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EXHIBIT 10.41
XXXXXX XXXX FINANCIAL GROUP - LLC
September 26, 2000
Xxxxxx X. Xxxxxxx, CEO
Amarillo Biosciences, Inc.
000 Xxxx Xxxxx Xxx.
Xxxxxxxx, Xxxxx 00000-0000
Re: Engagement Agreement
Dear Xx. Xxxxxxx:
This Engagement Agreement ("Agreement") defines the scope of services to be
provided by Xxxxxx Xxxx Financial Group, LLC ("Xxxxxx Xxxx") to Amarillo
Biosciences, Inc. its successors and/or affiliates (the "Company") as well as
the compensation to be paid by the Company to Xxxxxx Xxxx in exchange.
1.0 ENGAGEMENT.
1.1 ADVISORY SERVICES. Xxxxxx Xxxx will provide advisory services to the
Company in the areas of corporate development corporate finance and capital
placement transactions. Xxxxxx Xxxx will assign a managing director to lead its
activities and act as primary interface with the company. Xxxxxx Xxxx will also
introduce other firms, products and services to the Company as indicated during
the normal course of business and act as coordinator for all activities within
its purview. It is also understood that Xxxxxx Xxxx is acting as an advisor
only, and shall have no authority to enter into any commitments on the Company's
behalf, or to negotiate the terms of any transaction, or to hold any funds or
securities in connection with any transaction or to perform any other acts on
behalf of the Company without the Company's express written consent.
1.2 TRANSACTIONS. During the course of the engagement period, it is
anticipated that the Company will choose to execute one or more corporate
development and/or corporate finance transactions. Xxxxxx Xxxx will assist the
Company in executing these transactions on a best efforts basis, on terms
satisfactory and acceptable to the Company.
2.0 ENGAGEMENT TERMS.
2.1 PERIOD. The period of Xxxxxx Xxxx'x engagement (the "Engagement Period")
will expire upon the earlier to occur of (i) 12 months from the date we receive
an executed copy of the Agreement from the Company or (ii) the mutual written
agreement of the Company and Xxxxxx Xxxx. The Engagement Period may be extended
for additional 6-month periods under the same terms and conditions as described
herein upon mutual consent of the Company and Xxxxxx Xxxx.
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Notwithstanding the foregoing, Xxxxxx Xxxx may at its sole option, terminate its
obligation hereunder without liability if, in the reasonable opinion of Xxxxxx
Xxxx, a change has occurred in the Company's financial condition, results of
operations, properties, business prospects, or the composition of the Company's
management which, in Xxxxxx Xxxx'x sole determination has adversely affected the
Company's business.
2.2 EXCLUSIVITY. The company engages Xxxxxx Xxxx on an exclusive basis. The
company shall not be permitted to engage any other firm or person as an
investment banker or other financial intermediary for the duration of this
engagement except Transition Partners representing Atrix. Notwithstanding any
other provisions of this Agreement if at any time during the 12 month period
following the end of the Engagement Period the Company completes a securities
transaction with an investor or potential investor introduced by Xxxxxx Xxxx (or
an affiliate of any such entity), upon the closing of any such transaction
Xxxxxx Xxxx will be paid the Compensation which would be due under section 3.0
hereof.
3.0 COMPENSATION.
Throughout the course of what Xxxxxx Xxxx anticipates will be a long-term
relationship with the Company, Xxxxxx Xxxx may perform a variety of services. No
compensation shall be due for funds received from Atrix Inc. or from existing
shareholders of the Company and/or their direct affiliates, including but not
limited to conversions by existing shareholders of debt to equity. In exchange
for these services Xxxxxx Xxxx shall receive compensation as follows:
3.1 TRANSACTIONS. Any sale, merger, acquisition, joint venture, strategic
alliance, technology partnership, licensing agreement strategic purchasing,
agreement, taking private, or other similar agreements shall accrue compensation
to Xxxxxx Xxxx under a standard "Xxxxxx Formula" percentage fee of the Aggregate
Consideration calculated as follows:
5.0% for Aggregate Consideration of less than $5,000,000, plus
4.0% for Aggregate Consideration between $5,000,000 - $10,000,000, plus
3.0% for Aggregate Consideration between $10,000,001 - $15,000,000, plus
2.0% for Aggregate Consideration above $15,000,000
A minimum of $100,000 fee will be due for any transacdon falling under the
description defined above. "Aggregate Consideration" is defined as the greater
of the total amount actually payable or the value assigned to such a
transaction, whether due at Closing or deferred by the Company or any affiliate
of the Company, and shall include all cash or cash equivalents, the principal
amount of any notes, all classes of securities issued, the aggregate amounts
payable pursuant to any consulting agreements, employment agreements, agreements
not to complete and similar agreements, and the aggregate amount of value of any
bank or term loans or other debts assumed or refinanced as part of the
transaction.
3.2 CORPORATE FINANCE. All securities transactions for the benefit of the
Company will accrue compensation to Xxxxxx Xxxx according to the corresponding
categories below:
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3.2.1 SECURED DEBT FINANCING. For any traditional financing (which includes
senior debt financing, revolving lines of credit, equipment lease financing,
purchase order financing, accounts receivable, or any other type of secured debt
financing), with the exception of any extension, expansion or revision of the
Company's existing credit facilities, Xxxxxx Xxxx shall receive upon Closing: a
success fee, payable in cash, equal to one and one-half percent (1.5%) of the
gross proceeds received by the Company at each such Closing, and no warrants.
3.2.2 SUBORDINATED DEBT FINANCING. For any debt investment placed for the
Company (including mezzanine funding, notes, term loans, promissory notes,
debentures, etc.), with the exception of any extension, expansion or revision of
the Company's existing credit facilities, Xxxxxx Xxxx shall receive upon
Closing: (i) a success fee, payable in cash, equal to three and on half percent
(3.5%) of the gross proceeds received by the Company at each such Closing; plus
(ii) warrants in the entity financed, with a cashless exercise provision, equal
to three and one-half percent (3.5%) of the gross proceeds received by the
Company at each such Closing; exercisable at a strike price equal to one hundred
percent (100%) of the fair market value price of the common stock for the
Company as of the date the Company receives the funds, in whole or in part, at
any time within 7 years from issuance.
3.2.3 EQUITY INVESTMENT. For any equity investment into the Company by a
financing source contact of Xxxxxx Xxxx for which the Company receives funds
(including any common stock, preferred stock, convertible preferred stock,
convertible debentures, subordinated debt with warrants or any other securities
convertible into common stock), Xxxxxx Xxxx shall receive upon Closing: (i) a
success fee, payable in cash, equal to seven percent (7%) of the gross amount to
be disbursed to the Company each said Closing plus (ii) warrants in the entity
financed, with a cashless exercise provision, equal to six percent (6%) of the
gross amount to be disbursed to the Company at each such Closing; exercisable at
a strike price equal to 100% of the fair market value price of the common stock
for the Company as of the date the Company receives the funds, in whole or in
part at any time within 7 years from issuance.
3.3 RETAINER. The Company will, simultaneously with delivery of this
executed Agreement to Xxxxxx Xxxx, make a $25,000 non-refundable advance payment
to Xxxxxx Xxxx. Upon a successful Closing, if any, such $25,000 will be deducted
from the success fee payable to Xxxxxx Xxxx.
3.4 EXPENSES. In addition to any success fee payable to Xxxxxx Xxxx herein,
the Company will reimburse Xxxxxx Xxxx monthly for Xxxxxx Xxxx'x reasonable
direct out-of-pocket expenses incurred in connection with their services;
however all expenses in excess of $1000 shall be pre-approved.
3.5 FEE REDUCTIONS. Not withstanding any other provisions to the contrary
within this, section #3, if any of the companies listed in Exhibit "A" attached
hereto and made a part of the Agreement enter into a dual signed Letter of
Intent with the Company within 90 days of executing this Agreement the Success
Fee will be reduced by 50%; if within 120 days, 25%. After 120 days, there will
be no reduction.
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4.0 OTHER
4.1 OFFERING MATERIALS. Xxxxxx Xxxx will use no offeiing materials other
than such materials approved by the Company. The Company agrees to use its best
efforts to approve and/or prepare, as necessary, any offering materials within
15 days from the date the Company advises Xxxxxx Xxxx that it intends to execute
a financial transaction, in accordance with section 1.2 hereof.
4.2 CLOSING. Xxxxxx Xxxx will assist with the closing of any transaction or
financing (the "Closing") which will occur through an escrow established with
City National Bank or other escrow agent designated by Xxxxxx Xxxx and
reasonably acceptable to the Company.
4.3 CONFIDENTIALITY. This Agreement is for the confidential use of the
Company and Xxxxxx Xxxx only and may not be disclosed by the Company to any
person other than its attorneys, accountants and financial advisors, and,only on
a confidential basis in connection with the proposed transaction or financing,
except where disclosure is required by law or is mutually consented to in
writing by Xxxxxx Xxxx and the Company.
4.4 DISCLOSURE. During the Engagement Period and for sixty days thereafter,
the Company agrees not to issue any press releases or communications to the
public relating to the transactions or financings without Xxxxxx Xxxx'x prior
approval or unless otherwise required by law, which will not be unreasonably
withheld or delayed, and the Company agrees that such press release will state
that the transaction or financing was arranged by Xxxxxx Xxxx, unless we
mutually agree otherwise or unless otherwise required by law. The Company
further agrees that Xxxxxx Xxxx may, at its own expense, publicize its services
to the Company hereunder including, without limitation, issuing press releases,
placing advertisements and referring to the transaction or financing on Xxxxxx
Xxxx'x website.
4.5 PERFORMANCE. Notwithstanding any other provision of this Agreement,
nothing set forth herein shall be construed as a firm commitment to execute any
transaction or place the full amount of any offering or any minimum portion
thereof. Xxxxxx Xxxx cannot guarantee the successful conclusion of any
transaction, for which the Company has the right to reject, for any reason, in
its sole and absolute discretion.
4.6 INDEMNIFICATION. The Company shall indemnify and hold harmless Xxxxxx
Xxxx from and against all claims, damages, losses, and liabilities (including,
without limitation, reasonable attorneys' fees and expenses) arising out of or
based upon (i) any misstatement or omission or alleged misstatement or omission,
in any Company documentation or any other materials or information supplied or
approved by the Company which are disseminated by Xxxxxx Xxxx to third parties,
including financing sources, or (ii) any agreement between the Company and any
financing source; except that the Company shall not be liable for any claim
damage, loss or liability which is finally determined to have resulted from
Xxxxxx Xxxx'x fraud, gross negligence or willful misconduct In any action where
indemnity applies, Xxxxxx Xxxx shall be entitled to its own separate counsel at
the Company's expense. Neither termination nor completion of this Agreement
shall affect these
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indemnification provisions, which shall survive any such termination or
completion and remain operative and in full force and effect.
4.7 GOVERNING LAW/ARBITRATION. The terms of this Agreement will be governed
by and interpreted in accordance with the internal laws of the State of
California, without regard to the principles of conflict of laws. Any
controversy, dispute or claim between the parties relating to this Agreement
shall be resolved by binding arbitration in Orange County, California in
accordance with the rules of the American Arbitration Association. The parties
agree that in the event that any controversy, dispute or claim between the
parties relating to this Agreement is resolved by binding arbitration, the
prevailing party, if any, as determined by the arbitrators' award, shall be
entitled to reimbursement of all expenses incurred in the arbitration including
reasonable attorneys' fees; provided that in no, event shall the arbitrator have
the authority to award punitive damages. Judgment on the award may be entered in
any court having jurisdiction over the award.
4.8 MISCELLANEOUS. The Company undertakes and represents to Xxxxxx Xxxx that
the number of shares necessary to fulfill any offerings will be available at
Closing, that the number of shares of common stock underlying the shares will be
available upon each conversion of the shares; that the shares of common stock
underlying the warrants will be available upon exercise of the warrants; and
that the Company will comply in all respects with the terms of each purchase
agreement and registration rights agreement entered into with the purchasers of
the shares.
If the foregoing is acceptable, please sign and return to Xxxxxx Xxxx a copy of
this Agreement, which shall represent the entire agreement between us with
respect to the matters addressed herein. We look forward to working with and
remain,
Yours very truly,
Xxxxxx Xxxx Financial Group, LLC
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Xxxx X. Xxxxx
President
ACCEPTED AND AGREED TO THIS __ DAY OF ___________, 2000.
Amarillo Biosciences, Inc.
By:
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Its:
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ADDENDUM "A"TO ENGAGEMENT AGREEMENT
DATED SEPTEMBER 26, 2000
BY AND BETWEEN
XXXXXX XXXX FINANCIAL GROUP, LLC
AND
AMARILLO BIOSCIENCES, INC.
Antex
Demegen
MGI Pharma
Biopharm and Middle Eastern investors introduced through Biopharm
Crystaal/Biovail
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