Exhibit 1.4
THE CITADEL
X.X. XXXXXXX & CO. 0000 XXXXXX XXXXX XXXXX XXXXX
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INVESTMENT BANKING XXXXXX, XX 00000
000-000-0000
MEMBER NASD FAX 000-000-0000
ENGAGEMENT AGREEMENT
BY AND BETWEEN
X. X. XXXXXXX & CO. AND SARDY HOUSE LLC
This Engagement Agreement (also referred herein as the "Engagement" or the
"Agreement") confirms our mutual understanding regarding the retention of X.X.
XXXXXXX & Co (also referred to as the "Advisor") and SARDY HOUSE LLC (also
referred to as the "Company"), and the Company's sole member, North and South
Aspen, L.L.C. (also referred to herein as the "Holder"), as their exclusive
financial advisor and underwriter with respect to the proposed Transaction. As
used in this Engagement Agreement the term "Transaction" shall refer to the
public, registered sale, on a best efforts all or none minimum, best efforts
maximum basis, of the Company's newly issued membership interests to investors
(the "Offering").
As the Company's financial advisor and underwriter, we will act on behalf of the
Company and will provide independent advice and counsel on issues of a financial
nature pertaining to this Engagement. Advisor will report directly to Xxxxxx
Xxxxxx and Xxxxx Xxxxxx as the authorized representatives of the Company's
Manager and Member. Advisor will keep same apprised of our activities as
requested to our progress on a going forward basis.
In carrying out this assignment, Advisor recognizes that sales of membership
interests pursuant to the Offering may be solicited by the Company or by the
Holder. The Company and Holder recognize that any such solicitation needs to be
in strict compliance with all applicable federal and state securities laws and
regulations. The Company, Holder and Advisor will coordinate their efforts and
work closely with each other and the Company's in-house staff to assist the
Company and Holder in their overall program to achieve various corporate
objectives and remain in compliance with all applicable federal and state
securities laws and regulations.
1. The financial and investment banking services and activities Advisor
anticipates performing over the entire course of this Engagement for the
Company can be generally described as follows:
PREPARATION OF THE OFFERING MATERIALS. Advisor will work with the Company
and its counsel to prepare all necessary documentation for the Offering.
This includes, but is not limited to, the preliminary prospects, final
prospectus, subscription agreements
and any other marketing materials to be used by the Company in the
marketing of membership interests in the Company. As part of this
process, Advisor will perform due diligence on the Company and its
business, management and financial situation. The Company agrees to
cooperate fully, and cause its management, employees and agents to
cooperate fully with Advisor in the due diligence process.
MARKETING OF OFFERING. The Company intends to market the Offering through
its in-house staff. All potential investors in the Offering will be
referred by the Company's in-house staff to Advisor and Advisor will
respond to such potential investors' questions with regards to the
Offering. In addition, Advisor will require that any potential investor
submit information pursuant to a subscription agreement, which
information will be reviewed by Advisor to determine whether an
investment in the Offering is suitable for such potential investor. The
determination as to suitability will be at the sole discretion of
Advisor.
OTHER SERVICES. Advisor will also serve as an advisor to the Company in
connection with the Offering and in achieving its corporate objectives.
Advisor will perform all tasks necessary for the Company to complete a
sale of membership interests to investors, including reviewing all
closing and marketing materials prepared by the Company and its counsel,
establishing any required escrow accounts, securing approval of the
underwriting and closing arrangements by the NASD, and managing the
closing process.
The possible services and tasks listed above are reflective of the
overall commitment Advisor is prepared to make to assist the Company
through completion of the Offering. The above list of services and tasks
is representative of the type of work that will have to be done by
Advisor, in order for the Company to achieve its business objectives. It
is based on Advisor's present understanding of the Company's
circumstances, requirements and goals and, as such, is subject to
modification and adjustment in the event that those factors change. Many
of the activities outlined above are interrelated, subject to iteration
and continuing in nature, to be sure. We believe Advisor possesses such
expertise and is prepared to dedicate the time and resources required to
do the job properly and professionally and agree to use our "best
efforts" to perform our services hereunder. Of course, no assurance can
be given to the Company or to the Holder that the Offering will be
successful, notwithstanding our best efforts.
2. In consideration of Advisor's services, the Holder agrees to pay the
Advisor the following compensation:
(a) A retainer of $7,500 commencing May 1, 2003 and each month
thereafter through October 1, 2003, for a total of six (6)
monthly payments; and
(b) Upon the closing of a sale of a membership interest(s) pursuant
to the Offering, Advisor shall be paid in certified funds, as
underwriter of the Company, a cash success fee equal to 3.25% of
the total Transaction value
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(defined in paragraph 3). The retainer described in paragraph
2(a) will not reduce the cash success fee due to Advisor upon
closing.
3. It is the intent of the parties that any fee payable to Advisor pursuant
to paragraph 2(b) above will be computed based upon the total
consideration regardless of how allocated or the form of consideration.
Therefore, the "total Transaction value" referred to above shall include
(i) any and all deferred installments of the transaction price, (ii) any
portion of the transaction price held in escrow at closing.
4. The Company and the Holder agree that Advisor will act as the exclusive
Advisor and underwriter to the Company, with regard to all matters
related to this Engagement Agreement from the date of acceptance of this
Engagement Agreement until such time as all membership interests being
sold pursuant to the Offering are sold or the Company cancels the
Offering.
5. It is the Advisor's intent that the Offering contemplated in this
Engagement Agreement be pursued on a negotiated basis and the Advisor
makes no representations or guarantees that the Offering will be
completed. The Advisor is not obligated to purchase any portion of the
Offering in connection with this Engagement.
6. The Advisor agrees that any corporate information provided by the
Company, in the course of this Engagement, is the property of the Company
and not to be considered proprietary material of the Advisor. However,
all material prepared by the Advisor and included in any prospectus or
related documents is proprietary and may not be copied or duplicated by
the Company and/or used for any purpose unrelated to the completion of
this Offering.
7. The Company and the Holder agree to reimburse Advisor within 14 days from
receipt of a statement from the Advisor for all out-of-pocket expenses
incurred by the Advisor (other than the fees and expenses of Advisor's
counsel and the NASD fees related to Advisor's underwriter approval) in
connection with the matters contemplated by this Engagement in excess of
$500 each month. Advisor will not incur single expenses in excess of $250
without the prior approval of the Company. The aggregate expenses will
not exceed $25,000.
8. Each party agrees to indemnify and hold the other harmless and each of
its officers, directors, employees, representatives and agents harmless
to the fullest extent permitted by law from and against any and all
losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, cost, expenses and disbursements (including without
limitation fees and disbursements of counsel) related to or arising out
of any untrue statement or alleged untrue statement of a material fact
made by the party or any omission or alleged omission of the party to
state a material fact; and to reimburse the other party for all
reasonable expenses as may be incurred by it in connection with
investigating, preparing or defending any such action or claim, whether
or not in connection with pending or threatened litigation or
administrative proceedings. This
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provision of this paragraph 8 shall survive the expiration or termination
of this Engagement including a termination resulting from a closing of
the Transaction.
9. In connection with Advisor's services, the Company will furnish (or cause
to be furnished) to the Advisor such information and data as is within
the Company's possession or control relating to the Company as the
Advisor reasonably deems necessary and reasonably requests in order to
complete its assignments for the Company. Advisor will keep and maintain
all non-public information which it receives or develops concerning the
Company confidential and will disclose such information only as is
required in its reasonable judgment by this assignment or is required by
law. The Company recognizes and confirms that in the performance of its
services hereunder: (i) Advisor may rely upon information provided by the
Company without independent verification; (ii) Advisor shall incur no
liability as a result of such reliance; and (iii) Advisor does not assume
responsibility for the accuracy or completeness of such information,
whether or not it makes an independent verification.
10. No party identified under Paragraph 8, may assign its rights, duties or
responsibilities hereunder without the prior consent of the other party,
which shall not be unreasonably withheld. This Engagement shall inure to
the benefit of the respective successors and assigns of the parties
hereto and of the indemnified parties hereunder and their successors and
assigns and representatives, and the obligations and liabilities assumed
in this Engagement by the parties hereto shall be binding upon their
respective successors and assigns.
11. Advisor may publish, at its own expense, an advertisement announcing the
completion of the Offering and Advisor's role therein.
12. By signing this Engagement Agreement, each signatory hereby acknowledges
the fact that he/she is legally empowered to sign this Engagement
Agreement on behalf of the party identified with his/her signature.
13. The parties agree and covenant that they will execute such other and
further instruments and documents as are or may become necessary or
advisable to effectuate the terms of this Agreement, including without
limitation, a direct placement agreement or underwriting agreement with
customary warranties and representations.
14. This Agreement may not be amended or modified except in writing and shall
be governed and construed in accordance with the laws of the State of
Colorado without regard to the principles of the conflicts of law. The
indemnity and reimbursement provisions contained herein shall remain in
full force and effect in the event of termination. The invalidity,
legality or enforceability of any provision of this agreement shall in no
way affect the validity, legality or enforceability of any other
provision. If any provision is held to be unenforceable as a matter of
law, the other provisions shall not be affected thereby and shall remain
in full force and effect. This Engagement Agreement incorporates the
entire understanding of the parties with
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respect to the subject matter hereof and supersedes all previous
agreements should they exist with regard to the subject matter of this
Engagement Agreement.
15. Signatures on this Agreement may be communicated by facsimile
transmission and shall be binding upon the parties transmitting the same
by facsimile transmission. This Agreement may be executed in
counterparts, all of which taken together, shall constitute a single
agreement.
We are extremely pleased to propose this Engagement. If the foregoing correctly
sets forth the agreed upon terms of Engagement, please sign in the appropriate
space below and return to X. X. Xxxxxxx & Company at 0000 Xxxxxx Xxxxx Xxxxx
Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000.
Sincerely,
Submitted this May 12, 2003
Amended this October 15, 0000
X.X. Xxxxxxx & Company
Accepted this October 15, 2003
/s/ XXXXX X. XXXXXXX COMPANY:
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Xxxxx X. Xxxxxxx Sardy House, LLC
President
By: Block 66, LLC, its Manager
By: /s/ Xxxxxx Xxxxxx
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HOLDER:
North and South Aspen, LLC
By: /s/ Xxxxxx Xxxxxx
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