in a
Transaction (or sale to a Covered Party) in the form of subordinated
debt, and (iii) 1% of the gross amount raised in a Transaction (or
sale to a Covered Party) in the form of senior debt (including lines
of credit or commitments to fund which are undrawn at any closing of a
Transaction).
(c) COO shall also receive warrants to purchase an amount of shares of
Xxxxxxxxx'x common stock equal to five percent (5%) of the Company's
equity securities (or equity security equivalents) privately placed by
COO in the Offering (or otherwise sold to a Covered Party within
twelve months of the Termination Date). The warrants will be
exercisable for five (5) years and will have an exercise price of 100%
of the offering price per share of the Company's securities as
determined by the Offering. The warrants will also contain other
customary terms and conditions including piggy-back registration
rights, cashless exercise and anti-dilution rights triggered by
subsequent stock splits, stock dividends, recapitalizations or other
similar occurrences, which terms and conditions will be embodied in
documentation acceptable to the parties to the Agreement.
4. During the period that COO is engaged by the Company, the Company may
directly or indirectly initiate any discussions or other contacts, or solicit
any inquiries or indications of interest concerning this Offering and shall
promptly furnish COO with the names of all parties with whom the Company, its
directors, officers and its controlling shareholders have conducted any
discussions, received inquiries from or had any other related contacts
concerning any investment in securities (other than common stock) of the
Company. The Company shall also promptly inform COO of the identity of any third
party that subsequently makes any such inquiry or whose interest in a possible
investment in this Offering subsequently becomes known to the Company.
5. In addition to any fees that may be payable to COO, Xxxxxxxxx will
reimburse COO promptly upon request for the reasonable out-of-pocket expenses
incurred in connection with this engagement, including without limitation the
reasonable professional and legal fees and expenses incurred by COO. These
out-of-pocket fees and expenses reimbursable by the Company shall not exceed a
total of $20,000 unless approved by the Company in writing in advance.
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6. During the period that COO is engaged by the Company, the Company may
engage another investment banker or agent to solicit any inquiries or
indications of interest concerning this Offering. In that event, the Company
shall promptly furnish COO with the names of any additional investment bankers
that may be engaged and COO will subsequently meet with any additional
investment banker or agent to coordinate placement activities such that there is
an equitable division and assignment of candidates and no duplication of contact
activity.
7. In consideration of COO's services on behalf of the Company in
connection with the Offering, the Company agrees to indemnify and hold harmless
COO and each of its affiliates, stockholders, directors, officers, employees,
agents and controlling persons (within the meaning of Section 15 of the
Securities Act of 1934) to the extent and as provided for in the indemnification
and contribution provisions (the "Indemnification Provisions") attached hereto
as Addendum A and incorporated herein in their entirety.
8. If COO completes the Offering or any other Transaction pursuant to the
Agreement, COO may, at its expense, place an announcement, subject to
Xxxxxxxxx'x consent, in any newspapers and periodicals it may select stating
that COO has acted as financial advisor, investment banker or placement agent
for the Company in the transaction.
9. Xxxxxxxxx represents that there are no brokers, representatives or other
persons that have an interest in compensation due from any of the transactions
contemplated hereunder other than a finder's fee for Xxxxxxx X. Xxxxxx.
10. The Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. The Agreement represents the entire
understanding between the parties and all prior discussions and negotiations are
merged in it. The Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
If the foregoing is in accordance with your understanding of the terms of our
agreement, please sign and return the enclosed duplicate hereof.
Sincerely yours, Accepted and agreed to as of the date first above written.
XXXXX, XXXXXXX & X'XXXX, LLC XXXXXXXXX RESOURCES, INC.
/s/ Xxxxx X'Xxxx /s/ X. X. Xxxxxxxxx
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Xxxxx X'Xxxx X. X. Xxxxxxxxx
Principal Chairman & CEO
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ADDENDUM A
INDEMNIFICATION PROVISIONS
In connection with the engagement of Xxxxx, Xxxxxxx & X'Xxxx LLC
("COO") by Xxxxxxxxx Resources, Inc. ("Xxxxxxxxx" or the "Company") pursuant to
a letter of agreement dated December 14, 1999, between the Company and COO, as
it may be amended from time to time (the "Agreement"), the Company hereby agrees
as follows:
1. To the extent permitted by law, the Company will indemnify COO and
its affiliates, stockholders, directors, officers, employees, agents
and controlling persons (within the meaning of Section 15 of the
Securities Act of 1933, as amended, or Section 20 of the Securities Act
of 1934) against all losses, claims, damages or liabilities, as the
same are incurred (including the reasonable fees and expenses of
counsel), relating to or arising out of its activities under the
Agreement, except to the extent that any losses, claims, damages or
liabilities (or actions in respect thereof) are found in a final
judgment by a court of law to have directly resulted from COO's willful
misconduct or gross negligence in performing the services described
therein.
2. Promptly after receipt by COO of notice of any claim or the
commencement of any action or proceeding with respect to which COO is
entitled to be indemnified under the Agreement, COO will notify the
Company in writing of such claim or of the commencement of such action
or proceeding, and the Company will assume the defense of such action
or proceeding, will employ counsel satisfactory to COO and will pay the
fees and expenses of such counsel. It is the intent of the parties, if
this is permitted by the applicable Canons of Ethics governing
attorneys and provided that no conflict of interest exists, hereto that
counsel for such action, if any, would be shared by the parties.
Notwithstanding the preceding sentence, COO will be entitled to employ
counsel separate from counsel for the Company and from any other party
in such action if COO and the Company or court of competent
jurisdiction reasonably determines that a conflict of interest exists
which makes representation by counsel chosen by the Company not
advisable or permitted, provided however that COO shall seek the
Company's consent which shall not unreasonably be withheld or delayed,
to the appointment of COO's counsel and the rates to be charged. In
such event, the Company will pay the reasonable fees and disbursements
of such separate counsel.
3. The Company agrees to notify COO promptly of the assertion against
it or any other person of any claim or the commencement of any action
or proceeding relating to a transaction contemplated by the Agreement.
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4. If for any reason the foregoing indemnity is unavailable to COO or
insufficient to hold COO harmless, then the Company shall contribute to
the amount paid or payable by COO as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect
not only the relative benefits received by the Company on the one hand
and COO on the other, but also the relative fault of the Company on the
one hand and COO on the other that resulted in such losses, claims,
damages or liabilities, as well as any relevant equitable
considerations. The amounts paid or payable by a party in respect of
losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees and expenses incurred in
defending any litigations, proceeding or other action or claim.
5. It is understood and agreed that, in connection with COO's
engagement by the Company, COO may also be engaged to act for the
Company in one or more additional capacities, and that the terms of any
such additional engagement may be embodied in one or more separate
written agreements. These Indemnification Provisions shall apply to the
engagement under the Agreement and to any such additional engagement
and any modification of such additional engagement; provided, however,
that in the event that the Company engages COO to act as a dealer
manager in an exchange or tender offer or as an underwriter in
connection with the issuance of securities by the Company or to furnish
an opinion letter, such further engagement may be subject to separate
indemnification and contribution provision as may be mutually agreed
upon.
6. These Indemnification Provisions shall remain in full force and
effect whether or not the transaction contemplated by the Agreement is
completed and shall survive the termination of the Agreement, and shall
be in addition to any liability that the Company might otherwise have
to any indemnified party under the Agreement or otherwise.
XXXXX, XXXXXXX & X'XXXX, LLC XXXXXXXXX RESOURCES, INC.
/s/ Xxxxx X'Xxxx /s/ X. X. Xxxxxxxxx
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Xxxxx X'Xxxx X. X. Xxxxxxxxx
Principal Chairman & CEO
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