Exhibit 10.2
April 6, 2000
Xxxxx Xxxxxx
Chairman/ Chief Executive Officer
First Priority Group, Inc.
00 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
The purpose of this letter agreement (the "Agreement") is to set forth the terms
and conditions pursuant to which Ladenburg Xxxxxxxx & Co. Inc. ("LTCO") shall
serve as exclusive placement agent in connection with the proposed offering of
equity securities (the "Securities") of First Priority Group, Inc. (the
"Company") pursuant to a registration statement, wherein the commitment for the
offering will be for $10,000,000 (the "Offering"). All references to dollars
shall be to U.S. dollars. The terms of such Offering and the Securities shall be
substantially in the form set forth in Exhibit D hereto, which exhibit is
incorporated by reference herein.
Upon the terms and subject to the conditions of this Agreement, the
parties hereto agree as follows:
1. Appointment. (a) Subject to the terms and conditions of this
Agreement hereinafter set forth, the Company hereby retains LTCO, and LTCO
hereby agrees to act as the Company's exclusive placement agent and financial
advisor in connection with the Offering, effective as of the date hereof. The
Company expressly acknowledges and agrees that LTCO's obligations hereunder are
on a reasonable best efforts basis only and that the execution of this Agreement
does not constitute a commitment by LTCO to purchase the Securities and does not
ensure the successful placement of the Securities or any portion thereof or the
success of LTCO with respect to securing any other financing on behalf of the
Company.
(b) Except as set forth below in this Section 1, during the
effectiveness of this Agreement, neither the Company nor any of its subsidiaries
or affiliates shall, directly or indirectly, through any officer, director,
employee, agent or otherwise (including, without limitation, through any
placement agent, broker, investment banker, attorney or accountant retained by
the Company or any of its subsidiaries or affiliates), solicit, initiate or
encourage the submission of any proposal or offer (an "Investment Proposal")
from any person or entity (including any of such person's or entity's officers,
directors, employees, agents and other representatives) except for those
entities or persons listed on Exhibit E relating to any issuance of the
Company's or any of its subsidiaries' equity securities (including debt
securities with any equity feature) or relating to any other transaction having
a similar effect or result on the Company's or any of its subsidiaries'
capitalization, or participate in any discussions or negotiations regarding, or
furnish to any other person or entity any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage any effort or attempt by any other person or entity to do or seek to
do any of the foregoing. The Company shall immediately cease and cause to be
terminated any and all contacts, discussions and negotiations with third parties
regarding any Investment Proposal except for those entities or persons listed on
Exhibit E. The Company shall promptly notify LTCO if any such Investment
Proposal, or any inquiry or contact with any person or entity with respect
thereto, is made. The Company shall not provide or release any information with
respect to this Agreement or the Offering except as required by law.
(c) Notwithstanding anything to the contrary contained herein, in the
event that LTCO shall not provide to the Company within 30 days after the date
hereof, one or more qualified institutional investors reasonably acceptable to
the Company willing to invest in the Offering on substantially the same terms as
outlined in the term sheet marked Exhibit D with documentation that is
reasonably satisfactory to the Company and its counsel, the Company shall have
the right to terminate this Agreement upon a ten-day written notice.
2. Fees and Compensation. In consideration of the services rendered by
LTCO in connection with the Offering, the Company agrees to pay LTCO the
following fees and other compensation:
(a) 1) 2% warrant coverage on $5 million as commitment fee; one
half of which shall be payable immediately upon the initial
closing which will be the date of the completion of the
initial draw down under the Offering and the remainder of
which shall be payable six months after such date; after
the Company draws down at least $5 million under the
Offering, 4% warrant coverage on the amount draw down by
the Company at each subsequent closing payable at the
applicable subsequent closing which will be the date of the
completion of the applicable subsequent draw down under the
Offering. The warrant coverage shall be determined as
follows: 1% * (for the initial and six months later
closing) $5 million or (for subsequent closings) the amount
drawn down by the Company at the applicable subsequent
closing / the volume weighted average price ("VWAP") of the
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Company's common stock on the trading day immediately
preceding the applicable closing. The Warrants shall have a
term of three years and a strike price equal to 150% of the
VWAP of the Company's common stock on the trading day
immediately preceding the applicable closing; and
2) a cash fee payable upon the initial and each subsequent
closing equal to 4% of the amount drawn down by the Company
at each such closing; and
(b) Reimbursement of reasonable and actual expenses incurred by
LTCO in connection with the Offering, except legal fees shall
not exceed $35,000 in the aggregate with those legal fees paid
to the Investor(s) as set forth in Exhibit D herein. Such fees
shall be refunded by LTCO to the Company out of the first Draw
Down commission otherwise payable after the Company has drawn
down at least $5 million.
(c) All amounts payable hereunder shall be paid to LTCO out of the
Company's or investor's attorney escrow account at the
closing.
(d) Should LTCO provide a qualified institutional investor(s)
reasonably acceptable to the Company and such investor(s) is
willing to invest in the Offering on substantially the same
terms as outlined in the term sheet marked Exhibit D, with
documentation that is reasonably satisfactory to the Company
and its counsel, and the Company were to terminate the
Agreement after April 6, 2000 or prior to March 31, 2001 (the
"Termination Date"), for reasons other than a breach of this
Agreement by LTCO, the Company will pay $100,000 to LTCO as a
"break-up" fee.
3. Terms of Retention. (a) Unless extended or terminated in writing by
the parties hereto in accordance with the provisions hereof, this
Agreement shall remain in effect until the Termination Date of March
31, 2001 or the full commitment of the Offering is invested, which
ever is earlier.
(b) Notwithstanding anything herein to the contrary, the
obligation to pay the Fees and Compensation and Expenses
described in Section 2, if any, and paragraphs 2, 6, and 8 of
Exhibit A and all of Exhibit B and Exhibit C attached hereto,
each of which exhibits is incorporated herein by reference,
shall survive any termination or expiration of the Agreement.
It is expressly understood and agreed by the parties hereto
that any private financing of equity or debt or other capital
raising activity of the Company within 24 months of the
termination or expiration of this Agreement, with any
investors to whom the Company was introduced by LTCO or who
was contacted by LTCO while this Agreement was in effect and
disclosed to the Company in writing, shall result in such fees
and compensation being due and payable by the Company to LTCO
under the same terms of Section 2 above.
4. Right of First Refusal. Upon completion of the Offering, LTCO shall
have an irrevocable right of first refusal for a period of one year
to provide all financing
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arrangements for the Company (other than conventional banking
arrangements, borrowing and commercial debt financing and discrete
unrelated transactions of not more than $250,000 where no investment
banking fee is being paid). LTCO shall exercise such right in
writing within five (5) business days of receipt of a written term
sheet describing such proposed transaction in reasonable detail.
5. Information. The Company recognizes and confirms that in completing
its engagement hereunder, LTCO will be using and relying on publicly
available information and on data, material and other information
furnished to LTCO by the Company or the Company's affiliates and
agents. It is understood and agreed that in performing under this
engagement, LTCO will rely upon the accuracy and completeness of,
and is not assuming any responsibility for independent verification
of, such publicly available information and the other information so
furnished. Notwithstanding the foregoing, it is understood that LTCO
will conduct a due diligence investigation of the Company and the
Company will cooperate in all respects with such investigation as a
condition of LTCO's obligations hereunder.
6. Registration. The Company shall prepare and file with the SEC a
registration statement. From time to time in connection with any
particular sale of Securities, the Company will, at its own expense,
obtain any registration or qualification required to sell any
Securities under the Blue Sky laws of any applicable jurisdictions,
as reasonably requested by LTCO.
7. No General Solicitation. The Securities will be offered only by
approaching prospective purchasers on an individual basis. No
general solicitation or general advertising in any form will be used
in connection with the offering of the Securities. From and after
the filing of the registration statement, the Company shall
pre-clear any proposed press release with LTCO which consent shall
not be unreasonably withheld.
8. Closing. The closing of the sale of the Securities shall be subject
to customary closing conditions, including the provision at closing
by the Company of officers' certificates, opinions of counsel and
"cold comfort" letters from the Company's auditors.
9. Miscellaneous. This Agreement together with the attached Exhibits A
through E constitutes the entire understanding and agreement between
the parties with respect to its subject matter and there are no
agreements or understandings with respect to the subject matter
hereof which are not contained in this Agreement. This Agreement may
be modified only in writing signed by the party to be charged
hereunder.
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If the foregoing correctly sets forth our agreement, please confirm
this by signing and returning to us the duplicate copy of this letter.
We appreciate this opportunity to be of service and are looking forward
to working with you on this matter.
Very truly yours,
LADENBURG XXXXXXXX & CO. INC.
By:
-------------------------------------
Name:
Title:
Agreed to and accepted as of the date first written above:
First Priority Group, Inc.
By:
--------------------------------------------
Name:
Title:
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EXHIBIT A
STANDARD TERMS AND CONDITIONS
1. The Company shall promptly provide LTCO with all relevant information
about the Company (to the extent available to the Company in the case
of parties other than the Company) that shall be reasonably requested
or required by LTCO, which information shall be accurate in all
material respects at the time furnished.
2. LTCO shall keep all information obtained from the Company strictly
confidential except: (a) information which is otherwise publicly
available, or previously known to, or obtained by LTCO independently of
the Company and without breach of LTCO's agreement with the Company;
(b) LTCO may disclose such information to its employees and attorneys,
and to its other advisors and financial sources on a need to know basis
only and shall ensure that all such employees, attorneys, advisors and
financial sources will keep such information strictly confidential; and
(c) pursuant to any order of a court of competent jurisdiction or other
governmental body or as may otherwise be required by law.
3. The Company recognizes that in order for LTCO to perform properly its
obligations in a professional manner, it is necessary that LTCO be
informed of and, to the extent practicable, participate in meetings and
discussions between the Company and any third party relating to the
matters covered by the terms of LTCO's engagement.
4. The Company agrees that any report or opinion, oral or written,
delivered to it by LTCO is prepared solely for its confidential use and
shall not be reproduced, summarized, or referred to in any public
document or given or otherwise divulged to any other person without
LTCO's prior written consent, except as may be required by applicable
law or regulation.
5. No fee payable to LTCO pursuant to any other agreement with the Company
or payable by the Company to any agent, lender or investor shall reduce
or otherwise affect any fee payable by the Company to LTCO hereunder.
6. The Company represents and warrants that: (a) it has full right, power
and authority to enter into this Agreement and to perform all of its
obligations hereunder; (b) this Agreement has been duly authorized and
executed and constitutes a valid and binding agreement of the Company
enforceable in accordance with its terms; and (c) the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby does not conflict with or result in a breach of (i)
the Company's certificate of incorporation or by-laws or (ii) any
agreement to which the Company is a party or by which any of its
property or assets is bound.
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EXHIBIT A (CONTINUED)
7. Nothing contained in this Agreement shall be construed to place LTCO
and the Company in the relationship of partners or joint venturers.
Neither LTCO nor the Company shall represent itself as the agent or
legal representative of the other for any purpose whatsoever nor shall
either have the power to obligate or bind the other in any manner
whatsoever. LTCO, in performing its services hereunder, shall at all
times be an independent contractor.
8. This Agreement has been and is made solely for the benefit of LTCO and
the Company and each of the persons, agents, employees, officers,
directors and controlling persons referred to in Exhibit B and their
respective heirs, executors, personal representatives, successors and
assigns, and nothing contained in this Agreement shall confer any
rights upon, nor shall this Agreement be construed to create any rights
in, any person who is not party to such Agreement, other than as set
forth in this paragraph.
9. The rights and obligations of either party under this Agreement may not
be assigned without the prior written consent of the other party hereto
and any other purported assignment shall be null and void.
10. All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and shall be mailed, hand
delivered, or sent via facsimile and confirmed by letter, to the party
to whom it is addressed at the following addresses or such other
address as such party may advise the other in writing:
To the Company:
Xxxxx Xxxxxx
First Priority Group, Inc.
00 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To LTCO:
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All notices hereunder shall be effective upon receipt by the party to which it
is addressed.
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EXHIBIT B
INDEMNIFICATION
The Company agrees that it shall indemnify and hold harmless, LTCO, its
stockholders, directors, officers, employees, agents, affiliates and controlling
persons within the meaning of Section 20 of the Securities Exchange Act of 1934
and Section 15 of the Securities Act of 1933, each as amended (any and all of
whom are referred to as an "Indemnified Party"), from and against any and all
losses, claims, damages, liabilities, or expenses, and all actions in respect
thereof (including, but not limited to, all legal or other expenses reasonably
incurred by an Indemnified Party in connection with the investigation,
preparation, defense or settlement of any claim, action or proceeding, whether
or not resulting in any liability), incurred by an Indemnified Party: (a)
arising out of, or in connection with, any actions taken or omitted to be taken
by the Company, its affiliates, employees or agents, or any untrue statement or
alleged untrue statement of a material fact contained in any of the financial or
other information contained in the registration statement and/or final
prospectus furnished to LTCO by or on behalf of the Company or the omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; or (b) with respect to, caused by, or otherwise
arising out of any transaction contemplated by the Agreement or LTCO's
performing the services contemplated hereunder; provided, however, the Company
will not be liable under clause (b) hereof to the extent, and only to the
extent, that any loss, claim, damage, liability or expense is finally judicially
determined to have resulted primarily from LTCO's negligence or bad faith in
performing such services.
If the indemnification provided for herein is conclusively determined
(by an entry of final judgment by a court of competent jurisdiction and the
expiration of the time or denial of the right to appeal) to be unavailable or
insufficient to hold any Indemnified Party harmless in respect to any losses,
claims, damages, liabilities or expenses referred to therein, then the Company
shall contribute to the amounts paid or payable by such Indemnified Party in
such proportion as is appropriate and equitable under all circumstances taking
into account the relative benefits received by the Company on the one hand and
LTCO on the other, from the transaction or proposed transaction under the
Agreement or, if allocation on that basis is not permitted under applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and LTCO on the other, but also the
relative fault of the Company and LTCO.
The Company shall not settle or compromise or consent to the entry of
any judgment in or otherwise seek to terminate any pending or threatened action,
claim, suit or proceeding in which any Indemnified Party is or could be a party
and as to which indemnification or contribution could have been sought by such
Indemnified Party hereunder (whether or not such Indemnified Party is a party
thereto), unless such consent or termination includes an express unconditional
release of such Indemnified Party, reasonably satisfactory in form and substance
to such Indemnified Party, from all losses,
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claims, damages, liabilities or expenses arising out of such action, claim, suit
or proceeding.
The foregoing indemnification and contribution provisions are not in
lieu of, but in addition to, any rights which any Indemnified Party may have at
common law hereunder or otherwise, and shall remain in full force and effect
following the expiration or termination of LTCO's engagement and shall be
binding on any successors or assigns of the Company and successors or assigns to
all or substantially all of the Company's business or assets.
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EXHIBIT C
JURISDICTION
The Company hereby irrevocably: (a) submits to the jurisdiction of any
court of the State of New York in NY or Nassau County or any federal court
sitting in the State of New York in the Southern District or Eastern District
for the purposes of any suit, action or other proceeding arising out of the
Agreement between the Company and LTCO which is brought by or against the
Company or LTCO; (b) agrees that all claims in respect of any suit, action or
proceeding may be heard and determined in any such court; and (c) to the extent
that the Company has acquired, or hereafter may acquire, any immunity from
jurisdiction of any such court or from any legal process therein, the Company
hereby waives, to the fullest extent permitted by law, such immunity.
The Company waives, and the Company agrees not to assert in any such
suit, action or proceeding, in each case, to the fullest extent permitted by
applicable law, any claim that: (a) the Company is not personally subject to the
jurisdiction of any such court; (b) the Company is immune from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
the aid of execution, execution or otherwise) with respect to it or its
property; (c) any such suit, action or proceeding is brought in an inconvenient
forum; (d) the venue of any such suit, action or proceeding is improper; or (e)
this Agreement may not be enforced in or by any such court.
Any process against the Company in, or in connection with, any suit,
action or proceeding filed in the United States District Court or any other
court of the State of New York, arising out of or relating to this Agreement or
any transaction or agreement contemplated hereby, may be served on the Company
personally, or overnight courier (with the same effect as though served upon the
Company personally) addressed to the Company at the address set forth in the
Agreement between the Company and LTCO.
Nothing in these provisions shall affect any party's right to serve
process in any manner permitted by law or limit its rights to bring a proceeding
in the competent courts of any jurisdiction or jurisdictions or to enforce in
any lawful manner a judgment obtained in one jurisdiction in any other
jurisdiction.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of law
principles.
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