EXHIBIT 2.2
XxXxxxxx & Co.
Suite 450
0000 Xxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
May 8, 2002
Xx. Xxxx X. Xxxxxxx
President
Ballantyne of Omaha, Inc.
0000 XxXxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Dear Xxxx:
By this letter agreement ("Agreement"), Ballantyne of Omaha, Inc. (the
"Company") retains XxXxxxxx & Co. ("XxXxxxxx") as its exclusive financial
advisor, upon the terms and subject to the conditions set forth herein, in
connection with a review of strategic alternatives (the "Review") generally
described as an analysis of the spectrum of alternatives available to maximize
shareholder value. This Agreement confirms the understanding between the Company
and XxXxxxxx with respect to the services XxXxxxxx will provide and confirms the
parties' understanding concerning fees and expenses, indemnification obligations
and other matters. The appointment of XxXxxxxx is exclusive and is for a period
of twelve (12) months commencing on the date of acceptance of this Agreement by
the Company, subject to (i) extension by written agreement of the Company and
XxXxxxxx and (ii) termination pursuant to Section 7 hereof.
1. FINANCIAL ADVISORY SERVICES PROVIDED. As the Company's financial advisor in
connection with the Review, XxXxxxxx will assist the Company in such
activities as the Company reasonably may require or request, including, but
not limited to:
a) developing a spectrum of alternatives to maximize shareholder value;
b) providing analysis of each alternative;
c) assessing the implementation viability of each alternative;
d) preparing and presenting periodic reports to the Company's board of
directors (the "Board");
e) marketing the Company in connection with a Transaction (as defined on
the attached Schedule I ) or other alternative the Company has elected
to pursue;
f) working with the Company and its other professionals in structuring the
key provisions of a Transaction or other alternative the Company has
elected to pursue;
g) managing the process for effectuating a Transaction or other alternative
the Company has elected to pursue including, without limitation,
managing and conducting the sale/auction process and managing the due
diligence/data room;
h) if requested, negotiating with the applicable parties in a Transaction
or other alternative the Company has elected to pursue and
i) taking such other steps necessary in order to complete a Transaction or
other alternative the Company has elected to pursue.
2. COMPENSATION. The above-described financial advisory services will be
provided without charge to the Company. However, in the event a Transaction
is consummated, the Company agrees to pay XxXxxxxx a cash fee in an amount
equal to 3% of the aggregate Consideration (as defined on the attached
Schedule I) paid in the Transaction. In the event, and only in the event,
that a Transaction is consummated, such payment shall be paid to XxXxxxxx
concurrently therewith.
3. OUT OF POCKET EXPENSES. During the period that XxXxxxxx serves as the
financial advisor hereunder, the Company agrees to reimburse XxXxxxxx for
reasonable and necessary expenses as incurred, including travel costs,
document production and other similar expenses up to a maximum amount not
exceeding $20,000. If an expense is in excess of $1,000, then XxXxxxxx will
obtain the approval of the Company prior to incurring such expense.
4. INDEMNIFICATION. The Company and XxXxxxxx agree to the provisions with
respect to the Company's indemnity of XxXxxxxx and other matters set forth
in Schedule II, the terms and conditions of which (i) are incorporated
herein in their entirety and (ii) form an integral part of this Agreement.
5. COOPERATION. Subject to Section 6 hereof, the Company agrees to furnish, or
cause to be furnished, to XxXxxxxx such information and data relating to
the Company and the Review that is within its control and not subject to
contractual or legal restrictions as to the disclosure of such material, as
XxXxxxxx determines is reasonably appropriate, and agrees to provide
XxXxxxxx with reasonable access to the Company's officers, directors,
employees, consultants, counsel, and independent accountants. The Company
agrees to inform XxXxxxxx promptly of any material developments that
concern or affect the Company or the Review.
The Company acknowledges that XxXxxxxx will rely upon the completeness
and accuracy of the information furnished to it pursuant to this Section 5
without undertaking independent verification and that XxXxxxxx does not
assume responsibility for the completeness or accuracy of such information.
The Company agrees to retain its own legal counsel and accountants for any
necessary legal, tax and accounting advice.
6. CONFIDENTIALITY. Except to the extent authorized by the Company in writing
or required by any federal or state law, rule or regulation or any decision
or order of any court or regulatory authority, XxXxxxxx will use its best
efforts not to disclose non-public information ("Confidential Information")
pertaining to the Company or its subsidiaries to any person, other than to
any officer, director, employee, agent, attorney, accountant or employee of
XxXxxxxx who needs to know the Confidential Information in connection with
the performance of XxXxxxxx'x services under this Agreement, provided that
each person who is provided with Confidential Information shall be informed
by XxXxxxxx of its confidential nature and shall agree to be bound by the
terms and conditions of this Section 6 to the same extent as if an original
signatory hereto. In the event that
XxXxxxxx or any person who has received Confidential Information from
XxXxxxxx becomes required by law or compelled by legal process to disclose
any such information, XxXxxxxx shall provide the Company with prompt prior
written notice of such requirement so that the Company may seek a
protective order (or other appropriate remedy) or waive compliance with
this Section 6.
Information provided to XxXxxxxx by the Company shall not be deemed to
be Confidential Information if such information (i) is or becomes generally
available to the public, other than as a result of a breach of this
Agreement by XxXxxxxx or any person to whom XxXxxxxx has disclosed such
information; (ii) is lawfully obtained by XxXxxxxx from a third party,
provided that the third party is not, to XxXxxxxx'x knowledge after making
due inquiry, bound by a nondisclosure agreement or other confidentiality
restriction with respect to such information or (iii) is documented by
XxXxxxxx as having been acquired or developed independently by XxXxxxxx
without violating any of its obligations under this Agreement; provided,
however, that such information shall not in any manner be used in violation
of any state or federal securities law.
The Company has outstanding publicly-held securities, and the
Confidential Information contains material non-public information. XxXxxxxx
acknowledges that it is (i) aware that the United States securities laws
prohibit any person in possession of material non-public information about
a company from purchasing or selling securities of such company, and from
communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person may purchase or sell
such securities and (ii) represented by counsel who is familiar with the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations thereunder, and XxXxxxxx agrees that it will
neither use nor permit any third party to use any Confidential Information
in violation of the Exchange Act or rules or regulations thereunder,
including, without limitation, Rules 10b-5 and 14e-3.
XxXxxxxx agrees that money damages would not be a sufficient remedy
for any breach of this Section 6 by it or any person to whom XxXxxxxx has
disclosed Confidential Information, and that, in addition to all other
remedies, the Company shall be entitled to specific performance and
injunctive or other equitable relief as a remedy for any such breach
without proof of damages. XxXxxxxx further agrees to waive, and to use its
best efforts to cause each person to whom XxXxxxxx has disclosed
Confidential Information to waive, any requirements for securing or posting
of any bond in connection with such remedy.
XxXxxxxx hereby acknowledges and confirms that the Company is not
making any representation or warranty, express or implied, as to the
accuracy or completeness of the Confidential Information and other
information supplied by the Company, and that neither the Company nor any
of its officers, directors, employees, stockholders, owners, affiliates,
agents or representatives will have any liability to XxXxxxxx or to any
other person resulting from the use by XxXxxxxx or any other person of the
Confidential Information or other information supplied by the Company.
This Agreement in no way alters, cancels, or modifies the
Confidentiality Agreement dated March 26, 2002 by and between the Company
and BalCo Holdings, LLC ("BalCo").
Any advice provided to the Company by XxXxxxxx pursuant to this
Agreement is solely for the information and assistance of the Board and
executive management of the Company. Except to the extent (i) authorized by
XxXxxxxx in writing; (ii) required by any federal or state law, rule or
regulation or any decision or order of any court or regulatory authority or
(iii) based upon a good faith determination by the Board that disclosure is
required in order to enable it to fulfill its fiduciary duties, the Company
will use its best efforts not to disclose any advice provided by XxXxxxxx
hereunder or the terms and conditions of this Agreement, to any person,
other than to any officer, director, employee, agent, attorney, accountant
or employee of the Company who needs to know of such advice or this
Agreement in connection with the services provided by XxXxxxxx under this
Agreement. In the event that the Company shall elect to make disclosure
covered by this paragraph, the Company shall provide XxXxxxxx with prior
written notice and a copy of such disclosure.
7. TERMINATION. Either the Company or XxXxxxxx may terminate this Agreement at
any time by giving thirty (30) days written notice to the other.
8. THIRD PARTY BENEFICIARY. The Company agrees that XxXxxxxx has been retained
to act solely as financial advisor to the Company, as set forth above, and
not as an advisor to or agent of any other person, and that the Company's
engagement of XxXxxxxx is not intended to confer rights upon any person not
a party hereto (including stockholders, employees or creditors of the
Company) as against XxXxxxxx or its affiliates, or their respective
directors, officers, employees or agents. The Company further agrees that
under no circumstances shall the execution of this Agreement or any act of
XxXxxxxx hereunder commit or be deemed a commitment by XxXxxxxx (or any
affiliate) to provide or arrange any bank financing or other debt or equity
financing for any transaction or to purchase any security in connection
therewith. It is specifically understood that the Board will base its
decisions regarding whether and how to pursue the Transaction after
considering all factors it deems relevant including the advice of XxXxxxxx
and the Company's legal, tax and other business advisors, and such other
factors which it considers appropriate. XxXxxxxx, as an independent
contractor under this Agreement, shall not assume the responsibilities of a
fiduciary to the Company or its stockholders in connection with the
performance of XxXxxxxx'x services hereunder, and any duties arising out of
its engagement shall be owed solely to the Company. XxXxxxxx, as an
independent contractor under this Agreement, shall have no right to bind
the Company in any manner. The rights and obligations the Company may have
to XxXxxxxx or XxXxxxxx'x affiliates under any credit or other agreement,
if any, are separate from the Company's rights and obligations under this
Agreement and will not be affected by XxXxxxxx'x services hereunder. The
rights and obligations XxXxxxxx or its affiliates may have to the Company
under any credit or other agreement, if any, are separate from XxXxxxxx'x
rights and obligations under this Agreement and will not be affected by
this Agreement.
9. ADDITIONAL AGREEMENTS. The parties hereto acknowledge that BalCo, an
affiliate of XxXxxxxx, owns a number of shares of Common Stock of the
Company. The parties also acknowledge that BalCo has previously expressed a
desire to enter into discussions with the Company concerning the possible
acquisition of additional shares of Common Stock, including all of the
shares of Common Stock, of the Company. The parties agree that simultaneous
with the execution of this Agreement, XxXxxxxx will cause BalCo to enter
into such agreements with the Company so to provide that, under certain
circumstances, neither BalCo, nor any of its affiliates will be a purchaser
of the stock of the Company during the term of this Agreement.
10. GOVERNING LAW. This Agreement is governed by the laws of the State of
Nebraska, without regard to principles of conflicts of laws. The parties
hereby submit to the jurisdiction of, and waive any venue objections
against, the United States District Court for the District of Nebraska and
the trial courts of the State of Nebraska and consent to the personal
jurisdiction of such courts for the purposes of this Agreement.
11. SURVIVAL; BINDING; ASSIGNMENT. Following the expiration or termination of
this Agreement by the Company, the terms and conditions of (i) Section 2
shall survive and continue to be applicable to any Transaction consummated
by the Company within one (1) year following the expiration or termination
of this Agreement; (ii) Section 3 shall survive to the extent of any unpaid
expenses which accrued prior to the expiration or termination of this
Agreement; (iii) Section 4 shall survive for the period specified in
Schedule II and (iv) Sections 6, 11 and 12 shall survive indefinitely.
Following the termination of this Agreement by XxXxxxxx, the terms and
conditions of (i) Section 4 shall survive for the period specified in
Schedule II and (ii) Sections 6, 11 and 12 shall survive indefinitely. This
Agreement shall be binding upon and inure to the benefit of the Company,
XxXxxxxx, the Indemnified Person(s) (as defined on the attached Schedule
II) and their respective permitted successors and assigns. This Agreement
may not be assigned without the prior written consent of the other party to
this Agreement.
12. ENTIRE AGREEMENT; AMENDMENTS; PRIOR AGREEMENT. This Agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof. All prior agreements, whether written or oral, are merged
herein and shall be of no force or effect. This Agreement may be amended by
an agreement in writing signed by XxXxxxxx and the Company.
13. NOTICES. All notices, demands or other communications given hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person or on the third (3rd) calendar day after being mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, to the addresses hereinabove first mentioned or to such other
address as any party hereto shall designate to the other for such purpose.
14. MISCELLANEOUS. Any determination that any provision of this Agreement may
be or is unenforceable shall not affect the enforceability of the remaining
provisions of this Agreement. The section headings in this Agreement are
for convenience of reference and are not to be deemed to be a part of this
Agreement. This Agreement may be executed
simultaneously in two (2) counterparts, each of which shall be deemed to be
an original but both of which shall constitute one and the same instrument.
If the terms set forth in this Agreement are acceptable to you, please
sign and date the enclosed copy of this letter and return it to XxXxxxxx.
XxXxxxxx & Co.
By: /s/Xxxx X. Xxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxx, Partner
Agreed and Accepted as of
this 8th day of May 2002.
Ballantyne of Omaha, Inc.
By: /s/Xxxx X. Xxxxxxx
------------------------------
Xxxx X. Xxxxxxx, President
SCHEDULE I
DEFINITION OF TRANSACTION
For purposes hereof, the term "Transaction" shall mean, whether in one or a
series of transactions, (a) any merger, consolidation, joint venture or other
business combination; (b) the acquisition by a purchaser, directly or
indirectly, of all or substantially all of the capital stock of the Company; and
(c) the acquisition by a purchaser, directly or indirectly, of all or
substantially all of assets, properties and/or businesses of the Company, by way
of a direct or indirect purchase, lease, license, exchange, joint venture or
other means. Excluded from the term Transaction are the (i) sale or other
disposition of Xenotech Rental Corporation and (ii) mortgaging or other
financing, or sale or other disposition of the Company's real property
(including, without limitation, all structures and fixtures located thereon and
all improvements thereto) located at 0000 XxXxxxxx Xxxxxx, Xxxxx, Xxxxxxxx.
DEFINITION OF CONSIDERATION
The term "Consideration" shall mean the total amount of cash and the fair market
value of other property paid or payable (including amounts paid into escrow) to
the Company and its shareholders in connection with the Transaction, including
amounts paid or payable in respect of options or similar rights, whether or not
vested, plus, without duplication, the amount of all indebtedness for borrowed
money of the Company (including capitalized leases) outstanding immediately
prior to consummation of the Transaction. Consideration shall also include,
without duplication, the aggregate amount of any cash dividends or other
distributions that are outside of the ordinary course and are declared by the
Company after the date hereof, amounts paid by the Company to repurchase any of
its securities outstanding on the date hereof and, in the case of a sale of
assets, the net value of any working capital of the Company (other than cash)
not acquired by the purchaser. Under no circumstances shall Consideration
include any amount payable to BalCo and/or its affiliates (in its or their
capacity as shareholder(s) of the Company), but not to the other shareholders of
the Company. Any dispute as to the fair market value of any asset or other
property shall be resolved by the entity which shall render the fairness opinion
in connection with the Transaction.
SCHEDULE II
INDEMNIFICATION AGREEMENT
The Company agrees to indemnify XxXxxxxx, any controlling person of XxXxxxxx and
each of their respective directors, officers, employees, agents, affiliates and
representatives (each, an "Indemnified Party") and hold each of them harmless
against any and all losses, claims, damages, expenses, liabilities, joint or
several (collectively, "Liabilities") to which the Indemnified Parties may
become liable, directly or indirectly, arising out of, or relating to, the
Agreement to which this Schedule II is attached (the "Agreement"), unless it is
finally judicially determined that the Liabilities resulted from the negligence
or misconduct of any Indemnified Party. Notwithstanding the foregoing, the
Company shall have no obligation under this Schedule II or the Agreement to any
Indemnified Party with respect to any claim arising out of, or relating to, such
Indemnified Party's status as, or relation to, a shareholder of the Company. The
Company further agrees to reimburse each Indemnified Party immediately upon
request for all expenses (including reasonable attorneys' fees and expenses) as
they are incurred in connection with the investigation of, preparation for,
defense of, or providing evidence in, any action, claim, suit, proceeding or
investigation, directly or indirectly, arising out of, or relating to, the
Agreement or XxXxxxxx'x services thereunder, unless it is finally judicially
determined that such liability results from the negligence or misconduct of such
Indemnified Party. Moreover, in no event, regardless of the legal theory
advanced, shall any Indemnified Party be liable to the Company or any person
asserting claims on behalf of or in the right of the Company for any
consequential, indirect, incidental or special damages of any nature. In the
event that an Indemnified Party is requested or required to appear as a witness
in any action brought by or on behalf of or against the Company or any affiliate
of the Company, in which such Indemnified Party is not named as a defendant, the
Company agrees to reimburse XxXxxxxx for all reasonable expenses incurred by it
in connection with such Indemnified Party's appearing and preparing to appear as
such a witness, including, without limitation, the reasonable fees and
disbursements of its legal counsel.
The Company shall maintain, control and lead any indemnification proceedings.
NOTWITHSTANDING THE FOREGOING, the Company shall not, without XxXxxxxx'x prior
written consent, settle, compromise or consent to the entry of any judgment in
or otherwise seek to terminate any claim, action, suit, proceeding or
investigation in respect of which indemnification is sought hereunder (whether
or not XxXxxxxx or any other Indemnified Party is an actual or potential party
to such claim, action, suit, proceeding or investigation), unless (a) such
settlement, compromise, consent or termination includes an unconditional release
of each Indemnified Party from any liabilities arising out of such claim,
action, suit, proceeding or investigation and (b) except to the extent
authorized by the parties in writing or required by any federal or state law,
rule or regulation or any decision or order of any court or regulatory
authority, the parties agree that the terms of such settlement shall remain
confidential.
The Company and XxXxxxxx agree that if any indemnification or reimbursement
sought pursuant to the first paragraph of this Schedule II is for any reason
unavailable or insufficient to hold the Indemnified Parties harmless (except by
reason of the negligence or misconduct of an Indemnified Party) then, whether or
not XxXxxxxx is the person entitled to indemnification or reimbursement, the
Company and XxXxxxxx shall contribute to the Liabilities for which such
indemnification or reimbursement is held unavailable in such proportion as is
appropriate to reflect (a) the relative benefits to the Company on the one hand
and XxXxxxxx on the other hand, in connection with the transaction to which such
indemnification or reimbursement relates or (b) if the allocation provided by
clause (a) above is not available, then in such proportion as is appropriate to
reflect not only the relative benefits referred to in such clause (a), but also
the relative fault of the parties as well as any other relevant equitable
considerations; provided, however, that in no event shall the amount to be
contributed by XxXxxxxx exceed the fees actually received by XxXxxxxx under the
Agreement. The Company agrees that, for the purposes of this paragraph, the
relative benefits to the Company and XxXxxxxx of the contemplated transaction
(whether or not such transaction is consummated) shall be deemed to be in the
same proportion that the aggregate consideration payable, exchangeable or
transferable (or contemplated to be payable, exchangeable or transferable) in
such transaction bears to the fees paid or payable to XxXxxxxx as financial
advisor under the Agreement.
XxXxxxxx agrees that it will provide Company with notice of any matter which it
may seek indemnification for hereunder within thirty (30) days of XxXxxxxx'x
receipt of such information reasonably indicating that a claim hereunder has
occurred. If XxXxxxxx fails to provide the Company with such notice AND the
Company is prejudiced in its defense of such claim, then the Company shall be
relieved of such indemnity hereunder to the extent such failure of notice by
XxXxxxxx has directly adversely affected the amount of damages.
The rights of the Indemnified Parties referred to above shall be in addition to
any rights that any Indemnified Party may otherwise have.
All rights to indemnification hereunder shall survive for a period of four (4)
years from the date of the Agreement.
