EXHIBIT 10.8
Stonegate Securities
0000 Xxxxxx Xxxx, 0xx Xxxxx
Xxxxxx, XX 00000
214-987-4121
February 1, 2002 CONFIDENTIAL
Precis, Inc.
0000 XxXxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
President
Gentlemen:
The purpose of this letter (the "Agreement") is to set forth the terms of the
engagement by Precis, Inc. (the "Company") of Stonegate Securities, Inc.
("Stonegate") to serve as the Company's non-exclusive financial advisor and to
furnish certain investment banking services to the Company as described below.
Stonegate and the Company are each sometimes referred to herein as a "Party" and
collectively, as the "Parties".
9. SERVICES PROVIDED BY STONEGATE.
(a) Familiarize itself to the extent it deems appropriate and
feasible with the business, operations, properties, financial
condition, management, and strategic direction of the Company,
as well as make any suggestions on how the Company might
enhance any of the above;
(b) Evaluate the possible sale of equity related securities in the
Company, including, without limitation, evaluating potentially
raising capital for the Company in the form of a private
placement of common stock, convertible preferred stock, or
convertible debt securities with Stonegates institutional and
other clients (such an evaluation could include, among other
things, a restructuring and/or a refinancing of the Companys
current levels of debt, or assistance in restructuring the
Companys existing bank financing); it being agreed and
understood that the undertaking of any such possible sale of
securities shall be pursuant to a separate agreement between
the Parties; and
(c) Evaluate potential acquisitions, mergers, or joint ventures by
the Company, or other strategic alternatives available to the
Company.
10. TERM OF ENGAGEMENT.
The term of Stonegate's engagement shall be for the period commencing
on the date of this Agreement and continuing until the first
anniversary of the date of this Agreement (the "Initial Term"), and may
be extended beyond the Initial Term by mutual written consent of the
Parties. Notwithstanding the foregoing, either Party may terminate this
Agreement at any time upon ten (10) days written notice to the other
Party, in which event neither Party will have any further obligations
hereunder, except for any unpaid amounts under Sections 3, 4, and 5
below, and except for any obligations set forth in Section 7 below,
which shall survive any such termination.
Precis, Inc.
February 1, 2002
Page 2
11. COMPENSATION.
For providing services hereunder, the Company agrees to pay Stonegate a
due diligence fee of $25,000, payable upon execution and delivery of
this Agreement by the Parties.
12. COMPENSATION FOR OTHER SERVICES.
If Stonegate provides services to the Company in addition to those
provided in Section 1 above, Stonegate shall be compensated for such
services pursuant to a separate agreement between, and as mutually
agreed to by, the Parties.
13. REIMBURSEMENT OF EXPENSES.
In addition to the engagement fees in Section 3, the Company agrees to
reimburse Stonegate on a monthly basis for reasonable out-of-pocket
expenses incurred by Stonegate with regard to rendering services
hereunder, including but not limited to, airfare, hotel, and other
expenses in connection with visiting the Company, and expenses incurred
in connection with any road show or other presentations or marketing
efforts made on behalf of the Company by Stonegate. The Parties shall
attempt to have the Company directly billed for any such expenses.
14. INFORMATION.
The Company agrees to make available to Stonegate all information
relating to the Company, which information, taken as a whole, will not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading
(the "Information"). The Company agrees to advise Stonegate immediately
of the occurrence of any event or any other change known to the Company
that results in the Information, taken as a whole, containing an untrue
statement of a material fact or omitting to state any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. The Company
acknowledges that Stonegate may rely on the Information without
undertaking independent verification.
Precis, Inc.
February 1, 2002
Page 3
15. INDEMNIFICATION.
(a) If in connection with any services or matters that are the
subject of or arise out of this Agreement or Stonegates
engagement hereunder, Stonegate becomes involved (whether or
not as a named party) in any action, claim, investigation, or
legal proceeding (including any governmental inquiry or
investigation and including, but not limited to, actions,
claims or legal proceedings arising out of or based upon any
breach by the Company of any agreement or representation or
warranty of the Company contained herein, or any untrue
statement or alleged untrue statement of a material fact by
the Company in any release or communication to an offeree of
the Companys securities or an omission or alleged omission to
state a material fact required to be stated therein or
necessary to make the statements contained therein, not
misleading), the Company agrees to indemnify and hold
Stonegate, and its officers, directors, employees, agents, and
affiliates (collectively, the Stonegate Indemnitees), harmless
against any losses, claims, costs, damages, or liabilities as
they are incurred, to which any Stonegate Indemnitee may incur
or suffer in connection therewith, provided that such
Stonegate Indemnitee promptly notifies the Company of any such
action, claim, investigation, or legal proceeding and provides
the Company with an opportunity to defend against or settle
such matter with counsel of its choice. Stonegate shall
provide reasonable assistance to the Company in any such
matter, at the Companys expense. The Company shall promptly
reimburse Stonegate for any legal action or other costs of
expenses reasonably incurred by such Stonegate Indemnitee in
connection with the investigation, contest or defense of any
such loss, claim, damage, liability or action. Notwithstanding
the above, the Company shall not be liable under the indemnity
provisions hereof in respect of any loss, claim, cost, damage,
or liability pertaining to such matter to the extent(a)ab.,
but only to the extent, that it is found in a final judgement
by a court of competent jurisdiction that such loss, claim,
cost, damage, or liability resulted from such Stonegate
Indemnitees gross negligence, bad faith, or willful
misconduct. The foregoing agreements shall apply to any
modification of Stonegates engagement hereunder, and shall
remain in full force and effect following the completion or
termination of Stonegates engagement hereunder and the sale of
any securities, and shall be in addition to any rights that
any Stonegate Indemnitee may have, at common law or otherwise.
If for any reason the foregoing indemnification is judicially
determined to be unavailable, or insufficient to hold any
Stonegate Indemnitee harmless, then the Company agrees to
contribute to the losses, claims, costs, damages, or
liabilities for which such indemnification is held unavailable
in such proportion as is appropriate to reflect not only the
relative benefits received by the Company and such Stonegate
Indemnitee, but also the relevant fault of each such person or
entity, as well as any relevant equitable considerations.
(b) If in connection with any services or matters that are the
subject of or arise out of this Agreement or Stonegates
engagement hereunder, the Company becomes involved in any
action, claim, investigation, or legal proceeding which is
finally judicially determined to have resulted primarily from
the bad faith or gross negligence of Stonegate, Stonegate
agrees to indemnify and hold the Company, and its officers,
directors, employees, agents, and affiliates (collectively,
the Company Indemnitees), harmless against any losses, claims,
costs, damages, or liabilities as they are incurred, to which
any Company Indemnitee may incur or suffer in connection
therewith, provided that such Company Indemnitee promptly
notifies Stonegate of any such action, claim, investigation,
or legal proceeding and
Precis, Inc.
February 1, 2002
Page 4
provides Stonegate with an opportunity to defend against or
settle such matter with counsel of its choice. The Company
shall provide reasonable assistance to Stonegate in any such
matter, at Stonegates expense. Stonegate shall promptly
reimburse the Company for any legal action or other costs of
expenses reasonably incurred by such Company Indemnitee in
connection with the investigation, contest or defense of any
such loss, claim, damage, liability or action. The foregoing
agreements shall apply to any modification of Stonegates
engagement hereunder, and shall remain in full force and
effect following the completion or termination of Stonegates
engagement hereunder and the sale of any securities, and shall
be in addition to any rights that any Company Indemnitee may
have, at common law or otherwise. If for any reason the
foregoing indemnification is judicially determined to be
unavailable, or insufficient to hold any Company Indemnitee
harmless, then Stonegate agrees to contribute to the losses,
claims, costs, damages, or liabilities for which such
indemnification is held unavailable in such proportion as is
appropriate to reflect not only the relative benefits received
by Stonegate and such Company Indemnitee, but also the
relevant fault of each such person or entity, as well as any
relevant equitable considerations.
16. COMPANY NOT RESPONSIBLE FOR CONTENT OF PUBLISHED RESEARCH BY STONEGATE.
Company recognizes that Stonegate may follow, and continue to follow,
the Company and its common stock and, from time to time, Stonegate may
issue research reports concerning the Company and its common stock. It
is understood between the Company and Stonegate that such reports are
not issued on behalf, or with the authorization, of the Company, and
Stonegate shall have sole responsibility for their content. It is also
understood that Stonegate is under no obligation to issue any research
reports on the Company, and any such research shall be conducted at the
sole discretion of Stonegate's research department.
17. GENERAL.
This Agreement represents the entire agreement of the Parties
concerning the subject matter hereof and supersedes all prior
agreements or understandings, oral or written, between the Parties with
respect to the subject matter hereof. This Agreement may not be amended
or modified except in writing and signed by the Parties, Stonegate and
the Company, and shall be governed by and construed in accordance with
the laws of the State of Texas. This Agreement is binding upon and
inures to the benefit of the parties hereto and the indemnitees set
forth in Section 7 above. This Agreement may not be assigned by either
Party without the prior written consent of the other Party, which
consent shall not be unreasonably withheld.
Delivered herewith are two identical copies of this Agreement. If the
foregoing is in accordance with your understanding of the terms of our
engagement, please confirm your agreement by signing both enclosed
copies of this Agreement and returning to Stonegate one executed copy
of this Agreement, along with the payment to be made pursuant to
Section 3 above, to the undersigned; it being understood and agreed
that the failure to deliver the foregoing to Stonegate on or before
January 30, 2002 shall render this Agreement null and void.
Very truly yours,
STONEGATE SECURITIES, INC.
Precis, Inc.
February 1, 2002
Page 5
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx, President
AGREED TO AND ACCEPTED
as of the date first set forth above:
PRECIS, INC.
By: /s/ XXXXXX X. XXXXXXX
Title: President
