April 6, 2017 David Briskie President & Chief Financial Officer Youngevity International, Inc Chula Vista, CA 91914 Re: Registered Offering Dear Mr. Briskie:
Exhibit
1.1
April 6, 2017
Xxxxx Xxxxxxx
President & Chief Financial
Officer
Youngevity International,
Inc
0000 Xxxxxxx
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Xxxxx Xxxxx, XX
00000
Re: Registered
Offering
Dear Xx.
Xxxxxxx:
The purpose of this
engagement letter (the “Engagement Letter”) is to outline
our agreement in principle pursuant to which Tripoint Global
Equities, LLC (“Tripoint” or “Selling Agent”) along with its
division BANQ, will act as the lead managing selling agent and book
runner in connection with the proposed registered primary offering
of up to $10,000,0000 by the Company (the “Offering”) of the preferred stock,
(collectively referred herein as the “Securities”) of Youngevity
International, Inc. (collectively with its subsidiaries the
“Company”), on a
“best efforts” basis.
This Engagement
Letter states certain conditions and assumptions upon which the
Offering is premised. Except as expressly provided for herein under
Section 15, this Engagement Letter is not intended to be a binding
legal document.
The terms of our
agreement in principle are as follows:
1. The Company
hereby engages Tripoint, for the period beginning on the date
hereof and ending on October 31, 2017 (the “Engagement Period”), to act as the
Company’s financial advisor and investment banker in
connection with the proposed Offering. During the Engagement Period
or until the consummation of the Offering, whichever is earlier to
occur, the Company agrees not to solicit, negotiate with or enter
into any agreement with any other source of financing (whether
equity, debt or otherwise), any underwriter or potential
underwriter, selling agent, financial advisor or any other person
or entity for the Offering with exception for its current
discussions with Northland and Xxxxxx Xxxxxx. However, if Tripoint
should determine for any reason that Tripoint shall not proceed
with conducting the Offering, then the Engagement Period shall
automatically terminate and this Engagement Letter shall no longer
be of force or effect.
2. Tripoint will
act as the exclusive, lead managing Selling Agent and book runner
of the Offering of a syndicate, subject to, among other things,
completion of Tripoint’s due diligence examination of the
Company and its affiliates and the execution of a definitive
selling agency agreement between the Company and Tripoint in
connection with the Offering (the “Selling Agency Agreement”) and
other documentation that is customary with regard to an offering of
the type contemplated herein.
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3. The actual size of the Offering, the precise
number of Securities to be offered by the Company, and the offering
price per Securities shall be the subject of continuing
negotiations between the Company and Tripoint which will include,
but not be limited to, the capitalization of the Company (at the
time of the Offering) being acceptable to Tripoint, general market
and economic conditions, a review and finalization of audited
financial statements and formal financial projections of the
Company, as well as other factors which Tripoint deems relevant in
its discretion. Tripoint may with the Company’s approval (not
to be unreasonably withheld, conditioned or delayed), (i) create a
selling syndicate for the Offering comprised of broker-dealers who
are members of the Financial Industry Regulatory Authority
(“FINRA”) and/or (ii) rely on soliciting dealers
who are FINRA members to participate in placing a portion of the
Offering.
4. If applicable, the Selling Agency
Agreement will provide that the Company will grant to Tripoint an
option, exercisable within 45 days after the closing of the
Offering (the “Closing”), to offer and sell up to an additional
15% of the total number of Securities to be offered by the Company,
solely for the purpose of covering over-allotments related to the
Offering (the “Over- allotment
Securities”).
5.
Tripoint shall be entitled to a placement fee of four percent
(4.0%) of the gross proceeds of the Offering price, which shall be
allocated by Tripoint to members of the selling syndicate and
soliciting dealers in its sole discretion.
6. The Company shall, as soon as practicable
following the date of execution of the Selling Agency Agreement,
prepare and file with the Securities and Exchange Commission (the
“Commission”) and the appropriate state securities
authorities, a Registration Statement on Form S-1 (the
“Registration
Statement”) under the
Securities Act of 1933, as amended (the “Act”), and a prospectus included therein (the
“Prospectus”) covering the Securities to be sold in the
Offering the Over-allotment Securities and the Securities
underlying the Selling Agent’s Warrants (as defined below).
The Registration Statement (including the Prospectus therein), and
all amendments and supplements thereto, will be in form
satisfactory to Tripoint and counsel to Tripoint and will contain
such interim and other financial statements and schedules as may be
required by the Act and rules and regulations of the Commission
thereunder. Tripoint and its counsel shall be given the opportunity
to make such review and investigation in connection with the
Registration Statement and the Company as they deem desirable.
Tripoint and the Company shall mutually agree on the use of
proceeds of the Offering, which shall be described in detail within
the Prospectus, it being further understood and agreed that, except
as may expressly approved by Tripoint, no proceeds from the
Offering will be used to pay outstanding loans owed by the Company
to any Company officers, directors or
stockholders.
7.
The Registration Statement filing will include as an exhibit a
proposed form of Selling Agency Agreement. The final Selling Agency
Agreement will be in form satisfactory to the Company and Tripoint
and will include indemnification provisions and other terms and
conditions customarily found in Selling Agency Agreements for self
directed primary public offerings. Without limiting the generality
of the foregoing, the Selling Agency Agreement shall contain
customary representations and warranties of the Company and shall
further provide that: (i) the Company, the Company’s
directors and officers and any other holder(s) of 5.0% or more of
the outstanding Securities as of the effective date of the
Registration Statement (and all holders of securities exercisable
for or convertible into Securities) shall enter into
customary“lock-up”
agreements in favor of Tripoint pursuant to which such persons and
entities shall agree, for a period of 6 months after the Offering
is completed, that they shall neither offer, issue, sell, contract
to sell, encumber, grant any option for the sale of or otherwise
dispose of any securities of the Company without Tripoint’s
prior written consent, which consent shall not be unreasonably
withheld.
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8.
Concurrently with or as soon as practicable after the filing of the
Registration Statement with the Commission, the Company shall make
all necessary state “blue sky” securities law filings
with respect to the Securities to be sold in the Offering
(including the Over-allotment Securities). The Company and Tripoint
will cooperate in obtaining the necessary approvals and
qualifications in such states as Tripoint deems necessary and/or
desirable.
9.
The Company agrees to pay a non-accountable $20,000 due diligence
fee upon signing of this Engagement Letter. The Company shall be
responsible for and pay all expenses relating to the Offering,
including, without limitation, all filing fees and communication
expenses relating to the registration of the Securities to be sold
in the Offering (including the Over-allotment Securities) with the
Commission and the filing of the offering materials with FINRA; if
applicable all fees and expenses relating to the listing of such
Securities on the OTCQX, Nasdaq market system, NYSE or NYSE MKT as
the Company and Tripoint together determine; all fees, upon the
execution of the Engagement Letter, the Company at its own expense
will conduct background checks, by a background search firm
acceptable to Tripoint, for the Company’s senior management;
all fees, expenses and disbursements relating to the registration
or qualification of such Securities; if the Offering requires
“blue sky” registration, the Company shall issue an
initial payment of $10,000 to such counsel performing such work and
a payment to cover all filing fees upon the commencement of
“blue sky” work by such counsel, with the balance of
such counsel fees and expenses to be due on the Closing)); the
costs of all mailing and printing of the Offering documents
(including the Selling Agency Agreement, any Blue Sky Surveys and,
if appropriate, any Agreement Among Selected Dealers’
Agreement and Selling Agent’s Questionnaire), Registration
Statements, Prospectuses and all amendments, supplements and
exhibits thereto and as many preliminary and final Prospectuses as
Tripoint may reasonably deem necessary; the costs of preparing,
printing and delivering certificates representing such Securities;
fees and expenses of the transfer agent for such Securities; stock
transfer taxes, if any, payable upon the transfer of securities
from the Company to Tripoint; the fees and expenses of the
Company’s accountants and the fees and expenses of the
Company’s legal counsel and other agents and representatives.
Upon Tripoint’s and the Company’s mutual agreement, the
Company shall provide funds to pay all such fees, expenses and
disbursements in advance. It is understood and agreed that the
Company shall be responsible for Tripoint’s legal costs
detailed in this Section 9 up to a maximum of $45,000 and if the
Offering is not consummated, legal fees shall be capped at
$20,000.
10.
While the Commission is reviewing the Registration Statement,
Tripoint may plan and arrange one or more “road show”
marketing trips for the Company’s management to meet with
prospective investors. Such trips will include visits to a number
of prospective institutional and retail investors. The Company
shall pre-approve all such road shows and all Tripoint expenses in
excess of $1,000, alone or in the aggregate and pay for such
pre-approved expenses, including, without limitation, travel and
lodging expenses, associated with such trips. During the 45-day
period prior to the filing of the Registration Statement with the
Commission, and at all times thereafter prior and following to the
effectiveness of the Registration Statement, both
the Company, Tripoint and their respective officers, directors and
related parties will abide by all rules and regulations of the
Commission relating to public offerings, including, without
limitation, those relating to public statements (i.e., “gun
jumping”) and disclosures of material non-public
information.
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11.
At such time as the Company and Tripoint are mutually satisfied
that it is appropriate to commence the Offering, the final terms of
the Selling Agency Agreement will be negotiated and the Company
will request the Commission to make the Registration Statement
effective.
12. The Selling Agency Agreement shall provide
that, at the Closing, the Company shall grant to Tripoint (or its
designated affiliates) share purchase warrants (the
“Selling Agent’s
Warrants”) covering a
number of Securities equal to five percent (5.0%) of the total
number of Securities being sold in the Offering. The Selling
Agent’s Warrants will be non- exercisable for six (6) months
after the date of the Closing and will expire five years after such
date. The Selling Agent’s Warrants will be exercisable at a
price equal to 120.0% of the public offering price in connection
with the Offering. The Selling Agent’s Warrants shall not be
redeemable. The Company will register the Common Stock underlying
the Selling Agent’s Warrants under the Act and will file all
necessary undertakings in connection therewith. The Selling
Agent’s Warrants may not be transferred, assigned or
hypothecated for a period of six (6) months following the Closing,
except that they may be assigned, in whole or in part, to any
successor, officer, manager, registered representative or member of
Tripoint (or to officers, managers or members of any such successor
or member), and to members of the syndicate or selling group. The
Selling Agent’s Warrants may be exercised as to all or a
lesser number of Securities, will provide for cashless exercise.
The Selling Agent’s Warrants shall further provide for
adjustment in the number and price of such warrants (and the Common
Stock underlying such warrants) to prevent dilution in the event of
a stock dividend, stock split or other reclassification of the
Common Stock.
13.
The Offering shall be conditioned upon, among other things, the
following:
a.
Satisfactory completion by Tripoint of its due diligence
investigation and analysis of: (i) the Company’s arrangements
with its officers, directors, employees, affiliates, customers and
suppliers, and (ii) the audited historical financial statements of
the Company as required by the SEC (including any relevant stub
periods);
b.
The execution by the Company and Tripoint of a definitive Selling
Agency Agreement containing all applicable terms and conditions
provided for in this Engagement Letter;
c.
Neither the Company nor any of its affiliates has, either prior to
the initial filing or the effective date of the Registration
Statement, made any offer or sale of any securities which are
required to be “integrated” pursuant to the Act or the
regulations thereunder with the offer and sale of the Securities
pursuant to the Registration Statement;
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d.
The Company’s registration of the Securities under the
provisions of Section 12(b) or (g), as applicable, of the
Securities Exchange Act of 1934 on or prior to the effective date
of the Offering;
e.
The Company maintaining the retention of a PCAOB registered firm of
independent certified public accountants acceptable to Tripoint and
the Company, including, without limitation, the Company’s
existing auditor, which will have responsibility for the
preparation of the financial statements and the financial exhibits,
if any, to be included in the Registration Statement, it being
agreed that the Company will continue to engage a PCAOB registered
accounting firm of comparable quality (as may be determined by the
Company’s audit committee) for a period of at least three
years after the Closing;
f.
The Company retaining a transfer agent for the Company’s
Securities reasonably acceptable to Tripoint and continuing to
retain such transfer agent for a period of two (2) years after the
Closing;
g.
The Company registering with the Corporation Records Service
(including annual report information) published by Standard &
Poor’s Corporation, or such other similar service as
determined by the Company, and covenanting to maintain such
registration for a period of three (3) years from the
Closing;
14. Notwithstanding any provision to the contrary
in this Engagement Letter, the Selling Agent agrees that the
Company may conduct and complete private financings, whether
through debt, equity or a combination of both, prior to and
subsequent to the closing of the Offering (the "Private
Placements"). Selling Agent may
act as the placement agent for such Private Placements as mutually
agreed to in writing by the Company and Tripoint, and it shall
allow other broker-dealers who are members of the FINRA to
participate in and place any and all such financings it acts as
placement agent; provided, however, that the Company must inform
the Selling Agent before it agrees to employ any such
broker-dealers and the Selling Agent maintains the right to reject
any such selected broker-dealers in the Selling Agent's sole,
reasonable, discretion. For each investor that the Selling Agent
introduces to the Company for a Private Placement, whether directly
or indirectly, and invests in the Private Placement (collectively,
the "SA
Investors"), upon completion of
such Private Placement, the Company shall pay, in the case of an
equity or convertible debt offering, the Selling Agent a fee in an
amount equal to (i) ten percent (10%) the amount of gross proceeds
and (ii) ten percent (10%) in warrants to purchase shares of the
Company's securities issued in the Private Placement at the same
price per share and on the same terms as the warrants or other
convertible security issued to the investors of the Private
Placement, sold to the SA Investors. Other than as contemplated in
this paragraph 14, none of the other fees payable to the Selling
Agent pursuant to the Selling Agency Agreement, shall be payable to
the Selling Agent upon the closing of a Private
Placement.
15.
Except for Paragraphs 9, 10, 15, 16, 17, 18, 19, 20, 21 and 22 (and
Exhibit A attached hereto) hereof (which Paragraphs are intended be
legally binding and enforceable on and against the Company and
Tripoint), this Engagement Letter is not intended to be a binding
legal document, as the agreement between the parties hereto on
these matters will be embodied in the Selling Agency Agreement.
Until the Selling Agency Agreement has been finally negotiated and
signed, but subject to the last sentence of this Paragraph, the
Company or Tripoint
may at any time terminate its further participation in the proposed
transactions and the party so terminating shall have no liability
to the other on account of any matters provided for herein, except
that regardless of which party elects to terminate, the Company
agrees to reimburse Tripoint for, or otherwise pay and bear, the
expenses and fees to be paid and borne by the Company as provided
for in Paragraphs 9 and 10 above and to reimburse Tripoint for the
full amount of its accountable expenses incurred to such date
(which shall include, but shall not be limited to, all fees and
disbursements of Tripoint’s counsel, travel, lodging and
other “road show” expenses, mailing, printing and
reproduction expenses, and any expenses incurred by Tripoint in
conducting its due diligence) and;
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16.
The Company represents and warrants to Tripoint that the entry into
this Engagement
Letter
or any other action of the Company in connection with the proposed
Offering will not violate any existing agreement between the
Company and any other selling agent and/or placement
agent.
17.
The Company and Tripoint agree that neither party will issue press
releases or engage in any other publicity, without the other
party’s prior written consent, commencing on the date hereof
and continuing for a period of forty (40) days from Closing of the
Offering, other than normal and customary releases issued in the
ordinary course of the Company’s business. The Company and
Tripoint covenant to adhere to all “gun jumping” and
“quiet period” rules and regulations of the Commission
prior to, during and following the filing of the Registration
Statement and the consummation of the Offering.
18. During the Engagement Period or until the
Closing, the Company agrees to cooperate with Tripoint and to
furnish, or cause to be furnished, to Tripoint, any and all
information and data concerning the Company, its subsidiaries and
the Offering that Tripoint deems appropriate, including, without
limitation, the Company’s acquisition plans and plans for
raising capital or additional financing (the
“Information”). The Company shall provide Tripoint
reasonable access during normal business hours from and after the
date of execution of this Engagement Letter until the date of the
Closing to all of the Company’s and its subsidiaries assets,
properties, books, contracts, commitments and records and to the
Company’s and its subsidiaries officers, directors,
employees, appraisers, independent accountants, legal counsel and
other consultants and advisors. The Company represents and warrants
to Tripoint that all Information: (i) made available by the Company
to Tripoint or its agents, representatives and any potential
syndicate or selling group member, (ii) contained in any
preliminary or final Prospectus prepared by the Company in
connection with the Offering, and (iii) contained in any filing by
the Company with any court or governmental regulatory agency,
commission or instrumentality, will be complete and correct in all
material respects and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein not misleading in the light of the
circumstances under which such statements are made. The Company
further represents and warrants to Tripoint that all such
Information will have been prepared by the Company in good faith
and will be based upon assumptions which, in light of the
circumstances under which they were made, are reasonable. The
Company acknowledges and agrees that in rendering its services
hereunder, Tripoint will be using and relying on such Information
(and information available from public sources and other sources
deemed reliable by Tripoint) without independent verification
thereof by Tripoint or independent appraisal by Tripoint of any of
the Company’s assets. The Company acknowledges and agrees
that the specific terms of this Engagement Letter are confidential
and will not be disclosed to anyone other
than the officers and directors of the Company and the
Company’s accountants and legal counsel. Except as
contemplated by the terms hereof or as required by applicable law,
the Company and Tripoint shall keep strictly confidential all
non-public Information concerning the Company provided to Tripoint.
No obligation of confidentiality shall apply to Information that:
(a) is in the public domain as of the date hereof or hereafter
enters the public domain without a breach by Tripoint, (b) was
known or became known by Tripoint prior to the Company’s
disclosure thereof to Tripoint, (c) becomes known to Tripoint from
a source other than the Company, and other than by the breach of an
obligation of confidentiality owed to the Company, (d) is disclosed
by the Company to a third party without restrictions on its
disclosure or (e) is independently developed by Tripoint as
evidenced by written documentation.
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19.
This Engagement Letter shall be deemed to have been made and
delivered in New York City and both this Engagement Letter and the
transactions contemplated hereby shall be governed as to validity,
interpretation, construction, effect and in all other respects by
the internal laws of the State of New York, without regard to the
conflict of laws principles thereof.
20.
The Company agrees that any and all decisions, acts, actions, or
omissions with respect to the Offering shall be the sole
responsibility of the Company, and that the performance by Tripoint
of services hereunder will in no way expose Tripoint to any
liability for any such decisions, acts, actions or omissions of the
Company.
21. Tripoint reserves the right to reduce any item
of its compensation or adjust the terms thereof as specified herein
in the event that a determination and/or suggestion shall be made
by FINRA to the effect that the Selling Agent’s aggregate
compensation is in excess of FINRA rules or that the terms thereof
require adjustment; provided, however,
the aggregate compensation otherwise
to be paid to the Selling Agent by the Company may not be increased
above the amounts stated herein without the approval of the Company
in writing.
22.
Tripoint and the Company: (i) agree that any legal suit, action or
proceeding arising out of or relating to this Engagement Letter
and/or the transactions contemplated hereby shall be instituted
exclusively in New York Supreme Court, County of New York, or in
the United States District Court for the Southern District of New
York, (ii) waive any objection which they may have or hereafter to
the venue of any such suit, action or proceeding, and (iii)
irrevocably consent to the jurisdiction of the New York Supreme
Court, County of New York, and the United States District Court for
the Southern District of New York in any such suit, action or
proceeding. Tripoint and the Company further agree to accept and
acknowledge service of any and all process which may be served in
any such suit, action or proceeding in the New York Supreme Court,
County of New York, or in the United States District Court for the
Southern District of New York and agree that service of process
upon the Company mailed by certified mail to the Company’s
address shall be deemed in every respect effective service of
process upon the Company, in any such suit, action or proceeding,
and service of process upon Tripoint mailed by certified mail to
Tripoint’s address shall be deemed in every respect effective
service process upon Tripoint, in any such suit, action or
proceeding. Notwithstanding any provision of this Engagement Letter
to the contrary, the Company agrees that neither Tripoint nor its
affiliates, and the respective officers, directors, employees,
agents and representatives of Tripoint, its affiliates and each
other person, if any, controlling Tripoint or any of its
affiliates, shall have any liability (whether direct or indirect,
in contract or tort or otherwise) to the Company
for or in connection with the engagement and transaction described
herein except for any such liability for losses, claims, damages or
liabilities incurred by us that are finally judicially determined
to have resulted from the bad faith or gross negligence of such
individuals or entities. Tripoint will act under this Engagement
Letter as an independent contractor with duties to the Company.
Because Tripoint will be acting on the Company’s behalf in
this capacity, it is Tripoint’s practice to receive
indemnification. A copy of Tripoint’s standard
indemnification form is attached to this Engagement Letter as
Exhibit A, which is incorporated herein and shall be deemed to be a
part of this Engagement Letter.
(Signature
Page and Indemnification Provisions Follow)
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We
are delighted at the prospect of continuing our working
relationship with you. If you are in agreement with the foregoing,
please execute and return two copies of this Engagement Letter to
the undersigned. This Engagement Letter may be executed in
counterparts and by facsimile transmission.
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Yours
truly,
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TRIPOINT
GLOBAL EQUITIES, LLC
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By:
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/s/
Xxxx
Xxxxxxxxx
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Name:
Xxxx Xxxxxxxxx
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Title:
CEO
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ACCEPTED
AND AGREED TO AS OF
THE
DATE FIRST ABOVE WRITTEN:
YOUNGEVITY
INTERNATIONAL, INC
By: /s/ Xxxxx
Xxxxxxx
Name:
Xxxxx Xxxxxxx
Title:
Chief Financial Officer
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EXHIBIT A
INDEMNIFICATION PROVISIONS
In connection with the engagement letter to which
this Exhibit A is attached (the “Engagement
Letter”), the Company
(the “Indemnitor”) agrees to indemnify and hold harmless
Tripoint and its affiliates, and the respective officers,
directors, employees, agents and representatives of Tripoint, its
affiliates and each other person, if any, controlling Tripoint or
any of its affiliates (Tripoint and each such other person being an
“Indemnified
Person”) from and against
any losses, claims, damages or liabilities related to, arising out
of or in connection with the engagement (the
“Engagement”) under the Engagement Letter, and will
reimburse each Indemnified Person for all expenses (including fees
and expenses of counsel) as they are incurred in connection with
investigating, preparing, pursuing or defending any action, claim,
suit, investigation or proceeding related to, arising out of or in
connection with the Engagement, whether or not pending or
threatened and whether or not any Indemnified Person is a party.
The Indemnitor will not, however, be responsible for any losses,
claims, damages or liabilities (or expenses relating thereto) that
are judicially determined in a judgment not subject to appeal to
have resulted from the bad faith or gross negligence of any
Indemnified Person.
The
Indemnitor will not, without Tripoint’s prior written
consent, settle, compromise, consent to the entry of any judgment
in or otherwise seek to terminate any action, claim, suit or
proceeding in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is a party
thereto) unless such settlement, compromise, consent or termination
includes a release of each Indemnified Person from any liabilities
arising out of such action, claim, suit or proceeding. No
Indemnified Person seeking indemnification, reimbursement or
contribution under this Exhibit A will, without the prior written
consent of the Indemnitor, which consent will not be unreasonably
withheld, settle, compromise, consent to the entry of any judgment
in or otherwise seek to terminate any action, claim, suit,
investigation or proceeding referred to in the preceding
paragraph.
If the indemnification provided for in the first
paragraph of this Exhibit A is judicially determined to be
unavailable (other than in accordance with the third sentence of
the first paragraph hereof) to an Indemnified Person in respect of
any losses, claims, damages or liabilities referred to herein,
then, in lieu of indemnifying such Indemnified Person hereunder,
the Indemnitor shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages
or liabilities (and expense relating thereto): (i) in such
proportion as is appropriate to reflect the relative benefits to
the applicable Indemnified Person, on the one hand, and the
Indemnitor, on the other hand, of the Engagement or (ii) if the
allocation provided by clause (i) above is not available, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in such clause (i) but also the relative fault
of each of the applicable Indemnified Person and the Indemnitor, as
well as any other relevant equitable considerations;
provided,
however, that in no event shall
any Indemnified Person’s aggregate contribution to the amount
paid or payable exceed the aggregate amount of fees actually
received by Tripoint under the Engagement Letter. Assuming that the
Indemnitor has fully satisfied the amount of their obligations
provided for herein to the Indemnified Persons, and the Indemnified
Persons shall have no further liabilities in connection therewith,
then the Indemnitor may take control of any
pending
action or litigation in order to reduce the expenses in connection
therewith. For the purposes of this Exhibit A, the relative
benefits to the Indemnitor and the applicable Indemnified Person of
the Engagement shall be deemed to be in the same proportion as: (a)
the total value paid or contemplated to be paid or received or
contemplated to be received by the Indemnitor and its affiliates
(including the Company’s stockholders), as the case may be,
in the transaction or transactions that are the subject of the
Engagement, whether or not any such transaction is consummated,
bears to (b) the fees paid to Tripoint in connection with the
Engagement.
Procedure. Upon obtaining knowledge of any claim which may
give rise to indemnification not involving a Third Party Claim, the
Indemnified Person shall, as promptly as practicable following the
date the Indemnified Person has obtained such knowledge, give
written notice (which may be delivered by facsimile transmission,
with confirmation of receipt by the receiving party) of such claim
for which indemnification is sought (each, a
“Claim”) to the Indemnitor, but no failure to give
such notice shall relieve the Indemnitor of any liability hereunder
(except to the extent that the Indemnitor has suffered actual,
irreversible and material economic prejudice thereby). The
Indemnified Person, at its cost, shall furnish to the Indemnitor in
good faith and in reasonable detail such information as the
Indemnified Person may have with respect to such
Claim.
Promptly after receipt by an Indemnified Person of
notice of the commencement of any action, suit or proceeding
involving a Claim by a third party (each, a
“Third
Party Claim”) against it,
such Indemnified Person will give written notice to the Indemnitor
of the commencement of such Third Party Claim, and shall give the
Indemnifying Party such information with respect thereto as the
Indemnitor may reasonably request, but no failure to give such
notice shall relieve the Indemnitor of any liability hereunder
(except to the extent the Indemnitor has suffered actual,
irreversible and material economic prejudice thereby). The
Indemnitors shall have the right, but not the obligation, to assume
the defense and control the settlement of such Third Party Claim,
at their cost and expense (and not as a reduction in the amount of
indemnification available hereunder), using counsel selected by the
Indemnitor and reasonably acceptable to the Indemnified Person. If
the Indemnitor satisfies the requirements of this Exhibit A and
desire to exercise our right to assume the defense and control the
settlement of such Third Party Claim, the Indemnitor shall give
written notice (the “Notice”) to the Indemnified Person within fourteen
(14) calendar days of receipt of notice from the Indemnified Person
of the commencement of or assertion of any Third Party Claim
stating that the Indemnitors shall be responsible for such Third
Party Claim. Notwithstanding the foregoing, the Indemnified Person
shall have the right: (i) to assume the defense and control the
settlement of a Third Party Claim and (ii) to employ separate
counsel at our reasonable expense (provided that the Indemnitor
shall not be required to reimburse the expenses and costs of more
than one law firm) and control its own defense of a Third Party
Claim if (x) the named parties to any such action (including any
impleaded parties) include both the Indemnified Person and the
Indemnitor, and the Indemnified Person shall have been advised by
counsel that there are one or more legal or equitable defenses
available to the Indemnified Person that are different from those
available to the Indemnitor, (y) such Third Party Claim involves
equitable or other non-monetary damages or in the reasonable
judgment of the Indemnified Person, such settlement would have a
continuing material adverse effect on the Indemnified
Person’s business (including any material impairment of its
relationships with customers and suppliers) or (z) or in the
reasonable judgment of the Indemnified Person, the Indemnitor may
not be able to satisfy fully such Third Party Claim. In addition,
if the Indemnitors fail to give the Indemnified Person the Notice
in accordance with the terms
hereof, the Indemnified Person shall have the right to assume
control of the defense of and settle the Third Party Claim and all
costs incurred in connection therewith shall constitute damages of
the Indemnified Person. For the avoidance of doubt, the Indemnitor
acknowledges that they will advance any retainer fees required by
legal counsel to an Indemnified Person simultaneously with the
engagement by such Indemnified Person of such counsel, it being
understood and agreed that the amount of such retainer shall not
exceed $30,000 and that such retainer shall be credited to fees
incurred with the balance (if any) refundable to the
Indemnitors.
If
at any time after the Indemnitors assume the defense of a Third
Party Claim, any of the conditions set forth in the paragraph above
are no longer satisfied, the Indemnified Person shall have the same
rights as set forth above as if the Indemnitor never assumed the
defense of such claim.
Notwithstanding
the foregoing, the Indemnitor or the Indemnified Person, as the
case may be, shall have the right to participate, at the
Indemnitor’s or the Indemnified Person’s own expense,
in the defense of any Third Party Claim that the other party is
defending.
If
the Indemnitor assumes the defense of any Third Party Claim in
accordance with the terms hereof, the Indemnitor shall have the
right, upon 30 calendar days’ prior written notice to the
Indemnified Person, to consent to the entry of judgment with
respect to, or otherwise settle such Third Party Claim; provided,
however, that with respect to such consent to the entry of judgment
or settlement, the Indemnified Person will not have any liability
and will be fully indemnified with respect to all Third Party
Claims. Notwithstanding the foregoing, the Indemnitor shall not
have the right to consent to the entry of judgment with respect to,
or otherwise settle a Third Party Claim if: (i) the consent to
judgment or settlement of such Third Party Claim involves equitable
or other non-monetary damages against the Indemnified Person, or
(ii) in the reasonable judgment of the Indemnified Person, such
settlement would have a continuing effect on the Indemnified
Person’s business (including any material impairment of its
relationships with customers and suppliers), without the prior
written consent of the Indemnified Person. In addition, the
Indemnified Person shall have the sole and exclusive right to
settle any Third Party Claim on such terms and conditions as it
deems reasonably appropriate, (x) if the Indemnitor fails to assume
the defense in accordance with the terms hereof, or (y) to the
extent such Third Party Claim involves only equitable or other
non-monetary relief, and shall have the right to settle any Third
Party Claim involving monetary damages with our consent, which
consent shall not be unreasonably withheld.
The
provisions of this Exhibit A shall apply to the Engagement and any
modification thereof and shall remain in full force and effect
regardless of any termination or the completion of Tripoint’s
services under the Engagement Letter.
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0000 Xxxxxxxx, 00xx
Xxxxx
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Phone:
000 000 0000
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Xxx Xxxx, XX
00000
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xxx.xxxxxxxxxxxxxxxxxxxxxx.xxx
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Fax:
000 000 0000
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