CONFIDENTIAL
September 2, 1998
Conductus, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx, President and Chief Executive Officer
Dear Xx. Xxxxxxx:
This letter agreement sets forth the terms and conditions under which Conductus,
Inc. ("Conductus" or the "Company") has retained Xxxxxxxxx & Company LLC
("Xxxxxxxxx") to act as its financial advisor with respect to the private
placement (the "Financing") of equity or equity-related securities (the
"Securities") on a best efforts basis on terms satisfactory to the Company and
in compliance with Section 4(2) of the Securities Act of 1933 as amended, and
other federal and state securities laws.
1. SERVICES TO BE RENDERED - Xxxxxxxxx will assist the Company in effecting
the Financing on the terms and conditions of this letter agreement. In
this regard, we propose to undertake certain activities including, if
appropriate, the following:
(a) Identify, introducing to, and consulting as to strategy for initiating
discussions with, potential investors;
(b) Negotiating the sale of the Securities to investors; and
(c) Assisting in the preparation of definitive documentation for the
Financing.
2. COMPENSATION - Upon completion of the Financing the Company agrees to pay
Xxxxxxxxx a cash placement fee (the "Placement Fee") equal to four percent
(4%) of the Securities sold to investors identified to the Company by
Xxxxxxxxx. The Placement Fee is paid upon consummation of, and out of the
proceeds of, the proposed Financing. The Placement Fee will be payable
regardless of the size of the Financing and whether or not the Financing
occurs in one transaction or a series of transactions.
3. DUE DILIGENCE - In connection with Xxxxxxxxx'x engagement, the Company and
its advisors will furnish Xxxxxxxxx with all data, material, and
information concerning the Company (the "Information") which Xxxxxxxxx
reasonably requests, all of which will be accurate and complete in all
material respects, except with respect to the Company's financial
statements which shall present fairly the financial position of the
Company, to the best of the Company's knowledge, at the time furnished.
The Company recognizes and confirms that in advising it and in undertaking
the assignment, Xxxxxxxxx will be using and relying on the Information and
financial and other information furnished to Xxxxxxxxx by the Company and
its advisors, without independent verification. Moreover, Xxxxxxxxx will
not perform any appraisal of the assets or businesses of the
Conductus, Inc.
September 2, 1998
Page 2
Company or any party. Xxxxxxxxx is hereby authorized to use and deliver
the Information, and any other data obtained by Xxxxxxxxx from reliable
published sources to prospective interested investors. In connection with
the engagement of Xxxxxxxxx hereunder, the Company has entered into
separate letter agreement, dated as of the date hereof, providing for the
indemnification of Xxxxxxxxx and certain related parties by the Company
(the "Indemnification Agreement").
4. CALIFORNIA LAW - This letter agreement and the related indemnification
agreement referred to above shall be deemed made in California. Such
agreements shall be governed by the laws of the state of California,
without regard to such state's rules concerning conflicts of laws. Should
suit be brought to enforce this letter agreement or the Indemnification
Agreement, the prevailing party shall be entitled to recover from the other
reimbursement for reasonable attorneys' fees. Any dispute arising from the
interpretation, validity or performance of this letter agreement or any of
its terms and provisions shall be submitted to binding arbitration with the
National Association of Securities Dealers.
5. Upon execution of this engagement letter, Xxxxxxxxx and the Company will
exchange mutually acceptable Confidentiality Agreements.
Conductus, Inc.
September 2, 1998
Page 3
Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to us the enclosed duplicate copy of this letter agreement. We
look forward to working with you and to the successful conclusion of this
assignment.
Very truly yours,
XXXXXXXXX & COMPANY LLC
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------------
Title: Vice President
-------------------------------
Accepted and Agreed to
as of the date written above:
CONDUCTUS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
CONFIDENTIAL
September 2, 1998
Xxxxxxxxx & Company LLC ("Davenport")
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Gentlemen:
In consideration of Xxxxxxxxx'x agreement to act on behalf of Conductus, Inc.
(the "Company"), in connection with the private placement, pursuant to the
engagement letter of even date herewith (the "Engagement Letter"), we hereby
agree to indemnify and hold harmless Xxxxxxxxx, its affiliates, the respective
partners, directors, officers, agents and employees of Xxxxxxxxx and its
affiliates and each person, if any, controlling Xxxxxxxxx or any of its
affiliates within the meaning of either Section 15 of the Securities Act of 1933
or Section 20 of the Securities Exchange Act of 1934, (Xxxxxxxxx and each such
other person are hereinafter referred to as an "Indemnified Person"), from and
against any such losses, claims, damages, expenses and liabilities (or actions
in respect thereof), joint or several, as they may be incurred (including all
legal fees and other expenses incurred in connection with investigating,
preparing, defending, paying, settling, or compromising any claim, action, suit,
proceeding, loss, damage, expense or liability, whether or not in connection
with an action in which any Indemnified Person is a named party) to which any of
them may become subject (including in settlement of any action, suit or
proceeding, if such settlement is effected with the Company's consent, which
consent shall not be unreasonably withheld), and which are related to or arise
out of Xxxxxxxxx'x engagement, the transaction contemplated by such engagement
or any Indemnified Person's role in connection therewith, including, but not
limited to, any losses, claims, damages, expenses and liabilities (or actions in
respect thereof) arising out of, based upon or caused by any untrue statement or
alleged untrue statement of a material fact contained in the offering
memorandum, or any amendment or supplement thereto, or in any other document of
the Company furnished to any party or to Xxxxxxxxx in connection with the
Financing Transaction, or arising out of, based upon or caused by any omission
or alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading. The Company will not, however, be responsible under the foregoing
provisions with respect to any loss, claim, damage, expense or liability to the
extent that a court having jurisdiction shall have determined by a final
judgment (not subject to further appeal) that such loss, claim, damage, expense
or liability resulted from actions taken or omitted to be taken by Xxxxxxxxx due
to its gross negligence or willful misconduct. All capitalized terms not
otherwise defined herein have the same meaning as ascribed to them in the
Engagement Letter, unless the context indicates or requires otherwise.
Promptly after receipt by an Indemnified Person of notice of the commencement of
any action, such Indemnified Person will, if a claim in respect thereof is to be
made against the Company, notify the Company of the commencement thereof; but
the omission to notify the Company xxxx
Xxxxxxxxx & Company LLC
September 2, 1998
Page 2
not relieve it from any liability which it may have to any Indemnified Person
otherwise than stated in this Indemnification Agreement. In case any such
action is brought against any Indemnified Person, and it notifies the Company of
the commencement thereof, the Company will be entitled to participate therein
and, to the extent that it may wish, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Person; provided, however, that if
the defendants in any such action include both the Indemnified Person and the
Company and counsel for the Indemnified Person reasonably determines there is a
conflict of interest that cannot or should not be waived, the Company shall not
have the right to direct the defense of such action on behalf of such
Indemnified Person and such Indemnified Person shall have the right to select
separate counsel to defend such action on behalf of such Indemnified Person.
After notice from the Company to such Indemnified Person of its election to
assume the defense thereof and approval by such Indemnified Person of counsel
appointed to defend such action, the Company will not be liable to such
Indemnified Person for any legal or other expenses, other than reasonable costs
of investigation, incurred by such Indemnified Person in connection with the
defense thereof unless: (i) the Indemnified Person shall have employed separate
counsel in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the Company shall not
be liable for the expenses of more than one separate counsel (in addition to
local counsel) in any one action or separate but substantially similar actions
in the same jurisdiction arising out of the same general allegations or
circumstances); or (ii) the Company has authorized the employment of counsel for
the Indemnified Person at the expense of the Company. After any notice from the
Company to such Indemnified Person, the Company will not be liable for the costs
and expenses of any settlement of such action effected by such Indemnified
Person without the consent of the Company.
If the indemnity referred to above should be, for any reason whatsoever,
unenforceable, unavailable to or otherwise insufficient to hold harmless
Xxxxxxxxx and each Indemnified Person in connection with the transaction, each
Indemnified Person shall be entitled to receive from the Company, and the
Company shall pay, contributions for such losses, claims, damages, liabilities
and expenses (or actions in respect thereof) so that each Indemnified Person
ultimately bears only a portion of such losses, claims, damages, liabilities
expenses and actions as is appropriate (i) to reflect the relative benefits
received by Xxxxxxxxx on the one hand and the Company on the other hand in
connection with the transaction or (ii) if the allocation on that basis is not
permitted by applicable law, to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of Xxxxxxxxx and the Company
in connection with the actions or omissions to act which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations; provided, however, that in no event shall the
aggregate contribution of all Indemnified Persons to all losses, claims,
damages, liabilities, expenses and actions exceed the amount of the fee actually
received by Xxxxxxxxx pursuant to the engagement letter. The respective
relative benefits received by Xxxxxxxxx and the Company in connection with the
transaction shall be deemed to be in the same proportion as the aggregate fee
paid to Xxxxxxxxx in connection with the transaction bears to the total
consideration of the transaction. The relative fault of Xxxxxxxxx and the
Company shall be determined by reference to, among other things, whether the
actions or omissions to act were by Xxxxxxxxx or the Company and the
Xxxxxxxxx & Company LLC
September 2, 1998
Page 3
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action or omission to act.
The indemnity, contribution and expense payment obligations of the Company
referred to above shall be in addition to any liability which the Company may
otherwise have and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of any Indemnified
Person and the Company. The Company also agrees that the Indemnified Persons
shall have no liability to the Company or any person asserting claims on behalf
of or in right of the Company for or in connection with any manner referred to
in this letter except to the extent that any such liability results from the
gross negligence or willful misconduct of Xxxxxxxxx in performing the services
that are the subject of this letter and in no event shall such liability exceed
the amount of fees actually received by Xxxxxxxxx hereunder.
Very truly yours,
CONDUCTUS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
Accepted and Agreed to
as of the date written above:
XXXXXXXXX & COMPANY LLC
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------
Title: Vice President
-------------------------
