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EXHIBIT 10.61
XXXX & XXXXXXXX CAPITAL, LLC
000 XXXXX XXXXXX, XXXXX 0000
XXX XXXX, XXX XXXX 00000
TELEPHONE (000) 000-0000 FACSIMILE (000) 000-0000
April 17, 1997
Shaman Pharmaceuticals, Inc.
Xxxx Xxxxx Xxxxxx
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xx. Xxxx X. Xxxxx
ENGAGEMENT AGREEMENT
Dear Madam or Sir:
This letter agreement (this "Agreement") confirms the
understanding between Shaman Pharmaceuticals, Inc., a Delaware corporation (with
its subsidiaries collectively, the "Company"), and Xxxx & Xxxxxxxx Capital, LLC
(the "Placement Agent"), pursuant to which the Company has retained the
Placement Agent to render certain financial advisory services to the Company, on
the terms and subject to the conditions set forth herein, in connection with the
matters referred to herein.
1. RETENTION.
(a) The Company hereby retains the Placement
Agent to act as, and the Placement Agent agrees to act as, financial adviser to
the Company on an exclusive basis in connection with an offering (the
"Transaction") by the Company structured as an offering conducted pursuant to
Regulation D ("Regulation D") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), or another private placement exemption. The
Transaction will be structured to result in proceeds to the Company (before
deducting fees of the Placement Agent) of approximately $10 million, although
the offering to investors will not establish any minimum or maximum size of the
offering. The Placement Agent shall be obligated to use its best efforts to
assist the Company in completing the Transaction but shall not be obligated to
purchase for cash consideration any of the securities offered in the
Transaction.
(b) The Company agrees to sell the securities in
the Transaction pursuant to agreements in forms mutually satisfactory to the
Company and the investors who
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purchase the securities. The documents for the transaction will be prepared by
the Placement Agent and its legal counsel. It is expected that the offering
materials to be provided by the Company for use by the Placement Agent in the
Transaction will consist of the Company's latest Annual Report on Form 10-K, all
reports and documents filed by the Company with the Securities and Exchange
Commission pursuant to Section 13, 14(a) or 15(d) of the Securities Exchange Act
of 1934, as amended, since the end of the fiscal year covered by such annual
report on Form 10-K and such other information, if any, as the Company shall
determine to provide to prospective investors.
2. COMPENSATION.
(a) As compensation for services rendered and to
be rendered hereunder by the Placement Agent, the Company agrees to pay the
Placement Agent (or cause the Placement Agent to be paid), at the time of the
closing of the Transaction, (1) an amount in cash equal to 3 percent of the
gross proceeds (on gross proceeds up to $7.5 million) from the sale of
securities to investors in the Transaction and (2) an amount of securities (the
"Fee Securities") of the same type as sold to investors in the Transaction
having a value equal to 4 percent of the gross proceeds from the sale of
securities to investors in the Transaction. For this purpose, the Fee Securities
will be valued at the same unit price paid in cash by investors in the
Transaction. The Fee Securities shall be registered in such names and
denominations as specified by the Placement Agent. The holders of the Fee
Securities will be entitled to registration rights under applicable securities
laws on the same terms as the investors in the Transaction. If the Transaction
is consummated in more than one closing, such compensation shall be paid pro
rata upon each closing.
(b) The Company agrees to pay the Placement
Agent the non- refundable amount of $25,000 upon execution of this Agreement by
the Company, as a retainer to be credited against the fees payable by the
Company pursuant to Section 2(a) if any closing of the Transaction occurs. The
Company shall pay or reimburse the Placement Agent for up to $50,000 of actual
out-of-pocket legal fees and expenses incurred by the Placement Agent in
connection with its engagement hereunder. The Company shall be responsible for
its own out-of-pocket expenses incurred in connection with the Transaction,
including, without limitation, costs and expenses of its legal counsel.
(c) All cash payments to the Placement Agent
hereunder shall be made by wire transfer of immediately available funds to such
account as shall be specified by the Placement Agent.
3. TERMINATION OR RESIGNATION. Subject to Section 8,
hereof, each of the Placement Agent and the Company shall have the right at any
time during the term of this Agreement to terminate the Placement Agent's
services under this Agreement for any reason on ten days prior written notice.
If the Company terminates the Placement Agent's services hereunder at any time,
the Placement Agent shall be entitled to receive all of the
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amounts earned and payable pursuant to Section 2 hereof during the period ending
on the effective date of such termination; provided, however, that if the
Company terminates the Placement Agent's services and, within 12 months after
such termination, proceeds with a financing which is exempt from registration
under the Securities Act on terms substantially similar to the terms proposed by
the Placement Agent with (x) any purchaser who completes a purchase of
securities in the Transaction or (y) any person introduced to the Transaction by
the Placement Agent pursuant to its engagement under this Agreement or with
respect to whom the Placement Agent assisted the Company in negotiations
regarding the Transaction during its engagement, then the Placement Agent shall
be entitled to receive compensation at the rate provided for in Section 2 hereof
as if the Placement Agent had been the financial adviser in connection
therewith.
4. INDEMNITY. As the Placement Agent shall be acting on
behalf of the Company, the Company agrees to indemnify the Placement Agent as
set forth in SCHEDULE I hereto, which is incorporated herein and made a part
hereof.
5. REPRESENTATIONS AND WARRANTIES OF COMPANY. The
Company represents and warrants to the Placement Agent that:
(a) this Agreement has been duly authorized and
validly executed and delivered by the Company and constitutes a legal, valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms; and
(b) the securities offered in the Transaction
will, when issued and paid for, be legal, valid and binding obligations of the
Company, in the case of securities other than capital stock, and duly
authorized, validly issued, fully paid and non-assessable, in the case of
capital stock.
6. FURTHER COVENANTS OF THE COMPANY. The Company agrees
as follows:
(a) The Company agrees that, except as otherwise
required by law, any reference to the Placement Agent or any affiliate of the
Placement Agent in any document, or any other release or communication to any
party outside the Company, is subject to the Placement Agent's prior approval
(which shall not be unreasonably withheld), which shall be given or subsequently
confirmed in writing. Except as otherwise required by law, if the Placement
Agent resigns its appointment or is terminated prior to the dissemination of any
such document or other release or communication, no reference shall be made
therein to the Placement Agent without the Placement Agent's prior written
permission; and
(b) In connection with the Placement Agent's
activities hereunder, the Company agrees to famish the Placement Agent with all
information concerning the Company that the Placement Agent reasonably deems
appropriate and agrees to provide the Placement Agent with appropriate access to
the Company's accountants, counsel,
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consultants and other appropriate agents and representatives. The Company
acknowledges that the Placement Agent may rely upon the completeness and
accuracy of information and data furnished to it by the Company's officers,
directors, employees, agents and representatives without independent
verification of such information and data or an appraisal of the Company's
assets.
7. CONFIDENTIALITY. Except to the extent authorized by
the Company or required by any federal or state law, rule or regulation or any
decision or order of any court or regulatory authority, the Placement Agent
agrees that it shall not disclose to any person, other than to persons who need
to know the information in connection with the Placement Agent's engagement
hereunder (subject to the last sentence of this section), any confidential
information which has not become public (other than through disclosure in
violation of this Section 7), about the Company received by the Placement Agent
from the Company or its attorneys, accountants, consultants or other agents or
representatives in connection with the services rendered hereunder. The
Placement Agent shall notify the Company of any order or directive to the
Placement Agent to disclose any such confidential information and shall
cooperate with the Company (at the Company's sole cost and expense) in resisting
such order or directive, if appropriate, in limiting the scope of the
information to be disclosed, and in maintaining the confidentiality of any
information that is disclosed. Without the consent of the Company, the Placement
Agent shall not disclose any confidential information to any employee or agent
of the Placement Agent except in connection with rendering advice to the Company
and shall use all reasonable efforts to ensure that all such confidential
information remains confidential.
8. SURVIVAL OF CERTAIN PROVISIONS. The compensation and
expense provisions contained in Section 2, the termination and resignation
provisions contained in Section 3, the indemnity and contribution agreements
contained in Section 4 and SCHEDULE I of this Agreement, the representations and
warranties of the Company contained in Section 5 of this Agreement, Section 7
and this Section 8 shall remain operative and in full force and effect
regardless of (a) any investigation made by or on behalf of the Placement Agent
or by or on behalf of any affiliate of the Placement Agent, any Indemnified
Person (as defined in SCHEDULE I hereto), or any person controlling any of them,
(b) consummation of the Transaction, or (c) any termination or expiration of
this Agreement or the Placement Agent's services under this Agreement, and this
Agreement shall be binding upon, and shall inure to the benefit of, any
successors, assigns, heirs and personal representative of the Company, the
Placement Agent, the Indemnified Persons and any such person.
9. NOTICES. Notice given pursuant to any of the
provisions of this Agreement shall be in writing and shall be mailed or
delivered (which shall include telephone line facsimile transmission) to the
Company at the address set forth on the first page of this Agreement or at the
following telephone line facsimile transmission number: (000) 000-0000, as the
case may be, and to the Placement Agent at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxxx X. Xxxxxxxx, Xx., or at the
following telephone line facsimile line transmission number: (000) 000-0000, as
the case may
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be, in either case with a copy to Law Offices of Xxxxx X Xxxxx, Penthouse Suite,
00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (telephone line facsimile
transmission number (000) 000-0000). Any such notice shall be effective upon
receipt.
10. CONSTRUCTION. This Agreement incorporates the entire
understanding of the parties and supersedes all previous agreements and shall be
governed by, and construed in accordance with, the laws of the State of New York
as applied to contracts made and performed wholly in the State of New York,
without regard to principles of conflict of laws.
11. SEVERABILITY. Any determination that any provision
of this Agreement may be, or is, unenforceable shall not affect the
enforceability of the remainder of this Agreement.
12. HEADINGS. The section headings in this Agreement
have been inserted as a matter of convenience for reference and are not an
effective part of this Agreement.
13. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
14. THIRD PARTY BENEFICIARIES. This Agreement has been
and is made solely for the benefit of the Company, the Placement Agent and the
other Indemnified Persons referred to in Section 4 hereof and their respective
successors and permitted assigns, and no other person shall acquire or have any
right under or by virtue of this Agreement.
15. SUCCESSION. This Agreement shall be binding upon and
inure to the benefit of the Company, the Placement Agent, the Indemnified
Persons and their respective successors, permitted assigns, heirs and personal
representatives. No party may assign its rights or obligations under this
Agreement without the prior written consent of the other party to this
Agreement.
16. ADVERTISEMENTS. The Company agrees that the Placement
Agent shall have the right to place advertisements after the final closing of
the Transaction in financial and other newspapers and journals at its own
expense describing its services to the Company hereunder. The Placement Agent
shall afford the Company a reasonable opportunity to review the text of any such
advertisement before it is placed and will not include in any such advertisement
any statements to which the Company reasonably objects.
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If the foregoing terms correctly set forth our agreement,
please confirm this by signing and returning to the Placement Agent the
duplicate copy of this letter. Thereupon this letter, as signed in counterpart,
shall constitute our agreement on the subject matter herein.
XXXX & XXXXXXXX CAPITAL, LLC
By: /s/ Xxxxxxxx X. Xxxx
----------------------------------
Xxxxxxxx X. Xxxx
Confirmed and Agreed to as of
the date first set forth above:
SHAMAN PHARMACEUTICALS, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
President and
Chief Executive Officer
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SCHEDULE I
This SCHEDULE I is a part of and is incorporated into that
certain letter agreement, dated April 4, 1997 (the "Agreement"), by and between
Shaman Pharmaceuticals, Inc., a Delaware corporation (with its subsidiaries
collectively, the "Company"), and Xxxx & Altschul Capital, LLC (the "Placement
Agent"). Capitalized terms used herein and not otherwise defined shall have the
respective meanings provided in the Agreement.
The Company agrees to indemnify and hold harmless the
Placement Agent, its affiliates and each person controlling the Placement Agent
(within the meaning of Section 15 of the Securities Act), and the respective
directors, officers, agents and employees of the Placement Agent, its affiliates
and each such controlling person (the Placement Agent and each such entity or
person, an "Indemnified Person") from and against any losses, claims, damages,
judgments, assessments, costs and other liabilities (collectively, the
"Liabilities"), and shall reimburse each Indemnified Person for all fees and
expenses (including the reasonable fees and expenses of one counsel for all
Indemnified Persons, except as otherwise expressly provided herein)
(collectively, the "Expenses") as they are incurred by an indemnified person in
investigating, preparing, pursuing or defending any claim, action, proceeding or
investigation and whether or not any Indemnified Person is a party
(collectively, the "Actions"), (i) caused by, or arising out of or in connection
with, any untrue statement or alleged untrue statement of a material fact
contained in any offering documents prepared by the Company (including any
amendments thereof and supplements thereto) (the "Offer Documents") or by any
omission or alleged omission to state therein a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading (other than untrue statements or alleged untrue statements
in, or omissions or alleged omissions from, information relating to an
Indemnified Person furnished in writing by or on behalf of such Indemnified
Person expressly for use in the Offer Documents) or (ii) otherwise arising out
of or in connection with advice or services rendered or to be rendered by any
Indemnified Person pursuant to the Agreement, the transactions contemplated
thereby or any Indemnified Person's actions or inactions in connection with any
such advice, services or transactions; provided, however, that, in the case of
clause (ii) only, the Company shall not be responsible for any Liabilities or
Expenses of any Indemnified Person that are determined by final judgment of a
court of competent jurisdiction to have resulted primarily from such Indemnified
Person's negligence, bad faith, or willful misconduct in connection with any of
the advice, actions, inactions or services referred to above. The Company also
agrees to reimburse each Indemnified Person for all Expenses as they are
incurred in connection with enforcing such Indemnified Person's rights under the
Agreement, which includes this SCHEDULE I.
Upon receipt by an Indemnified Person of actual notice of an
Action against such Indemnified Person with respect to which indemnity may be
sought under the Agreement, such Indemnified Person shall promptly notify the
Company in writing; provided that failure by any Indemnified Person so to notify
the Company shall not relieve the
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Company from any liability which the Company may have on account of this
indemnity or otherwise to such Indemnified Person, except to the extent the
Company shall have been materially prejudiced by such failure. The Company
shall, if requested by the Placement Agent, assume the defense of any such
Action including the employment of counsel reasonably satisfactory to the
Placement Agent. Any inactions in connection with any such advice, services or
transactions except for Liabilities (and related Expenses) of the Company that
are determined by final judgment of a court of competent jurisdiction to have
resulted primarily from such Indemnified Person's negligence, bad
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