Xxxxxxxxx, Xxxxxx and Xxxxxxxx Securities Corporation
000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000-0000
(000) 000-0000
EXHIBIT 4
October 25, 1994
PRIVATE AND CONFIDENTIAL
________________________
Andros Incorporated
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Chairman of the Board of Directors
Gentlemen:
This letter agreement (the "Agreement") confirms our understanding
that Andros Incorporated (which together with its subsidiaries and affiliates
is hereinafter referred to as the "Company") has engaged Xxxxxxxxx, Xxxxxx
& Xxxxxxxx Securities Corporation ("DLJ") to act as the exclusive financial
advisor to the Company and the Special Committee of the Company's Board of
Directors (the "Committee") for a period of 12 months, commencing upon your
acceptance of this Agreement, with respect to the sale, merger, consolidation
or any other business combination, in one or a series of transactions,
involving all or a substantial amount of the business, securities or assets
of the Company (each, a "Transaction").
As discussed, we propose to undertake certain services on the
Committee's behalf including to the extent requested by the Committee: (i)
assisting in preparing an offering memorandum describing the Company, its
operations, its historical performance and its future prospects; (ii)
identifying and contacting selected qualified acquirors; (iii) arranging for
potential acquirors to conduct business investigations; and (iv) negotiating
the financial aspects of any proposed Transaction under the Committee's
guidance (the "Financial Advisory Services"). Also, DLJ will deliver an
opinion to the Committee as to the fairness from a financial point of view of
the consideration to be received by the Company's stockholders in any
proposed Transaction (a "Fairness Opinion").
As compensation for the Financial Advisory Services to be provided by
DLJ hereunder, the Company agrees to pay to DLJ: (a) $100,000, payable
promptly upon execution of this Agreement, (b) $300,000 as compensation for
the Fairness Opinion, payable at the time DLJ notifies the Committee that it
is prepared to deliver the Fairness Opinion and, (c) an amount equal to one
precent (1%) of the aggregate amount of consideration received by the Company
and/or its shareholders (treating any shares issuable upon exercise of
options, warrants, or other rights of conversion as outstanding) plus the
face amount of any debt securities assumed (excluding trade debt and any
amounts outstanding under the current working capital line) or the
liquidation value of any preferred stock redeemed or remaining outstanding in
connection with the Transaction, including, in the case of a sale or other
disposition by the Company of assets, the net value of any assets not sold by
the
Andros Incorporated October 25, 1994
Page 2
Company (the "Transaction Value"), less the amount paid by the Company
pursuant to clauses (a) and (b) of this sentence. The compensation referred
to in clause (c) above shall be payable in cash promptly upon consummation of
a Transaction. For purposes of this Agreement, a Transaction shall be deemed
to have been consummated upon the earliest of any of the following events to
occur: (a) the acquisition of a majority of the outstanding common stock of
the Company calculated on a fully-diluted basis, (b) a merger or
consolidation of the Company with another person, (c) the acquisition by
another person of all or a substantial portion of the assets of the Company
or, (d) in the case of any other Transaction, the consummation thereof. Upon
request by DLJ from time to time, the Company shall reimburse DLJ promptly
for all reasonable out-of-pocket expenses (including reasonable fees and
expenses of counsel) incurred by DLJ in connection with its engagement
hereunder, whether or not a Transaction is consummated.
As DLJ will be acting on the Committee's behalf, the Company agrees to
the indemnification and other obligations set forth in Schedule I attached
hereto, which schedule is an integral part hereof:
In the event that the consideration received in a Transaction is paid in
whole or in part in the form of securities or other assets, the value of such
securities or other assets, for purposes of calculating our additional
compensation, shall be the fair market value thereof, as the parties hereto
shall mutually agree, on the day prior to the consummation of the
Transaction; provided, that if such consideration includes securities with an
existing public trading market, the value thereof shall be determined by the
last sales price for such securities on the last trading day thereof prior to
such consummation.
The Company shall make available to DLJ all financial and other information
concerning its business and operations which DLJ reasonably requests as well
as any other information relating to any Transaction prepared by the Company
or any of its other advisors. In performing its services hereunder
(including, without limitation, in giving an opinion of the type referred to
in the second paragraph hereof), DLJ shall be entitled to rely without
investigation upon all information that is available from public sources as
well as all other information supplied to it by or on behalf of the Company
or its advisors and shall not in any respect be responsible for the accuracy
or completeness of, or have any obligation to verify, the same or to conduct
any appraisal of assets. To the extent consistent with legal requirements,
all information given to DLJ by the Company unless publicly available or
otherwise available to DLJ without restriction or breach of any
confidentiality agreement, will be held by DLJ in confidence and will not be
disclosed to anyone other than DLJ's agents and advisors without the
Company's prior approval or used for any purpose other than those referred to
in this Agreement.
Any opinion requested by the Committee and any advice, written or oral,
provided by DLJ pursuant to this Agreement will be treated by the Committee
and the Company as confidential, will be solely for the information and
assistance of the Committee in connection with its consideration of a
transaction of the type referred to in the first paragraph of this Agreement
and will not be used, circulated, quoted or otherwise referred to for any
other purpose, nor will it be filed with, included in or referred to in whole
or in part in any registration statement, proxy statement or any other
document, except in each case with our prior written consent. We understood
that our opinion may be reproduced in full in any proxy statement mailed to
shareholders of the Company, and we agree to provide our written consent to
such use, provided that we are afforded a reasonable opportunity to review
and influence those portions of any such proxy statement that include or
refer to our opinion or otherwise refer to DLJ.
Andros Incorporated October 25, 1994
Page 3
In order to coordinate our efforts with respect to a possible
Transaction, during the period of our engagement hereunder none of the
Company, the Committee, nor any representative thereof (other than DLJ) will
initiate discussions regarding a Transaction except through DLJ. In the event
the Committee or management of the Company receives an inquiry regarding a
Transaction, it will promptly advise DLJ of such inquiry in order that we may
evaluate such prospective purchaser and its interest and assist the Committee
in any resulting negotiations.
This Agreement may be terminated by either the Company or DLJ upon
receipt of written notice to that effect by the other party. Upon any
termination or expiration of this Agreement, DLJ will be entitled to prompt
payment of all fees accrued prior to such termination or expiration and
reimbursement of all out-of-pocket expenses as described above. The indemnity
and other provisions contained in Schedule I will also remain operative and
in full force and effect regardless of any termination or expiration of this
Agreement.
In addition, if at any time prior to 12 months after the termination or
expiration of this Agreement a Transaction is consummated, DLJ will be
entitled to payment in full of the compensation described in the third
paragraph of this letter.
It is understood that if the Company completes a transaction in lieu of
any Transaction for which DLJ is entitled to compensation pursuant to this
Agreement (including, but not limited to, a recapitalization or a partial or
complete liquidation), DLJ and the Company will in good faith mutually agree
upon acceptable compensation for DLJ taking into account, among other things,
the results obtained and the custom and practice of investment bankers acting
in similar transactions.
The Company further agrees that it will not enter into any transaction
referred to in either of the two preceding paragraphs unless, prior to or
simultaneously with such transaction, adequate provision is made with
respect to the payment of compensation to DLJ as contemplated by such
paragraphs.
Please not that DLJ is a full service securities firm engaged in
securities trading and brokerage activities, as well as providing investment
banking and financial advisory services. In the ordinary course of our
trading and brokerage activities, DLJ or its affiliates may at any time hold
long or short positions, and may trade or otherwise effect transactions, for
our own account or on the accounts of customers, in debt or equity securities
of the Company or other entities that may be involved in the Transaction. We
recognize our responsibility for compliance with Federal laws in connection
with any such activities.
The Company acknowledges and agrees that DLJ has been retained solely to
provide the advice or services set forth in this Agreement. DLJ shall act as
an independent contractor, and any duties of DLJ arising out of its
engagement hereunder shall be owned solely to the Committee.
This letter Agreement shall be binding upon and inure to the benefit of
the Committee, the Company, DLJ, each Indemnified Person (as defined in
Schedule I hereto) and their respective successors and assigns.
This letter Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York.
Andros Incorporated October 25, 1994
Page 4
The Company irrevocably and unconditionally submits to the non-exclusive
jurisdiction of any State or Federal court sitting in New York City over any
suit, action or proceeding arising out of or relating to this letter
(including Schedule I hereto). The Company hereby agrees that service of any
process, summons, notice or document by U.S. registered mail addressed to the
Company shall be effective service of process for any action, suit or
proceeding brought in any such court. The Company irrevocably and
unconditionally waives any objection to the laying of venue of any such suit,
action or proceeding brought in any such court and any claim that any such
suit, action or proceeding brought in such a court has been brought in an
inconvenient forum. The Company agrees that a final judgment in any such
suit, action or proceeding brought in any such court shall be conclusive and
binding upon the Company and may be enforced in any other courts to whose
jurisdiction the Company is or may be subject, by suit upon such judgment.
If any term, provision, covenant or restriction contained in this
Agreement, including Schedule I, is held by a court of competent jurisdiction
or other authority to be invalid, void, unenforceable or against its
regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
After reviewing this Agreement, please confirm that the foregoing is in
accordance with your understanding by signing and returning to me the
duplicate of this letter attached hereto, whereupon it shall be our binding
Agreement.
Very truly yours,
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By: /s/ Xxx X. Xxxxxxx
--------------------------
Accepted and agreed to
this 25th day of October, 1994
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Xxxxxx Xxxxxxx
Chairman of the Board of
Andros Incorporated and its
Special Committee
