Exhibit 10
February 2, 1999
Fingerhut Companies, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Mr. Xxxxxxx Xxxxxxx
Re: ENGAGEMENT LETTER
Xx. Xxxxxxx:
This is to confirm our agreement (the "Agreement"), pursuant to which
Fingerhut Companies, Inc. (the "Company") has agreed to engage Wit Capital
Corporation ("Wit"), a New York corporation, an NASD registered broker-dealer,
and an affiliate of Xxxxxx X. Xxxxxx, to act as a financial advisor to assist
the Company in connection with the proposed merger, exchange of capital stock,
asset acquisition or other similar business combination relating to the Company
and Federated Department Stores (the "Transaction").
The Company agrees that in the event of completion of the Transaction
within 12 months after the date hereof, Wit shall be entitled to a cash fee (the
"Fee") equal to $500,000, payable at the closing of such Transaction.
Xxx's engagement for the Company under this Agreement shall expire upon
payment of the Fee. Since Wit shall be acting on behalf of the Company, the
Company agrees to indemnify Wit in accordance with the provisions of Annex A
hereto, which is incorporated by reference and made a part hereof. Wit shall
make no agreement or commitment for the Company with respect to the proposed
Transaction without the prior authorization of the Company, and nothing shall
constitute an obligation of the Company to Wit to accept the proposal relating
to the proposed Transaction or to complete the proposed Transaction. Xxx agrees
to keep confidential the proposed Transaction and all material non-public
information concerning the Company which it receives in connection with its
engagement hereunder.
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof, supersedes all existing agreements between
us concerning such subject matter, and may be modified only by a written
instrument duly executed by each party. This Agreement shall be binding upon and
inure to the benefit of the Company and Xxx and their respective successors and
assigns. This Agreement shall be interpreted in accordance with the laws of the
State of New York, without giving effect to such state's conflict of laws
doctrine. The provisions of Annex A hereto shall survive any termination of this
Agreement.
Fingerhut Companies, Inc.
February 2, 1999
Page 2
If the foregoing terms correctly set forth our agreement, please confirm
this by signing and returning to us the duplicate copy of this Agreement. We
look forward to working with you in connection with the proposed Transaction.
Sincerely,
WIT CAPITAL CORPORATION
By:
Name: Xxxxxx X. Xxxxxx
Title: Chairman
Agreed to and Accepted
this __ day of ______________, 1999
FINGERHUT COMPANIES, INC.
By:
Name: Xxxxxxx Xxxxxxx
Title:
Fingerhut Companies, Inc.
February 2, 1999
Page 3
ANNEX A
INDEMNIFICATION
Recognizing that transactions of the type contemplated in this engagement
sometimes result in litigation and that Wit Capital Corporation ("Wit") role is
advisory, the Company agrees to indemnify and hold harmless Wit, its affiliates
and their respective officers, directors, employees, agents and controlling
persons (collectively, the "Indemnified Parties"), from and against any losses,
claims, damages and liabilities, joint or several, related to or arising in any
manner out of any transaction, proposal or any other matter (collectively, the
"Matters") contemplated by the engagement of Wit hereunder, and will promptly
reimburse the Indemnified Parties for all expenses (including reasonable fees
and expenses of legal counsel), as and when incurred, in connection with the
investigation of, preparation for or defense of any pending or threatened claim
related to or arising in any manner out of any Matter contemplated by the
engagement of Wit hereunder, or any action or proceeding arising therefrom
(collectively, "Proceedings"), whether or not such Indemnified Party is a formal
party to any such Proceedings. Notwithstanding the foregoing, the Company shall
not be liable to the extent of any losses, claims, damages, liabilities or
expenses that a court of competent jurisdiction shall have determined by final
judgment resulted from the gross negligence or willful misconduct of an
Indemnified Party. The Company further agrees that it will not, without the
prior written consent of Xxx, settle, compromise or consent to the entry of any
judgment in any pending or threatened Proceeding in respect of which
indemnification may be sought hereunder (whether or not Wit or any Indemnified
Party is an actual or potential party to such Proceeding), unless such
settlement, compromise or consent includes an unconditional release of Wit and
each other Indemnified Party hereunder from all liability arising out of such
Proceeding.
The Company agrees that if any indemnification or reimbursement sought
pursuant to this letter were for any reason (other than the application of the
second sentence of the preceding paragraph) not to be available to any
Indemnified Party or insufficient to hold it harmless as and to the extent
contemplated by this letter, then the Company shall contribute to the amount
paid or payable by such Indemnified Party in respect of losses, claims, damages
and liabilities in such proportion as is appropriate to reflect the relative
benefits to the Company and its stockholders on the one hand, and Wit on the
other, in connection with the Matters to which such indemnification or
reimbursement relates or, if such allocation is not permitted by applicable law,
not only such relative benefits but also the relative faults of such parties as
well as any other equitable considerations. It is hereby agreed that the
relative benefits to the Company and/or its stockholders and to Wit with respect
to Xxx's engagement shall be deemed to be in the same proportion as (i) the
total value paid or received or to be paid or received by the Company and/or its
stockholders pursuant to the Matters (whether or not consummated) for which Wit
is engaged to render financial advisory
Fingerhut Companies, Inc.
February 2, 1999
Page 4
services bears to (ii) the fees paid to Wit in connection with such engagement.
In no event shall the Indemnified Parties contribute an amount in excess of the
aggregate amount of fees actually received by Wit pursuant to such engagement
(excluding amounts received by Xxx as reimbursement of the expenses).
The Company further agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with Xxx's engagement hereunder to the extent of
losses, claims, damages, liabilities or expenses that a court of competent
jurisdiction shall have determined by final judgment resulted from the gross
negligence or willful misconduct of such Indemnified Party. The indemnity,
reimbursement and contribution obligations of the Company shall be in addition
to any liability which the Company may otherwise have and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company or an Indemnified Party.
The indemnity, reimbursement and contribution provisions set forth herein
shall remain operative and in full force and effect regardless of (i) any
withdrawal, termination or consummation of or failure to initiate or consummate
any Matter referred to herein, (ii) any investigation made by or on behalf of
any party hereto or any person controlling (within the meaning of Section 15 of
the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended) any party hereto, (iii) any termination or the
completion or expiration of this letter of Xxx's engagement and (iv) whether or
not Wit shall, or shall not be called upon to, render any formal or informal
advice in the course of such engagement.
