EXHIBIT 10.31
[XXXX XXXX & CO., INC. LETTERHEAD]
____________, 2004
Bakers Footwear Group, Inc.
0000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
This letter, when executed by the parties hereto, will constitute an
agreement between Bakers Footwear Group, Inc., a Missouri corporation (the
"Company"), and Xxxx Xxxx & Co., Inc. ("RBCO"), pursuant to which the Company
agrees to retain XXXX and XXXX agrees to be retained by the Company under the
terms and conditions set forth below.
1. The Company hereby retains RBCO to render consulting advice to the
Company as an investment banker relating to financial and similar matters. In
this regard, subject to the terms and conditions set forth herein, RBCO shall
furnish to the Company advice and recommendations with respect to such aspects
of the business and affairs of the Company as the Company shall, from time to
time, reasonably request upon reasonable notice.
2. This Agreement shall be effective for a period of two (2) years
commencing ___________, 2004 (the "Term"). RBCO may terminate this Agreement
upon ten (10) days prior written notice to the Company. Paragraphs 5, 14, 15 and
16 shall survive the expiration or termination of this Agreement under all
circumstances.
3. During the Term of this Agreement, RBCO will provide the Company
with such regular and customary consulting advice as is reasonably requested by
the Company, provided that RBCO shall not be required to undertake duties not
reasonably within the scope of the consulting advisory service contemplated by
this Agreement. In performance of these duties, RBCO shall provide the Company
with the benefits of its best judgment and efforts. It is understood and
acknowledged by the parties that the value of RBCO's advice is not measurable in
any quantitative manner, and that RBCO shall be obligated to render advice, upon
the request of the Company, in good faith, but shall not be obligated to spend
any specific amount of time in doing so. RBCO shall act in the following
capacities in any of the following transactions (each a "Transaction" and,
collectively, the "Transactions") entered into or contemplated by the Company
throughout the Term hereof:
(A) Mergers and Acquisitions: Financial advisor in connection
with any purchase or sale of assets or stock, merger, acquisition, business
combination, joint venture or other strategic transaction (it is understood that
the purchase of the assets constituting 15 stores or store locations or less and
less than $2 million in value is not included in the foregoing).
(B) Capital Raising: Sole or lead managing underwriter or
placement agent in connection with any public or private offering of securities
or other capital markets financing.
(C) Warrant Exercise Programs: Agent in connection with the
exercise of warrants or options in the Company.
(D) Self-Tenders: Dealer manager with respect to any
self-tender offer by the Company.
4. The Company acknowledges that RBCO and its affiliates are in the
business of providing financial service and consulting advice (of all types
contemplated by this Agreement) to others. Nothing contained in this Agreement
shall be construed to limit or restrict the right of RBCO or its affiliates, to
be a partner, director, officer, employee, agent or representative of, or to
engage in, any other business, whether of a similar nature or not, nor to limit
or restrict the right of RBCO to render services or advice of any kind to any
other corporation, firm, individual or association.
5. RBCO's compensation for its services hereunder shall be determined
by agreement between the Company and RBCO on the basis of compensation
customarily paid to financial advisors, underwriters or placement agents in
similar transactions provided that RBCO's compensation in connection with a
transaction described in Section 3(A) (mergers and acquisitions) shall be not
less than 2% of the Total Consideration (as defined below) in such transaction,
and Section 3(B) (capital raising) shall be not less than 7% for equity or
securities convertible into equity and 4% for all other securities; provided,
however, that no compensation shall be paid to RBCO in connection with a
transaction in which (i) there is no underwriter and (ii) the persons set forth
on Schedule 5 do not participate.
"Total Consideration" shall mean anything of value received (or given,
as the case may be) by the Company, its security holders and its employees,
including assumption of debt. Non-cash consideration shall be valued as follows:
(i) in the case of an exchange of securities in a transaction in which the
number of securities of the acquirer to be received will vary in a manner
designed to produce a fixed value to be received in exchange for each security
of the target company, the number of securities of the target company exchanged
in such transaction, shall be multiplied by the value per share specified in the
agreement between the target company and the acquirer; (ii) in the case of an
exchange of securities in a transaction in which the number of securities of the
acquirer to be received in exchange for each security of the acquired company is
fixed and the value of such securities may vary, (x) for securities traded on a
national securities exchange, the average closing sale price (or, if no closing
sale price is reported, the last reported sale price) of the securities for the
twenty (20) full trading days ending on the fifth trading day prior to the
closing of the transaction, shall be multiplied by the number of securities of
the acquirer to be issued upon exchange of the target company's securities in
the transaction, and (y) for securities quoted by a national quotation service,
the average of the closing bid and ask prices of the securities for a period of
twenty (20) full trading days ending on the fifth trading day prior to the
closing of the transaction, shall be multiplied by the number of securities of
the acquirer to be issued in the transactions; and (iii) for any other
securities, the value shall be reasonably determined by RBCO and the Company,
provided, that if such securities are promissory notes, the securities shall be
valued at face value.
6. The Company, upon receipt of appropriate supporting documentation,
shall reimburse RBCO for any and all reasonable out-of-pocket expenses incurred
by RBCO in
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connection with services requested by the Company to be rendered by RBCO to the
Company pursuant to this Agreement, including, but not limited to, hotel, food
and associated expenses, all charges for travel and long-distance telephone
calls and all other expenses incurred by RBCO in connection with services
requested by the Company to be rendered by RBCO to the Company pursuant to this
Agreement. In the event such expenses are incurred by RBCO while RBCO is
contemporaneously providing its services to the Company and any other clients(s)
of RBCO, such expenses shall be allocated appropriately among RBCO's
clients. Expenses payable under this Section 6 shall not include allocable
overhead expenses of RBCO, including, but not limited to, attorneys' fees,
secretarial charges and rent.
7. In connection with XXXX's activities on behalf of the Company, the
Company will furnish RBCO with all financial and other information regarding the
Company that RBCO 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 RBCO 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 RBCO: (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.
8. The Company acknowledges that all advice (written or oral) given by
RBCO to the Company is intended solely for the benefit and use of the Company.
Other than to the extent required to be reflected in Board and committee meeting
minutes, or as required by applicable law (including, without limitation,
securities laws) no advice (written or oral) of RBCO 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 RBCO be made by the Company
(or such persons), without the prior written consent of RBCO.
9. No person or entity, other than the Company or any of its
subsidiaries, shall be entitled to make use of or rely upon the advice of RBCO
to be given hereunder, and the Company shall not transmit such advice to others
(except legal counsel and accountants retained by the Company to evaluate the
transaction), or encourage or facilitate the use of or reliance upon such advice
by others, without the prior written consent of RBCO.
10. It is understood that RBCO, solely with respect to services
rendered under this Agreement, makes no commitment whatsoever to make a market
in the securities of the Company or to recommend or advise its clients to
purchase the securities of the Company. Research reports or corporate finance
reports that may be prepared by RBCO will, when and if prepared, be done solely
on the merits or judgment of analysts of RBCO or senior corporate finance
personnel of RBCO.
11. The use of RBCO's name in any annual report or other report of the
Company, or any release or similar document prepared by or on behalf of the
Company, must have the prior written approval of RBCO unless the Company is
required by law to include RBCO's name in
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such annual report, other report or release, in which event RBCO will be
furnished with a copy of such annual report, other report or release using
RBCO's name in advance of publication by or on behalf of the Company.
12. Should any purchases of securities be requested to be effected
through RBCO by the Company, its officers, directors, employees or other
affiliates, or by any person on behalf of any profit sharing, pension or similar
plan of the Company, for the account of the Company or the individuals or
entities involved, such orders shall be taken by a registered account executive
of RBCO, shall not be subject to the terms of this Agreement, and the normal
brokerage commission as charged by RBCO will apply in conformity with all rules
and regulations of the New York Stock Exchange, the National Association of
Securities Dealers, Inc. or such other regulatory bodies as shall have
jurisdiction with respect to such transactions. Where no regulatory body sets
the fee, the normal established fee as used by RBCO shall apply.
13. The Company acknowledges that the Company engaged RBCO to serve as
the financial advisor to the Company with respect to the proposed public
offering (the "Offering") of common equity securities for the Company for the
period commencing on October 12, 2001 and ending on June 30, 2004 (the "Offering
Engagement Period"). The Company acknowledges that the efforts of RBCO in
connection with the Offering are of substantial assistance to the Company in
enabling it to access the capital markets. Therefore, if the Offering is not
consummated during the Offering Engagement Period and, (subject to the proviso
at the end of this sentence and the final sentence of this Section 13, as
applicable) during the twenty four (24) month period following termination of
the Offering Engagement Period, the Company completes a similar offering of its
securities in lieu of the Offering, or any person introduced to the Company by
RBCO during the Offering Engagement Period purchases securities from the
Company, or enters into any Transaction with the Company, the Company shall pay
RBCO upon the closing of such transaction, a cash fee in consideration of RBCO's
efforts in lieu of the amount that would otherwise have been payable to RBCO had
such transaction occurred during the Offering Engagement Period; provided,
however, that in the event that RBCO breaches the Underwriting Agreement
referred to in Section 22 of this Agreement, the Company's obligations to RBCO
pursuant to this Section 13 shall terminate and be of no further force or
effect, and no such fee shall be owed to RBCO in connection with or related to
any subsequent offering, purchase or other transaction. In the case of a
purchase of securities by any person introduced to the Company by RBCO, such
cash fee will equal 7% of the price paid for the equity securities or securities
convertible or exchangeable into equity securities and 5% of the price paid for
the debt securities by such person; in the case of a purchase of securities by
other persons, the cash fee will equal 3% of the price paid; and in the case of
a sale or purchase of assets or stock by, or a merger, acquisition, joint
venture or other strategic transaction with any person introduced to the Company
by RBCO, such cash fee will equal 2% of the Total Consideration paid or received
by such person or its shareholders. Notwithstanding the foregoing, to the extent
RBCO is unable to complete the Offering during the Offering Engagement Period,
on terms acceptable to the Company, and another investment bank is ultimately
able to do so (whether during the Offering Engagement Period or at any time
during the twenty four (24) month period following termination of the Offering
Engagement Period), on terms significantly better than the terms of the Offering
proposed by RBCO, RBCO will not receive compensation relating to that offering.
14. RBCO will hold in confidence any confidential information which the
Company provides or has provided to RBCO pursuant to this Agreement or otherwise
in connection with the Offering which is designated as being confidential.
Notwithstanding the foregoing, RBCO shall not be required to maintain
confidentiality with respect to information: (i) which is or becomes part of the
public domain not due to the breach of this agreement by RBCO; (ii) of which it
had independent knowledge prior to disclosure; (iii) which comes into the
possession of RBCO in the normal and routine course of its own business from and
through independent non-confidential sources; or (iv) which is required to be
disclosed by RBCO by governmental requirements.
15. Nothing in this Agreement shall be construed to limit the ability
of RBCO 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, notwithstanding that such entities may be
engaged in a business which is similar to or competitive with the business of
the Company, and notwithstanding that such entities may have actual or potential
operations, products, services, plans, ideas, customers or supplies similar or
identical to the Company's, or may have been identified by the Company 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.
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16. The Company agrees to indemnify RBCO 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 a Transaction
consummated.
17. The Company acknowledges and agrees that it is a sophisticated
business enterprise and that RBCO 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, RBCO shall act as an independent contractor,
and any duties of RBCO 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.
18. This Agreement does not and will not constitute any agreement,
commitment or undertaking, express or implied on the part of RBCO 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 any Transaction.
19. Every provision of this Agreement is intended to be severable. If
any term or provision hereof is deemed unlawful or invalid for any reason
whatsoever, such unlawfulness or invalidity shall not affect the validity of the
remainder of this Agreement.
20. Any notice or other communication between the parties hereto shall
be sent by certified or registered mail, postage prepaid, if to the Company,
addressed to it at Attention: Xxxxx Xxxxxx, 0000 Xxxxx Xxxxxx, Xx. Xxxxx,
Xxxxxxxx 00000, President and Chief Executive Officer, with a copy to Xxxxx Xxxx
LLP, One Metropolitan Square, 000 Xxxxx Xxxxxxxx, Xxxxx 0000, Xx. Xxxxx,
Xxxxxxxx 00000, Attention: X. Xxxx Xxxxxx, Esq. or, if to RBCO, addressed to it
at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxxxxx,
Managing Director, with a copy to Xxxxxxxxx Xxxxxxx, P.A., 0000 Xxxxxxxx Xxxxxx,
Xxxxx, Xxxxxxx 00000, Attention: Xxxx X. Xxxxx, Esq., or to such address as may
hereafter be designated in writing by one party to the other. Such notice or
other communication shall be deemed to be given on the date of receipt.
21. If, during the term hereof, RBCO shall cease to do business, the
provisions hereof relating to the duties of RBCO and compensation by the Company
as it applies to RBCO shall thereupon cease to be in effect, except for the
Company's obligation of payment for services rendered prior thereto. This
Agreement shall survive any merger of, acquisition of, or acquisition by RBCO
and, after any such merger or acquisition, shall be binding upon the Company and
the corporation surviving such merger or acquisition.
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22. This Agreement together with the Underwriting Agreement, dated as
of the date hereof, embodies the entire agreement and understanding between the
Company and RBCO and supersedes any and all negotiations, prior discussions and
preliminary and prior agreements and understandings related to the central
subject matter hereof.
23. This Agreement has been duly authorized, executed and delivered by
and on behalf of the Company and RBCO.
24. This Agreement shall be construed and interpreted in accordance
with laws of the State of New York applicable to contracts executed and to be
wholly performed therein without giving effect to conflict of laws, rules or
principles. Any dispute hereunder shall be brought in a court in the State of
New York.
25. This Agreement and the rights hereunder may not be assigned by
either party (except by operation of law) and shall be binding upon and inure to
the benefit of the parties and their respective successors, assigns and legal
representatives.
26. This Agreement may be modified or amended, or its provisions
waived, only by an instrument in writing signed by the person or persons against
whom enforcement of this modification, amendment or waiver is sought.
27. It is understood and agreed that failure or delay by either the
Company or RBCO 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.
28. EACH OF RBCO 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
BAKERS FOOTWEAR GROUP, INC.
By:
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
XXXX XXXX & CO., INC
By:
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Managing Director
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SCHEDULE 5
Special Situations Private Equity Fund, L.P.
Special Situations Cayman Fund, L.P.
Special Situations Fund III, L.P.
The Crown Advisors, LLC
Crown Investment Partners, LP
SWB Holdings, Inc.
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APPENDIX I
The Company agrees to indemnify and hold harmless RBCO, its officers
and employees, each of its directors, its affiliates (as defined in Rule 405
under Securities Act of 1933, as amended (the "Securities Act")) and each
person, if any, who controls RBCO within the meaning of the Securities Act (RBCO
and each such person being an "Indemnified Party") from and against any loss,
claim, damage or liability, joint or several (or any actions, including
shareholder actions, in respect thereof), to which such Indemnified Party may
become subject under the Securities Act or any applicable federal or state law,
or otherwise, which are related to or result from the performance by RBCO of the
services contemplated by or the engagement of RBCO 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 RBCO's 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 RBCO pursuant to, or the performance by RBCO 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 RBCO's 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 shall be entitled to
participate therein and, to the extent that it wishes, 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 advise 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 advise of counsel to the
Indemnified Party) between the Indemnified Party and the Company that makes it
impossible or
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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 required to pay fees and expenses
for more than one firm of attorneys representing Indemnified Parties unless the
defense of the 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 received by the Company, on the one hand, and RBCO on the
other hand, of the Transactions as contemplated whether or not the Transactions
are consummated or, (ii) if (but only if) the allocation provided for in clause
(i) is not permitted by applicable law, 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 RBCO, 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 received by the Company, on
the one hand, and RBCO, on the other, of the Transactions as contemplated shall
be deemed to be in the same proportion as 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 Transactions bear to the fees paid
or to be paid to RBCO under this Agreement. Notwithstanding the foregoing, the
Company expressly agrees that RBCO shall not be required to contribute any
amount in excess of the amount by which fees paid RBCO hereunder (excluding
reimbursable expenses), exceeds the amount of any damages which RBCO has
otherwise been required to pay.
The Company agrees that without RBCO's prior written consent, which
shall not be unreasonably withheld, it will not settle, compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification could be sought
under the indemnification provisions of this Agreement (in which RBCO or any
other Indemnified Party is an actual or potential party to such claim, action,
suit or proceeding), unless such settlement, compromise, consent or judgment
includes an unconditional release of each Indemnified Party from all liability
arising out of such claim, action, suit 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 RBCO on a monthly basis
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for all 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. In
addition to any reimbursed fees, expenses or costs outlined hereunder, RBCO
shall also receive from the Company cash compensation of $2,000.00 per person,
per day, plus reasonable out-of-pocket expenses and costs should RBCO be
required to provide testimony in any formal or informal proceeding regarding the
Company in which RBCO is not named as a defendant.
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 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 award expressly states that it,
or any portion thereof, is based solely on a claim as to which indemnification
is not available.
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