EXHIBIT 14(A)
XXX XXXXXXX
CHAIRMAN AND
EXECUTIVE PARTNER
PERSONAL AND CONFIDENTIAL
December 14, 2001
Xx. Xxxxx Ki Xxxx Xxx
Chairman of the Board
Toymax International, Inc.
000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Dear Xxxxx:
This Agreement confirms that ACG International Inc. (including affiliated,
subsidiaries and all other entities, collectively and individually, ("ACG") has
been engaged by Toymax International, Inc. (including affiliated, subsidiaries
and all other entities, collectively and individually, the "Company") as an
advisor whose assignment is to assist with the Company's desire to execute a
transaction (or a combination of transactions) to Sell an/or to merge the
Company.
I. SERVICES PROVIDED BY ACG:
In accepting the engagement, ACG agrees to:
- advise about the Company's strategy for selling the Company, as well as about
the Transaction's possible structure and terms;
- Assist with the identification of potential prospective buyers and advise in
the process of selecting the buyer
- Coordinate and advise about preparing presentation materials concerning the
Company, as well as about making effective presentations to Potential buyers;
- Advise about structuring, negotiating, and closing the Transaction on
favorable terms.
ACG agrees to keep and maintain all material and nonpublic information, which it
receives, concerning the Company confidential and to disclose only that
information as contemplated for the execution of this Agreement or as required
by law.
II. DEFINITIONS:
EXPIRATION AND TERMINATION DATES: For purposes of this Agreement, this Agreement
expires three years from the date of approval of this Agreement by the Company
(the "Expiration Date"). Each party has the right to terminate this Agreement
upon thirty (30) days notice. Any termination will not relieve the Company's
obligation to compensate and indemnify ACG as well as to comply with its other
agreements hereunder.
POTENTIAL BUYERS: For purposes of this Agreement, prospective potential buyers
include but not limited to, e.g., strategic buyers, investors, lenders, banks,
private equity funds, joint venture or strategic corporate partners, merger
partners, intermediaries, investment bankers, merchant bankers, and/or sources
-- are individually and collectively defined as "Potential Buyer" or "Buyer."
TRANSACTION: For purposes of this Agreement, "Transaction" shall mean a
transaction (or combination of transactions) whereby the Company accepts a bid
offer from a Potential Buyer.
CLOSING AND CLOSING DATE: For purposes of this Agreement, a "Closing" is defined
as an event at which all or part of the Transaction is consummated; a "Closing
Date" is defined as the day on which a Closing occurs or is chiefly completed.
III. COMPENSATION FOR SERVICES PROVIDED BY ACG:
A. Fees - For ACG's efforts, ACG's compensation would consist of cash advisory
fees whose payment schedule is designed to minimize costs to the Company while
ACG's work is being done, and to reward ACG's efforts when a transaction closes.
ACG will earn advisory fees totaling 2% of the Total Transaction Value,
including but not limited to any stock, cash and any other remuneration
consideration. Prior to closing, a fee at the rate of $7,500 per month should be
payable in monthly installments, with the first payment starting with the
execution of this Agreement. The balance of the advisory fees would be payable
in full in a single cash installment at the closing. If no closing occurs, the
balance maximum total is $100,000.
B. Method of Payment - The Company agrees to pay ACG its such fee by wire
transfer to the bank account so designated by ACG or to an ACG Affiliate and to
provide evidence that irrevocable instructions have been issued to the
institution accepting funds on behalf of the Company.
IV. OTHER ISSUES:
(A) EXPENSES: In addition to any fees that may be payable to ACG hereunder and
regardless of whether any Transaction is consummated, the Company agrees to
reimburse ACG promptly for all reasonable out-of-pocket expenses incurred by
ACG hereunder including, but not limited to, long-distance telephone,
facsimile, legal, copying, travel, word processing, internet communication,
document binding, and mailing costs.
(B) SURVIVABILITY: All terms and conditions of this Agreement not modified by
expiration or termination or closing (including, for example, but not
limited to, money owed to ACG, arbitration, and indemnification) will
survive the Expiration or Termination or Closing Dates.
V. REPRESENTATIONS AND WARRANTIES:
The undersigned represents and warrants to ACG that he is duly authorized and
has full power and authority to execute this and to enter into and consummate
the Transaction, and has no reason to believe that this Agreement or the
Transaction may violate any laws, rules, or regulations of any government,
government agency, or court of law, or any bylaws of the Company.
In addition, the Company agrees:
(A) to make available to ACG all information relating to the Transaction which
ACG reasonably requests as well as any other information relating to the
Transaction prepared by the Company or any of the Company's advisors;
(B) to notify ACG of all communications between the Company and Potential Buyer,
and provide ACG with copies of all direct correspondence between the Company
and any Potential Buyers;
(C) that if the Company elects to consummate any transaction contemplated by
this Agreement under the form of another or new entity, then the Company
shall cause the other entity to ratify all the terms and conditions of this
Agreement; and the Company shall continue to be liable for the performance
of the terms, covenants, and conditions herein.
VI. ACKNOWLEDGEMENTS
The Company acknowledges:
(A) That ACG shall be entitled to rely upon all information supplied to ACG by
the Company or its advisors and shall not in any respect be responsible for
the accuracy or completeness of such information.
(B) that ACG does not guarantee that any transaction will be consummated, and
that the Company will have no claim whatsoever against ACG if any
transaction (including the Transaction) is not consummated;
(C) That ACG does not perform legal or accounting or tax services or render
legal or accounting or tax advice on any aspect of any transaction
contemplated by this Agreement.
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(D) That ACG is purely an independently contracting advisor to the Company and
is neither retained nor authorized to act as an exclusive or nonexclusive
agent in arranging any placement of any securities of the Company.
VII. ACG REPRESENTATIONS AND WARRANTIES
ACG represents and warrants that it is duly authorized and has full power and
authority to execute this Agreement, and agrees to promptly make available to
the Company all information relating to the Transaction which the Company
reasonably requests.
(A) To notify the Company of all communications between ACG and Potential
Buyers, and provide the Company with copies of all direct correspondence between
ACG and any Potential Buyers.
VIII. INDEMNIFICATION BY THE COMPANY:
In connection with the engagement of ACG to advise and assist with matters
set forth in this Agreement, the Company hereby agrees to indemnify and hold
harmless ACG and its affiliates, the respective directors, officers, partners,
agents and employees of ACG and its affiliates, and each other person, if any,
controlling ACG or any of its affiliates (all of which are hereinafter called
the "Indemnified Person") to the full extent permitted by law, from and against
all losses, claims, damages, liabilities, and expenses incurred by them as they
are incurred (including but not limited to reasonable fees and disbursements of
counsel), which; (a) are related to or arise out of actions taken or omitted to
be taken (including statements made or omitted to be made) by the company or by
an Indemnified Person; (i) with the Company's consent, or (ii) in conformity
with the Company's actions or omission in connection with the engagement of ACG
pursuant to this Agreement; or, (b) are otherwise related to or arise out of
ACG's activities on the Company's behalf under ACG's engagement pursuant to this
Agreement.
IX. Miscellaneous Conditions:
(A) GOVERNING LAW: This Agreement shall be governed by and construed solely and
exclusively in accordance with the laws of the State of New York. This Agreement
supersedes all prior agreements and can only be amended in writing as mutually
agreed to by the Company and ACG.
(B) DISPUTES: Should any dispute, controversy, or claim arise out of or in
connection with this Agreement, or the breach, termination, or invalidity
thereof, and reasonable efforts to resolve it have failed, ACG and the Company
specifically and irrevocably agree that it will be promptly submitted to
American Mediation Council LLC ("AMC") under its Mediation Rules. If in AMC's
sole judgement, good faith efforts to resolve the dispute have failed, then ACG
and the Company agree that the dispute will be promptly submitted to resolution
by binding arbitration in New York City in accordance with the rules of
commercial procedure of the American Arbitration Association. A judgment upon
any award rendered by the arbitrators shall be entered by a court having subject
matter jurisdiction therein and all parties expressly waive any challenge to the
use of arbitration in accordance with this paragraph.
ACG and the Company agree that jurisdiction and venue for the entry of judgment
upon said arbitration award shall be solely and exclusively in New York County.
The arbitrators are directed to award the expenses of the arbitration --
including required travel and other expenses of the arbitrators and any
representatives of the arbitrators, the costs and charges of the American
Arbitration Association, and all reasonable attorney's fees and costs -- to the
prevailing party in the arbitration. In such event, no action shall be
entertained if filed more than one year subsequent to the date the cause(s) of
action actually occurred regardless of whether damages were otherwise as of said
time calculable. The arbitrator shall not have the authority to amend this
Agreement.
(C) ASSIGNMENT: No interest of any party under this Agreement may be assigned or
otherwise transferred except with the written consent of the other party. This
Agreement shall bind and inure to the benefit of the successors, assigns,
personal representatives, heirs, and legatees of the parties hereto, as their
interests shall appear.
(D) NOTICES: All notices, consents, and other communications (except where
otherwise indicated) relating to this Agreement must be in writing and shall be
deemed to have been duly given at the time when received by the addressee at its
principal place of business or to whatever new address has been communicated by
a notice given under the terms of this paragraph.
(E) WAIVER AND SEVERABILITY: Failure by a party to this Agreement to insist upon
strict compliance by another party to this Agreement with any of the terms of
this Agreement will not be deemed a waiver by such party of strict compliance
with any other instance of the same term or of any other term contained in this
Agreement. No waiver of any provisions of this Agreement shall be effective
unless it is in writing, signed by the party against whom it is asserted. The
unenforceability or invalidity of any article,
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subarticle, section, or provision of this Agreement shall not affect the
enforceability or validity of the remaining provisions, or portions thereof, of
this Agreement, and effect shall give rise to the intent manifested by the
remaining provisions, or portions thereof.
(F) COUNTERPARTS: This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute but one and the same instrument. Counterpart copies may be executed
by xxxxxxx.
(G) ENTIRE AGREEMENT: This Agreement constitutes and contains the entire
agreement between ACG and the Company with respect to the subject matter hereof,
and supersedes any and all prior agreements, arrangements, and understandings
between the parties hereof and thereof relating to the subject matter hereof and
thereof. No modification, amendment, or waiver of the provisions of this
Agreement shall be effective unless made in writing specifically referring to
this Agreement and signed by each of the parties hereto. Both parties hereby
disclaim specific authorship of this Agreement.
(H) Confidentiality: The Company agrees that any information or advice rendered
by ACG or its representatives or agents in connection with this Agreement are
for the sole confidential use of the Company, and the Company will not, and will
not permit any third party, to disclose or otherwise refer to such advice or
information in any manner without ACG's prior written consent.
XII. SIGNATURES:
If the foregoing correctly sets forth the agreement and understanding between
ACG and the Company, please sign the acknowledgement below, whereupon this
letter shall constitute a binding agreement, and return the executed letter to
ACG.
Very cordially,
For ACG International INC.
By: /s/ XXX XXXXXXX
Xxx Xxxxxxx, Chairman and Executive Partner
Agreed and Accepted:
Date: December 14, 2001
For Toymax International, Inc.
by: /s/ XXX KI XXXX
Xxxxx Xxx, Chairman of the Board
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