EXHIBIT 10.3
[LADENBURG XXXXXXXX LETTERHEAD]
February 14, 2000
Xxxx X. Xxxxxxxxx
President,Chief Executive Officer
Nanopierce Technologies, Inc.
000-00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Dear Xx. Xxxxxxxxx:
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 in connection with the proposed offering (the
"Offering") of securities (the "Securities") of Nanopierce Technologies, Inc.
(the "Company"). The gross proceeds from the Offering will be up to
$30,000,000. All references to dollars shall be to U.S. dollars. The terms of
such Offering and the Securities shall be substantially in the form set forth in
Exhibit D hereto, which exhibit is incorporated by reference herein.
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
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hereinafter set forth, the Company hereby retains LTCO, and LTCO hereby agrees
to act as the Company's exclusive placement agent and financial advisor 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. The Company shall immediately cease and cause to be terminated any
and all contacts, discussions and negotiations with third parties regarding any
Investment Proposal. The Company shall promptly notify LTCO if any such
Investment Proposal, or any inquiry or contact with any person or entity with
respect thereto, is made. The Company shall not 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
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LTCO in connection with the Offering, the Company agrees to pay LTCO the
following fees and other compensation:
(a) 1) a commitment fee payable immediately upon the initial closing
equal to 1% of the total draw down commitment amount; and
2) an additional fee payable upon the initial and each
subsequent closing equal to 7% of the amount drawn down by
the Company at each such closing.
(b) $35,000 non-accountable expense allowance ($17,500 shall be paid
upon execution of this Letter Agreement by the Company and the
balance of $17,500 upon the initial closing).
(c) 8% Warrant Coverage.
(d) 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.
(e) Should LTCO provide a qualified institutional investor acceptable
to the Company and such investor is willing to invest at
substantially the same terms outlined in the term sheet marked
Exhibit D and the Company were to terminate the Agreement after
February 8, 2000 or prior to March 7, 2002 (the "Termination
Date"), 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
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by the parties hereto in accordance with the provisions hereof, this Agreement
shall remain in effect until the Termination Date of March 7, 2002.
(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, 6, 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
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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
renegotiating, restructuring, revision or other amendment of such Offering by
and between the Company and the investors in such Offering 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
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have an irrevocable right of first refusal for a period of one year 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). 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
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its engagement hereunder, LTCO will be using and relying 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.
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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
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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.
8. Miscellaneous. This Agreement constitutes the entire understanding
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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: Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: EVP
Agreed to and accepted
as of the date first written above:
NANOPIERCE TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
Title: President & CEO
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EXHIBIT A
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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 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 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 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 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.
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 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 does not conflict with or result in a breach of (i) the
Company's certificate of 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.
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EXHIBIT A (CONTINUED)
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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,
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 X. Xxxxxxxxx
Nanopierce Technologies, Inc.
000 - 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To LTCO:
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Xxxxxxxxx: (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
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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
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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 therein, 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
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aggregate contribution of LTCO and/or any Indemnified Party be in excess of 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
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Indemnified Party, from all losses, claims, damages, liabilities or expenses
arising out of such action, claim, suit or proceeding.
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
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JURISDICTION
The Company 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 has acquired, or hereafter may acquire, any immunity from
jurisdiction of any such court or from any legal process therein, the Company
hereby waives, to the fullest extent permitted by law, such immunity.
The Company waives, and the Company 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) the Company is not personally subject to the
jurisdiction of any such court; (b) the Company 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 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 upon the Company personally) addressed to the
Company 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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