NOBLE INTERNATIONAL INVESTMENTS, INC.
October 13, 2000
PERSONAL AND CONFIDENTIAL
International Cosmetics Marketing Co.
0000 XX Xxxx xx Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, CFO
Gentlemen:
This letter agreement ("Agreement") confirms the terms and conditions
of the exclusive engagement of Noble International Investments, Inc. ("Noble")
by International Cosmetics Marketing Co. (collectively, the "Company") to render
certain financial advisory and investment banking services to the Company in
connection with the Company's review of its strategic and financial alternatives
including, but not limited to, a possible Transaction, Alternative Transaction
or Financing.
In the context of this Agreement, (A) "Transaction" means any merger,
acquisition, consolidation, reorganization, recapitalization (not including
stock splits), business combination or other transaction or series of
transactions (including a purchase or sale of assets) involving the Company and
a Strategic Partner (as defined herein) resulting directly or indirectly from
Noble's services; (B) "Alternate Transaction" means a transaction other than a
Transaction including any joint venture, marketing agreement, licensing
agreement or similar transaction or agreement entered into by the Company and a
Strategic Partner resulting directly or indirectly from Noble's services; and
(C) "Financing" means a public offering or private placement of debt or equity
securities of the Company (a "Securities Financing") and/or the arrangement in
the U.S. credit markets of a credit facility provided by one or more lenders (a
"Bank Financing") resulting directly or indirectly from Noble's services.
1. Services. Noble agrees to perform the following services:
(a) Review historical and projected financial and operating
information of the Company and any Strategic Partners;
(b) Assist the Company's management with the preparation of a
memorandum (the "Memorandum") describing the Company's
business together with such other materials as may be
reasonably required for marketing of the Company;
(c) Identify and seek out persons, groups of persons,
partnerships, joint ventures,
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corporations or other entities (each, together with its
affiliates, a "Strategic Partner") who would be interested in
entering into a Transaction or Alternate Transaction with the
Company;
(d) Advise and assist the Company as to the financial aspects and
structure of any proposed Transaction or Alternate Transaction
and assist in negotiating the terms thereof;
(e) Advise and assist the Company in the negotiation of any
documentation relating to a Transaction or Alternate
Transaction, which would include but not be limited to letters
of intent and definitive agreements;
(f) Subject to the satisfactory completion of due diligence
investigations by Noble and market conditions, act as the
Company's lead managing underwriter or exclusive agent, as the
case may be, in connection with a Securities Financing;
(g) Advise the Company with respect to, and arrange and assist in
the negotiation of the terms of, any Bank Financing;
(h) Assist the Board of Directors of the Company recruiting
candidates for executive level management positions with the
Company; and
(i) Perform such other services as the Company and Noble shall
mutually agree to in writing.
Noble reserves the right to determine that neither it nor any of its
affiliates will participate in any Financing, and the foregoing is not an
agreement or commitment by Noble or any of its affiliates to provide funds,
either directly or through a syndicate of lenders pursuant to any credit
facility or to underwrite, place or purchase any securities or otherwise provide
or participate in any Financing.
2. Fees. The Company agrees to pay Noble for its services as follows:
(a) A consulting fee ("Consulting Fee") of (i) $10,000.00 for each
month during the Term payable in consecutive monthly
installments during the Term with the first of such
installments being paid by the Company to Noble upon execution
of this letter and each subsequent monthly installment being
due and payable on each successive monthly anniversary of such
date, plus (ii) five year "cashless exercise" warrants to
purchase 250,000 shares of the Company's common stock at an
exercise price of $2.50 (subject to adjustment in certain
events) for which Noble shall have registration rights with
respect to the common stock underlying such warrants; plus
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(b) In addition to the Consulting Fee and upon consummation of a
Transaction, a fee ("Transaction Fee") equal to (i) 5% of the
Consideration (as hereinafter defined) up to $3,000,000.00,
plus (ii)3% of the Consideration from and including
$3,000,000.00 up to $5,000,000.00, plus (iii) 1% of the
Consideration including and in excess of $5,000,000.00; and
(c) In addition to the Consulting Fee and the Transaction Fee and
upon consummation of an Alternate Transaction, an alternate
transaction fee ("Alternate Transaction Fee") to be agreed
upon in a good faith negotiation between the Company and Noble
subject to a minimum of $25,000.00; and
(d) In addition to the Consulting Fee, the Transaction Fee and the
Alternate Transaction Fee and upon the closing of any part of
a Financing, the Company shall pay Noble:
(i) in connection with any equity Securities Financing in
a public offering, a fee to be agreed upon by the
Company and Noble;
(ii) in connection with any equity Securities Financing in
a private placement, (A) a cash fee equal to 10% of
the gross proceeds raised from the sale of the
securities, plus (B) a non-accountable expense fee
equal to 3% of the aggregate offering price of all
securities sold in such offering, plus (C) Noble
shall have the right to purchase, for $.01 each,
"cashless exercise" warrants to purchase common stock
equal to 10% of the number of shares of common stock
(or common stock equivalent shares) sold in the
equity Securities Financing (subject to adjustment).
The warrants will have a term of five years and have
an exercise price of 100% of the per share price (or
conversion price of the securities, if applicable) at
which the investors invested in connection with the
equity Securities Financing and will be transferable
to Noble employees and affiliates. Noble shall also
be granted registration rights with respect to the
common stock underlying such warrants which will
include at least one demand registration right at the
Company's cost and an unlimited number of piggyback
registration rights;
(iii) in connection with any debt Securities Financing,
such amount as shall be agreed by the Company and
Noble;
(iv) in connection with any Bank Financing that is
consummated prior to termination of this Agreement in
which Noble acts as arranger, the Company shall pay
Noble aggregate arrangement fees in an amount to be
agreed upon, payable on the date of execution of
definitive documentation with respect thereto, which
fee shall be in addition to any fee payable to
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any affiliate of Noble that may act as agent or a
member of a lending syndicate or otherwise as a
participant in any such Bank Financing.
Notwithstanding the forgoing provisions of this Paragraph 2(d), the
Company and Noble shall negotiate and execute definitive agreements prior to the
commencement of any Financing which agreements will more specifically set forth
the terms and conditions (including without limitation any compensation payable
to Noble in addition to that listed above) pursuant to which a Financing will
occur.
Notwithstanding the provisions of this Agreement, the Company agrees
and acknowledges that Noble has expended significant time and effort providing
services to the Company similar to the services listed in Paragraph 1 hereof
since September, 1999 (the "Past Services") for which Noble has not received any
compensation. The Company agrees that the fees it is agreeing to pay Noble
pursuant to Paragraph 2 hereof are in partial consideration for the Past
Services.
In the context of this Agreement, "Consideration" means the aggregate
value of all cash, securities, the assumption of debt by the Company or the
Strategic Partner, as the case may be, and any other forms of payment received
or to be received, directly or indirectly, by the Strategic Partner or the
Company or their respective shareholders or employees, as the case may be,
pursuant to a Transaction or an Alternate Transaction including the total of all
interest-bearing indebtedness of the Strategic Partner or the Company, as the
case may be (both long term and short term including capitalized leases)
outstanding, assumed or refinanced at the closing of a Transaction or an
Alternate Transaction and also including any infusions of cash, securities,
assets or other forms of value into the Strategic Partner or the Company, as the
case may be, pursuant to a Transaction or an Alternate Transaction. If part of
the Consideration is contingent upon the occurrence of some future event (e.g.,
the realization of earnings projections), then such portion of the Transaction
Fee shall be paid by the Company to Noble upon the earlier of the determination
or receipt of such Consideration. If part or all of the Consideration is
represented by securities, the value thereof for the purpose of computing the
Transaction Fee and Alternate Transaction Fee shall be determined by mutual
agreement between Noble and the Company. Any inability to agree upon the value
of the securities described in any of the foregoing will be resolved through
submission to binding arbitration before the National Association of Securities
Dealers, Inc.
3. Term. The term of this Agreement shall commence on the date hereof and
end on the third anniversary of the date hereof or at such earlier time as
provided in this Paragraph 3 (the "Term"). This Agreement may be renewed upon
mutual written agreement of the parties hereto. This agreement may not be
terminated by either party during the first 12 months of the Term. If within the
first 12 months of the Term the Company completes a Financing as a result of
which it receives gross proceeds of $1,000,000.00 or more (the "Initial
Financing") the Company may not terminate this Agreement prior to the expiration
of the Term. If the Company does not complete the Initial Financing, either
party may terminate this Agreement by giving the other party at least thirty
(30) days prior written notice of such termination, at which time the Company
shall pay to Noble all fees earned and all reasonable expenses incurred, in
accordance with Paragraphs 2 and 5
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hereof, respectively. The Company agrees to pay Noble any fees specified in
Paragraph 2 and to fulfill any obligations therein to the extent that any event
specified herein occurs during the Term of this Agreement or within twenty-four
(24) months after the termination or expiration of this Agreement. Any
obligation pursuant to this Paragraph 3, and pursuant to Paragraphs 2, 4, 5, 6
and 8 hereof, shall survive the termination or expiration of this Agreement.
4. Exclusivity / Right to Future Financings.
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(a) The Company agrees to retain Noble on an exclusive basis in
connection with a possible Transaction or Alternate
Transaction for the Term of this Agreement. In order to
coordinate the efforts to effect a Transaction or Alternate
Transaction satisfactory to the Company during the Term of
this Agreement, neither the Company nor any of its management,
representatives or affiliates will pursue any discussion with
any potential third party except through Noble. If any of
these persons receives an inquiry concerning a possible
Transaction or Alternate Transaction, they will promptly
inform Noble of the third party's interest in order that Noble
can assess that third parties interest and assist the Company
in any resulting negotiations.
(b) If the Company decides to pursue a Financing during the Term
of this Agreement or within twenty-four (24) months from the
expiration or termination of this Agreement, then Noble shall
have the right to act as lead arranger for any Bank Financing,
or to serve as the Company's lead managing underwriter or
exclusive agent, as the case may be, in connection with any
Securities Financing, subject to the satisfactory completion
of Noble's due diligence investigation, market conditions and
the good faith negotiation of customary and mutually agreeable
terms and conditions.
5. Expenses. The Company agrees to reimburse Noble for all of its
reasonable out-of-pocket fees, expenses and costs (including, but not limited
to, legal, accounting, travel, accommodations, telephone, computer, courier and
supplies) in connection with the performance of its services under this
Agreement. All such fees, expenses and costs will be billed at any time by Noble
and are immediately payable by the Company when invoiced. Upon termination or
expiration of the Agreement or completion of a Transaction, Alternate
Transaction, or Financing, any unreimbursed fees and expenses will be
immediately due and payable.
6. Indemnification. In addition to the payment of fees and reimbursement
of fees and expenses provided for above, and regardless of whether a
Transaction, Alternate Transaction or Financing is consummated, the Company
agrees to indemnify Noble and its affiliates with regard to the matters
contemplated herein, as set forth in Annex A, attached hereto, which is
incorporated by reference as if fully set forth herein.
7. Matters Relating to Engagement. The Company acknowledges that Noble has
been
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retained solely to provide the services set forth in this Agreement. In
rendering such services, Noble shall act as an independent contractor, and any
duties of Noble arising out of its engagement hereunder shall be owed solely to
the Company. The Company further acknowledges that Noble may perform certain of
the services described herein through one or more of its affiliates.
The Company acknowledges that Noble is a securities firm that is
engaged in securities trading and brokerage activities, as well as providing
investment banking and financial advisory services. The Company acknowledges and
agrees that in connection with the performance of Noble's services hereunder (or
any other services) that neither Noble nor any of its employees will be
providing the Company with legal, tax or accounting advice or guidance (and no
advice or guidance provided by Noble or its employees to the Company should be
construed as such) and that Noble does not hold itself out to be an advisor as
to legal, tax, accounting or regulatory matters in any jurisdiction. The Company
shall consult with its own legal, tax, accounting and other advisors concerning
all matters and advice rendered by Noble to the Company and the Company shall be
responsible for making its own independent investigation and appraisal of the
risks, benefits and suitability of the advice and guidance given by Noble to the
Company and the transactions contemplated by this Agreement. Neither Noble nor
its employees shall have any responsibility or liability whatsoever to the
Company or its affiliates with respect thereto.
The Company recognizes and confirms that in performing its duties
pursuant to this Agreement, Noble will be using and relying on data, material,
and other information (the "Information") furnished by the Company, a Strategic
Partner or their respective employees and representatives. The Company will
cooperate with Noble and will furnish Noble with all Information concerning the
Company and any Transaction, Alternate Transaction or Financing which Noble
deems appropriate and will provide Noble with access to the Company's officers,
directors, employees, independent accountants and legal counsel for the purpose
of performing Noble's obligations pursuant to this Agreement. The Company hereby
agrees and represents that all Information furnished to Noble pursuant to this
Agreement shall be accurate and complete in all material respects at the time
provided, and that, if the Information becomes materially inaccurate, incomplete
or misleading during the term of Noble's engagement hereunder, the Company shall
promptly advise Noble in writing. Accordingly, Noble assumes no responsibility
for the accuracy and completeness of the Information. In rendering its services,
Noble will be using and relying upon the Information without independent
verification evaluation thereof.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to the conflict
of laws provisions thereof.
9. No Brokers. The Company represents and warrants to Noble that there are
no brokers, representatives or other persons which have an interest in
compensation due to Noble from any transaction contemplated herein or which
would otherwise be due any fee, commission or remuneration upon consummation of
any Transaction, Alternative Transaction or Financing.
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10. Authorization. The Company and Noble represent and warrant that each
has all requisite power and authority, and all necessary authorizations, to
enter into and carry out the terms and provisions of this Agreement and the
execution, delivery and performance of this Agreement does not breach or
conflict with any agreement, document or instrument to which it is a party or
bound.
11. Miscellaneous. This Agreement constitutes the entire understanding and
agreement between the Company and Noble with respect to the subject matter
hereof and supersedes all prior understanding or agreements between the parties
with respect thereto, whether oral or written, express or implied. Any
amendments or modifications must be executed in writing by both parties. This
Agreement and all rights, liabilities and obligations hereunder shall be binding
upon and insure to the benefit of each party's successors but may not be
assigned without the prior written approval of the other party. If any provision
of this Agreement shall be held or made invalid by a statute, rule, regulation,
decision of a tribunal or otherwise, the remainder of this Agreement shall not
be affected thereby and, to this extent, the provisions of this Agreement shall
be deemed to be severable. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument. The descriptive
headings of the Paragraphs of this Agreement are inserted for convenience only,
do not constitute a part of this Agreement and shall not affect in anyway the
meaning or interpretation of this Agreement.
Please confirm that the foregoing correctly sets forth our agreement by
signing below in the space provided and returning this Agreement to Noble for
execution, whereupon Noble will send the Company a fully executed original
hereof which shall constitute a binding agreement as of the date first above
written.
NOBLE INTERNATIONAL INVESTMENTS, INC.
By: /s/ Nico X. Xxxxx
------------------------------
Name: Nico X. Xxxxx
------------------------------
Title: President
------------------------------
AGREED TO AND ACCEPTED
AS OF THE ABOVE DATE:
INTERNATIONAL COSMETICS MARKETING CO.
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
------------------------------
Title: Chief Financial Officer
------------------------------
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ANNEX A: INDEMNIFICATION
The Company agrees to indemnify Noble, its employees, directors,
officers, agents, affiliates, and each person, if any, who controls it within
the meaning of either Section 20 of the Securities Exchange Act of 1934 or
Section 15 of the Securities Act of 1933 (each such person, including Noble is
referred to as "Indemnified Party") from and against any losses, claims, damages
and liabilities, joint or several (including all legal or other expenses
reasonably incurred by an Indemnified Party in connection with the preparation
for or defense of any threatened or pending claim, action or proceeding, whether
or not resulting in any liability) ("Damages"), to which such Indemnified Party,
in connection with providing its services (or Past Services) or arising out of
its engagement hereunder, may become subject under any applicable Federal or
state law or otherwise, including but not limited to liability or loss (i)
caused by or arising out of an untrue statement or an alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
necessary in order to make a statement not misleading in light of the
circumstances under which it was made, (ii) caused by or arising out of any act
or failure to act, or (iii) arising out of Noble's engagement or the rendering
by any Indemnified Party of its services under this Agreement (including the
Past Services); provided, however, that the Company will not be liable to the
Indemnified Party hereunder to the extent that any Damages are found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Indemnified Party seeking
indemnification hereunder.
These indemnification provisions shall be in addition to any liability
which the Company may otherwise have to any Indemnified Party.
If for any reason, other than a final non-appealable judgment finding
an Indemnified Party liable for Damages for its gross negligence or willful
misconduct the foregoing indemnity is unavailable to an Indemnified Party or
insufficient to hold an Indemnified Party harmless, then the Company shall
contribute to the amount paid or payable by an Indemnified Party as a result of
such Damages in such proportion as is appropriate to reflect not only the
relative benefits received by the Company and its shareholders on the one hand
and the Indemnified Party on the other, but also the relative fault of the
Company and the Indemnified Party as well as any relevant equitable
considerations.
Promptly after receipt by the Indemnified Party of notice of any claim
or of the commencement of any action in respect of which indemnity may be
sought, the Indemnified Party will notify the Company in writing of the receipt
or commencement thereof and the Company shall have the right to assume the
defense of such claim or action (including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of fees and expenses of
such counsel), provided that the Indemnified Party shall have the right to
control its defense if, in the opinion of its counsel, the Indemnified Party's
defense is unique or separate to it as the case may be, as opposed to a defense
pertaining to the Company. In any event, the Indemnified Party shall have the
right to retain counsel reasonably satisfactory to the Company, at the Company's
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sole expense, to represent it in any claim or action in respect of which
indemnity may be sought and agrees to cooperate with the Company and the
Company's counsel in the defense of such claim or action. In the event that the
Company does not promptly assume the defense of a claim or action, the
Indemnified Party shall have the right to employ counsel to defend such claim or
action. Any obligation pursuant to this Annex shall survive the termination or
expiration of the Agreement.
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