MERGERS AND ACQUISITION ENGAGEMENT AGREEMENT
MERGERS AND ACQUISITION ENGAGEMENT AGREEMENT, effective as of October
1, 1998, by and between Speech Design GmbH, a German corporation (the
"Company"), and Helix Capital Services Inc ("Helix"), successor by merger to
Helix Capital Services LLC.
W I T N E S S E T H :
WHEREAS, Helix has been acting as the Company's principal financial
advisor since June 1, 1998; and
WHEREAS, the Company and Helix desire to memorialize their
understanding regarding the services to be provided by Helix to the Company and
its subsidiaries.
NOW, THEREFORE, in consideration of the mutual premises contained
herein, the parties hereby agree as follows:
1. PROPOSED SERVICES
1.1 Financial Advisory Services.
1.1.1. Helix will act as the principal financial
advisor to the Company and its subsidiaries
and affiliates, and will assist the Company
in identifying, introducing, analyzing,
structuring, negotiating, and effecting the
Transactions (as defined below), on the
terms and conditions of this Agreement set
forth below. In connection with services
relating to the Transactions, Helix will
assist and consult with the Company on
strategic, financial and operational issues
and tactical implementation of concepts
relating to the growth of the Company.
1.1.2. Xxxx Xxxxx, and other professionals of
Helix, will devote significant time, as
needed, to participate in meetings, lead
strategic planning sessions, initiate and
help in recruiting key personnel and advise
management on operational issues in growth
and/or turnaround situations.
1.1.3. As used herein, the term "Transaction" shall
mean (i) any transaction or series of
transactions (other than the purchase or
sale of assets in the ordinary course of
business) whereby, directly or indirectly,
the Company acquires, or the Company or any
of its assets or properties is acquired by,
or merges with or into another entity, or
any other similar business transaction or
arrangement between the Company or any of
its subsidiaries and affiliates and a third
party, including, without limitation, a
merger, combination or consolidation,
regardless of the accounting or tax
treatment of such transaction (each, a "M&A
Transaction"), and (ii) any
transaction or series of transactions (other
than senior debt financing, and transactions
with banking institutions arranged by the
Company's management in the ordinary course
of business) whereby, directly or
indirectly, the Company or any of its
subsidiaries or affiliates receives
additional capital or debt financing or
markets additional equity other than through
a public offering (each, a "Capital
Transaction").
1.1.4. Other Activities. Helix will undertake
certain activities on the Company's behalf,
including, if appropriate, the following:
1.1.4.1. Identifying and introducing
acquisition opportunities;
1.1.4.2. Assisting the Company in its
determination of appropriate values
to be realized in Transactions;
1.1.4.3. Advising the Company in the
negotiations as to the form and
structure of Transactions;
1.1.4.4. Advising and assisting the Company's
management in making presentations
to the Company's Board of Directors
about Transactions;
1.1.4.5. In addition to advising on any
Transactions, rendering such other
financial advisory and merchant
banking services as may from time to
time be agreed in writing between
Helix and the Company.
2. FURTHER AGREEMENT TERMS
2.1. Transaction Timing. A Transaction shall be deemed to have
occurred when Consideration Paid (as defined below) for a
Transaction has been received by the Company or the Company's
shareholders or, in the event of a merger, acquisition,
purchase by the Company, Consideration Paid has been sent to
the receiving party, provided that if Consideration Paid shall
be paid in installments, the full amount will be construed to
have been received upon receipt of the first installment
exchanged between parties to a Transaction.
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2.2. Limitation and Exclusivity.
2.2.1. The Company agrees that as of the date
hereof Helix shall be the exclusive advisor
to the Company with respect to M&A
Transactions and the Company shall not enter
into any agreement relating to an M&A
Transaction during the term of this
Agreement without the participation of
Helix; provided, however, the Company may
retain another person or entity (a "Finder")
to introduce to the Company a business for
the purpose of consummating a M&A
Transaction. The Company may reduce Helix's
fees with respect to such transaction to the
extent set forth in paragraph 2.3.3.1
hereof. If the Company consummates a M&A
Transaction during the term of this
Agreement (or for a period of one year
thereafter as described below) without
Helix's participation, the Company agrees
that it, and its successors and assigns,
shall nevertheless be obligated to provide
or cause to be provided to Helix, the
compensation provided in paragraph 2.3.3.1
hereof.
2.2.2. With respect to Capital Transactions, the
Company's obligation to retain Helix is
subordinate to existing agreements with
investment banking firms relating to private
debt or equity financing. In addition, the
Company retains the right to engage an
investment banking firm to assist it in
arranging any Capital Transaction, provided
that the Company will notify Helix in
writing 15 days prior to entering into such
an agreement with an investment banking
firm. No fee will be payable to Helix
pursuant to this Agreement with regard to
any Capital Transaction arranged by such
investment banking firm unless a fee-
sharing agreement is reached between such
firm, the Company and Helix.
2.3. Compensation. The Company will compensate Helix in the form of
a retainer, success fees and reimbursement of its reasonable
expenses as described below. Fees will be paid directly to
Helix or to another entity as designated from time to time by
Helix.
2.3.1. Retainer. The Company will pay Helix a
monthly retainer in the amount of $10,000
during the term of this Agreement.
2.3.2. Consideration Paid. For the purpose of this
Agreement, Consideration Paid is defined as:
2.3.2.1. In the event of a sale by the
Company of newly issued securities,
the amount of cash invested in the
Company.
2.3.2.2. In the event of a sale, merger or
acquisition of the Company or the
Company's assets, the cash
consideration (including amounts
paid into escrow) plus the fair
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market value of non-cash
consideration paid by the acquiror,
plus the amount of debt and other
interest bearing obligations
assumed, refinanced, retired, or
defeased by the acquiror, less any
cash obtained by the acquiror upon
successful completion of the
Transaction.
2.3.2.3. In the event of a purchase, merger
or acquisition of another entity or
another entity's assets by the
Company, the cash consideration
(including amounts paid in escrow)
plus the fair market value of
non-cash consideration paid by the
Company, plus the amount of debt and
other interest bearing obligations
assumed or refinanced by the
Company, in connection with the
Transaction.
2.3.2.4. The fair market value of any
non-cash consideration delivered in
a Transaction will be the value
agreed upon by the Company and Helix
prior to the consummation of the
Transaction.
2.3.3. Success fees:
2.3.3.1. With respect to a M&A Transaction,
the Company shall pay Helix a
success fee upon closing of each M&A
Transaction. Success fees for each
M&A Transaction shall be determined
by mutual agreement between Helix
and the Company based on market
conditions, but in no event will be
less than 2% of the Consideration
Paid; provided, however, that if
with respect to any given M&A
Transaction, a Finder introduces to
the Company a business and such
introduction results in a M&A
Transaction, any success fees due
Helix may be reduced by the amount
of the fees the Company is obligated
to pay to such Finder; provided,
further, that if all or any portion
of such fees to be paid to such
Finder are not actually paid when
due, such fees or portion thereof,
as applicable, shall be paid to
Helix at that time. Success fees
shall be due and payable if the
Company completes a M&A Transaction
during the term of this Agreement
and within one year of the
termination of this Agreement with a
party introduced to the Company by
Helix in connection with this
Agreement. This success fee will be
paid in cash, or in other negotiable
securities and financial instruments
as specifically agreed in writing by
Helix and the Company, but in any
case, if agreement is not reached,
the success fee will be paid in the
same consideration as paid or
received by the Company.
2.3.3.2. With respect to a Capital
Transaction, the Company and Helix
will reach an agreement on a success
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fee for each specific Capital
Transaction if and when the Company
instructs Helix to proceed with
arranging for such Capital
Transaction.
2.3.4. Expenses. The Company shall reimburse Helix,
upon Helix's request and regardless of
whether the Company consummates any
Transactions, for its reasonable and actual
out of pocket expenses incurred by it in
connection with this Agreement. In no event,
however, shall the Company be liable to
Helix for out-of-pocket expenses in excess
of $3,750 per month without the prior
approval of the Company.
2.4. Information and Reliance. In connection with Helix's
engagement, the Company will furnish Helix with all
information concerning the Company which Helix and the Company
deem appropriate and will provide Helix with necessary and
reasonable access to the Company's officers, directors,
accountants and counsel. It is understood that Helix will rely
on the accuracy and completeness of such information supplied
by the Company, its authorized officers and agents, or
available from generally recognized public sources, without
any independent investigation or verification thereof.
2.5. Confidentiality. During the term of this Agreement, the
Company, on the one hand, and Helix, on the other hand, will
have access to and become acquainted with advice, data,
materials, contacts or other information provided by one party
to the other, including the existence of this Agreement
(collectively, the "Confidential Information"). Each party
hereto agrees to treat the Confidential Information of the
other party confidentially and agrees not to disclose
Confidential Information of the other party other than (i) to
its employees, attorneys, affiliates, representatives and
agents to whom disclosure is necessary in order to carry out
the terms of the engagement, and (ii) if, in the reasonable
opinion of legal counsel, such disclosure is legally required.
Both parties shall take all precautions reasonably necessary
to maintain the confidentiality of the Confidential
Information of the other party, it being understood, however,
that a copy of this Agreement may be filed with the U.S.
Securities and Exchange Commission and its terms be described
in the Company's public filings.
2.5.1. Notwithstanding the foregoing, the following
shall not be Confidential Information: (a)
information generally available to the
public, or which is published or becomes
public; (b) information which a party can
show was in its possession at the time it
was disclosed and which was not acquired
directly or indirectly from the disclosing
party, and (c) information rightfully
acquired from others who did not obtain it
under a pledge of confidentiality to a party
hereto.
2.5.2. Each party hereto covenants and agrees that
is shall not misuse or misappropriate any of
the Confidential Information of the other
party. Each party acknowledges and agrees
that Confidential Information of each party
constitutes trade secrets and that the other
party will obtain no
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ownership interest therein. Upon termination
of Helix's engagement with the Company, or
whenever requested by the other party, each
of the Company and Helix shall immediately
deliver to the other all property in its
possession or under its control belonging to
the other party or containing any
Confidential Information of the other party.
2.5.3. The parties acknowledge and agree that the
restrictions contained in this Agreement, in
view of the nature of the respective
businesses of the parties hereto, are
reasonable and necessary in order to protect
their legitimate interests and that any
violation thereof would result in
irreparable injuries to the other parties.
The parties agree that in addition to any
other rights or remedies which the other
party may be entitled to at law or in
equity, the other party shall be entitled to
obtain injunctive relief from any court of
competent jurisdiction and reimbursement of
any costs and expenses, including, without
limitation, attorneys' fees and expenses,
incurred in connection with the enforcement
of this Section 2.5.
2.6. Indemnification. The Company agrees to indemnify and hold
Helix harmless from and against any and all losses, claims,
damages and liabilities (or actions including security holder
actions in respect thereof) related to or arising out of
Helix's engagement hereunder or its role in connection
herewith, and will reimburse Helix for all reasonable expenses
(including reasonable counsel fees and expenses) as they are
incurred by Helix in connection with investigating, preparing
for or defending any such action or claim, whether or not in
connection with pending or threatened litigation in which
Helix is a party and whether or not initiated by or on behalf
of the Company. The Company will not, however, be responsible
for any claims, liabilities, losses, damages or expenses that
have resulted from the willful misconduct or gross negligence
of Helix. The Company also agrees that Helix shall not have
any liability to the Company for or in connection with Helix's
engagement, except for liability for losses, claims, damages,
liabilities or expenses incurred by the Company that result
from the willful misconduct or gross negligence of Helix.
2.6.1. In the event that the foregoing indemnity is
unavailable, then the Company shall
contribute to amounts paid or payable by
Helix in respect of its losses, claims,
damages and liabilities:
2.6.1.1. in such proportion as appropriately
reflects the relative benefits
received by, the Company and Helix
in connection with the matters as to
which such losses, claims, damages
or liabilities relate, or
2.6.1.2. if (but only if) the allocation
provided for in 2.6.1.1 is for any
reason held to unenforceable, in
such proportion as is appropriate to
reflect not only the relative
benefits referred to in 2.6.1.1 but
also the relative fault of the
Company and Helix, as well as any
other relevant equitable
considerations;
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2.6.1.3. provided, however, that in no event
shall the amount to be contributed
by Helix exceed the amount of the
fee actually received by Helix. The
foregoing shall be in addition to
any rights that Helix may have at
common law or otherwise and shall
extend upon the same terms to and
inure to the benefit of Helix and
its affiliates and their respective
directors, officers, employees,
agents or controlling persons of
Helix.
2.6.1.4. The Company agrees that, without
Helix's prior written consent, it
will not settle, compromise or
consent to the entry of any judgment
in any pending or threatened claim,
action, or proceeding in respect of
which indemnification could be
sought under the indemnification
provisions of this Agreement
(whether or not Helix or any other
party is an actual or potential
party to such claim, action or
proceeding), unless such settlement,
compromise or consent includes an
unconditional release of each
indemnified party from all liability
arising out of such claim, action or
proceeding.
2.7. Limited Commitment. It is understood that Helix makes no
commitment to raise capital and/or effect any of the
Transactions. In addition, the Company has the right not to
accept any or all offers with respect to the Transactions.
2.8. Term and termination. This Agreement shall have a term
commencing on July 1, 1997 and extending through December 1,
2000, which term may be further extended by the mutual consent
of both parties. Notwithstanding the foregoing, the provisions
of paragraphs 2.3, 2.5 and 2.6 hereof will survive any
termination of the Agreement.
2.9. Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of New
York, without giving effect to conflicts of laws. Any
controversy or claim arising out of or relating to this letter
agreement, other than as provided for in Section 2.5 herein,
shall be settled by arbitration in accordance with the rules
of the American Arbitration Association, and judgment upon an
award arising in connection therewith may be entered in any
court of competent jurisdiction.
2.10. Survival. In the event that any provision herein is determined
to be enforceable under the current law at the time of
execution of this Agreement, or unenforceable under a law that
may supersede that law in place at the time of execution, all
other
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provisions and the intent of this Agreement shall survive such
findings.
2.11. Independent Contractor. The Company acknowledges and agrees
that Helix has been retained solely as a mergers and
acquisitions and financial advisor to the Company. In such
capacity, Helix shall act as an independent contractor.
2.12. Waiver of Rights. No provision of this Agreement may be
modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing by the party
against whom the same is sought to be enforced and no failure
by either party to enforce any of this rights hereunder shall,
except as aforesaid, be deemed to be a waiver of such right.
No waiver by either party hereto at any time of any breach by
the other party hereof of, or compliance with, any provision
of this Agreement to be performed by such other party shall be
deemed to be a waiver of a similar or dissimilar provision
hereof at the same or any prior or subsequent time.
2.13. Notices. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be properly given
if delivered personally, mailed prepaid registered mail,
overnight courier, or sent by telecopy (as long as the
telecopy is followed by a hard copy) addressed as follows:
In the case of Helix:
Helix Capital Services LLC
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xx. Xxxx Xxxxx
Fax: (000) 000-0000
and
Helix Capital Services LLC
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxx Xxxxx
Fax: (000) 000-0000
In the case of the Company:
Speech Design GmbH
Xxxxxxxxxxxxxxxx 0
X-00000 Xxxxxxxx
Xxxxxxx
Attn: Xxxxxxx Xxxxxxxxxxx
Fax: 000-00-00-0000-0000
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With a copy to:
XxXxxxxxx, Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
or to such other address as the parties shall from time to
time specify by notice given in accordance herewith. Any
notice so given shall be conclusively deemed to have been
given or made on the day of delivery, if delivered, if mailed
by registered mail, upon the date shown on the postal return
receipt as the date upon which the envelope containing such
notice was actually received by the addressee, if delivered by
overnight courier, two (2) days after deposit with the
overnight courier, and if by telecopy, upon transmission
thereof, as long as the telecopy is followed by delivery of a
hard copy.
2.14. Entire Agreement. This mutually signed Agreement, attached
Exhibits and any properly executed and signed Amendments,
constitute the entire agreement between the parties with
respect to the engagement of Helix contemplated hereby and
cancels and superseded all prior understandings and agreements
between the parties with respect thereto and no agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
3. Miscellaneous. Each of this Agreement. This Agreement may be executed
in any number of counterparts; each of which shall be deemed to be an
original and all of which together shall be deemed to be the same
agreement.
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IN WITNESS WHEREOF, the parties hereto have set their hand on January __, 1999.
HELIX CAPITAL SERVICES, LLC
By: /s/ Xxxx Xxxxx
---------------
Name: Xxxx Xxxxx
Title: Secretary
SPEECH DESIGN GMBH
By: /s/ Xxxxxxx Xxxxxxxxxxx
-----------------------
Name: Xxxxxxx Xxxxxxxxxxx
Title:
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