EXHIBIT 2.4
Ladenburg Xxxxxxxx Logo
February 23, 2000
Xxxxx Xxxxxxx
Chief Financial Officer, Executive V-P
Xxxxxxxx.xxx, Inc.
0000 X. Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Dear Xx. Xxxxxxx:
The purpose of this letter agreement (the "Agreement") is to set forth the terms
and conditions pursuant to which Ladenburg Xxxxxxxx & Co. Inc. ("LTCO") shall
serve as exclusive placement agent in connection with the proposed offering (the
"Offering") of equity securities (the "Securities') of Xxxxxxxx.xxx, Inc. (the
"Company") pursuant to a registration statement. The gross proceeds from the
Offering will be up to $40,000,000. All references to dollars shall be to U.S.
dollars. The terms of such Offering and the Securities shall be as agreed to
between the Company, LTCO and the purchasers thereof.
Upon the terms and subject to the conditions of this Agreement, the
parties hereto agree as follows:
1. Appointment. (a) Subject to the terms and conditions of this
Agreement hereinafter set forth, the Company hereby retains LTCO, and LTCO
hereby agrees to act as the Company's exclusive placement agent and financial
advisor in connection with the Offering, effective as of the date hereof. The
Company expressly acknowledges and agrees that LTCO's obligations hereunder are
on a reasonable best efforts basis only and that the execution of this Agreement
does not constitute a commitment by LTCO to purchase the Securities and does not
ensure the successful placement of the Securities or any portion thereof or the
success of LTCO with respect to securing any other financing on behalf of the
Company. LTCO shall not commence any selling efforts until the registration
statement has been declared effective by the SEC.
(b) Except as set forth below in this Section 1 and as outlined
in Appendix I hereto, during the effectiveness of this Agreement, neither the
Company nor any of its subsidiaries or affiliates shall, directly or indirectly,
through any officer, director, employee, agent or otherwise (including, without
limitation, through any placement agent, broker, investment banker, attorney or
accountant retained by the Company or any of its subsidiaries or affiliates),
solicit, initiate or encourage the submission of any proposal or offer (an
"Investment Proposal") from any person or entity (including any of such person's
or entity's officers, directors, employees, agents and other representatives)
relating to any issuance of the Company's or any of its subsidiaries' equity
securities (including debt securities with any equity feature) or relating to
any other transaction having a similar effect or result on the Company's or any
of its subsidiaries' capitalization, or participate in any discussions or
negotiations regarding, or furnish to any other person or entity any information
with respect to, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage any effort or attempt by any other
person or entity to do or seek to do any of the foregoing. The Company shall
immediately cease and cause to be terminated any and all contacts, discussions
and negotiations with third parties regarding any Investment Proposal. The
Company shall promptly notify LTCO if any such Investment Proposal, or any
inquiry or contact with any person or entity with respect thereto, is made. The
Company shall not provide or release any information with respect to this
Agreement or the Offering except as required by law.
2. Fees and Compensation. In consideration of the services rendered
by LTCO in connection with the Offering, the Company agrees to pay LTCO the
following fees and other compensation:
(a) 1) 2% warrant coverage as commitment fee payable
immediately upon the initial closing; and
2) a cash fee payable upon the initial and each subsequent
closing equal to 5% of the amount drawn down by the
Company at each such closing; and
(b) $35,000 non-accountable expense allowance.
(c) All amounts payable hereunder shall be paid to LTCO out of
an attorney escrow account at the closing or by such other
means acceptable to LTCO.
(d) Should LTCO provide a qualified institutional investor
acceptable to the Company and such investor is willing to
invest at substantially the same terms as agreed to between
the Company, LTCO and such investor, and the Company were
to terminate the Agreement after February 23, 2000 or prior
to March 31, 2001 (the "Termination Date"), for reasons
other than a breach of this Agreement by LTCO, the Company
will pay $200,000 to LTCO as a "breakup" fee.
3. Terms of Retention. (a) Unless extended or terminated in writing
by the parties hereto in accordance with the provisions hereof, this Agreement
shall remain in effect until the Termination Date of March 31, 2001.
(b) Notwithstanding anything herein to the contrary, the
obligation to pay the Fees and Compensation and Expenses described in Section 2,
if any, and paragraphs 2, 6, and 8 of Exhibit A and all of Exhibit B and Exhibit
C attached hereto, each of which exhibits is incorporated herein by reference,
shall survive any termination or expiration of the Agreement. It is expressly
understood and agreed by the parties hereto that any private financing of equity
or debt or other capital raising activity of the Company within 24 months of
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the termination or expiration of this Agreement, with any investors to whom the
Company was introduced by LTCO or who was contacted by LTCO while this Agreement
was in effect and disclosed to the Company in writing, shall result in such fees
and compensation being due and payable by the Company to LTCO under the same
terms of Section 2 above. Upon completion of the Offering, any future
renegotiation, restructuring, revision or other amendment of such Offering by
and between the Company and the investors in such Offering involving additional
capital shall be deemed to be a new financing and shall result in additional
fees and compensation due and payable by the Company to LTCO under the terms of
Section 2 above.
4. Right of First Refusal. Upon completion of the Offering, LTCO
shall have an irrevocable right of first refusal for a period of one year to
provide all financing arrangements for the Company (other than conventional
banking arrangements, borrowing and commercial debt or lease financing and
discrete unrelated transactions of not more than $250,000 where no investment
banking fee is being paid), upon terms no less favorable than that reasonably
available to the Company in the market place. LTCO shall exercise such right in
writing within five (5) business days of receipt of a written term sheet
describing such proposed transaction in reasonable detail.
5. Information. The Company recognizes and confirms that in
completing its engagement hereunder, LTCO will be using and relying on publicly
available information and on data, material and other information furnished to
LTCO by the Company or the Company's affiliates and agents. It is understood
and agreed that in performing under this engagement, LTCO will rely upon the
accuracy and completeness of, and is not assuming any responsibility for
independent verification of, such publicly available information and the other
information so furnished. Notwithstanding the foregoing, it is understood that
LTCO will conduct a due diligence investigation of the Company and the Company
will cooperate in all respects with such investigation as a condition of LTCO's
obligations hereunder.
6. Registration. Promptly following execution of this Agreement,
the Company shall prepare and file with the SEC a registration statement. From
time to time in connection with any particular sale of Securities, the Company
will, at its own expense, obtain any registration or qualification required to
sell any Securities under the Blue Sky laws of any applicable jurisdictions, as
reasonably requested by LTCO.
7. No General Solicitation. The Securities will be offered only
by approaching prospective purchasers on an individual basis. No general
solicitation or general advertising in any form will be used in connection with
the offering of the Securities. From and after the filing of the registration
statement, the Company shall pre-clear any proposed press release with LTCO.
8. Closing. The closing of the sale of the Securities shall be
subject to customary closing conditions, including the provision at closing by
the Company of officers' certificates, opinions of counsel and "cold comfort"
letters from the Company's auditors.
9. Miscellaneous. This Agreement together with the attached
Exhibits A through C constitutes the entire understanding and agreement between
the parties with respect
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to its subject matter and there are no agreements or understandings with respect
to the subject matter hereof which are not contained in this Agreement. This
Agreement may be modified only in writing signed by the party to be charged
hereunder.
If the foregoing correctly sets forth our agreement, please confirm
this by signing and returning to us the duplicate copy of this letter.
We appreciate this opportunity to be of service and are looking forward
to working with you on this matter.
Very truly yours,
LADENBURG XXXXXXXX & CO. INC.
By: /s/ Xxxxx Xxxxx
--------------------------------------
Name: Xxxxx Xxxxx
Title: EVP
Agreed to and accepted
as of the date first written above:
XXXXXXXX.XXX, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Exec. VP and CFO
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EXHIBIT A
---------
STANDARD TERMS AND CONDITIONS
1. The Company shall promptly provide LTCO with all relevant
information about the Company (to the extent available to the
Company in the case of parties other than the Company) that
shall be reasonably requested or required by LTCO, which
information shall be accurate in all material respects at the
time furnished.
2. LTCO shall keep all information obtained from the Company strictly
confidential except: (a) information which is otherwise publicly
available, or previously known to, or obtained by LTCO independently
of the Company and without breach of LTCO's agreement with the
Company; (b) LTCO may disclose such information to its employees and
attorneys, and to its other advisors and financial sources on a need
to know basis only and shall ensure that all such employees,
attorneys, advisors and financial sources will keep such information
strictly confidential; and (c) pursuant to any order of a court of
competent jurisdiction or other governmental body or as may otherwise
be required by law.
3. The Company recognizes that in order for LTCO to perform properly its
obligations in a professional manner, it is necessary that LTCO be
informed of and, to the extent practicable, participate in meetings
and discussions between the Company and any third party relating to
the matters covered by the terms of LTCO's engagement.
4. The Company agrees that any report or opinion, oral or written,
delivered to it by LTCO is prepared solely for its confidential use
and shall not be reproduced, summarized, or referred to in any public
document or given or otherwise divulged to any other person without
LTCO's prior written consent, except as may be required by applicable
law or regulation.
5. No fee payable to LTCO pursuant to any other agreement with the
Company or payable by the Company to any agent, lender or investor
shall reduce or otherwise affect any fee payable by the Company to
LTCO hereunder.
6. The Company represents and warrants that: (a) it has full right, power
and authority to enter into this Agreement and to perform all of its
obligations hereunder; (b) this Agreement has been duly authorized and
executed and constitutes a valid and binding agreement of the Company
enforceable in accordance with its terms; and (c) the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby does not conflict with or result in a breach of
(i) the Company's certificate of incorporation or by-laws or (ii) any
agreement to which the Company is a party or by which any of its
property or assets is bound.
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EXHIBIT A (CONTINUED)
---------------------
7. Nothing contained in this Agreement shall be construed to place LTCO
and the Company in the relationship of partners or joint venturers.
Neither LTCO nor the Company shall represent itself as the agent or
legal representative of the other for any purpose whatsoever nor shall
either have the power to obligate or bind the other in any manner
whatsoever. LTCO, in performing its services hereunder, shall at all
times be an independent contractor.
8. This Agreement has been and is made solely for the benefit of LTCO and
the Company and each of the persons, agents, employees, officers,
directors and controlling persons referred to in Exhibit B and their
respective heirs, executors, personal representatives, successors and
assigns, and nothing contained in this Agreement shall confer any
rights upon, nor shall this Agreement be construed to create any
rights in, any person who is not party to such Agreement other than as
set forth in this paragraph.
9. The rights and obligations of either party under this Agreement may
not be assigned without the prior written consent of the other party
hereto and any other purported assignment shall be null and void.
10. All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and shall be mailed, hand
delivered, or sent via facsimile and confirmed by letter, to the party
to whom it is addressed at the following addresses or such other
address as such party may advise the other in writing:
To the Company:
Xxxxx Xxxxxxx
Xxxxxxxx.xxx, Inc.
0000 X. Xxxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To LTCO:
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile; (000) 000-0000
All notices hereunder shall be effective upon receipt by the party to which it
is addressed.
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EXHIBIT B
---------
INDEMNIFICATION
The Company agrees that it shall indemnify and hold harmless, LTCO, its
stockholders, directors, officers, employees, agents, affiliates and controlling
persons within the meaning of Section 20 of the Securities Exchange Act of 1934
and Section 15 of the Securities Act of 1933, each as amended (any and all of
whom are referred to as an "Indemnified Party"), from and against any and all
losses, claims damages, liabilities, or expenses, and all actions in respect
thereof (including, but not limited to, all legal or other expenses reasonably
incurred by an Indemnified Party in connection with the investigation,
preparation, defense or settlement of any claim, action or proceeding, whether
or not resulting in any liability), incurred by an Indemnified Party; (a)
arising out of, or in connection with, any actions taken or omitted to be taken
by the Company, its affiliates, employees or agents, or any untrue statement or
alleged untrue statement of a material fact contained in any of the financial or
other information contained in the registration statement and/or final
prospectus furnished to LTCO by or on behalf of the Company or the omission or
alleged omission of a materiel fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; or (b) with respect to, caused by, or otherwise
arising out of any transaction contemplated by the Agreement or LTCO's
performing the services contemplated hereunder; provided, however, the Company
will not be liable under clause (b) hereof to the extent, and only to the
extent, that any loss, claim, damage, liability or expense is finally judicially
determined to have resulted primarily from LTCO's gross negligence or bad faith
in performing such services.
If the indemnification provided for herein is conclusively determined
(by an entry of final judgment by a court of competent jurisdiction and the
expiration of the time or denial of the right to appeal) to be unavailable or
insufficient to hold any Indemnified Party harmless in respect to any losses,
claims, damages, liabilities or expenses referred to therein, then the Company
shall contribute to the amounts paid or payable by such Indemnified Party in
such proportion as is appropriate and equitable under all circumstances taking
into account the relative benefits received by the Company on the one hand and
LTCO on the other, from the transaction or proposed transaction under the
Agreement or, if allocation on that basis is not permitted under applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and LTCO on the other, but also the
relative fault of the Company and LTCO; provided, however, in no event shall the
aggregate contribution of LTCO and/or any Indemnified Party be in excess of net
compensation actually received by LTCO and/or such Indemnified Party pursuant to
this Agreement.
The Company shall not settle or compromise or consent to the entry of
any judgment in or otherwise seek to terminate any pending or threatened action,
claim, suit or proceeding in which any Indemnified Party is or could be a party
and as to which indemnification or contribution could have been sought by such
Indemnified Party hereunder (whether or not such Indemnified Party is a party
thereto), unless such consent or termination includes an express
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unconditional release of such Indemnified Party, reasonably satisfactory in form
and substance to such Indemnified Party, from all losses, claims, damages,
liabilities or expenses arising out of such action, claim, suit or proceeding.
The foregoing indemnification and contribution provisions are not in
lieu of, but in addition to, any rights which any Indemnified Party may have at
common law hereunder or otherwise, and shall remain in full force and effect
following the expiration or termination of LTCO's engagement and shall be
binding on any successors or assigns of the Company and successors or assigns to
all or substantially all of the Company's business or assets.
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EXHIBIT C
---------
JURISDICTION
The Company hereby irrevocably: (a) submits to the jurisdiction of any
court of the State of New York or any federal court sitting in the State of New
York for the purposes of any suit, action or other proceeding arising out of the
Agreement between the Company and LTCO which is brought by or against the
Company or LTCO; (b) agrees that all claims in respect of any suit, action or
proceeding may be heard and determined in any such court; and (c) to the extent
that the Company has acquired, or hereafter may acquire, any immunity from
jurisdiction of any such court or from any legal process therein, the Company
hereby waives, to the fullest extent permitted by law, such immunity.
The Company waives, and the Company agrees not to assert in any such
suit, action or proceeding, in each case, to the fullest extent permitted by
applicable law, any claim that (a) the Company is not personally subject to the
jurisdiction of any such court; (b) the Company is immune from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
the aid of execution, execution or otherwise) with respect to it or its
property; (c) any such suit, action or proceeding is brought in an inconvenient
forum: (d) the venue of any such suit, action or proceeding is improper, or (e)
this Agreement may not be enforced in or by any such court.
Any process against the Company in, or in connection with, any suit,
action or proceeding filed in the United States District Court for the Southern
District of New York or any other court of the State of New York, arising out of
or relating to its Agreement or any transaction or agreement contemplated
hereby, may be served on the Company personally, or by first class mail or
overnight courier (with the same effect as though served upon the Company
personally) addressed to the Company at the address set forth in the Agreement
between the Company and LTCO.
Nothing in these provisions shall affect any party's right to serve
process in any manner permitted by law or limit its rights to bring a proceeding
in the competent courts of any jurisdiction or jurisdictions or to enforce in
any lawful manner a judgment obtained in one jurisdiction in any other
jurisdiction.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of law
principles.
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Appendix I
----------
The Company is currently represented by Xxxxxx Securities in the pursuit of
"strategic alternatives and market opportunities", including merger with or
strategic investment from specifically identified companies. The anticipated
transaction from the engagement of Xxxxxx Securities, which could include a
capital investment from one or more of the listed companies, is considered
strategic in nature and not considered to be of similar effect to the
transaction outlined herein as referenced in section 1 paragraph (b) herein.
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Ladenburg Xxxxxxxx Logo
February 23, 2000
-----------------
Xxxxxxxx.xxx, Inc.
------------------
Ticker: MDCM
Exchange: NASDAQ
Up to $40,000,000 Underwritten Offering of Common Stock
-------------------------------------------------------
Securities: Common Stock
---------- ------------
Total Draw Down Commitment: up to $40,000,000
-------------------------- -----------------
Draw Down Amount: up to $4,000,000
---------------- ----------------
Use of Proceeds: [_____________]
---------------
Draw Down Terms:
---------------
(a) The Company may, in its sole discretion, issue and
exercise a draw down (a "Draw Down") during a Draw
Down Pricing Period (which shall mean a period of
22 consecutive trading days preceding a Draw Down
Exercise Date, as defined below), which Draw Down
the Investor will be obligated to accept.
(b) Only one Draw Down shall be allowed in each Draw
Down Pricing Period. The Draw Down shall occur on
the first trading day following the end of the
Draw Down Pricing Period (the "Draw Down Exercise
Date"), based on the Average Daily Price during
the Draw Down Pricing Period.
(c) There shall be a maximum of 12 Draw Downs during
the term of this Equity Line of Credit.
(d) Each Draw Down will expire on the calendar day
after the Draw Down Exercise Date.
(e) The Company must inform the Investor via facsimile
transmission as to the amount of the Draw Down the
Company wishes to exercise before the first day of
the Draw Down Pricing Period (the "Draw Down
Notice"). The closing bid price of the Common
Stock on each Draw Down Exercise Date must be
greater than [$_________] per share. At no time
shall the Investor be required to purchase more
than the scheduled Draw Down amount for a given
Draw Down Pricing Period so that if the Company
chooses not to exercise the Draw Down in a given
Draw Down Pricing Period the Investor
is not obligated to purchase more than the
scheduled amount in a subsequent Draw Down Pricing
Period.
Pricing:
-------
(a) Commencing on the Effective Date of the
Registration Statement and continuing for a period
of 12 months thereafter, the Investor agrees to
honor Draw Down requests from the Company for a
total of up to $40,000,000 of the Company's Common
Stock based upon Draw Downs of $4,000,000 per Draw
Down and a per share purchase price equal to 93%
of the Average Daily Price for the Draw Down
Pricing Period.
(b) If the Average Daily Price on a given trading day
is less than the Threshold Price then the
Investor's payment obligation under the Draw Down
will be reduced by 1/22nd for such trading day and
the corresponding portion of the Draw Down amount
shall be withdrawn from the Draw Down Pricing
Period. At no time shall the Threshold Price be
set below [$_______] unless agreed upon by the
Company and the Investor.
Conditions:
----------
(a) The Company shall cause to be filed a Registration
Statement, which Registration Statement shall
provide for the sale of the Common Stock purchased
by and issued to the Investor hereunder. Before
the Investor shall be obligated to accept a Draw
Down request from the Company, the Company shall
have caused a sufficient number of shares of
Common Stock to be registered to cover the shares
of Common Stock to be issued in connection with
the Draw Down.
(b) Such Common Stock shall be placed in a mutually
agreed upon escrow account before the issuance of
a Draw Down request. The shares of Common Stock
shall be settled on a weekly basis through the DTC
system.
(c) The Investor may terminate this Draw Down facility
if a Material Adverse Effect or a Material Change
of Ownership has occurred.
(d) The Company shall pay all fees and expenses
related to the transactions contemplated by this
Agreement. The Company shall pay at the Closing
all attorneys fees and expenses incurred by the
Investor of up to $35,000.
Limitation on Issuance: The Company shall not issue more than 20% of
---------------------- common shares outstanding without shareholder
approval.
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Confidentiality: The Company agrees that it will not disclose,
--------------- and will not include in any public announcement,
the name or names of the Investor, unless
expressly agreed to by the Investor or unless and
until such disclosure is required by law or
regulation, and then only to the extent of such
requirement.
Documentation: The definitive documentation shall contain
------------- such additional and supplementary provisions,
including without limitation, representations,
warranties, covenants, agreements and remedies, as
are appropriate to preserve and protect the
economic benefits intended to be conveyed to the
Investor pursuant hereto.
Certain Definitions:
-------------------
(a) "Average Daily Price" shall be the price based on
the VWAP of the Company's Common Stock.
(b) "Average Price" shall be the average of the
Average Daily Price for the applicable Draw
Down Pricing Period.
(c) "Draw Down Pricing Period" shall meet, a period of
22 consecutive trading days preceding a Draw Down
Exercise Date.
(d) "Material Adverse Effect" shall mean any effect on
the business, operations, properties or financial
condition of the Company that is material and
adverse to the Company and its subsidiaries and
affiliates, taken as a whole and/or any condition,
circumstance or situation that would prohibit or
otherwise interfere with the ability of the
Company to enter into and perform any of its
obligations under the Purchase Agreement or the
Registration Rights Agreement in any material
respect.
(e) "Material Change in Ownership" shall mean that
the officers and directors of the Company
shall own less than ___% of outstanding Common
Stock of the Company.
(f) "Threshold Price" is the lowest price at which the
Company will issue new shares of Common Stock.
(g) "VWAP" shall mean the daily volume weighted
average price of the Company's Common Stock as
reported by Bloomberg Financial using the AQR
function.
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AMENDMENT TO APPENDIX 1 OF ENGAGEMENT LETTER DATED
FEBRUARY 23, 2000 FROM LADENBURG XXXXXXXX TO
XXXXXXXX.XXX, INC. ("ENGAGEMENT LETTER")
Appendix 1 of the Engagement Letter is hereby amended to read in its
entirety as follows:
The Company is currently represented by Xxxxxx Securities in
the pursuit of "strategic alternatives and market
opportunities", including merger with or strategic investment
from specifically identified companies. The anticipated
transaction from the engagement of Xxxxxx Securities, which
could include a capital investment from one or more of the
listed companies, is considered strategic in nature and not
considered to be an Investment Proposal referenced in section
1 paragraph (b) herein or subject to the right of first
refusal referenced in section 4 herein.
The Company has on March ___, 2000, entered into an engagement
letter with Xxxxxx Brothers pursuant to which Xxxxxx Brothers
has been engaged to act as the Company's placement agent and
financial advisor in connection with strategic alternatives
and market opportunities. Any transaction entered into or any
equity or equity-linked securities of the Company sold
pursuant to such engagement letter with or to a party
introduced to the Company by Xxxxxx Brothers is considered
strategic in nature and not considered to be an Investment
Proposal referenced in section 1 paragraph (b) herein or
subject to the right of first refusal referenced in section 4
herein.
LADENBURG XXXXXXXX CO., INC.
By /s/ Xxxxx Xxxxx
---------------------------------------
Dated: March 27, 2000
XXXXXXXX.Xxx, INC.
By /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Dated: March 27, 2000
