EXHIBIT 10.17
[LADENBURG
XXXXXXXX LOGO]
Established 1876
June 7, 2000
Xxxx XxXxxxx
Chief Executive Officer
Xxxxxxxxxx.xxx, Inc.
0000 Xxxxxx Xxx.
Santa Clara, CA 95051
Dear Xx. XxXxxxx:
The purpose of this letter agreement (the "Agreement") is to set forth the
terms and conditions pursuant to which Ladenburg Xxxxxxxx & Co. Inc. ("LTCO")
shall serve as exclusive placement agent soley in connection with the proposed
offering (the "Offering") of securities (the "Securities") of Xxxxxxxxxx.xxx,
Inc. (the "Company"), under the terms form set forth in Exhibit D hereto, which
exhibit is incorporated by reference herein (the "Term Sheet"). The gross
proceeds from the Offering will be up to $5,000,000. All references to dollars
shall be to U.S. dollars.
Upon the terms and subject to the conditions of this Agreement, the parties
hereto agree as follows:
1. Appointment. (a) Subject to the terms and conditions of this Agreement
hereinafter set forth, the Company hereby retains LTCO, and LTCO hereby agrees
to act as the Company's exclusive placement agent and financial advisor soley in
connection with the Offering, effective as of the date hereof. The Company
expressly acknowledges and agrees that LTCO's obligations hereunder are on a
reasonable best efforts basis only and that the execution of this Agreement does
not constitute a commitment by LTCO to purchase the Securities and does not
ensure the successful placement of the Securities or any portion thereof or the
success of LTCO with respect to securing any other financing on behalf of the
Company.
(b) Except as set forth below in this Section 1, during the effectiveness
of this Agreement, neither the Company nor any of its subsidiaries or affiliates
shall, directly or indirectly, through any officer, director, employee, agent or
otherwise (including, without limitation, through any placement agent, broker,
investment banker, attorney or accountant retained by the Company or any of its
subsidiaries or affiliates), solicit, initiate or encourage the submission of
any proposal or offer (an "Investment Proposal") from any person or entity
(including any of such person's or entity's officers, directors, employees,
agents and other representatives) relating to any issuance of the Company's or
any of its subsidiaries' equity securities (including debt securities with any
equity feature) or relating to any other transaction having a similar effect or
result on the Company's or any of its subsidiaries' capitalization, or
participate in any discussions or negotiations regarding, or furnish to any
other person or entity any information with respect to, or otherwise cooperate
in any way with, or assist or participate in, facilitate or encourage any effort
or attempt by any other person or entity to do or seek to do any of the
foregoing. Notwithstanding the foregoing, the Company shall not be required to
cease or cause to be terminated any contacts, arrangements, engagements,
discussions and negotiations with third parties regarding any Investment
Proposal, agency or advisory services, which was initiated prior to the date of
this Agreement, including but not limited to the Company's arrangements with
Xxxxxxxxx & Co. ("Jefferies"). Neither LTCO nor the Company shall provide or
release any information with respect to this Agreement or the Offering except as
required by law.
2. Fees and Compensation. In consideration of the services rendered by LTCO
in connection with the Offering, the Company agrees to pay LTCO the following
fees and other compensation:
(a) A cash fee payable immediately upon the closing of any portion of the
Offering and equal to 7% of the aggregate capital raised.
(b) 7% warrant coverage on the total amount of the Offering, payable at
the first closing. Such warrants shall be in the form of Exhibit D.
(c) $35,000 non-accountable expense allowance, payable at the first
closing.
(d) Upon the exercise of investor warrants, if any, by a holder thereof,
the Company shall promptly notify LTCO of such exercise, and shall pay
to LTCO an amount equal to 7% of the gross dollar amount received by
the Company in connection with such exercise of the warrants.
(e) All amounts payable hereunder shall be paid to LTCO out of an attorney
escrow account at the closing or by such other means acceptable to
LTCO.
(f) Should LTCO provide a qualified institutional investor(s) on or before
July 5, 2000 reasonably acceptable to the Company and such investor(s)
is willing to invest in the Offering on substantially the same terms
as outlined in the term sheet marked Exhibit E, and the Company
declines to enter into definitive agreements with such investor(s) to
consummate the Offering, for reasons other than a breach of this
Agreement by LTCO, the Company will pay $200,000 to LTCO as a
"break-up" fee.
3. Terms of Retention. (a) Unless extended or terminated in writing by the
parties hereto by written notice to the other in accordance with the provisions
hereof, this Agreement shall remain in effect until the Termination Date of July
5, 2000.
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(b) Notwithstanding anything herein to the contrary, the obligation to pay
the Fees and Compensation and Expenses described in Section 2, if any, and
paragraphs 2, 5, and 8 of Exhibit A and all of Exhibit B and Exhibit C attached
hereto, each of which exhibits is incorporated herein by reference, shall
survive any termination or expiration of the Agreement. It is expressly
understood and agreed by the parties hereto that any private financing of equity
or debt or other capital raising activity of the Company within 24 months of the
termination or expiration of this Agreement, with any investors or lenders to
whom the Company was introduced by LTCO or who was contacted by LTCO while this
Agreement was in effect and disclosed to the Company in writing, shall result in
such fees and compensation due and payable by the Company to LTCO under the same
terms of Section 2 above. Upon completion of the Offering, any future
renegotiation, restructuring, revision or other amendment of such Offering by
and between the Company and the investors in such Offering which results in the
receipt of any net new funds by the Company from such investor(s) shall be
deemed to be a new financing and shall result in additional fees and
compensation due and payable by the Company to LTCO under the terms of Section 2
above.
4. Right of First Refusal. Upon completion of the Offering, LTCO shall have
an irrevocable right of first refusal through the Termination Date to provide
all private financing arrangements for the Company (other than conventional
banking arrangements, borrowing and commercial debt financing and discrete
unrelated transactions of not more than $250,000 where no investment banking fee
is being paid), subject to Jefferies written agreement to waive its right to
represent the Company in such transaction. LTCO shall exercise such right in
writing within five (5) business days of receipt of a written term sheet
describing such proposed transaction in reasonable detail.
5. Information. The Company recognizes and confirms that in completing its
engagement hereunder, LTCO will be using and relying solely on publicly
available information and on data, material and other information furnished to
LTCO by the Company or the Company's affiliates and agents. It is understood and
agreed that in performing under this engagement, LTCO will rely upon the
accuracy and completeness of, and is not assuming any responsibility for
independent verification of, such publicly available information and the other
information so furnished.
6. Offers and Sales Only to Institutional Accredited Investors. Offers and
sales of the Securities will be made only to qualified institutional buyers (as
defined in Rule 144A) and to "accredited investors" as defined in Rule 501(a)
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
7. No General Solicitation. The Securities will be offered only by
approaching prospective purchasers on an individual basis. No general
solicitation or general advertising in any form will be used in connection with
the offering of the Securities. From and after the execution of this Agreement
until the completion of the Offering, the Company shall pre-clear any proposed
press release which mentions this Agreement or the Offering with LTCO. LTCO will
comply with all federal, state and applicable securities laws and regulations in
performing its services under this Agreement.
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8. Miscellaneous. This Agreement, together with the attached Exhibits A
though E constitutes the entire understanding and agreement between the parties
with respect to its subject matter and there are no agreements or understandings
with respect to the subject matter hereof which are not contained in this
Agreement. This Agreement may be modified only in writing signed by the party to
be charged hereunder.
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If the foregoing correctly sets forth our agreement, please confirm this by
signing and returning to us the duplicate copy of this letter.
We appreciate this opportunity to be of service and are looking forward to
working with you on this matter.
Very truly yours,
LADENBURG XXXXXXXX & CO. INC.
By: /s/ Illegible
----------------------------------------
Name:
Title:
Agreed to and accepted as of the date first written above:
XXXXXXXXXX.XXX, INC.
By: /s/ Xxxx XxXxxxx
------------------------------------
Name: Xxxx XxXxxxx
Title: Chief Executive Officer
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EXHIBIT A
STANDARD TERMS AND CONDITIONS
1. The Company shall promptly provide LTCO with all relevant information about
the Company (to the extent available to the Company in the case of parties
other than the Company) that shall be reasonably requested or required by
LTCO, which information shall be complete and accurate in all material
respects at the time furnished.
2. LTCO shall keep all information obtained from the Company strictly
confidential except: (a) information which is otherwise publicly available,
or previously known to, or obtained by LTCO independently of the Company
and without breach of LTCO's agreement with the Company; (b) LTCO may
disclose such information to its employees and attorneys, and to its other
advisors and financial sources on a need to know basis only and shall use
best efforts to ensure that all such employees, attorneys, advisors and
financial sources will keep such information strictly confidential; and (c)
pursuant to any order of a court of competent jurisdiction or other
governmental body (including any subpena) or as may otherwise be required
by law.
3. The Company recognizes that in order for LTCO to perform properly its
obligations in a professional manner, it is necessary that LTCO be informed
of and, to the extent practicable, participate in meetings and discussions
between the Company and any third party, including, without limitation, any
prospective purchaser of the securities, relating to the matters covered by
the terms of LTCO's engagement.
4. The Company agrees that any report or opinion, oral or written, delivered
to it by LTCO is prepared solely for its confidential use and shall not be
reproduced, summarized, or referred to in any public document or given or
otherwise divulged to any other person without LTCO's prior written
consent, except as may be required by applicable law or regulation.
5. No fee payable to LTCO pursuant to any other agreement with the Company or
payable by the Company to any agent, lender or investor shall reduce or
otherwise affect any fee payable by the Company to LTCO hereunder. If LTCO
engages any other broker-dealer or other finder to assist LTCO in the
placement of the Offering, then the fees of such other broker-dealer or
finder shall be paid by LTCO.
6. The Company represents and warrants that: (a) it has full right, power and
authority to enter into this Agreement and to perform all of its
obligations hereunder; (b) this Agreement has been duly authorized and
executed by and constitutes a valid and binding agreement of the Company
enforceable in accordance with its terms; and (c) the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby do not conflict with or result in a breach of (i) the
Company's certificate of
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EXHIBIT A (CONTINUED)
incorporation or by-laws or (ii) any agreement to which the Company is a
party or by which any of its property or assets is bound.
7. Nothing contained in this Agreement shall be construed to place LTCO and
the Company in the relationship of partners or joint venturers. Neither
LTCO nor the Company shall represent itself as the agent or legal
representative of the other for any purpose whatsoever nor shall either
have the power to obligate or bind the other in any manner whatsoever.
LTCO, in performing its services hereunder, shall at all times be an
independent contractor.
8. This Agreement has been and is made solely for the benefit of LTCO and the
Company and each of the persons, agents, employees, officers, directors and
controlling persons referred to in Exhibit B and their respective heirs,
executors, personal representatives, successors and assigns, and nothing
contained in this Agreement shall confer any rights upon, nor shall this
Agreement be construed to create any rights in, any person who is not party
to such Agreement, other than as set forth in this paragraph.
9. The rights and obligations of either party under this Agreement may not be
assigned without the prior written consent of the other party hereto and
any other purported assignment shall be null and void.
10. All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and shall be mailed, hand delivered,
sent by a recognized overnight courier service such as Federal Express, or
sent via facsimile and confirmed by letter, to the party to whom it is
addressed at the following addresses or such other address as such party
may advise the other in writing:
To the Company:
Xxxx XxXxxxx
Xxxxxxxxxx.xxx, Inc.
0000 Xxxxxx Xxx.
Santa Clara, CA 95051
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To LTCO:
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All notices hereunder shall be effective upon receipt by the party to which it
is addressed.
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EXHIBIT B
INDEMNIFICATION
The Company agrees that it shall indemnify and hold harmless, LTCO, its
stockholders, directors, officers, employees, agents, affiliates and controlling
persons within the meaning of Section 20 of the Securities Exchange Act of 1934
and Section 15 of the Securities Act of 1933, each as amended (any and all of
whom are referred to as an "Indemnified Party"), from and against any and all
losses, claims, damages, liabilities, or expenses, and all actions in respect
thereof (including, but not limited to, all legal or other expenses reasonably
incurred by an Indemnified Party in connection with the investigation,
preparation, defense or settlement of any claim, action or proceeding, whether
or not resulting in any liability), incurred by an Indemnified Party: (a)
arising out of, or in connection with, any actions taken or omitted to be taken
by the Company, its affiliates, employees or agents, or any untrue statement or
alleged untrue statement of a material fact contained in any of the financial or
other information furnished to LTCO by or on behalf of the Company or the
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; or (b) with respect to, caused by, or
otherwise arising out of any transaction contemplated by the Agreement or LTCO's
performing the services contemplated hereunder; provided, however, the Company
will not be liable under clause (b) hereof to the extent, and only to the
extent, that any loss, claim, damage, liability or expense is finally judicially
determined to have resulted primarily from LTCO's gross negligence or bad faith
in performing such services.
If the indemnification provided for herein is conclusively determined (by
an entry of final judgment by a court of competent jurisdiction and the
expiration of the time or denial of the right to appeal) to be unavailable or
insufficient to hold any Indemnified Party harmless in respect to any losses,
claims, damages, liabilities or expenses referred to herein, then the Company
shall contribute to the amounts paid or payable by such Indemnified Party in
such proportion as is appropriate and equitable under all circumstances taking
into account the relative benefits received by the Company on the one hand and
LTCO on the other, from the transaction or proposed transaction under the
Agreement or, if allocation on that basis is not permitted under applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and LTCO on the other, but also the
relative fault of the Company and LTCO; provided, however, in no event shall the
aggregate contribution of LTCO and/or any Indemnified Party be in excess of the
net compensation actually received by LTCO and/or such Indemnified Party
pursuant to this Agreement.
The Company shall not settle or compromise or consent to the entry of any
judgment in or otherwise seek to terminate any pending or threatened action,
claim, suit or proceeding in which any Indemnified Party is or could be a party
and as to which indemnification or contribution could have been sought by such
Indemnified Party hereunder (whether or not such Indemnified Party is a party
thereto), unless such consent or termination includes an express unconditional
release of such Indemnified Party, reasonably satisfactory in form and substance
to such Indemnified Party, from all losses, claims, damages, liabilities or
expenses arising out of such action, claim, suit or proceeding.
In the event any Indemnified Party shall incur any expenses covered by this
Exhibit B, the Company shall reimburse the Indemnified Party for such covered
expenses within ten (10) business days of the Indemnified Party's delivery to
the Company of an invoice therefor, with receipts attached. Such obligation of
the Company to so advance funds may be conditioned upon
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the Company's receipt of a written undertaking from the Indemnified Party to
repay such amounts within ten (10) business days after a final, non-appealable
judicial determination that such Indemnified Party was not entitled to
indemnification hereunder.
The foregoing indemnification and contribution provisions are not in lieu
of, but in addition to, any rights which any Indemnified Party may have at
common law hereunder or otherwise, and shall remain in full force and effect
following the expiration or termination of LTCO's engagement and shall be
binding on any successors or assigns of the Company and successors or assigns to
all or substantially all of the Company's business or assets.
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EXHIBIT C
JURISDICTION
The Company and LTCO each hereby irrevocably: (a) submits to the
jurisdiction of any court of the State of New York or any federal court sitting
in the State of New York for the purposes of any suit, action or other
proceeding arising out of the Agreement between the Company and LTCO which is
brought by or against the Company or LTCO; (b) agrees that all claims in respect
of any suit, action or proceeding may be heard and determined in any such court;
and (c) to the extent that the Company or LTCO has acquired, or hereafter may
acquire, any immunity from jurisdiction of any such court or from any legal
process therein, the Company an LTCO each hereby waives, to the fullest extent
permitted by law, such immunity. The prevailing party in any litigation
respecting this Agreement shall be entitled to an award of its costs, including
reasonable attorneys' fees, in connection therewith.
The Company and LTCO each waives, and agrees not to assert in any such
suit, action or proceeding, in each case, to the fullest extent permitted by
applicable law, any claim that: (a) it is not personally subject to the
jurisdiction of any such court; (b) it is immune from any legal process (whether
through service or notice, attachment prior to judgment, attachment in the aid
of execution, execution or otherwise) with respect to it or its property; (c)
any such suit, action or proceeding is brought in an inconvenient forum; (d) the
venue of any such suit, action or proceeding is improper; or (e) this Agreement
may not be enforced in or by any such court.
Any process against the Company or LTCO in, or in connection with, any
suit, action or proceeding filed in the United States District Court for the
Southern District of New York or any other court of the State of New York,
arising out of or relating to this Agreement or any transaction or agreement
contemplated hereby, may be served personally, or by first class mail or
overnight courier (with the same effect as though served personally) addressed
to the party being served at the address set forth in the Agreement between the
Company and LTCO.
Nothing in these provisions shall affect any party's right to serve process
in any manner permitted by law or limit its rights to bring a proceeding in the
competent courts of any jurisdiction or jurisdictions or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of law principles.
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