Exhibit 10.02
PERSONAL AND CONFIDENTIAL December 28, 1999
Xx. Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
xxxxxxx.xxx, inc.
One Arizona Center
000 Xxxx Xxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Dear Xxxx:
This agreement ("Agreement") sets forth the terms of the engagement by
xxxxxxx.xxx, inc. (the "Company") of Xxxxxxxx, Billings, Xxxxxx & Co., Inc.
("FBR" or the "Advisor"), pursuant to which FBR shall serve as the financial
advisor to the Company in connection with an analysis of the Company's strategic
opportunities, including:
(a) The private sale of a minority equity interest in the Company to
Hispanic Broadcasting Corporation (the "HBC Equity Transaction");
(b) The private sale of a minority or majority equity interest in the
Company to any party other than Hispanic Broadcasting Corporation (an "Equity
Transaction");
(c) To the extent requested by the Company in writing, the potential
purchase of all or substantially all of the assets and/or liabilities or capital
stock of any company, partnership, business, joint venture or any other
enterprise, whether structured as a purchase and assumption transaction, merger,
reverse merger, stock transfer or otherwise (a "Purchase Transaction").
It is acknowledged that the Company is under no obligation to enter
into any of the above-mentioned transactions (collectively referred to herein as
"Transactions").
1. SCOPE OF SERVICES
In connection with the analysis and pursuit of any of the above
mentioned transactions, FBR will, as the Company's exclusive financial advisor
and investment banker, undertake one or more of the following activities, as
requested from time to time by management of the Company (hereinafter referred
to as the "Advisory Services"):
1(a) Evaluation of the Company, its current and historical financial
condition, franchise value, operations and projected results;
1(b) Peer group performance comparisons and comparable company
analysis;
1(c) Identify and/or profile potential investor or purchaser candidates
for the Company (each a "Purchaser Entity"); upon the request of the Company,
advise on the transaction capacity, appropriate transaction structure and
pricing parameters for each Purchaser Entity;
1(d) Participation in: (i) discussions between the Company and a
Purchaser Entity; (ii) "due diligence" investigations of such Purchaser Entity;
and (iii) negotiation of a letter of intent, memorandum of understanding and/or
definitive agreement with a Purchaser Entity;
1(e) If appropriate, conduct board of director presentations regarding
potential Purchaser Entities and Transactions; provide a fairness opinion, if
required, to the Company at the time of execution of an agreement for a
Transaction, an update thereof at the time proxy materials are mailed to the
Company's shareholders with respect to approval of such agreement and at the
closing of the Transaction, or as otherwise required by the definitive agreement
with the Purchaser Entity (a "Fairness Opinion"); and
1(f) Such other financial advisory and investment banking services as
are customary in engagements of the type contemplated hereby and as may be
reasonably agreed upon by the Company and FBR.
The Company acknowledges that all advice (written or oral) given by FBR
to the Company is intended solely for the benefit and use of the Company
(including its management, directors, attorneys, accountants, and advisors).
Other than to the extent reflected in Board of Director meeting minutes, or as
may be required by law or regulation (including, without limitation, the proxy
rules under the federal securities laws), no advice (written or oral) of FBR
hereunder shall be used, reproduced, disseminated, quoted or referred to at any
time, in any manner, or for any purpose, nor shall any public references to FBR
be made by the Company (or its management, directors or attorneys), without the
prior consent by FBR.
It is understood that: (i) any Fairness Opinion which may be rendered
by the Advisor concerning a Transaction shall be used by the Board of Directors
solely in connection with their consideration of that Transaction; and (ii) the
Company will not furnish any Fairness Opinion or other material prepared by the
Advisor to any other person or persons or use or refer to any Fairness Opinion
for any other purposes without the prior written approval of the Advisor. The
Advisor acknowledges that any such Fairness Opinion may be referred to and
reproduced in its entirety in proxy materials sent to the Company's stockholders
in connection with the solicitation of approval for a Transaction.
The Advisor and its affiliates are engaged in securities trading,
brokerage activities and private equity investments, as well as providing
investment banking and financial advisory
services. In the ordinary course of such activities, they may at any time hold
long or short positions, and may trade or otherwise effect transactions, for
their account or the accounts of customers, in debt or equity securities of the
Company and potential Purchaser Entities. Subject to the provisions of Section 2
hereof, nothing in the Agreement shall be construed to prohibit or limit the
ability of FBR or its affiliates from pursuing, investigating, analyzing or
engaging in investment banking, financial advisory and other business
relationships with entities other than the Company, notwithstanding that such
entities may have customers, or potential customers, similar or identical to the
Company's, or may have been or may be identified as potential merger or
acquisition targets or potential candidates for some other business combination,
cooperation or relationship. The Company expressly acknowledges and agrees that
it does not claim any proprietary interest in the identity of any other entity
in its industry or otherwise, and that the identity of any such entity is not
confidential information.
2. INFORMATION TO BE SUPPLIED; CONFIDENTIALITY
2(a) In connection with FBR's activities on behalf of the Company, the
Company will furnish FBR with all financial and other information regarding the
Company that FBR reasonably believes appropriate to its assignment (all such
information so furnished by the Company, whether furnished before or after the
date of this Agreement, being referred to herein as the "Information"). The
Company will provide FBR with access to the officers, directors, employees,
independent accountants, legal counsel and other advisors and consultants for
the Company. The Company recognizes and agrees that FBR (i) will use and rely
primarily on the Information and information available from generally recognized
public sources in performing the services contemplated by this Agreement without
independently verifying the Information or such other information, (ii) does not
assume responsibility for the accuracy of the Information or such other
information, and (iii) will not make an appraisal of any assets or liabilities
owned or controlled by the Company or its market competitors.
2(b) FBR and its representatives will maintain the confidentiality of
the Information and, unless and until such information shall have been made
publicly available by the Company or by others without breach of a
confidentiality agreement, shall use or disclose the Information only as
authorized by the Company or as required by law or by order of a governmental
authority or court of competent jurisdiction. In the event that FBR is legally
required to make disclosure of any of the Information, FBR will give notice to
the Company prior to such disclosure, to the extent that FBR can practically do
so.
The foregoing paragraph shall not apply to information that:
(i) is or becomes (prior to the use or disclosure by FBR) generally
available to the public or within the industries in which the
Company or FBR or its affiliates conduct business, other than as
a direct result of a breach by FBR of its obligations under this
Agreement;
(ii) is already in the possession of, or conceived by, FBR or any of
its affiliates prior to being furnished to FBR by the Company,
provided that the source of such information was not prohibited
from disclosing the information in violation of any contractual,
legal or fiduciary obligation;
(iii) is obtained by FBR or any of its affiliates from a third party
who FBR reasonably believes to be in possession of the
information not in violation of any contractual, legal or
fiduciary obligation to the Company with respect to that
information; or
(iv) is independently developed by FBR or its affiliates.
2(c) Nothing in this Agreement shall be construed to limit the ability
of FBR or its affiliates to pursue, investigate, analyze, invest in, or engage
in investment banking, financial advisory or any other business relationships
with, entities other than the Company. The Company expressly acknowledges and
agrees that it does not claim any proprietary interest in the identity of any
other entity in its industry or otherwise, and that the identity of any such
entity is not confidential information.
2(d) The Company will advise FBR promptly and in any event prior to the
delivery of a Fairness Opinion, of the occurrence of any event or any other
change known to the Company that results in a material change to the information
previously supplied to FBR.
3. COMPENSATION
In connection with providing the Company with the Advisory Services set
forth above, FBR will be compensated by the Company as follows (see examples in
Appendix II):
3(a) Upon the execution of this Agreement, the Company will remit to
FBR a nonrefundable retainer of $100,000. This retainer will be applied to any
success fee as defined below.
3(b) In the event the HBC Equity Transaction is agreed to and
subsequently consummated, a success fee (the "Success Fee") equal to $150,000
plus one percent (1%) of the aggregate purchase price of the securities sold and
the fair market value of any additional non-cash consideration received by the
Company in excess of $5 million.
3(c) In the event an Equity Transaction is agreed to and subsequently
consummated, a Success Fee equal to three percent (3%) of the aggregate purchase
price of the securities sold and the fair market value of any additional
non-cash consideration received by the Company.
3(d) In the event a Purchase Transaction is agreed to and subsequently
consummated, a Success Fee equal to the sum of two percent (2%) of the first $30
million, one percent (1%) of any amount over $30 million and up to $500 million,
and one-half percent (1/2 %) of the any amount over $500 million of the fair
market value (as defined below) of the aggregate consideration paid by the
Company as of the closing of the Purchase Transaction. The Success Fee shall be
due and payable to FBR in immediately available funds at the closing of such
Purchase Transaction. For purposes of calculating the value of the aggregate
consideration, any outstanding stock options, warrants or other rights to
purchase stock shall be valued at the amount by which the per share value of the
consideration to be received for stock exceeds the per share exercise price of
any outstanding option, warrant or other right to purchase the stock.
For the purposes of Paragraph 3(d) above, "fair market value" of
non-cash consideration shall have the following meaning: (i) in the case of the
sale, exchange or purchase of the company's equity securities, the total
consideration paid for such securities (including amounts paid to holders of
options, warrants and convertible securities as consideration for such
securities), but excluding all indebtedness for borrowed money; and (ii) in the
case of a sale or disposition by the company of assets, the total consideration
paid for such assets, excluding the principal amount of all indebtedness for
borrowed money, whether or not assumed by the purchaser.
3(e) In addition to the Fee payable to FBR under this Agreement, the
Company agrees to reimburse FBR upon request for its reasonable out-of-pocket
expenses, including cost of legal counsel, incurred in connection with its
services under this Agreement whether or not a Transaction is consummated. Such
expenses will not exceed $100,000 without the written permission of the Company.
4. INDEMNIFICATION, CONTRIBUTION, AND LIMITATION OF LIABILITY
The Company agrees to indemnify FBR and its controlling persons,
representatives and agents in accordance with the indemnification provisions set
forth in Appendix I, and agrees to the other provisions of Appendix I, which is
incorporated herein by this reference, regardless of whether the proposed
Transaction is consummated.
5. TERM OF ENGAGEMENT PERIOD; SURVIVAL OF PROVISIONS
This Agreement and the retention of FBR hereunder shall remain in full
force and effect for six months from the date hereof and may be terminated by
the Company or FBR at any time, with or without cause, upon 30 days written
notice to that effect to the other party, without further obligation to each
other, except it is agreed that the provisions relating to indemnification,
limitation of liabilities, contribution, settlement, the provisions relating to
the payment of fees and expenses, confidentiality, the status of FBR as in
independent contractor, the limitation on to whom FBR shall owe any duties and
the waiver of the right to trial by jury in this Agreement will survive any such
termination. If terminated, any agreement or other written arrangement entered
into by the Company with a Purchaser Entity (that was contacted by FBR with the
express authorization of the Company) regarding the Transactions within a 12
month period following the termination of this Agreement shall be deemed to give
rise to the Success Fees set forth in Section 3, payable in full by the Company
to FBR, upon the completion of such transaction; provided, however, that FBR
shall be required to provide the Fairness Opinion described in Paragraph 1(e)
hereof. In the event that the Company's Board of Directors determines to sell
the Company during the Engagement Period, then the Company agrees to engage FBR
as it's exclusive financial advisor therefore and agrees to pay FBR a Success
Fee equal to one percent (1%) of the fair market value of such transaction up to
$500 million and one-half percent (1/2 %) of the fair market value of such
transaction in excess of $500 million.
6. INDEPENDENT CONTRACTOR; NO FIDUCIARY DUTY
The Company acknowledges and agrees that it is a sophisticated business
enterprise and that FBR has been retained pursuant to this Agreement to act as
financial advisor to the Company solely with respect to the matters set forth
herein. In such capacity, FBR shall act as an independent contractor, and any
duties of FBR arising out of its engagement pursuant to this Agreement shall be
contractual in nature and shall be owed solely to the Company. Each party
disclaims any intention to impose any fiduciary duty on the other.
7. BENEFICIARIES
This Agreement shall inure to the sole and exclusive benefit of FBR and
the Company and the persons referred to in Appendix I and their respective
successors and representatives. The obligations and liabilities under this
Agreement shall be binding upon FBR and the Company.
8. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of California applicable to contracts executed and to be
wholly performed therein without giving effect to its conflicts of laws
principles or rules. Any dispute hereunder shall be brought in a court in the
State of California.
9. AMENDMENTS
This Agreement may be modified or amended, or its provisions waived,
only by a writing signed by the person or persons against whom enforcement of
the modification, amendment or waiver is sought.
10. ANNOUNCEMENTS OF THE TRANSACTION
If a Transaction is consummated, the Company acknowledges and agrees
that FBR may, at its option and expense, place an announcement in such
newspapers and periodicals as it may choose stating that FBR has acted as
financial advisor to the Company in connection with the Transaction. Other than
announcements consistent with the preceding sentence neither parties shall make
any public announcement relating to the content of this agreement or any
proposed sale or transaction in the absence of mutual written agreements by the
parties regarding the content and timing of such announcement.
11. NO COMMITMENT
This Agreement does not and will not constitute any agreement,
commitment or undertaking, express or implied on the part of FBR or any
affiliate to purchase or to sell any securities or to provide any financing and
does not ensure the successful arrangement or completion of the Transaction.
12. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the parties and
supersedes and cancels any and all prior or contemporaneous arrangements,
understandings and agreements, written or oral, between them relating to the
subject matter hereof.
13. SEVERABILITY
If any portion of this Agreement shall be held or made unenforceable or
invalid by a statute, rule, regulation, decision of a tribunal or otherwise, the
remainder of this Agreement shall not be affected thereby and shall remain in
full force and effect, and, to the fullest extent, the provisions of the
Agreement shall be severable.
14. HEADINGS
The descriptive headings of the paragraphs subparagraph and Appendix I
of this Agreement are inserted for convenience only, do not constitute a part of
this Agreement and shall not affect in any way the meaning or interpretations of
this Agreement.
15. FAILURE OR DELAY NO WAIVER
It is understood and agreed that failure or delay by either the Company
or FBR in exercising any right, power or privilege hereunder shall not operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power,
or privilege hereunder.
16. WAIVER OF TRIAL BY JURY
EACH OF FBR AND THE COMPANY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) RELATED TO OR ARISING OUT OF THIS AGREEMENT.
If the foregoing terms correctly set forth our agreement, please sign and return
to us a duplicate copy of this Agreement. We look forward to working with you
toward the successful conclusion of this engagement and developing a long term
relationship with the Company.
Very truly yours,
XXXXXXXX, XXXXXXXX, XXXXXX & CO., INC.
By:
----------------------------------------------------------
Xxxxx X. Xxxxxxxxx, CFA
Managing Director
Confirmed and accepted as of
this__________________ day of ___________________, 1999
xxxxxxx.xxx, inc.
By:
----------------------------------------------------------
Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
APPENDIX I
The Company agrees to indemnify and hold harmless FBR and its
affiliates (as defined in Rule 405 under the Securities Act of 1933, as amended)
and their respective directors, officers, employees, agents and controlling
persons (FBR and each such person being an "Indemnified Party") from and against
all losses, claims, damages and liabilities (or actions, including shareholder
actions, in respect thereof), joint or several, to which such Indemnified Party
may become subject under any applicable federal or state law, or otherwise,
which are related to or result from the performance by FBR of the services
contemplated by or the engagement of FBR pursuant to, this Agreement and will
promptly reimburse any Indemnified Party for all reasonable expenses (including
reasonable counsel fees and expenses) as they are incurred in connection with
the investigation of, preparation for or defense arising from any threatened or
pending claim, whether or not such Indemnified Party is a party and whether or
not such claim, action or proceeding is initiated or brought by the Company. The
Company will not be liable to any Indemnified Party under the foregoing
indemnification and reimbursement provisions, (i) for any settlement by an
Indemnified Party effected without its prior written consent (not to be
unreasonably withheld); or (ii) to the extent that any loss, claim, damage or
liability is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted primarily from an Indemnified Parties willful
misconduct or gross negligence. The Company also agrees that no Indemnified
Party shall have any liability (whether direct or indirect, in contract or tort
or otherwise) to the Company or its security holders or creditors related to or
arising out of the engagement of FBR pursuant to, or the performance by FBR of
the services contemplated by, this Agreement except to the extent that any loss,
claim, damage or liability is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted primarily from FBR's bad faith,
willful misconduct or gross negligence.
Promptly after receipt by an Indemnified Party of notice of any
intention or threat to commence an action, suit or proceeding or notice of the
commencement of any action, suit or proceeding, such Indemnified Party will, if
a claim in respect thereof is to be made against the Company pursuant hereto,
promptly notify the Company in writing of the same. In case any such action is
brought against any Indemnified Party and such Indemnified Party notifies the
Company of the commencement thereof, the Company may elect to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Party, and an
Indemnified Party may employ counsel to participate in the defense of any such
action provided, that the employment of such counsel shall be at the Indemnified
Party's own expense, unless (i) the employment of such counsel has been
authorized in writing by the Company, (ii) the Indemnified Party has reasonably
concluded (based upon advice of counsel to the Indemnified Party) that there may
be legal defenses available to it or other Indemnified Parties that are
different from or in addition to those available to the Company, or that a
conflict or potential conflict exists (based upon advice of counsel to the
Indemnified Party) between the Indemnified Party and the Company that makes it
impossible or inadvisable for counsel to the Indemnifying Party to conduct the
defense of both
the Company and the Indemnified Party (in which case the Company will not have
the right to direct the defense of such action on behalf of the Indemnified
Party), or (iii) the Company has not in fact employed counsel reasonably
satisfactory to the Indemnified Party to assume the defense of such action
within a reasonable time after receiving notice of the action, suit or
proceeding, in each of which cases the reasonable fees, disbursements and other
charges of such counsel will be at the expense of the Company; provided,
further, that in no event shall the Company be required to pay fees and expenses
for more than one firm of attorneys representing Indemnified Parties unless the
defense of one Indemnified Party is unique or separate from that of another
Indemnified Party subject to the same claim or action. Any failure or delay by
an Indemnified Party to give the notice referred to in this paragraph shall not
affect such Indemnified Party's right to be indemnified hereunder, except to the
extent that such failure or delay causes actual harm to the Company, or
prejudices its ability to defend such action, suit or proceeding on behalf of
such Indemnified Party.
If the indemnification provided for in this Agreement is for any reason
held unenforceable by an Indemnified Party, the Company agrees to contribute to
the losses, claims, damages and liabilities for which such indemnification is
held unenforceable (i) in such proportion as is appropriate to reflect the
relative benefits to the Company, on the one hand, and FBR on the other hand, of
the Transaction (or other Transaction) as contemplated whether or not the
Transaction (or Other Transaction) is consummated or, (ii) if (but only if) the
allocation provided for in clause (i) is for any reason unenforceable, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) but also the relative fault of the Company, on the one hand and
FBR, on the other hand, as well as any other relevant equitable considerations.
The Company agrees that for the purposes of this paragraph the relative benefits
to the Company and FBR of the Transaction (or other Transactions) as
contemplated shall be deemed to be in the same proportion that the total value
received or contemplated to be received by the Company or its shareholders, as
the case may be, as a result of or in connection with the Transaction (or other
Transactions) bear to the fees paid or to be paid to FBR under this Agreement.
Notwithstanding the foregoing, the Company expressly agrees that FBR shall not
be required to contribute any amount in excess of the amount by which fees paid
FBR hereunder (excluding reimbursable expenses), exceeds the amount of any
damages which FBR has otherwise been required to pay.
The Company agrees that without FBR's prior written consent, which
shall not be unreasonably withheld, 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 (in which FBR or any other
Indemnified 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.
In the event that an Indemnified Party is requested or required to
appear as a witness in any action brought by or on behalf of or against the
Company in which such Indemnified Party is not named as a defendant, the Company
agrees to promptly reimburse FBR on a monthly basis
for all reasonable expenses incurred by it in connection with such Indemnified
Party's appearing and preparing to appear as such a witness, including, without
limitation, the reasonable fees and disbursements of its legal counsel.
If multiple claims are brought with respect to at least one of which
indemnification is permitted under applicable law and provided for under this
Agreement, the Company agrees that any judgment or arbitrate award shall be
conclusively deemed to be based on claims as to which indemnification is
permitted and provided for, except to the extent the judgment or arbitrate award
expressly states that it, or any portion thereof, is based solely on a claim as
to which indemnification is not available.
Confirmed and Agreed to:
xxxxxxx.xxx, inc.
By:
----------------------------------------------------------
Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
-------------------------------------------------------------
Date
APPENDIX II
SUCCESS FEE CALCULATIONS
a) HBC Equity Transaction.
$40 Million Investment: Base fee of $150,000 plus 1% of ($40 Million minus
$5 Million) $150,000 + $350,000= $500,000
b) Equity Transaction
$40 Million Investment: 3% of $40 Million .03 x $40,000,000 = $1,200,000
c) Purchase Transaction
$40 Million Purchase of another Entity: 2% of first $30 Million and 1% of
next $ 470 Million
$600,000 + $100,000 = $ 700,000
March 22, 2001
Xx. Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
xxxxxxx.xxx, inc.
One Arizona Center
000 Xxxx Xxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Dear Xxxx:
This letter agreement shall serve as an amendment (the "Amendment") to the
letter agreement dated December 30, 1999 (the "Engagement Agreement"), between
xxxxxxx.xxx, inc. (the "Company") and Xxxxxxxx, Billings, Xxxxxx & Co., Inc.
("FBR").
The Engagement Letter is hereby amended as follows:
1. The following paragraph is inserted as the fifth paragraph of the
Engagement Agreement:
(d) To assist the Company with the liquidation of certain assets
of the Company in one or more transactions and the distribution of the Company's
assets to its shareholders (a "Liquidation").
2. Paragraph 1(e) of the Engagement Agreement is replaced with the
following paragraph:
1(e) If appropriate, conduct board of director presentations
regarding potential Purchaser Entities and Transactions; provide a fairness
opinion, if required by the Transaction, at the time of execution of an
agreement for a Transaction, at the time proxy materials are mailed to the
Company's shareholders with respect to approval of any Transaction, at the
closing or completion of a Transaction or as otherwise required by a definitive
agreement with respect to a Transaction (a "Fairness Opinion"); and
3. The second paragraph of Section 3 ("Compensation") of the
Engagement Agreement is replaced with the following paragraph:
3(a). Upon the execution of this Agreement, the Company will
remit to FBR a nonrefundable retainer of $100,000. Upon the execution of the
Amendment, the Company will remit to FBR an additional nonrefundable retainer of
$100,000.
4. The following new Section 3(e) is inserted immediately after
Section 3(d) of the Engagement Letter:
3(e) In the event a Liquidation is completed and the aggregate
amount of retainers and fees that FBR has or is entitled to receive is less than
$250,000 pursuant to Sections 3(a) through 3(d), at or prior to the completion
of the Liquidation the Company will remit to FBR
an additional amount so that FBR shall have received an aggregate of $250,000
(not including expense reimbursements payable pursuant to Section 3(f)).
5. Section 3(e) of the Engagement Agreement is redesignated as
Section 3(f), and the dollar amount in the last sentence thereof shall be
amended from $100,000 to $150,000.
6. The first sentence of Section 5 ("Term of Engagement Period;
Survival of Provisions") is amended to change the word "twelve" in the second
line to "eighteen."
All capitalized terms set forth in this Amendment not otherwise defined herein
shall have the definition set forth in the Engagement Agreement. All other terms
of the Engagement Agreement, including those set forth in Paragraph 3(d), shall
remain in full force and effect.
Very truly yours,
XXXXXXXX, XXXXXXXX, XXXXXX & CO., INC.
By:
-----------------------------------------------
X. Xxxx Xxxxxx
Managing Director and Executive Vice President
By:
-----------------------------------------------
Xxxxxxx X. Xxxxx XXX
Managing Director
Confirmed and accepted as of
This 15th day of March, 2001
XXXXXXX.XXX, INC.
By: --------------------------
Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
September 5, 2001
Xx. Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
xxxxxxx.xxx, inc.
One Arizona Center
000 Xxxx Xxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Dear Xxxx:
As discussed, this letter agreement shall serve as a second amendment (the
"Amendment") to the letter agreement dated December 30, 1999 and the first
amendment dated March 22, 2001 (collectively, the "Engagement Agreement"),
between xxxxxxx.xxx, inc. (the "Company") and Xxxxxxxx, Billings, Xxxxxx & Co.,
Inc. ("FBR").
The Engagement Letter is hereby amended as follows:
1. The following paragraph is inserted as the third paragraph of
Paragraph 3(d) of Section 3 ("Compensation") of the Engagement Agreement:
There shall be a minimum Success Fee of $150,000, payable in cash. If
the Success Fee, when calculated, is greater than $350,000, then the
Success Fee shall be $350,000 payable in cash, plus an amount payable
in warrants of the surviving corporation/merger partner ("Surviving
Entity"). The warrant amount shall be determined by dividing the dollar
amount of the Success Fee in excess of $350,000, by the Company's
closing stock price on the day the Purchase Transaction is closed. The
strike price of the warrants shall equal the closing price of the
Company's stock price on the day the Purchase Transaction is closed.
2. Section (c) of Appendix II ("Success Fee Calculations") of the Engagement
Letter is replaced with the following:
c) Purchase Transaction (including the reverse merger with Great
Western Land and Recreation, Inc. ("GWLR").
Sum of:
2% of the first $30 million,
1% of any amount over $30 million and up to $500 million, 1/2%
of the amount over $500 million of the fair market value.
GWLR Example:
Approximate Number of Shares Issued: 18,000,000
Stock Price at Transaction Close: $.50
Fair Market Value of Shares Issued: $9,000,000
Warrants Issued: 4,940,000 @ $0.30 exercise price
4,940,000 @ $0.60 exercise price
4,940,000 @ $1.20 exercise price
Number of "In the money" Warrants: 4,940,000 (due to $0.50 closing
stock price)
Fair Market Value of "In the money" Warrants: $988,000 = [($.50 -
$0.30) x 4,940,000]
Total Fair Market Value: $9,988,000 = (9,000,000 + 988,000)
Success Fee (2% of the first $30 million) = $199,760
3. The following new Section (d) is inserted immediately after Section
(c) of Appendix II ("Success Fee Calculations") of the Engagement
Letter.
d) Warrant Calculation including GWLR (separate and independent example
from Appendix II, section (c))
Stock Price at Transaction Close: $1.00
Total Success Fee = $468,680
Cash Payable Portion of Success Fee = $350,000
Warrant Payable Portion of Success Fee = $118,680
Number of Warrants to be issued ($118,680 divided by $1.00) =
118,680
Exercise Price of Warrants (Stock Price on the day the Purchase
Transaction is closed) = $1.00
All capitalized terms set forth in this Amendment not otherwise defined herein
shall have the definition set forth in the Engagement Agreement. All other terms
of the Engagement Agreement, including those set forth in Paragraph 3(d), shall
remain in full force and effect.
Very truly yours,
XXXXXXXX, XXXXXXXX, XXXXXX & CO., INC.
By:
-----------------------------------------
X. Xxxx Xxxxxx
Managing Director and Executive Vice President
By:
-----------------------------------------
Xxxxxxx X. Xxxxx XXX
Managing Director
Confirmed and accepted as
of This ___ day of
September, 2001
XXXXXXX.XXX, INC.
By:
-------------------------------
Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
