March 24, 2000
eMarketplace, Inc.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Chairman
Re: Private Placement of Securities
Gentlemen:
This letter will confirm the understanding and agreement between U.S. Bancorp
Xxxxx Xxxxxxx Inc. ("U.S. Bancorp Xxxxx Xxxxxxx") and eMarketplace, Inc. (the
"Company") as follows:
1. ENGAGEMENT. The Company hereby engages U.S. Bancorp Xxxxx Xxxxxxx as
the Company's financial advisor to assist with, among other
transactions, the proposed offering (the "Placement") of common stock
(the "Securities") of the Company. U.S. Bancorp Xxxxx Xxxxxxx hereby
accepts the engagement upon the terms and conditions set forth in this
agreement.
As currently contemplated, the Placement will be of Securities with
gross proceeds of up to $30.0 million. Subject to material adverse
developments affecting the Company which become known to us and to
market conditions at the time of the offering, U.S. Bancorp Xxxxx
Xxxxxxx will work with the Company in identifying potential investors
and will use U.S. Bancorp Xxxxx Xxxxxxx'x reasonable efforts to assist
in arranging sales of the Securities to investors subject, in the case
of each proposed investor, to the prior approval of the Company.
The offering will be made by use of your publicly filed reports and
such other materials as you shall furnish and approve and are necessary
or appropriate for the proposed offering ("Offering Materials"). U.S.
Bancorp Xxxxx Xxxxxxx will consult with the Company in planning the
Placement and review with the Company and its counsel all Offering
Materials. The Company shall make available to U.S. Bancorp Piper
eMarketplace, Inc.
March 24, 2000
Page 2
Jaffray such documents and other information as U.S. Bancorp Xxxxx
Xxxxxxx shall reasonably request. Offers and sales of the Securities
will be made in accordance with the Regulation D, Rule 506, safe harbor
exemption from registration under the Federal Securities Act of 1933,
as amended (the "Act") and other available exemptions under the Act,
and applicable state or other jurisdiction securities laws. Both U.S.
Bancorp Xxxxx Xxxxxxx and the Company agree to comply with applicable
federal and state securities laws with respect to all offers and sales
of the Securities. The Company, with the advice of legal counsel, shall
take all steps necessary, to assure the availability of exemptions from
registration or qualification in each jurisdiction in which U.S.
Bancorp Xxxxx Xxxxxxx may reasonably request to conduct the Placement
of Securities.
The Company may in its discretion postpone, abandon or terminate the
Placement prior to closing. Until this agreement is terminated, or
until U.S. Bancorp Xxxxx Xxxxxxx declines to participate in the
Placement, the Company will not make any commitment with any other
financial advisor, placement agent or securities broker/dealer to
participate in the Placement without U.S. Bancorp Xxxxx Xxxxxxx'x prior
written consent.
U.S. Bancorp Xxxxx Xxxxxxx shall have first right to lead any Public
Offering, Private Placement or M&A Advisory Engagement for the Company
for a period of twelve months from the date of this agreement,
exclusive of any rights granted under an Engagement Letter Agreement,
by and between Full Moon Interactive, Inc. and Xxxxxxxxx, Xxxxxx &
Xxxxxxxx, dated February 28, 2000.
2. FEES. The Company will pay to U.S. Bancorp Xxxxx Xxxxxxx in cash at any
closing of the sale of Securities by the Company or its affiliates, a
selling commission of six percent (6%) of the gross proceeds by the
Company on all sales of the Securities made in such closing, including
sales to any entity affiliated or associated with U.S. Bancorp Xxxxx
Xxxxxxx.
U.S. Bancorp Xxxxx Xxxxxxx shall also be paid six percent of the gross
proceeds by the Company in connection with any financing of the Company
or any affiliate involving the issuance of equity, or debt with an
equity participation (also referred to herein as "Securities"),
consummated pursuant to any agreement, commitment or understanding,
oral or written, which is entered into (a) during the term of this
engagement, or (b) within six months after any termination of this
engagement; provided, however, that in the case of termination by U.S.
Bancorp Xxxxx Xxxxxxx prior to such a closing, such commission will
only extend to securities sold to investors who have, verbally or in
writing, contacted the Company or U.S. Bancorp Xxxxx Xxxxxxx or have
been contacted by U.S. Bancorp Xxxxx Xxxxxxx or the Company prior to
such termination. In the case of such termination by U.S. Bancorp Xxxxx
Xxxxxxx, U.S. Bancorp Xxxxx Xxxxxxx shall deliver to the Company,
reasonably promptly following the date of such termination, a schedule
listing such investors.
eMarketplace, Inc.
March 24, 2000
Page 3
3. EXPENSES. In addition, the Company, whether or not a closing shall
occur, will pay or cause to be paid all expenses and fees relating to
the preparation, printing, filing, delivery and shipping of the
Offering Materials and any amendment or supplement thereto (including,
without limitation, all expenses and fees of the Company's accountants
and counsel); the fees and expenses of any transfer agent or registrar;
the filing fees and fees and expenses of counsel incurred in connection
with the qualification or exemption of the Securities for offering and
sale under the securities laws of the states and other jurisdictions
which U.S. Bancorp Xxxxx Xxxxxxx shall reasonably designate; and, to
the extent provided below, the out-of-pocket expenses of U.S. Bancorp
Xxxxx Xxxxxxx incurred in connection with their investigation,
preparing to market and marketing the Securities. Whether or not a
closing shall occur, the Company shall promptly reimburse U.S. Bancorp
Xxxxx Xxxxxxx for all its legal fees (which shall not exceed $30,000)
and disbursements, travel and other reasonable out-of-pocket expenses
incurred in connection with the Placement which shall not exceed
$40,000 in the aggregate without prior written approval from the
Company. These expenses shall be paid upon receipt by the Company of an
invoice from U.S. Bancorp Xxxxx Xxxxxxx.
4. INDEMNIFICATION AND CONTRIBUTION. As more fully described in Exhibit A
hereto, the Company will indemnify and hold U.S. Bancorp Xxxxx Xxxxxxx
harmless from and against all claims, liabilities, losses, damages and
expenses incurred, including fees and disbursements of counsel, related
to or arising out of this engagement or the Placement. Exhibit A is
hereby incorporated into this agreement by reference and made a part
hereof.
5. TERMINATION. This agreement shall be terminable by the Company or U.S.
Bancorp Xxxxx Xxxxxxx upon ten days' written notice to the other party
and in no event longer than one (1) year; provided, however, no such
notice may be given prior to ninety (90) days from the date hereof. The
fee, expense reimbursement and representation, warranty and agreement
provisions of this agreement and the indemnity, contribution and other
provisions of Exhibit A to this agreement shall survive any termination
of this agreement.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The Company
represents and warrants to, and agrees with, U.S. Bancorp Xxxxx Xxxxxxx
that:
(a) the Securities will be offered and sold by the Company in
compliance with the requirements for the exemption from
registration pursuant to Section 5 of the Act and with all
other securities laws and regulations. The Company will file
appropriate notices with the Securities and Exchange
Commission and with other applicable securities authorities;
eMarketplace, Inc.
March 24, 2000
Page 4
(b) directly or through the Offering Materials, the Company shall
furnish to investors all information material to investors
under applicable securities laws, which information will not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated or necessary to
make the statements made not misleading;
(c) the Company will not, for a period of six months following the
final closing date of the Placement, offer for sale or sell
any securities unless, in the opinion of U.S. Bancorp Xxxxx
Xxxxxxx'x counsel, such offer or sale does not jeopardize the
availability of exemptions from the registration and
qualification requirements under applicable securities laws
with respect to the Placement. The Company has not engaged in
any such offering during the six months prior to the date of
this agreement;
(d) the execution, delivery and performance of this agreement and
the Placement of the Securities will not violate any provision
of the Articles of Incorporation or Bylaws of the Company or
any agreement or other instrument to which the Company is a
party or by which it is bound. Any necessary approvals,
governmental and private, will be obtained by the Company
prior to any closing.
(e) the sales of the Securities will be evidenced by a purchase
agreement (the "Purchase Agreement") between the Company and
the investors. The form of Purchase Agreement shall be
reasonably satifactory to U.S. Bancorp Xxxxx Xxxxxxx. The
Purchase Agreement will require the Company to file, promptly
after it has signed and delivered the Purchase Agreement(s), a
registration statement with the Securities and Exchange
Commission (the "SEC") for the resale from time to time of the
Securities to be issued under the Purchase Agreement. The
Company will not modify the Purchase Agreement or execute and
deliver additional Purchase Agreements after the time it has
filed the Registration Statement without the written consent
of U.S. Bancorp Xxxxx Xxxxxxx.
At each closing of the sale of Securities, the Company will provide U.S. Bancorp
Xxxxx Xxxxxxx with a certificate indicating the foregoing are true and correct
as of such closing. In addition, the Company will, at each closing, furnish to
U.S. Bancorp Xxxxx Xxxxxxx an opinion of counsel to the Company, in form
satisfactory to U.S. Bancorp Xxxxx Xxxxxxx and its counsel. U.S. Bancorp Xxxxx
Xxxxxxx may rely on the representations, warranties and opinions made or given
by the Company or its counsel to any purchaser of Securities.
7. NOTICES. All notices or communications hereunder will be in writing and
mailed, faxed or delivered by hand as follows:
eMarketplace, Inc.
March 24, 2000
Page 5
If to U.S. Bancorp Xxxxx Xxxxxxx Inc.:
U.S. Bancorp Xxxxx Xxxxxxx Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx, Managing Director
Facsimile: (000) 000-0000
If to the Company:
eMarketplace, Inc.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Xxxxxxxxx: (000) 000-0000
10. MISCELLANEOUS. This agreement may not be modified except in writing
signed by each of the parties hereto. This agreement (including the
Exhibit hereto) represents the entire understanding between the Company
and U.S. Bancorp Xxxxx Xxxxxxx and all prior discussions and
negotiations are merged into it. The Company is a sophisticated
business enterprise that has retained U.S. Bancorp Xxxxx Xxxxxxx for
the limited purposes set forth in this agreement. The parties
acknowledge and agree that their respective rights and obligations are
contractual in nature. Each party disclaims an intention to impose
fiduciary obligations on the other by virtue of the engagement
contemplated by this agreement. This agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota. Any
dispute or controversy arising out of this agreement shall be
determined by arbitration in accordance with the rules of the New York
Stock Exchange then in effect. The arbitrator shall have authority to
award attorneys' fees to the prevailing party. Any arbitration award
shall be final and binding upon the Company and U.S. Bancorp Xxxxx
Xxxxxxx and judgment upon the award may be entered in any court having
jurisdiction. This agreement shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives
of the Company and U.S. Bancorp Xxxxx Xxxxxxx.
eMarketplace, Inc.
March 24, 2000
Page 6
Please confirm that the foregoing correctly and completely sets forth our
understanding by signing and returning to us the enclosed duplicate of this
engagement agreement.
Sincerely,
U.S. BANCORP XXXXX XXXXXXX INC.
By /s/ XXXX XXXXXXX
----------------------------
Xxxx Xxxxxxx
Managing Director
Xxxxxx and accepted as of the date first above written.
eMARKETPLACE, INC.
By /s/ XXXXXX XXXXXXX
----------------------------
Xxxxxx Xxxxxxx
Chairman and Chief Executive Officer
Exhibit A to Engagement Letter
In consideration of the agreement of U.S. Bancorp Xxxxx Xxxxxxx to advise the
Company pursuant to the attached Engagement Letter, the Company agrees to
indemnify and hold harmless U.S. Bancorp Xxxxx Xxxxxxx, its affiliates (within
the meaning of the Securities Act of 1933), and each of their respective
partners, directors, officers, agents, consultants, employees and controlling
persons (within the meaning of the Securities Act of 1933) (U.S. Bancorp Xxxxx
Xxxxxxx and each such other person or entity are hereinafter referred to as an
"Indemnified Person"), from and against any losses, damages, expenses and
liabilities (collectively "Liabilities") or actions, investigations, inquiries,
arbitrations, claims or other proceedings in respect thereof, including
enforcement of this agreement (collectively "Actions") (Liabilities and Actions
are herein collectively referred to as "Losses"), as they may be incurred
(including all reasonable legal fees and other expenses incurred in connection
with investigating, preparing, defending, paying, settling or compromising any
Losses, whether or not in connection with any pending or threatened Action, and
notwithstanding the absence of a final determination as set forth below as to
the Company's obligation to reimburse an Indemnified Person for such Losses and
the possibility that such payments might later be held to have been improper) to
which any of them may become subject and which are related to or arise out of
any act, omission, transaction or event contemplated by the Engagement Letter.
The Company will not, however, be responsible under the foregoing provisions
with respect to any Losses to the extent that it shall have been finally
determined by arbitration in accordance with the terms of the Engagement Letter
that such Losses resulted primarily from actions taken or omitted to be taken by
an Indemnified Person due to its gross negligence or willful misconduct. To the
extent that any prior payment has been made by the Company to such Indemnified
Person is so determined to have been improper by reason of such Indemnified
Person's gross negligence or willful misconduct, U.S. Bancorp Xxxxx Xxxxxxx
shall promptly pay such amount to the Company, together with interest, at the
prime rate announced from time to time by US Bank, N.A.
If the indemnity referred to in this Exhibit A should be, for any reason
whatsoever, unenforceable, unavailable or otherwise insufficient to hold each
Indemnified Person harmless, the Company shall pay to or on behalf of each
Indemnified Person contributions for Losses so that each Indemnified Person
ultimately bears only a portion of such Losses as is appropriate (i) to reflect
the relative benefits received by each such Indemnified Person, respectively, on
the one hand and the Company on the other hand in connection with the
transaction or (ii) if the allocation on that basis is not permitted by
applicable law, to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of each such Indemnified Person,
respectively, and the Company as well as any other relevant equitable
considerations; provided, however, that in no event shall the aggregate
contribution of all Indemnified Persons to all Losses in connection with any
transaction exceed the amount of the fee actually received by U.S. Bancorp Xxxxx
Xxxxxxx pursuant to the Engagement Letter. The respective relative benefits
received by U.S. Bancorp Xxxxx Xxxxxxx and the Company in connection with any
transaction shall be deemed to be in the same proportion as the aggregate fee
paid to U.S. Bancorp Xxxxx Xxxxxxx in connection with the transaction bears to
the total consideration of the transaction. The relative fault of each
Indemnified Person and the Company shall be determined by reference to, among
other things, whether the actions or omissions to act were by such Indemnified
Person or the Company and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action or omission to
act.
The Company also agrees that no Indemnified Person shall have any liability to
the Company or its affiliates, directors, officers, employees, agents or
shareholders, directly or indirectly, related to or arising out of the
Engagement Letter, except Losses incurred by the Company which it shall have
been finally determined by arbitration in accordance with the terms of the
Engagement Letter to have resulted primarily from actions taken or omitted to be
taken by such Indemnified Person due to its gross negligence or willful
misconduct. In no event, regardless of the legal theory advanced, shall any
Indemnified Person be liable for any consequential, indirect, incidental or
special damages of any nature. The Company agrees that without U.S. Bancorp
Xxxxx Xxxxxxx'x prior written consent it shall not settle any pending or
threatened claim, action, suit or proceeding related to the Engagement Letter
unless the settlement also includes an express unconditional release of all
Indemnified Persons from all liability and obligations arising therefrom, or the
Company reaffirms its obligations to indemnify for or contribute to Losses
incurred by any unreleased Indemnified Person as herein provided.
Promptly after its receipt of notice of the commencement of any action, any
Indemnified Person will, if a claim in respect thereof is to be made against the
Company hereunder, notify in writing the Company of the commencement thereof;
but omission so to notify the Company will not relieve the Company from any
liability hereunder which it may have to any Indemnified Person. If the Company
so elects, the Company may assume the defense of such Action in a timely manner,
including the employment of counsel (reasonably satisfactory to U.S. Bancorp
Xxxxx Xxxxxxx) and payment of expenses, provided the Company acknowledges in
writing its unconditional obligation pursuant to this agreement to indemnify
U.S. Bancorp Xxxxx Xxxxxxx in respect of such Action and provides to U.S.
Bancorp Xxxxx Xxxxxxx evidence reasonably satisfactory to U.S. Bancorp Xxxxx
Xxxxxxx that the Company will have the financial resources to conduct such
defense actively and diligently and permits U.S. Bancorp Xxxxx Xxxxxxx and
counsel retained by U.S. Bancorp Xxxxx Xxxxxxx at its expense to participate in
such defense. Notwithstanding the foregoing, in the event U.S. Bancorp Xxxxx
Xxxxxxx determines in its sole discretion that it is advisable for the
Indemnified Persons to be represented by separate counsel, then U.S. Bancorp
Xxxxx Xxxxxxx may employ on behalf of the Indemnified Persons a single separate
counsel (and local counsel as necessary) to represent or defend such Indemnified
Persons in such action, claim, proceeding or investigation and the Company will
pay the fees and disbursements of such separate counsel as incurred.
In the event of any fundamental change involving the corporate structure of the
Company, such as by merger, plan of exchange or sale of all or substantially all
of its assets, any executory obligations of the Company in this engagement
letter shall, if not assumed by operation of law, be assumed by contract by the
acquiring entity or arrangements made to protect the interests of U.S. Bancorp
Xxxxx Xxxxxxx reasonably satisfactory to U.S. Bancorp Xxxxx Xxxxxxx.
If multiple claims are brought against U.S. Bancorp Xxxxx Xxxxxxx in any Action
with respect to at least one of which indemnification is permitted under
applicable law and provided for under this agreement, the Company agrees that
any judgment, arbitration award or other monetary award shall be conclusively
deemed to be based on claims as to which indemnification is permitted and
provided for.
The obligations of the Company referred to above shall be in addition to any
rights that any Indemnified Person may otherwise have.
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