EXHIBIT 1.02
Letter of Engagement
between
Centaur Pharmaceuticals Inc
having its business offices at
000 Xxxxxxx Xxxxxxx
Xxxxxxxxx
XX 00000
hereinafter called "Company"
on the one side
and
Bank Vontobel AG
having its registered offices at
Xxxxxxxxxxxxxx 0, 0000 Xxxxxx, Xxxxxxxxxxx
hereinafter called, together with its affiliates, "Bank Vontobel".
on the other side.
Centaur Pharmaceuticals Inc, Letter of Engagement 2
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Preamble
Centaur Pharmaceuticals Inc, Sunnyvale, CA, ("Company") is planning 1) a private
placement of common shares in the first quarter of 2000 (the "Mezzanine
Financing") and 2) an initial public offering and the listing of common shares
of the Company as soon as possible thereafter in 2000 (the "IPO").
The Mezzanine Financing is intended to consist of a primary offering of shares
only and, in Europe, it shall be conducted substantially on the basis of a
private placement. The IPO is intended to consist of a primary offering of newly
issued shares of the Company and, subject to further discussion and subject to
market conditions at the time of the offering, a secondary offering of shares by
certain shareholders of the Company ("Selling Shareholders"). The Mezzanine
Financing and the IPO are hereinafter each called an "Offering" and together
called the "Offerings".
1. The Engagement
You hereby appoint Bank Vontobel AG (together with its affiliates "Bank
Vontobel" or the "Global Co-ordinator") as Global Co-ordinator of the Offerings
and financial advisor (the "Engagement").
The Global Co-ordinator's services in connection with the Engagement
include, to the extent required:
(i) advice on the arrangement of the structure, timing and organisation of
each of the Offerings;
(ii) selecting and inviting the other syndicate members in conjunction with
you and conducting all communication with syndicate members;
(iii) advice on the restructuring of the Company, including an adequate capital
structure;
(iv) assisting, in conjunction with legal advisers, in the preparation of the
documentation required for each of the Offerings;
(v) co-ordination in conjunction with you of the involvement of the other
advisers assisting in the Engagement;
(vi) the valuation of the Company;
(vii) advice on and co-ordination of the marketing of the Company's shares and
their likely valuation in the public markets;
(viii) publication of a research report and co-ordination of the publication of
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research by other syndicate members, if any;
(ix) arranging and hosting a series of roadshows and one-on-one meetings to
present the Company to potential investors;
(x) implementation of the Offerings including acting as Global Co-ordinator
and Global Bookrunner with the goal to ensure an optimal placement at a
price satisfactory to the Company and its Selling Shareholders;
(xi) advice on the adequacy of price range, placing price and volume;
(xii) advice and assistance relating to listing the Company's shares on the SWX
New Market, on Nasdaq (together with a US-Lead Manager to be defined for
the IPO) or any other stock exchange agreed between Bank Vontobel and the
Company; and
(xiii) such other advice and assistance as may be required in connection with
the Offering or otherwise related to the Engagement.
The Offerings will be subject to the execution of a purchase or
underwriting agreement containing customary provisions for transactions of this
nature.
2. Commissions, Fees and Expenses
Commissions
You agree to pay total commissions of 5.5% of the gross proceeds of each of
the Offerings. These will include a praecipuum of 1.5% payable to the Global
Co-ordinator. The balance of 4.0% will be distributed among syndicate members
and broken down into management fee (20%), underwriting fee (20%) and selling
concession (60%).
Break-up Fee
If the Engagement is terminated by the Company for any reason prior to the
signing of the underwriting agreement for the IPO, then the Company will pay
to Bank Vontobel a Break-up Fee of US$ 250,000.
If the Engagement is terminated by the Company or by Bank Vontobel for any
reason (including a termination by the Global Co-ordinator for new-issue
market related reasons), the Company is required to reimburse Bank Vontobel
fully including for costs and expenses of external advisers.
Any such Cost Reimbursement (excluding VAT) will be offset against any Trade
Sale Fee which may become payable pursuant to the following paragraph.
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Trade Sale Fee
If there is an Acquisition (as defined below) of the Company before the
signing of the underwriting agreement for the IPO or within six months after
the termination of this Engagement (whichever is earlier) then the Company
will pay to the Global Co-ordinator a fee (the "Trade-Sale Fee") of 1.5 % of
the Consideration. An Acquisition shall mean one transaction or a series of
related transactions in which the Company's shareholders prior to the
transaction own less than a majority of the surviving corporation immediately
after the transaction, or a sale of substantially all of the Company's
assets.
In case of such Acquisition, the Company will engage Bank Vontobel as its
investment bank and its M&A adviser. Terms and conditions of such engagement
are subject to mutual agreement and will be defined in a respective letter of
engagement.
For the purpose of the preceding paragraph, "Consideration" means the total
amount actually received for the shares or assets sold, less the amount of
any liabilities assumed or to be satisfied by the buyer. If the aggregate
Consideration is increased by any future payment the Trade-Sale Fee will be
increased accordingly and the additional amount will be calculated and paid
when the future payment fall due. If the Consideration includes securities,
the value of that element will be their fair market value on the closing of
the Trade Sale; if the securities are publicly traded, the value will be
determined by the average of the published prices on the five dealing days
prior to the closing of the trade sale; debt instruments will be valued at
their face amount.
Notwithstanding the foregoing, if a minority stake of the Company is sold (in
order to better support the anticipated IPO and in agreement with the Global
Co-ordinator) and the IPO is completed as proposed, then there shall be no
Trade-Sale Fee.
Expenses
The Company will on request and whether or not the Offerings are completed,
reimburse Bank Vontobel
a) in case of the case of the Mezzanine Financing fully for the fees and
disbursements incurred in connection with the Engagement by the external
advisers engaged by the Global Co-ordinator, and
b) in case of the IPO with an amount of up to CHF 600,000 for the Bank's
out-of-pocket expenses, travel expenses, research and PR-costs in
connection with roadshows and for the fees and disbursements incurred in
connection with the Engagement by the external advisers engaged by the
Global Co-ordinator.
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In addition, the Company will pay its own fees and expenses for legal, SEC-
filing and other matters, the costs for audit work, PR-expenses as well as
presentations to investors and publication and printing costs (including
share certificates, the international and the U.S. offering circular(s) and
Swiss listing prospectus).
VAT and other Taxes
All commissions, fees, reimbursements of expenses and other sums payable to
us hereunder are subject to the addition of any applicable value added taxes
("VAT"). In addition, if you are obliged to make any deduction or withholding
in respect of such fees, reimbursement or other sums on account of any tax of
any nature, the amount payable to the Global Co-ordinator shall be grossed up
to the extent necessary to ensure that after such deduction the amount
otherwise payable remains unchanged.
3. Indemnity
In connection with the Engagement:
(a) you will not make any claim against the Global Co-ordinator or any of its
directors, officers, employees, representatives or agents ("Indemnified
Persons") to recover any loss or damage which you may suffer by reason of
or arising out of anything done or omitted by the Indemnified Persons,
unless the loss or damage arises from the gross negligence or wilful
misconduct of any of the Indemnified Persons;
(b) you undertake with the Global Co-ordinator (for itself and as trustee for
each of the other Indemnified Persons) to indemnify and hold harmless the
Indemnified Persons against all losses, liabilities, costs, actions, claims
or demands which may be incurred or brought or made against any of the
Indemnified Persons, in each case deriving from the Engagement ("Claims"),
unless the Claim arises from the gross negligence or wilful misconduct of
any of the Indemnified Persons.
It is understood between the parties that the indemnification provision
contained herein shall not prejudice the terms of the indemnification
provision to be contained in the underwriting agreement which will be
negotiated between the parties after completion of legal, financial,
accounting and business due diligence.
4. Information and Conduct
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You undertake to the Global Co-ordinator that:
(a) the Company will promptly provide Bank Vontobel with all information
relevant to the Offerings and will keep us fully up-to-date with all
developments, discussions or other factors that may be relevant to the
Offerings. The Global Co-ordinator may rely on the accuracy and
completeness of all such information without independent verification;
(b) in relation to any public document which may be issued in connection with
the Offerings, all statements of fact contained in it will be true,
complete and accurate and not misleading, your or your directors' opinions,
intentions and expectations contained in it will be honestly held and
reasonably based, and no fact will be omitted which would make any
statement misleading in any material respect; and
(c) the Company will, and will procure that your directors, employees and
representatives or agents will, comply with all laws and regulations that
are applicable in connection with the Offerings and will use your best
endeavours to obtain any necessary approvals and consents required to enter
into or complete the Offering.
Any advice given by the Global Co-ordinator is only to be used and relied
on by you. That advice, the Engagement(including the existence and scope of
this Letter of Engagement) and any matters relating to the services
provided by the Global Co-ordinator hereunder must not be disclosed or
referred to without the Global Co-ordinator's prior written consent.
In connection with the contemplated IPO, the Company will in any event
(including a listing of the Company's shares on a non- U.S.-exchange,
. become a reporting company under the Securities and Exchange Act of 1934,
. agree to comply with the referenced NASD regulations,
. enter into a Listing Agreement with the Swiss Exchange in the form
previously agreed with the Swiss Exchange and Bank Vontobel, if applicable,
. agree to the limitations on its ability to sell shares for two years from the
IPO assuming that a minimum of US$ 40 million is raised by the Company in the
IPO, except
a) pursuant to the exercise of currently outstanding options and warrants
and conversion of currently outstanding convertible securities,
b) pursuant to the exercise of options granted, or the purchase of shares
under the Incentive Plans, Director Plans or Purchase Plans
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c) in connection with any acquisition of a company, technology or product,
or any research, development, manufacturing collaboration, or any other
transaction where the primary consideration for the issuance of shares
is other than cash, or up to 100,000 shares for miscellaneous purposes,
unless
. the issuance is approved by Bank Vontobel, such approval not to be
unreasonably withheld
. the issuance is approved by a majority of the stockholders present, in
person or by proxy, at a stockholder meeting at which a quorum is
present, or by the written consent of holders of a majority of the
Company's outstanding common stock
. our common stock is then listed, or designated to be listed on notice
of issuance, on the Nasdaq, the SWX New Market or the German Neuer
Market, or
. the stockholders are provided with the right to purchase their pro rata
share of the issuance.
. until December 31, 2000, not undertake any other financing whose primary
purpose is to raise capital, unless Vontobel is the lead
underwriter/placement agent for such financing, or Vontobel otherwise
approves. Bank Vontobel acknowledges that this agreement shall not limit nor
relate in any way to the Company's ability to (i) raise money in connection
with corporate partnerships and other transactions in which a significant
component of the transaction is other than raising money in exchange for
equity, (ii) enter into merger and acquisition activities or (iii) take such
action as it deems appropriate to raise funds if in the good faith judgement
of Centaur's Board of Directors, such funds are needed by the Company and it
does not appear reasonably likely, after good faith discussions with
Vontobel, that Vontobel will be able to raise such funds on terms
approximately as favorable as Centaur could otherwise raise such funds.
All officers, directors and major stockholders shall agree to a minimum 6 months
lock-up. A listing on the SWX New Market would, without exception, require a 6
months lock-up for all Shareholders and the Company. Vontobel shall provide
support to the Company for obtaining the agreement for such lock-up of all
European investors in the Company's 1998 offering.
5. Conflicts of Interest
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You should be aware that the Global Co-ordinator is engaged in a range of
investment business and other services. Accordingly, the Global Co-
ordinator may have other clients operating in the same or similar business
sectors as yourselves whose interests might be regarded as conflicting with
your interests and, by reason of law, regulatory rules or duties of
confidentiality, it may not be possible to disclose these interests to you.
However, in the context of this Engagement, we confirm that we are not
aware of the existence of any such conflicts. If we do subsequently so
become aware we will, to the extent permitted by applicable law, regulatory
rules or duties of confidentially, promptly notify you thereof and agree
with you appropriate steps to safeguard the Company's interests.
6. Early Termination
The Global Co-ordinator and the Company may terminate the Engagement for
any reason by giving the other not less than 10 days' prior written notice.
Any such termination will be without prejudice to any accrued rights to the
date of termination (including but not limited to cost reimbursement, fees
and expenses payable pursuant to paragraph 2), and paragraph 3 and
paragraph 4 (relating to the confidentiality provisions only) of this
letter will remain in full force and effect following termination.
7. Miscellaneous
(a) The Global Co-ordinator may disclose any information received from or
relating to you or which is relevant for the Offerings to other members
within its group and its advisers as it deems appropriate subject to an
agreement by the person or persons receiving such information to comply
with applicable confidentiality requirements. The Global Co-ordinator may
disclose such information if it is required to do so by law or any
regulatory authority.
(b) We may advertise our services to you in newspapers and journals if a copy
of the advertisement is first approved by you.
(c) References herein to "you" are to the Company.
(d) This letter sets out the entire agreement and understanding between the
Global Co-ordinator and you in connection with the Engagement, and may not
be amended or modified, except upon mutual agreement and in written form.
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(e) If any provision of this letter is or becomes invalid that the validity of
the remaining provisions shall not be affected thereby. The invalid
provisions shall be replaced by a provision which reflects the intent and
purpose of this letter.
(f) This letter is governed by and will be construed in accordance with the
laws of Switzerland and you irrevocably submit to the exclusive
jurisdiction of the City of Zurich to settle any dispute that may arise.
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Zurich/Sunnyvale, January 31, 2000
For: Bank Vontobel AG
/s/ Xxxx-Xxxxx Xxxxxxxx /s/ Xxxxxxx Xxxxxx
-------------------------------- ---------------------------
By: Xxxx-Xxxxx Xxxxxxxx By: Xxxxxxx Xxxxxx
AGREED:
For: Centaur Pharmaceuticals Inc
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxx X. Day
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By: Xxxxxxx X. Xxxxxxxx By: Xxxx X. Day
