Exhibit 10.25
October 30, 1997
ENGAGEMENT LETTER
Xx. Xxxxx Xxxxxx
Chief Executive Officer
Navidec, Inc.
00 Xxxxxxxxx Xxxxx, Xxxxxxxx X, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxx:
This engagement letter shall serve, to set forth the terms upon which
Xxxxxx Xxxxxxx and Associates, Inc. ("JCA") will render Navidec, Inc. (the
"Company") certain investment banking services. On the basis of several
discussions held between JCA and the Company's respective representatives
subject to the terms and conditions of paragraph 10 hereafter, JCA agrees to act
as the Company's Placement Agent to assist the Company in a Private Placement
Offering on a "best efforts" basis, pursuant to the following terms and
conditions.
1. Investment Banking Services. JCA shall act as the Company's investment
banker and Placement Agent respecting matters relating to the
financing of the Company's businesses, recapitalizations, mergers and
acquisitions.
a) The Company proposes to issue a Private Placement Memorandum
("PPM") for up to $2,500,000 of a proposed issue of securities to
be determined at a later date by the Company and Xxxxxx Xxxxxxx &
Associates, Inc. (the "Securities"). JCA, as the Company's
investment banker, will market the Securities on a best efforts
basis.
b) The price per Unit shall be $4.50. Each Unit will consist of one
share of common stock and one warrant to purchase a share of
common stock.
c) The warrants will carry identical terms to the publicly trading
warrants.
2. Terms. Our relationship shall commence upon the execution of this
engagement letter.
3. Termination.
(a) This management letter may be terminated by the Company for just
cause upon 30 days written notice to JCA. In the event of
termination, JCA will be entitled to all items of compensation
(including any amounts deferred) payable to JCA pursuant hereto
as of the date of termination.
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Navidec, Inc.
October 30, 1997
Page 2
(b) JCA may terminate this agreement at any time, without notice, for
cause. For purposes of this letter agreement, "cause" shall mean
any breach of this engagement letter by the Company which is not
cured within 30 days after written notice of such breach is given
to the Company by JCA.
4. Compensation to JCA. JCA shall receive the following items of
compensation for the services rendered hereunder.
(a) JCA will be entitled to a sales commission of ten percent (10 %)
of the funds raised in the Private Placement.
(b) In return for undertaking the Private Placement the Company
agrees that at the closing of the Private Placement, JCA will
receive five (5) year warrants to purchase an amount of units
equal to ten percent (10%) of the units sold in this Private
Placement. The shares underlying the warrants will have standard
registration and piggyback rights and will be exercisable at the
discretion of both parties.
(c) In addition, if prior to consummation of the Private Placement,
the Company merges or sells, all or substantially all of its
assets, or sells a controlling block of stock and the offering
contemplated hereby is abandoned by the Company, the undersigned
shall be entitled to receive from the Company a cash fee of
$80,000 or five percent (5 %) of the outstanding value (not to
exceed $300,000) of the Company whichever is greater which the
Company and JCA mutually agree is a fair measure of compensation
to the JCA for the contemplated offering. Such cash fee shall be
in addition to payment for expenses and fees discussed.
(d) Pending completion of the Private Placement, the Company shall
refrain from negotiation with any other underwriter or investment
banker or other person regarding a possible private or public
offering of the Company's securities.
(e) In addition, brokers who place $100,000 or more in the securities
shall receive five percent (5%) warrant participation.
5. Expenses. The Company is responsible for the preparation of the PPM,
legal, printing, and accounting expenses, as well as Blue Sky filing
and registration fees.
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Navidec, Inc.
October 30, 1997
Page 3
(a) JCA will incur expenses in connection with this offering
including due diligence expenses, counsel, and other
expenditures. In consideration of the undertaking by JCA to use
its best efforts herein, the Company agrees to reimburse JCA for
its expenses in an amount equal to three percent (3%) of the
funds raised in the Private Placement for which JCA will not be
required to account, of which $10,000 will be prepaid in the form
of a deposit upon signing this engagement letter. The remaining
amount is to be paid upon closing of the offering.
(b) The Company will pay the expenses of a background search of the
primary management members where necessary.
6. Exclusive Agency. Unless waived, in writing, by JCA, JCA shall be the
Company's exclusive agent respecting investment banking services
required by the Company in the nature of those described herein.
JCA shall have the right of first refusal on future private placement
offerings for the Company, and the right of future negotiation on
secondary public offerings. JCA will not be paid any fees or
consideration for monies raised in any offering in which it chooses
non-participation.
7. Board Seat. JCA will be able to designate a mutually agreeable member
to the board of directors for a period of five years.
8. Representations & Indemnification. The Company represents and warrants
to JCA that: the Company will not cause or knowingly permit any action
to be taken in connection with the Private Placement which violates
the Securities Act of 1933 or any state securities laws; the Company
will cooperate with JCA so as to permit the Private Placement to be
conducted in a manner consistent with the applicable state and federal
securities laws; that all information and statements provided by the
Company in the Private Placement Memorandum will be true and correct;
that the Private Placement Memorandum will not be misleading or
violative of the anti-fraud provisions of the Securities and Exchange
Act of 1934; current Company management, as disclosed to JCA, will
continue in place after the Private Offering for a reasonable period
of time; there will be included in the Private Placement Memorandum
financial statements of the Company for the last three fiscal years or
for such shorter period as the Company was in existence and the latest
unaudited comparative quarterly or other interim financial statements;
the financial statements will fairly reflect the financial condition
of the Company and the results of its operations at a time and for the
periods covered by such financial statements, and such statements will
be substantially as heretofore represented to the undersigned; the
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Navidec, Inc.
October 30, 1997
Page 4
Company does not know of any facts adversely affecting in the Private
Placement Memorandum; the Company has prepared and delivered to the
undersigned its most recent estimate of sales, earnings, and cash flow
and agrees to update those estimates on a monthly basis during the
pendency of the Private Offering. The Company agrees to indemnify and
hold JCA and its attorneys, accountants, agents and employees,
officers and directors, free and harmless from any liability, cost and
expense, including attorneys' fees in the event of a breach of this
representation and warranty.
9. Choice of Laws and Arbitration. This engagement letter shall be
construed pursuant to the laws of the State of Florida. Any
controversy arising hereunder shall be resolved by arbitration
pursuant to the rule of the American Arbitration Association.
10. Conditions of Performance by JCA. Notwithstanding anything on the
contrary hereinabove set forth the performance of the obligations of
JCA as provided in this Engagement Letter is specifically subject to
and conditioned upon the following:
a) successful completion of in depth investigative procedures to be
conducted by JCA in respect to the Company, its operations and
general performance, as well as its officers and directors
(commonly referred to as "due diligence" procedures); and
b) results of the due diligence procedures employed by JCA
satisfactory to JCA in its sole determination.
If this engagement letter correctly sets forth our agreement, please so
indicate by signing and returning the enclosed copy of this letter.
Very truly yours, XXXXXX
XXXXXXX & ASSOCIATES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
Managing Director
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Navidec, Inc.
October 30, 1997
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Accepted and Agreed
this _____ day of ________________, 1997.
Navidec, Inc.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
Chief Executive Officer
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