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EXHIBIT 10.23
CONFIDENTIAL
April 22, 1999
Xx. Xxxxxxx XxXxxxxx
Chief Executive Officer and President
Xxxxx.xxx Networks
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000-0000
Dear Xxxxxxx:
This letter outlines the terms upon which BT Xxxx. Xxxxx ("BT Xxxx.
Xxxxx" or the "Agent") is to be engaged by [Xxxxx.xxx Networks LLC and Xxxxx.xxx
Networks] (collectively the "Company") to act as exclusive agent in connection
with the private placement (the "Offering") of one or more equity-related or
equity-linked securities (the "Securities") to be issued by the Company. It is
currently contemplated that the Offering will raise approximately $20.0 million.
Services
1. The Company, with the Agent's assistance, will prepare a Confidential
Offering Memorandum (the "Memorandum"), which will contain (a) a description of
the Company and its business, assets, prospects and management; (b) the terms
and conditions of the Offering and of the Securities; and (c) audited financial
statements and certain Company projections. If necessary, the Company will
update the Memorandum prior to completion of the Offering. The Agent shall be
entitled to rely on the accuracy and completeness of all information provided by
the Company, including information incorporated by reference in the Memorandum.
Additionally, representatives of the Company shall be available to answer
questions of, and to provide additional information to, any potential investors.
The Company represents that the Memorandum will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
2. The Agent agrees to use its reasonable best efforts to complete the private
placement of the Securities. The terms of the Offering shall be subject to
mutual agreement of the Company and each investor in the Offering. The Agent
will contact potential investors, assist in the negotiation and the structuring
of the investment in the Company, and provide related services that the Agent
deems advisable and reasonable that may facilitate the successful completion of
the Offering. The Agent will conduct all sales and solicitation efforts in a
manner consistent with your intent that the Offering be an exempt transaction
pursuant to the Securities Act of 1933, as amended (the "Act"). The Agent may
decline to participate in the Offering if it determines that the completion of
the Offering is impractical, undesirable or not advisable.
3. The Offering will be sold pursuant to a purchase agreement which shall (i)
contain customary representations and covenants on behalf of the Company, (ii)
provide for the delivery by the Company's counsel of customary opinions
addressed to the investors, may (iii) contain such other terms and conditions as
shall be agreed to by the Company and the investors, and (iv)
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contain customary representations and warranties of the purchasers of such
securities. The Company agrees that with regard to any escrow arrangements
utilized in connection with this offering, all bank accounts which contain
investor funds will be maintained at a "bank" within the meaning of Section 3(a)
(6) of the Securities Exchange Act of 1934.
In order to coordinate our efforts during the term of our engagement
hereunder, the Company hereby agrees not to initiate any discussions looking
toward any investment in the Company without first notifying BT Xxxx. Xxxxx. In
the event that the Company, its directors, management or controlling
shareholders receive any inquiry or are otherwise aware of the interest of any
third party concerning such investment during the term of the engagement, they
will promptly inform BT Xxxx. Xxxxx of the prospective investor and its
interest. Consistent with the parties' intention that the Offering will be an
exempt transaction, we currently anticipate offering the Securities to both U.S.
and non-U.S. persons and institutions. The Company confirms that accredited
investors across this range are acceptable, and acknowledge that upon completion
of the Offering there may be as many as 75 new investors in the Company.
You shall advise us of those states in which the Securities have been
qualified or exempted under the appropriate securities laws. The Company agrees
not to solicit any offerees or take any action which might jeopardize the
availability of the exemption under the Act.
Fees
4. As compensation for its services under this Agreement, the Agent will receive
a cash fee at closing equal to five (5%) of the gross proceeds raised by
Xxxxx.xxx Networks and two and one-half percent (2.5%) of the gross proceeds
raised by Xxxxx.xxx LLC. Payment of such Placement Fee shall be a condition of
closing the Offering. If more than one closing is required to complete the
Offering, then only that portion of the Placement Fee applicable to each closing
shall be payable at such closing.
In addition, whether or not the Offering is completed, the Company
agrees to reimburse the Agent, at closing or upon termination of this
engagement, for its reasonable out-of-pocket expenses, including fees and
expenses of Agent's counsel, if any, in connection with the Offering not to
exceed $10,000 without the prior consent of the Company, which shall not be
unreasonably withheld or delayed.
Indemnification
5. The Company agrees to indemnify and hold harmless the Agent, any of its
directors, officers, agents, and employees, and each person, if any, who
controls the Agent within the meaning of the Securities Act of 1933, as amended,
against any lawsuits, claims, damages or liabilities (or actions or proceedings
in respect thereof) to which the Agent or such person may become subject related
to or arising out of our engagement hereunder including, without limitation, the
use and content of the Memorandum, and will reimburse the Agent and each such
person for all legal and other expenses incurred in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding whether or not in connection with
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pending or threatened litigation in which the Agent or any such person is a
party; provided, however, that the Company will not be liable in any such case
for losses, claims, damages, liabilities or expenses that a court of competent
jurisdiction shall have found in a final judgment to have arisen primarily, in
bad faith, from the gross negligence or willful misconduct of the Agent or the
party claiming a right to indemnification. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
In case any proceeding shall be instituted involving any person in
respect to whom indemnity may be sought, such person (the "indemnified party")
shall promptly notify the Company, and the Company, upon the request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the Company
may designate in such proceedings and shall pay as incurred the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel at its own
expense, except that the Company shall pay as incurred the fees and expenses of
counsel retained by the indemnified party in the event that (i) the Company and
the indemnified party shall have mutually agreed to the retention of such
counsel or, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Company and the indemnified party and
representation of both parties by the same counsel would constitute a real or
perceived conflict of interest in the reasonable opinion of the indemnified
party, due to actual or potential differing interests between them. The Company
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Company agrees to indemnify the indemnified
party to the extent set forth in this letter. In no event shall the Company be
liable to Xxxx. Xxxxx for consequential damages or lost profits accruing to
Xxxx. Xxxxx.
In the event a claim for indemnification as described herein is
determined to be unenforceable by a final judgment of a court of competent
jurisdiction, then the Company shall contribute to the aggregate losses, claims,
damages or liabilities to which the Agent or its officers, directors, agents,
employees or controlling persons may be subject in such amount as is appropriate
to reflect the relative benefits received by each of the Company and the party
seeking contribution on the one hand and the relative faults of the Company and
the party seeking contribution on the other, as well as any relevant equitable
contributions.
The provisions of this agreement relating to indemnification and
contribution shall survive termination or modification of our engagement and
shall be binding upon any successors or assigns of the Company.
Other
6. The Company represents and warrants that no person or organization other than
BT Xxxx. Xxxxx is, as a result of any action by the Company, entitled to
compensation for services as a finder, broker, placement agent or investment
banker in connection with the Offering.
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7. The initial term of this engagement shall be four months and it shall
automatically renew on a month-to-month basis until terminated in writing by
either party. However, upon completion of the Offering, or upon mutual written
consent of both parties, the engagement shall terminate immediately. In any such
event the Company shall be responsible for the reimbursement of expenses as
provided in Section 4 incurred by Xxxx. Xxxxx through the date of termination.
8. For a period of three (3) years from closing of the Offering, the Company
shall provide BT Xxxx. Xxxxx, in a timely manner, with all written information
provided to the investors in this Offering.
9. The Company agrees that BT Xxxx. Xxxxx shall have the right, at its own cost,
to advertise its participation in the Offering in "tombstone" or other
appropriate financial advertisements in newspapers, magazines, trade periodicals
or other publications. BT Xxxx. Xxxxx agrees that such tombstone or other
advertisements shall not be published without the Company's prior approval,
provided that such approval is not unreasonably withheld or delayed.
10. The Agent agrees to keep confidential information that the Company
designates as confidential and proprietary (the "Information") and that is not
otherwise publicly available for a period of one year from the date of this
letter. The Agent agrees to exercise the same standard of care to prevent the
unauthorized use of disclosure of the Information as it exercises to prevent the
unauthorized disclosure or unauthorized use of its own proprietary information
(the "Standard of Care"). The Agent shall not be liable to the Company for any
unauthorized use or unauthorized disclosure of the Information to the extent
that the Standard of Care is exercised with respect thereto.
11. The invalidity or unenforceability of any provision of this Agreement shall
in no way offset the validity or enforceability of any other provision. This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the state of Maryland. The terms and provisions of this letter are
solely for the benefit of the Company and the Agent and the other indemnified
parties and their respective successors, assigns, heirs and personal
representatives, and no other person shall acquire or have any right by virtue
of this letter.
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Please confirm that the terms described here are in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
letter. We are pleased to be working with Xxxxx.xxx Networks on this project and
look forward to a successful outcome.
Very truly yours,
BT Alex. Brown Incorporated
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxx Xxxxxx Xxxxxx X. Xxxxxx, Xx.
Principal Principal
AGREED and CONFIRMED
Xxxxx.xxx Networks
By: /s/ Xxxxxxx XxXxxxxx
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Xxxxxxx XxXxxxxx
Chief Executive Officer and President
Date: 4/22/99
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