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Alloy Online, Inc. has omitted from this Exhibit 10.27 portions of the Agreement
for which Alloy Online, Inc. has requested confidential treatment from the
Securities and Exchange Commission. The portions of the Agreement for which
confidential treatment has been requested have been filed separately with the
Securities and Exchange Commission. Such omitted portions have been marked with
an asterisk.
EXHIBIT 10.27
LADENBURG XXXXXXXX
Xxxxx 6, 1998
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
ALLOY Designs, Inc.
000 X. 00xx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Gentlemen:
We are writing this letter to confirm our agreement ("Agreement") that
Ladenburg Xxxxxxxx & Co. Inc. ("Ladenburg") has been engaged by ALLOY Designs,
Inc. (the "Company") as its exclusive agent in connection with the proposed
financing as represented in the attached term sheet (the "Term Sheet") of
approximately $[ ]* million of debt of the Company (the "Financing").
This Agreement shall become effective upon the execution hereof by both the
Company and Ladenburg, and the term of this Agreement and the appointment
provided for herein shall end sixty (60) days after the date of such execution
by the Company (the "Term") subject to the provisions described in Section VII
below.
I. PERFORMANCE OF SERVICES
Xxxxxxxxx'x services shall be to act as agent in connection with the
Financing and assist in the negotiation and securing of the Financing.
II. COMPENSATION FOR SERVICES
A. If one or more Financings are consummated during the Term or within twelve
months after the end of the Term with an investor or lender introduced to
the Company by Ladenburg ("Covered Person") during the Term, the Company
will pay or cause to be paid to Ladenburg a placement fee (the "Placement
Fee") equal to [ ]*% of the Financing payable upon the closing of each
Financing. In no case shall the aggregate of the Placement Fees exceed
$[ ]*. Prior to contacting any prospective investor or lender, Ladenburg
shall identify such prospects to the Company.
B. Subject to the closing of the Financing, the Company agrees to reimburse
Ladenburg for all reasonable out-of-pocket expenses incurred in carrying
out the terms of this Agreement, including travel, telephone, facsimile,
courier and computer time charges, attorneys' fees and disbursements. Such
out-of-pocket expenses are limited to an
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aggregate of $[ ]* without prior approval from the Company. In the event
that a Financing is not consummated, the Company agrees to reimburse
Ladenburg for [ ]*% of all reasonable out-of-pocket expenses incurred in
carrying out the terms of this Agreement, including travel, telephone,
facsimile, courier and computer time charges, attorneys' fees and
disbursements.
C. If the Company decides to commence an initial public offering of its common
stock within 36 months of the date of the closing of the Financing, the
Company will attempt to negotiate a mutually acceptable agreement with
Ladenburg whereby Ladenburg will act as a manager for such initial public
offering.
The provisions of this section II shall survive the termination and
expiration of this Agreement.
III. INDEMNIFICATION
The Company and Ladenburg hereby agree to the terms and conditions of the
Indemnification Agreement attached hereto as Appendix A with the same force and
effect as if such terms and conditions were set forth at length herein.
IV. COORDINATION OF EFFORTS
In order to coordinate the efforts of both Ladenburg and the Company, and
to maximize the possibility of consummating a Financing during the term of this
Agreement, Ladenburg shall have the sole and exclusive authority to initiate and
conduct discussions with Covered Persons. In the event that the Company, its
directors, officers, employees or shareholders receive any inquiries from or
conduct any discussions with Covered Persons concerning the availability of the
Financing, such inquiries and discussions shall be promptly referred to
Ladenburg.
V. DISCLOSURE
All descriptive memoranda have been provided to Ladenburg by the Company.
All information provided by the Company to Ladenburg will be considered as
confidential information and shall be maintained as such by Ladenburg, except as
required by law until the same becomes known to the public without release
thereof by Ladenburg.
The Company agrees to provide to Ladenburg, among other things, all
reasonable information requested or required by Ladenburg or a Covered Person,
including, but not limited to, information concerning historical and projected
financial results and possible and known litigation and other contingent
liabilities of the Company. The Company also agrees to make available to
Ladenburg such representatives of the Company, including, among others,
directors, officers, employees, outside counsel and independent certified public
accountants, as Ladenburg may reasonably request. The Company will promptly
advise Ladenburg of any material changes in its business or finances. The
Company represents that all information made available to Ladenburg by the
Company, including, without limiting the generality of the foregoing, any
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placement memorandum or other information materials prepared by or approved by
the Company, will be complete and correct in all material respects and will not
contain any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statement therein not misleading in light of
the circumstances under which such statements are made. In rendering its
services hereunder, Ladenburg will be using and relying primarily on such
information without independent verification thereof or independent appraisal of
any of the Company's assets. Ladenburg does not assume responsibility for the
accuracy or completeness of the information. Ladenburg will not initiate contact
with or provide information to prospective purchasers without prior approval
from the Company.
Prior to the closing of an IPO by the Company and subject to the Company's
prior review and approval, the Company authorizes Ladenburg to make public
notice without identifying the Company by name or reference in the form of a
"tombstone," at Ladenburg's expense, of any Financing concluded under this
Agreement. After the closing of an IPO, the Company authorizes Ladenburg to make
public notice in the form of a "tombstone," at Ladenburg's expense, of any
Financing concluded under this Agreement.
VI. TERMINATION
This engagement may be terminated by the Company or by Ladenburg at any
time after 60 days with or without cause upon written notice to that effect to
the other party, but no such termination shall affect Xxxxxxxxx'x right to
compensation earned on or prior to such termination (including, without
limitation, the Placement Fee described in section IIA hereof) and, subject to
section IIB, Ladenburg shall be entitled to reimbursement of all reasonable
expenses not previously reimbursed.
VII. ENTIRE AGREEMENT, ETC.
This Agreement sets forth the entire understanding of the parties relating
to the subject matter hereof and supersedes and cancels any prior
communications, understandings and agreements between the parties. This
Agreement cannot be changed, nor can any of its provisions be waived, except by
written agreement signed by all parties hereto. This Agreement shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company and Ladenburg. In the event of a dispute between
Ladenburg and the Company with respect to this Agreement, the prevailing party
shall be entitled to recover its cost of reasonable attorney and court fees. A
telecopy of a signed original of this Agreement shall be sufficient to bind the
parties whose signatures appear hereon.
VIII. GOVERNING LAWS AND JURISDICTION
This Agreement shall be governed by and construed to be in accordance with
the laws of the State of New York applicable to contracts made and to be
performed solely within New York State (without applying New York's choice of
laws or conflicts of law provisions). Any dispute arising out of this Agreement
shall be adjudicated in the courts of the State of New York or in the
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federal courts sitting in New York. The parties each agree that service may be
made upon each of them by registered or certified mail (return receipt
requested).
IX. ACCEPTANCE
Please confirm that the foregoing is in accordance with your understanding
by signing on behalf of the Company and returning an executed copy of this
Agreement whereupon after execution by Ladenburg it shall become a binding
agreement between the Company and Ladenburg.
Very truly yours,
LADENBURG XXXXXXXX & CO. INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx
Vice Chairman
Accepted and agreed to:
ALLOY DESIGNS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
(Signature)
Date: April 6, 1998
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APPENDIX A
INDEMNIFICATION AGREEMENT
Appendix A to Letter Engagement Agreement (the "Agreement"), dated
April 6,1998 by and between ALLOY Designs, Inc. (the "Company") and Ladenburg
Xxxxxxxx & Co. Inc. ("Ladenburg").
The Company agrees to indemnify and hold Ladenburg and its affiliates,
control persons, directors, officers, employees and agents (each an "Indemnified
Person") harmless from and against all losses, claims, damages, liabilities,
costs or expenses, including those resulting from any threatened or pending
investigation, action, proceeding or dispute whether or not Ladenburg or any
such other Indemnified Person is a party to such investigation, action,
proceeding or dispute, arising out of Ladenburg's entering into or performing
services under this Agreement, or arising out of any matter referred to in this
Agreement. This indemnity shall also include Ladenburg's and/or any such other
Indemnified Person's reasonable attorneys' and accountants' fees and
out-of-pocket expenses incurred in, and the cost of Ladenburg's personnel whose
time is spent in connection with, such investigations, actions, proceedings or
disputes which fees, expenses and costs shall be periodically reimbursed to
Ladenburg and/or to any such other Indemnified Person by the Company as they are
incurred; provided, however, that the indemnity herein set forth shall not apply
where a court of competent jurisdiction has made a final determination that
Ladenburg acted in a grossly negligent manner or engaged in willful misconduct
in the performance of its services hereunder which gave rise to the loss, claim,
damage, liability, cost or expense sought to be recovered hereunder (but pending
any such final determination the indemnification and reimbursement provisions
hereinabove set forth shall apply and the Company shall perform its obligations
hereunder to reimburse Ladenburg and/or each such other Indemnified Person
periodically for its, his or their fees, expenses and costs as they are
incurred). The Company also agrees that neither Ladenburg nor any other
Indemnified Person shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company for or in connection with any act
or omission to act by Ladenburg as a result of its engagement under this
Agreement except for any such liability for losses, claims, damages, liabilities
or expenses incurred by the Company that is found in a final determination by a
court of competent jurisdiction to have resulted from Ladenburg's gross
negligence or willful misconduct.
If for any reason, the foregoing indemnification is unavailable to
Ladenburg or any such other Indemnified Person or insufficient to hold it
harmless, then the Company shall contribute to the amount paid or payable by
Ladenburg or any such other Indemnified Person as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the Company and its shareholders on the one hand
and Ladenburg or any such other Indemnified Person on the other hand, but also
the relative fault of the Company and Ladenburg or any such other Indemnified
Person, as well as any relevant equitable considerations; provided that in no
event will the aggregate contribution by Ladenburg and any such other
Indemnified Person hereunder exceed the amount of fees actually received by
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Ladenburg pursuant to this Agreement. The reimbursement, indemnity and
contribution obligations of the Company hereinabove set forth shall be in
addition to any liability which the Company may otherwise have and these
obligations and the other provisions hereinabove set forth shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, Ladenburg and any other Indemnified Person.
The terms and conditions hereinabove set forth in this Appendix A shall
survive the termination and expiration of this Agreement and shall continue
indefinitely thereafter.
LADENBURG XXXXXXXX & CO. INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
ALLOY DESIGNS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Date: April 6, 1998
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