EXHIBIT 10.14
Xxxxxxxxx & Company, Inc.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
CORPORATE FINANCE
December 1, 1999
Xx. Xxxx XxXxxxx
Chief Executive Officer
XXXXXXXXXX.XXX, INC.
00 Xxxxxxxx Xxx X/X 0-X
Xxxx, XX 00000
Dear Xxxx:
1. Retention. This letter agreement (the "Agreement") confirms that
Xxxxxxxxxx.xxx, Inc. (the "Company") has engaged Jefferies & Company, Inc.
("Jefferies" or the "Placement Agent") to act as exclusive financial advisor to
and sole placement agent for the Company in connection with the structuring,
issuance and sale (the "Transaction") of up to $25 million of equity securities
(the "Securities"). During the term of the Agreement, the Company agrees that it
will not, directly or indirectly, offer any of the Securities or any similar
securities for sale to, or solicit any offer to purchase any of the same from,
or otherwise contact, approach or negotiate with respect thereto with any person
or persons, other than through Jefferies as agent. The Company recognizes and
confirms, however, that Jefferies is not making any representations regarding
the prospective purchasers and does not perform due diligence on the prospective
purchasers.
2. Information on the Company. In connection with the Placement Agent's
activities hereunder, the Company will furnish Jefferies and its counsel with
all material and information regarding the business and financial condition of
the Company (all such information so furnished being the "Information") and with
a private placement memorandum with respect to the Company and the Securities
(such memorandum, including all exhibits or supplements thereto, the "Offering
Materials"). The Company recognizes and confirms that Jefferies: (a) will use
and rely solely on the Information, the Offering Materials and on information
available from generally recognized public sources in performing the services
contemplated by this Agreement without having independently verified the same;
(b) is authorized as the Company's exclusive financial advisor and sole
placement agent to transmit to any prospective purchaser of the Securities a
copy or copies of the Offering Materials, and the forms of purchase agreements
and other legal documentation necessary or advisable (in such form as provided
by the Company) in connection with the transactions contemplated hereby; (c)
does not assume responsibility for the accuracy or completeness of the
Information, the Offering Materials or such other information; (d) will not make
an appraisal of any assets or liabilities of the Company; and (e) retains the
right to continue to perform due diligence on the Company during the course of
the engagement. Jefferies agrees to keep the Information confidential so long as
it is and remains nonpublic, unless disclosure is required by law or requested
by any
XXXXXXXXXX.XXX, INC.
December 1, 1999
Page 2
governmental, regulatory or self-regulatory agency or body and Jefferies will
not make use thereof, except in connection with its services hereunder for the
Company.
3. Use of Name. Except as provided in Section 17, the Company and Jefferies
agree that any reference to the other party's name except in any release,
communication, or other material is subject to such party's prior written
approval, which may be given or withheld in its sole discretion. If Jefferies
resigns or this Agreement is terminated prior to the dissemination of any such
release, communication or material, no reference shall be made therein to
Jefferies by the Company or the Company by Jefferies, despite any prior written
approval that may have been given therefor.
4. Use of Advice. No statements made or advice rendered by Jefferies in
connection with the services performed by Jefferies pursuant to this Agreement
will be quoted by, nor will any such statements or advice be referred to, in any
report, document, release or other communication, whether written or oral,
prepared, issued or transmitted by, the Company or any person or corporation
controlling, controlled by or under common control with, the Company or any
director, officer, employee, agent or representative of any such person, without
the prior written authorization of Jefferies, which may be given or withheld in
its sole discretion, except to the extent required by law (in which case the
appropriate party shall so advise the Placement Agent in writing prior to such
use and shall consult with and provide the Placement Agent the opportunity to
comment with respect to the form and timing of disclosure).
5. Compensation. In payment for services rendered and to be rendered
hereunder by Jefferies, the Company agrees to pay to Jefferies as follows:
(a) Upon each closing of the sale of the Securities, the Company shall
pay to Jefferies in cash a fee in an amount that is equal to 6% of the aggregate
gross proceeds from the sale of Securities issued in connection with such
closing.
(b) In addition to the cash fee described above, in the event the
aggregate gross proceeds from the Transaction equals or exceeds $5 million, the
Company shall issue to Jefferies at each closing, a warrant to purchase shares
of common stock of the Company (each, a "Warrant"). Each Warrant shall be
exercisable at any time following its issuance for a period of five years at an
exercise price equal to $2.50. Each Warrant will be evidenced by a warrant
agreement which shall contain customary anti-dilution and exercise provisions
and such other terms as the parties may agree upon, and which shall be delivered
by the Company to Jefferies at each closing. The number of shares of common
stock into which each warrant is exercisable (the "Warrant Shares") shall be
equal to the difference between
XXXXXXXXXX.XXX, INC.
December 1, 1999
Page 3
(1) the sum of
(A) 1.5% of the number of shares of fully diluted common
stock of the Company immediately after such closing,
plus
(B) 2.0% of the number of shares of fully diluted common
stock of the Company immediately after such closing
times a fraction, the numerator of which is the
aggregate gross proceeds from all closings of the
Transaction minus $5 million, and the denominator of
which is $20 million, and
(2) the aggregate number of Warrant Shares already issued and
delivered to Jefferies pursuant to this section.
(c) In addition to the compensation to be paid to Jefferies as
provided in Section 5(a) hereof, without regard to whether any Transaction is
consummated or this Agreement expires or is terminated, the Company shall
reimburse Jefferies, promptly as billed, all reasonable fees, disbursements and
out-of-pocket expenses incurred by Jefferies directly related to providing the
services rendered hereunder (including, without limitation, the fees and
disbursements of Jefferies' counsel, travel and lodging expenses, word
processing charges, messenger and duplicating services, facsimile expenses and
other customary expenditures); provided, however, that any single expense
exceeding $5,000 (other than the fees and disbursements of Jefferies' counsel)
shall be previously approved in writing by the Company which approval shall not
be unreasonably withheld.
(d) Jefferies may resign at any time and the Company may terminate
Jefferies' services at any time, each by giving prior written notice to the
other. If the Company terminates Jefferies' services for any reason, Jefferies
and its counsel shall be entitled to receive all of the amounts due pursuant to
Sections 5(a) and 5(b) hereof up to and including the effective date of such
termination, as the case may be. If Jefferies' services hereunder are terminated
by the Company or this Agreement expires, and the Company completes a
transaction similar to the Transaction contemplated herein within six months of
such termination or expiration, then the Company shall pay Jefferies
concurrently with the closing of such transaction in cash the fees as outlined
in Section 5(a).
(e) If the Company consummates the Transaction with aggregate gross
proceeds equal to or greater than $20 million and undertakes (i) a financing
within one year of the closing of the sale of the Securities, Jefferies shall be
given the right, but not the obligation, to act as lead manager or co-manager
for such an offering and to receive a percentage of the aggregate gross spread
not less than the percentage of the aggregate
XXXXXXXXXX.XXX, INC.
December 1, 1999
Page 4
gross spread provided to the lead manager from such an offering (collectively
such percentages not exceeding 100% of the aggregate gross spread and such gross
spread in such transactions will be mutually determined in good faith by the
Company and Jefferies and shall be based on the prevailing market for similar
services); or (ii) a merger with or into, a consolidation with, a sale of all or
substantially all of its assets to, or an acquisition of all or substantially
all of the assets of, another person or group of affiliated persons (other than
the Company or its subsidiaries) in a transaction or series of related
transactions (any such transaction, a "Sale"), then Jefferies shall be given the
right, but not the obligation, to act as a financial advisor to the Company for
such transaction or transactions. The retention and compensation of Jefferies
for such subsequent transactions shall be outlined in a separate agreement or
agreements not considered part of this Agreement.
(f) No fee paid or payable to Jefferies or any of its affiliates shall
be credited against any other fee paid or payable to Jefferies or any of its
affiliates.
6. Representations and Warranties.
(a) The Company represents and warrants to Jefferies that (i) this
Agreement has been duly authorized, executed and delivered by the Company; and,
assuming the due execution by the Placement Agent, constitutes a legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, and (ii) the Information and the Offering Materials
will not, when delivered nor at the closing of the sale of the Securities,
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company shall advise the Placement
Agent promptly of the occurrence of any event or any other change prior to the
closing which results in the Information or the Offering Materials containing
any untrue statement of a material fact or omitting to state any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(b) Jefferies represents, warrants and convenants to the Company that
(i) this Agreement has been duly authorized, executed and delivered and,
assuming the due execution by the Company, constitutes a valid and binding
agreement of Jefferies, enforceable against Jefferies in accordance with its
terms. (ii) Jefferies holds all licenses and permits required to perform its
obligations under this Agreement, and (iii) the payment of any fee in accordance
with this Agreement will not violate any state or federal securities law or
regulation, and (iv) Jefferies will conduct its activities under this Agreement
in compliance with all applicable state and federal securities laws.
7. Indemnity; Limitation of Liability. In partial consideration of the
services to be rendered hereunder, the Company shall indemnify Jefferies and
certain other Indemnified Persons (as defined in Schedule A hereto) in
accordance with Schedule A
XXXXXXXXXX.XXX, INC.
December 1, 1999
Page 5
attached hereto. The parties hereto agree that Jefferies and the Indemnified
Persons shall not, and shall not be deemed to, owe any fiduciary duties to the
Company under this agreement or otherwise.
8. Conditions of Placement. It is understood that the execution of this
Agreement shall not be deemed or construed as obligating the Placement Agent to
purchase any of the Securities and there is no obligation on the part of the
Placement Agent to place the Securities. The Placement Agent's services to be
performed hereunder are subject to certain conditions, including, among others,
(i) approval of Jefferies' Underwriting Assistance Committee, (ii) satisfactory
completion of due diligence on the Company by the Placement Agent, (iii) the
form and terms of the Securities being mutually acceptable to the Company, the
Placement Agent and prospective purchasers of the Securities, (iv) market
conditions, and (v) no adverse change in the condition of the Company.
9. Survival of Certain Provisions. The indemnity and contribution
agreements contained in Schedule A to this Agreement and the provisions of
Sections 2, 3, 4, 5, 6, 7, 14 and 15 of this Agreement and this Section 9 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 or any person controlling either, (b)
completion of the sale of the Securities, (c) the resignation of the Placement
Agent or any termination of the Placement Agent's services or (d) any amendment,
expiration or termination of this Agreement, and shall be binding upon, and
shall inure to the benefit of, any successors, assigns, heirs and personal
representatives of the Company, the Placement Agent, and the Indemnified
Persons.
10. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered (a) if to the
Company, at the address set forth above, and (b) if to Jefferies, at the offices
of Jefferies at 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxx, Executive Vice President and
General Counsel.
11. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
12. Assignment. This Agreement may not be assigned by either party hereto
without the prior written consent of the other, to be given in the sole
discretion of the party from whom such consent is being requested. Any attempted
assignment of this Agreement made without such consent may be void, at the
option of the non-assigning party.
13. 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
XXXXXXXXXX.XXX, INC.
December 1, 1999
Page 6
referred to in Schedule A hereof and their respective successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
Agreement.
14. Construction and Choice of Law. This Agreement, together with Schedule
A attached hereto, incorporates the entire understanding of the parties and
supersedes all previous agreements relating to the subject matter hereof should
they exist. This Agreement and any issue arising out of or relating to the
parties' relationship hereunder shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of law.
15. Jurisdiction and Venue. Each party hereto consents specifically to the
exclusive jurisdiction of the federal courts of the United States sitting in the
Southern District of New York, or if such federal court declines to exercise
jurisdiction over any action filed pursuant to this Agreement, the courts of the
State of New York sitting in the County of New York, and any court to which an
appeal may be taken in connection with any action filed pursuant to this
Agreement, for the purposes of all legal proceedings arising out of or relating
to this Agreement. In connection with the foregoing consent, each party
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the court's exercise of personal jurisdiction
over each party to this Agreement or the laying of venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. Each party further irrevocably
waives its right to a trial by jury and consents that service of process may be
effected in any manner permitted under the laws of the State of New York.
16. Headings. The section headings in this Agreement have been inserted as
a matter of convenience of reference and are not part of this Agreement.
17. Press Announcements. The Company will issue a press release announcing
that Jefferies has been engaged by the Company to act as a financial advisor for
the Company, which release shall be mutually acceptable to the parties.
Notwithstanding the provisions of Section 3, at any time after the consummation
or other public announcement of the sale of the Securities, the Placement Agent
may place an announcement in such newspapers and publications as it may choose,
stating that the Placement Agent has acted as exclusive financial advisor and
sole placement agent to the Company in connection with the Transaction.
18. Amendment. This Agreement may not be modified or amended except in a
writing duly executed by the parties hereto.
19. Term. Except as provided herein, this Agreement shall run from the date
of this letter to a date of one year thereafter, unless extended by mutual
consent of the parties (the "Term").
XXXXXXXXXX.XXX, INC.
December 1, 1999
Page 7
Please sign and return an original and one copy of this letter to the
undersigned to indicate your acceptance of the terms set forth herein, whereupon
this letter and your acceptance shall constitute a binding agreement between the
Company and Jefferies as of the date first above written.
Sincerely,
JEFFERIES & COMPANY, INC.
By /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
Managing Director
Accepted and Agreed:
XXXXXXXXXX.XXX, INC.
By /s/ Xxxx XxXxxxx
------------------------------------
Xxxx XxXxxxx
Chief Executive Officer
SCHEDULE A
December 1, 1999
JEFFERIES & COMPANY, INC.
00000 Xxxxx Xxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Ladies and Gentlemen:
This letter agreement is entered into pursuant to, and in order to induce
Jefferies & Company, Inc. ("Jefferies" or the "Placement Agent") to enter into,
the engagement letter, dated June 26, 2000 (as amended from time to time in
accordance with the terms thereof, the "Agreement"), between Xxxxxxxxxx.xxx,
Inc. (the "Company") and Jefferies. Unless otherwise noted, all capitalized
terms used herein shall have the meanings set forth in the Agreement.
Since Jefferies will be acting on behalf of the Company in connection with
the transactions contemplated by the Agreement, and as part of the consideration
for the agreement of Jefferies to furnish its services pursuant to such
Agreement, the Company agrees to indemnify and hold harmless Jefferies and its
affiliates and their respective officers, directors, partners, counsel,
employees and agents, and any other persons controlling Jefferies or any of its
affiliates within the meaning of either Section 15 of the Securities Act of 1933
or Section 20 of the Securities Exchange Act of 1934, and the respective agents,
employees, officers, directors, partners, counsel and shareholders of such
persons (Jefferies and each such other person being referred to as an
"Indemnified Person"), to the fullest extent lawful, from and against all
claims, liabilities, losses, damages and expenses (or actions in respect
thereof), as incurred, related to or arising out of or in connection with (i)
actions taken or omitted to be taken by the Company, its affiliates, employees
or agents, (ii) actions taken or omitted to be taken by any Indemnified Person
(including acts or omissions constituting ordinary negligence) pursuant to the
terms of, or in connection with services rendered pursuant to, the Agreement or
any Transaction or proposed transaction contemplated thereby or any Indemnified
Person's role in connection therewith, provided, however, that the Company shall
not be responsible for any losses, claims, damages, liabilities or expenses of
any Indemnified Person to the extent, and only to the extent, that it is finally
judicially determined that they result solely from actions taken or omitted to
be taken by such Indemnified Person in bad faith or to be due solely to such
Indemnified Person's gross negligence, and/or (iii) any untrue statement or
alleged untrue statement of a material fact contained in any of the Information,
the Offering Materials, or in any amendment or supplement thereto, or arising
out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
JEFFERIES & COMPANY, INC.
December 1, 1999
Page 2
Any Indemnified Person shall have the right to retain separate counsel, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Person, unless (i) the employment of such counsel has been
specifically authorized in writing by the Company, (ii) the Company has failed
to assume the defense and employ counsel satisfactory to the Indemnified Person
as required in this Schedule A, or (iii) the named parties to any such action
(including any impleaded parties) include both (a) the Indemnified Person and
the Company, and (b) the Company and the Indemnified Person which shall have
been advised by counsel that there may be one or more legal defenses available
to such Indemnified Person which are different from or additional to those
available to the Company (in which case the Company shall not have the right to
assume the defense of such action on behalf of the Indemnified Person).
The Company shall not settle or compromise or consent to the entry of any
judgment in or otherwise seek to terminate any pending or threatened action,
claim, suit or proceeding in which any Indemnified Person is or could be a party
and as to which indemnification or contribution could have been sought by such
Indemnified Person hereunder (whether or not such Indemnified Person is a party
thereto), unless such Indemnified Person has given its prior written consent or
the settlement, compromise, consent or termination includes an express
unconditional release of such Indemnified Person, satisfactory in form and
substance to such Indemnified Person, from all losses, claims, damages or
liabilities arising out of such action, claim, suit or proceeding.
If for any reason (other than the bad faith or gross negligence of an
Indemnified Person as provided above) the foregoing indemnity is unavailable to
an Indemnified Person or insufficient to hold an Indemnified Person harmless,
then the Company, to the fullest extent permitted by law, shall contribute to
the amount paid or payable by such Indemnified Person as a result of such
claims, liabilities, losses, damages or expenses in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by Jefferies on the other, from the Transaction or proposed transaction
under the Agreement or, if allocation on that basis is not permitted under
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits received by the Company on the one hand and Jefferies on the
other, but also the relative fault of the Company and Jefferies, as well as any
relevant equitable considerations. Notwithstanding the provisions hereof, the
aggregate contribution of all Indemnified Persons to all claims, liabilities,
losses, damages and expenses shall not exceed the amount of fees actually
received by Jefferies pursuant to the Agreement with respect to the Transaction.
It is hereby further agreed that the relative benefits to the Company on the one
hand and Jefferies on the other with respect to any Transaction or proposed
transaction contemplated by the Agreement shall be deemed to be in the same
proportion as (i) the total value of the Transaction bears to (ii) the fees paid
to Jefferies with respect to such Transaction. The relative fault of the Company
on the one hand and Jefferies on the other with respect to the Transaction shall
be determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or the
JEFFERIES & COMPANY, INC.
December 1, 1999
Page 3
omission or alleged omission to state a material fact relates to information
supplied by the Company or by Jefferies and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
No Indemnified Person shall have any liability to the Company or any
officer, director, employee or affiliate thereof in connection with the services
rendered pursuant to the Agreement except for any liability for claims,
liabilities, losses or damages finally judicially determined to have resulted
solely from actions taken or omitted to be taken by such Indemnified Person in
bad faith or solely as a result of such Indemnified Person's gross negligence.
In addition, the Company agrees to reimburse the Indemnified Persons for
all reasonable expenses (including, without limitation, fees and expenses of
counsel) as they are incurred in connection with investigating, preparing,
defending or settling any such action or claim, whether or not in connection
with litigation in which any Indemnified Person is a named party. If any of
Jefferies' personnel appears as witnesses, are deposed or are otherwise involved
in the defense of any action against Jefferies, the Company or the Company
officers or directors, the Company will pay Jefferies (i) with respect to each
day that one of Jefferies' professional personnel appears as a witness or is
deposed and/or (ii) with respect to each day that one of Jefferies' professional
personnel is involved in the preparation therefor, (a) a fee of $2,000 per day
for each such person with respect to each appearance as a witness or for a
deposition and (b) at a rate of $200 per hour with respect to each hour of
preparation for any such appearance and the Company will reimburse Jefferies for
all reasonable expenses incurred by Jefferies by reason of any of its personnel
being involved in any such action.
The indemnity, contribution and expense reimbursement obligations set forth
herein (i) shall be in addition to any liability the Company may have to any
Indemnified Person at common law or otherwise, (ii) shall survive the expiration
of the Term, (iii) shall apply to any modification of Jefferies' engagement and
shall remain in full force and effect following the completion or termination of
the Agreement, (iv) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of Jefferies or any other
Indemnified Person and (v) shall be binding on any successor or assign of the
Company and successors or assigns to all or substantially all of the Company's
business and assets.
JEFFERIES & COMPANY, INC.
December 1, 1999
Page 4
Please sign and return an original and one copy of this letter to the
undersigned to indicate your acceptance of the terms set forth herein, whereupon
this letter and your acceptance shall constitute a binding agreement between the
Company and Jefferies as of the date of the Agreement.
Sincerely,
XXXXXXXXXX.XXX, INC.
By /s/ Xxxx XxXxxxx
------------------------------------
Xxxx XxXxxxx
Chief Executive Officer
Accepted and Agreed:
JEFFERIES & COMPANY, INC.
By /s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Managing Director
