Exhibit 10.1
[JUST TOYS, INC. LETTERHEAD]
June 24, 1999
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Gentlemen:
This letter will confirm our understanding that the scope of your
engagement pursuant to the letter agreement dated August 31, 1998 (the
"Engagement letter") between Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc. and Just Toys,
Inc. shall be expanded to include a "Sale Transaction" (as hereinafter defined).
In reference to the foregoing, we have agreed as follows:
1. The first sentence of Section 1 of the Engagement Letter shall be
amended in its entirety to read as follows:
The Company hereby engages Xxxxxx Xxxxxx as its exclusive financial
advisor for the purpose, among other things, of identifying and
assisting the Company with the structure, evaluation, negotiation
and financing of Acquisition Transactions (as hereinafter defined)
and Sale Transactions (as hereinafter defined).
2. The first paragraph of Section 1 of the Engagement Letter shall be
amended to add the following sentence:
As used in this agreement the term "Sale Transaction" means, whether
effected in one transaction or a series of transactions: (a) any
merger, consolidation, reorganization or other business combination
pursuant to which (i) the Company or the business of the Company is
acquired or combined with another entity, (ii) any subsidiary,
assets or business of the Company is spun-off, dividended or
otherwise distributed to the Company's stockholders or creditors,
(b) an acquisition, directly or indirectly, by a third party of more
than 25% of the capital stock outstanding or a substantial portion
of the Company's assets by way of a tender or exchange offer,
negotiated purchase or otherwise, or (c) the acquisition, directly
or indirectly, by a third party of control of the Company or the
ability to effect such control, through a proxy contest or
otherwise.
3. The first sentence of the second paragraph of Section 1 of the
Engagement Letter shall be amended to insert the words "and Sale Transactions"
after the words "Acquisition Transactions".
4. The first sentence of Section 3 of the Engagement Letter shall be
amended to insert the words "in connection with Acquisition Transactions" after
the words "pursuant to this agreement" in the second line thereof.
5. The following paragraph shall be added as an additional paragraph to
Section 3 of the Engagement Letter:
In connection with a Sale Transaction, the Company will pay Xxxxxx
Xxxxxx a transaction fee calculated as a percentage of the Purchase
Price (as hereafter defined) in accordance with the following
schedule:
Purchase Price Percentage
-------------- ----------
Up to the first $5.0 million 3.0%
Plus on the next $10.0 million 2.5%
Plus on the amount over $15.0 million 2.0%
In connection with a Sale Transaction involving a tender offer or other
purchase or sale of stock, the transaction fee will be payable and calculated
based on the Purchase Price as though 100% of the outstanding stock on a fully
diluted basis had been acquired for the same per share amount paid in the
transaction or series of transactions in which 50% or more of the Company's
outstanding stock is acquired. Nevertheless, Xxxxxx Xxxxxx'x services pursuant
to this Agreement will continue after such first step is accomplished to assist
the Company with a second step merger or similar transaction, at no additional
cost. If less than 50% of the Company's outstanding stock is acquired, the
transaction fee will be payable and calculated on the Purchase Price payable
only with respect to the actual stock acquired.
The term "Purchase Price" means the sum of the aggregate fair market
value of any securities and non-cash consideration, and the aggregate amount of
any cash consideration, received by the Company or the holders of its securities
in connection with a Sale Transaction (including, without limitation, amounts
paid to holders of any warrants, stock purchase rights, convertible securities
or similar rights and to holders of any options or stock appreciation rights
issued by the Company, whether or not vested), plus the amount of any
indebtedness of the Company that is on the acquired Company's balance sheet at
the consummation of the Sale Transaction or is otherwise assumed, refinanced or
extinguished, directly or indirectly, by the acquiring Company (or the surviving
entity in any merger), plus the amount of any payments
under consulting agreements, agreements not to compete or similar arrangements
(including such payments to management), plus, in the event the Sale Transaction
takes the form of a purchase of assets, (i) the value of any current assets of
the acquired company not purchased, minus (ii) the value of any current
liabilities of the Company not assumed by the acquiring company which were
directly related to the operations that are the subject of the Sale Transaction.
The term "Purchase Price" shall also indicate the present value
(discounted as of the closing date of the Sale Transaction at the rate of 6% per
annum) of the maximum consideration that is or may be payable subsequent to the
closing of a Sale Transaction, including the payment of which is contingent upon
the occurrence or non-occurrence of specified events or the passage of time. The
fair market value of any securities and non-cash consideration received by the
Company or holders of its securities shall be the value determined in good faith
by the Company and Xxxxxx Xxxxxx upon the closing of the Sale Transaction;
provided, however, that to the extent such consideration consists of securities
with an existing public trading market, the value thereof shall be the average
closing price for such notes or securities as reported on the primary exchange
on which such notes or securities are traded for the five trading days prior to
the consummation of the Sale Transaction.
Notwithstanding the foregoing, if the consideration per share is $2.00
or greater, the transaction fee payable in connection with a Sale Transaction
hereunder shall not exceed $100,000 (exclusive of any proceeds received with
respect to any Warrants.)
6. Except as amended hereby, the Engagement Letter shall remain in full
force and effect.
JUST TOYS, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Senior Vice President/Chief Operating
Officer
Agreed To and Accepted:
XXXXXX XXXXXX XXXXXXXX & CO., INC.
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: Senior Managing Director
