EXHIBIT 4.7
May 17, 2006
Xx. Xxxx Xxxxxxxxxx
Chief Executive Officer
Nutrition 21, Inc.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Dear Xxxx:
This letter ("Letter Agreement") represents our understanding of the basis upon
which X.X. Xxxxxxxxx, Towbin, LLC, a Delaware limited liability company
("CEUT"), and Dresdner Kleinwort Xxxxxxxxxxx Securities LLC ("DrKW") are engaged
as co-advisors to provide financial advisory and investment banking services to
Nutrition 21, Inc. (the "Company"). This letter solely relates to such financial
advisory and investment banking services and not to any potential investment in
the Company by CEUT or DrKW.
1. The Company hereby retains CEUT and DrKW to act as its co-exclusive
financial advisors with respect to a best efforts private placement
transaction of up to $10,000,000 of common stock, convertible notes, or
convertible preferred stock (the "Securities"). The Company will not
during the term of this engagement offer the Securities for sale to, or
solicit any offers to buy from, any person or persons, whether directly or
indirectly, otherwise than through CEUT and DrKW, provided, however, that
under no circumstances shall CEUT or DrKW be liable for failure to obtain
or produce the proposed financing, and provided further that the Company
is not obligated to sell any Securities.
2. As part of our engagement, CEUT and DrKW will provide the Company with the
following services:
a) Identify and contact potential investors;
b) As necessary, with management of the Company, meet with potential
investors approved by the Company and provide them with such
information furnished by the Company as may be appropriate; and
c) Assist the Company in negotiating with identified potential
investors.
3. As compensation for the services rendered by CEUT and DrKW hereunder, the
Company agrees to pay the following fees at the closing for the sale of
the Securities to investors:
a) To CEUT:
i) a cash fee equal to 5.0% of the proceeds raised from
investors, excluding the first $2.25 million of proceeds
("Excluded Proceeds") received from persons or entities who
were existing investors on April 25, 2006 and their affiliates
("Existing Investors"); such proceeds other than Excluded
Proceeds are referred to herein as "Net Proceeds", and the
Securities purchased by investors for the Net Proceeds are
referred to herein as "Net Securities"; and
ii) common stock warrants (the "Warrants"), in the form of
warrants issued to investors and with an exercise price equal
to the purchase price of the Securities, to purchase a number
of shares equal to 2.0% of the shares of common stock or
common stock equivalents included in the Net Securities but
not including common stock issuable on exercise of warrants
issued to Investors;
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b) TO DrKW:
i) a cash fee equal to 2.0% of the Net Proceeds; and
ii) Warrants to purchase a number of shares equal to 1.0% of the
shares of common stock or common stock equivalents included in
the Net Securities but not including common stock issuable on
exercise of warrants issued to Investors.
c) The common stock underlying the Warrants will be included in the
registration statement filed related to the private placement
transaction.
4. The Company also agrees to reimburse CEUT, but not DrKW, for its counsel
and out-of-pocket expenses, provided that the maximum liability of the
Company under this sentence shall in no event exceed $30,000; provided,
however, that nothing herein shall limit the indemnification provided for
in paragraph 5 below.
5. Each of CEUT and DrKW has entered into a separate letter agreement with
the Company, dated the date hereof, providing for the indemnification of
each of CEUT and DrKW by the Company in connection with the engagement
hereunder, the terms of which are incorporated into this agreement in
their entirety.
6. The Company recognizes and confirms that each of CEUT and DrKW in acting
pursuant to this engagement will be using publicly available information
and information in reports and other materials provided by others,
including, without limitation, information provided by or on behalf of the
Company and that neither CEUT or DrKW assumes responsibility for and may
rely, without independent verification, on the accuracy and completeness
of any such information. The Company agrees to furnish or cause to be
furnished to CEUT and DrKW all necessary or appropriate information for
use in its engagement and hereby warrants that any information relating to
the Company that is furnished to CEUT and DrKW on behalf of the Company,
will be true and correct in all material respects and not misleading.
7. The term of this engagement shall extend until the earlier of (i) closing
of the private placement transaction and (ii) six (6) months from the date
of this agreement, and shall automatically renew thereafter on a
month-to-month basis until terminated in writing by either party. Any such
termination shall not (except as provided herein) affect the compensation
or indemnification provisions set forth herein, all of which shall remain
in full force and effect. In addition, the Company shall be responsible
for any fees as outlined above for any offering undertaken by the Company
in lieu of the contemplated transaction described herein with any
investors introduced by CEUT or DrKW that is concluded within nine months
after the date of termination of this agreement.
8. Notwithstanding their engagement as placement agents hereunder, neither
CEUT or DrKW may, without its prior written consent, be quoted or referred
to in any document, release or communication prepared, issued or
transmitted by the Company (including any entity controlled by, or under
common control with, the Company and any director, officer, employee or
agent thereof).
9.Following completion of this engagement, each of CEUT and DrKW shall have the
right to place advertisements in financial and other newspapers and journals at
its own expense describing its services to the Company hereunder; subject to
prior written approval of the Company, which will not be unreasonably withheld.
10. This Agreement is governed by the laws of the State of New York, without
regard to such state's rules concerning conflicts of law, and will be binding
upon and inure to the benefit of the Company and CEUT and their respective
successors and assigns. The Company and CEUT and DrKW agree to waive trial by
jury in any action, proceeding or counterclaim brought by or on behalf of either
party with respect to any matter whatsoever relating to or arising out of any
actual or proposed transaction or the engagement of or performance by CEUT or
DrKW hereunder. The Company also hereby submits to the jurisdiction of the state
and federal courts located in New York County, New York in any proceeding
arising out of or relating to this Agreement, agrees not to commence any suit,
action or proceeding relating thereto except in such courts, and waives, to the
fullest extent permitted by law, the right to move to dismiss or transfer any
action brought in such court on the basis of any objection to personal
jurisdiction, venue or inconvenient forum. This agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
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11. CEUT and DrKW have been retained under this agreement as independent
contractors with no fiduciary or agency relationship to each other, to the
Company or to any other party. The advice rendered by CEUT and DrKW pursuant to
this agreement is intended solely for the benefit and use of the Board of
Directors of the Company in considering the matters to which this agreement
relates, and the Company agrees that such advice may not be relied upon by any
other person, used for any other purpose or reproduced, disseminated, quoted or
referred to at any time, in any manner or for any purpose. The Company
acknowledges and agrees that in performing its services for the Company, (i) the
obligations of each of CEUT and DrKW shall under all circumstances be deemed to
be several and not joint; (ii) CEUT and DrKW are not employees or agents of one
another, neither shall have any liability to the Company arising from the acts
or omissions of the other, and neither shall have any authority to bind the
other vis-a-vis any third party; and (iii) the rights of each of CEUT and DrKW
and other indemnified persons and the obligations of the Company under each
separate letter agreement referred to in paragraph 5 hereof shall be determined
without reference to the rights of the indemnified parties and the obligations
of the Company under the other separate letter agreement referred to in
paragraph 5 hereof.
12. The Company acknowledges that each of CEUT and DrKW and their affiliates may
have and may in the future have investment banking and other relationships with
parties other than the Company, which parties may have interests with respect to
this placement. Although CEUT and DrKW in the course of such other relationships
may acquire information about the placement, potential purchasers of the
Securities or such other parties, neither CEUT nor DrKW shall have any
obligation to disclose such information to the Company or to use such
information on behalf of the Company. Furthermore, the Company acknowledges that
CEUT and DrKW may have fiduciary or other relationships whereby CEUT and DrKW
may exercise voting power over securities of various persons, which securities
may from time to time include securities of the Company or of potential
purchasers of the Securities or others with interests in respect of the
placement. The Company acknowledges that each of CEUT and DrKW may exercise such
powers and otherwise perform its functions in connection with such fiduciary or
other relationships without regard to its relationship to the Company hereunder.
13. Please note that each of CEUT and DrKW is a full service securities firm
engaged in securities trading and brokerage activities, as well as providing
investment banking, financing and financial advisory services. In the ordinary
course of our trading, brokerage and financing activities, each of CEUT and DrKW
and their affiliates may at any time hold long or short positions, and may trade
or otherwise effect transactions, for our own account or the accounts of
customers, in debt or equity securities or senior loans of the Company.
If the foregoing correctly sets forth the understanding and agreement between
CEUT, DrKW and the Company, please so indicate in the space provided for that
purpose below, together with the enclosed duplicate original, and return one (1)
of these originals to us, whereupon this letter shall constitute a binding
agreement as of the date hereof.
Sincerely,
X.X. Xxxxxxxxx, Towbin, LLC
By: __________________
Xxxxxx Sepsis
Managing Director
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Dresdner Kleinwort Xxxxxxxxxxx Securities
LLC
By: __________________
__________________
Managing Director
By: __________________
__________________
Managing Director
Approved and agreed to as of May 17, 2006:
Nutrition 21, Inc.
By: _______________________
Xxxx Xxxxxxxxxx
Chief Executive Officer
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May 17, 2006
X.X. Xxxxxxxxx, Towbin, LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with the engagement of X.X. Xxxxxxxxx, Towbin, LLC, a Delaware
limited liability company ("CEUT"), to advise and assist Nutrition 21, Inc. (the
"Company") with the subject matter in the letter agreement dated the date hereof
between CEUT and the Company, the Company agrees that it will indemnify and hold
harmless CEUT and its affiliates and their respective directors, officers,
agents and employees and each other person controlling CEUT or any of CEUT's
affiliates (collectively, the "Indemnified Parties"), to the full extent lawful,
from and against any losses, expenses, claims or proceedings (collectively,
"losses") (i) related to or arising out of (A) oral or written information
provided by the Company, its employees or other agents, which information either
the Company or CEUT provide to any actual or potential buyers, sellers,
investors or offerees, or (B) any other action or failure to act by the Company,
its directors, officers, agents or employees or by CEUT or any Indemnified Party
at the Company's request or with the Company's consent, or (ii) otherwise
related to or arising out of the engagement or any transaction or conduct in
connection therewith and resulting primarily from the Company's negligence, bad
faith or willful misconduct, except that these clauses (i) and (ii) shall not
apply with respect to (x) any losses that are finally judicially determined to
have resulted primarily from the gross negligence or willful misconduct of such
Indemnified Party, or (y) any amount paid in settlement of claims without the
Company's consent, which consent will not be unreasonably withheld.
In the event that the foregoing indemnity is unavailable to any Indemnified
Party for any reason (other than as a consequence of a final judicial
determination of willful misconduct, bad faith or gross negligence of such
Indemnified Party), then the Company agrees to contribute to any losses related
to or arising out of the engagement or any transaction or conduct in connection
therewith as follows. With respect to such losses referred to in clause (i) of
the preceding paragraph, each of the Company and CEUT shall contribute in such
proportion as is appropriate to reflect the relative benefits received (or
anticipated to be received) by CEUT, on the one hand, and by the Company and its
security holders, on the other hand, from the actual or proposed transaction
arising in connection with the engagement. With respect to any other losses, and
for losses referred to in clause (i) of the preceding paragraph if the
allocation provided by the immediately preceding sentence is unavailable for any
reason, each of the Company and CEUT shall contribute in such proportion as is
appropriate to reflect not only the relative benefits as set forth above, but
also the relative fault of each of the Company and CEUT in connection with the
statements, omissions or other relevant equitable considerations. Benefits
received (or anticipated to be received) by the Company and its security holders
shall be deemed to be equal to the aggregate cash consideration and value of
securities or any other property payable, issuable, exchangeable or transferable
in such transaction or proposed transaction, and benefits received by CEUT shall
be deemed to be equal to the compensation paid by the Company to CEUT (whether
in cash or otherwise) in connection with the engagement (exclusive of amounts
paid for reimbursement of expenses or paid under this agreement). Relative fault
shall be determined by reference to, among other things, whether any alleged
untrue statement or omission or any other alleged conduct relates to information
provided by the Company or other conduct by the Company (or its employees or
other agents), on the one hand, or by CEUT, on the other hand. CEUT and the
Company agree that it would not be just and equitable if contribution were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to above.
Notwithstanding anything to the contrary above, in no event shall CEUT be
responsible for any amounts in excess of the amount of the compensation actually
paid by the Company to CEUT (in cash or otherwise) in connection with the
engagement (exclusive of amounts paid for reimbursement of expenses or paid
under this agreement).
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Promptly after CEUT receives notice of the commencement of any action or other
proceeding in respect of which indemnification or reimbursement may be sought
hereunder, CEUT will notify the Company thereof; but the omission so to notify
the Company shall not relieve the Company from any obligation hereunder unless,
and only to the extent that, such omission results in its forfeiture of
substantive rights or defenses. If any such action or other proceeding shall be
brought against any Indemnified Party, the Company shall, upon written notice
given reasonably promptly following CEUT's notice to the Company of such action
or proceeding, be entitled to assume the defense thereof at its expense with
counsel chosen by the Company and reasonably satisfactory to the Indemnified
Parties; provided, however, that any Indemnified Party may at its own expense
retain separate counsel to participate in such defense. Notwithstanding the
foregoing, such Indemnified Party shall have the right to employ separate
counsel at the Company's expense and to control its own defense of such action
or proceeding if, in the reasonable opinion of counsel to such Indemnified
Party, (i) there are legal defenses available to such Indemnified Party or to
other indemnified parties that are different from or additional to those
available to the Company, or (ii) a conflict or likely conflict exists between
the Company and such Indemnified Party that would make such separate
representation advisable; provided, however, that in no event shall the Company
be required to pay fees and expenses under this indemnity for more than one
counsel in any one legal action or group of related legal actions, and provided
further that the Company will pay the fees and expense of such counsel only to
the extent reasonable. The Company agrees that it will not, without the prior
written consent of CEUT, which consent shall not be unreasonably withheld or
delayed, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters that
are the subject of CEUT's engagement (whether or not any Indemnified Party is a
party thereto) unless such settlement, compromise or consent includes an
unconditional release of CEUT and each other Indemnified Party from all
liability arising or that may arise out of such claim, action or proceeding.
The Company further agrees that no Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company or
any of its affiliates, creditors or security holders for or in connection with
the engagement or any actual or proposed transactions or other conduct in
connection therewith except for losses incurred by the Company that are finally
judicially determined to have resulted primarily from the gross negligence or
willful misconduct of such Indemnified Party or have resulted from a breach of
the engagement between the Company and CEUT.
The foregoing agreement is in addition to any rights CEUT may have at common law
or otherwise and shall be binding on and inure to the benefit of any successors,
assigns, and personal representatives of the Company and each Indemnified Party.
This agreement is governed by the laws of the State of New York, without regard
to such state's rules concerning conflicts of laws. Each of the parties hereto
also hereby submits to the jurisdiction of the state and federal courts located
in New York County, New York in any proceeding arising out of or relating to
this agreement, agrees not to commence any suit, action or proceeding relating
hereto except in such courts, and waives, to the fullest extent permitted by
law, the right to move to dismiss or transfer any action brought in such court
on the basis of any objection to personal jurisdiction, venue or inconvenient
forum. Solely for purposes of enforcing this agreement, each party hereby
consents to personal jurisdiction, service of process and venue in any court in
which any claim or proceeding that is subject to this agreement is brought
against the other party. Any right to trial by jury with respect to any claim or
proceeding related to or arising out of the engagement, or any transaction or
conduct in connection therewith or this agreement is waived.
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This agreement shall remain in full force and effect notwithstanding the
completion or termination of the engagement.
Very truly yours,
Nutrition 21, Inc.
By: _______________________
Xxxx Xxxxxxxxxx
Chief Executive Officer
Agreed:
X.X. Xxxxxxxxx, Towbin, LLC
By: ____________________________
Xxxxxx Sepsis
Managing Director
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