Item 9 (c)(3)
December 3, 1996
Xxxxxxxxxx Electronics, Ltd.
00X000 Xxxxxxxxx Xxxx
XxXxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxxxx
Chief Executive Officer
Dear Xx. Xxxxxxxxxx:
This letter (this "Agreement") will confirm the agreement
between Xxxxxxxxxx Electronics, Ltd. (the "Company") and Forum
Capital Markets L.P. ("Forum"), pursuant to which the Company has
agreed to retain Forum to render financial advisory and other
investment banking services to the Company in connection with an
Exchange Offer (as defined below) involving the Company's
existing 7 1/4% Convertible Subordinated Debentures due December
15, 2006 (the "Existing Securities"), in each case on the terms
and subject to the conditions set forth herein.
1. Engagement. The Company hereby agrees to retain Forum,
and Forum agrees to act, as exclusive financial advisor to the
Company in connection with the Exchange Offer, all on the terms
and conditions set forth herein. The services to be performed by
Forum with respect to the Exchange Offer will include (1)
performing financial analyses, (2) advising the Company with
respect to the terms of the new debt and the new capital
structure of the Company and (3) assisting the Company in the
preparation of the Exchange Offer Documents (as defined below).
It is anticipated that the Exchange Offer will be structured to
qualify for exemption from registration under the Securities Act
of 1933, as amended, pursuant to Section 3(a)(9) thereof, and
Forum will not be required to take any action which could
jeopardize the availability of such exemption. Forum will not
take any action other than those described in clauses (1), (2) or
(3) above without the prior written consent of the Company.
2. Certain Definitions. For purposes of this Agreement:
(i) The term "Exchange Offer" means each offer
(including any amendment thereto or modification thereof) by the
Company or any subsidiary or affiliate of the Company (a "Related
Entity") to holders of the Existing Securities (collectively, the
"Holders") to purchase or acquire in one or more transactions
(whether by tender offer, exchange offer, open market purchase,
private purchase or otherwise) Existing Securities and/or any
solicitation (including any amendment to or modification of any
solicitation) by the Company or any Related Entity with respect
to any Existing Securities, including each offer or solicitation
involving the issuance of new securities and/or the complete or
partial restructuring of the Company's capitalization and/or the
payment of other consideration (including cash) to Holders.
(ii) The term "Exchange Offer Documents" means each
offering circular, consent solicitation document and, if any,
each registration statement filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, as the case may be, including, as applicable, each
related letter of transmittal, and each related letter to Holders
pertaining to the Exchange Offer and each amendment or supplement
to any of the foregoing.
3. Compensation. In full payment for services rendered
and to be rendered hereunder by Forum, the Company agrees to pay
Forum a cash fee of $200,000, payable upon the earlier of (a) the
date of mailing of the Exchange Offer Documents or (b) March 1,
1997.
4. Expenses. In addition to any fees that may be payable
to Forum hereunder, the Company hereby agrees to pay, to or on
behalf of Forum, promptly upon request from time to time,
reasonable travel and other out-of-pocket expenses incurred by
Forum, including, without limitation, the reasonable fees and
expenses of Forum's counsel; provided, however, that
reimbursement for expenses shall not exceed $35,000 unless
expenses in excess of such amount are approved by the Company.
5. Information. The Company shall furnish, or cause to be
furnished, to Forum all information requested by Forum for the
purpose of rendering services hereunder, including the Exchange
Offer Documents (collectively the "Information"). The Company
recognizes and confirms that Forum:
(a) will use and rely on the Information and on
information available from generally recognized public sources in
performing the services contemplated by this Agreement without
having independently verified the same;
(b) does not assume responsibility for the accuracy or
completeness of the Information and such other information
(except for that portion of the Information provided by Forum,
which consists only of the pricing information with respect to
the Existing Securities); and
(c) will not make any appraisals in connection with
any Exchange Offer (including, but not limited to, appraisals of
the Company, any Related Entity or any securities or assets
thereof).
6. Confidential Nature of Advice. All advice (written or
oral) given by Forum to the Company or any Related Entity in
connection with Forum's engagement hereunder is intended solely
for the use and benefit of the Company (including its management,
directors and counsel) and shall be treated as confidential. The
Company agrees that no such opinion or advice shall be otherwise
used or disclosed, in any manner or for any purpose, nor shall
any public references to Forum be made by the Company (or such
persons), without the prior consent of Forum.
7. Indemnification. (a) The Company will indemnify Forum
for and hold Forum harmless, to the extent lawful, from any and
all losses, claims, damages or liabilities, as incurred, (i)
arising out of any untrue statement of a material fact in any
offering material (including, without limitation, the Exchange
Offer Documents) provided by the Company or any omission of a
material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, or (ii) resulting from any breach of the terms of
this Agreement by the Company, or (iii) to which Forum may
otherwise become subject in connection with its rendering of
services hereunder; provided, however, that such indemnity will
not apply to losses, claims, damages or liabilities (x) arising
out of gross negligence or willful misconduct of Forum, (y)
arising out of the breach by Forum of its obligations hereunder
or (z) which result from any compromise or settlement not
approved by the Company in writing. The Company will promptly
reimburse Forum for any and all reasonable legal or other
expenses, as incurred, by Forum in connection with investigating,
preparing for or defending any such claims or any actions related
thereto. This indemnity will also extend on the same terms and
conditions as set forth herein to the directors, officers,
employees, agents, counsel and controlling persons of Forum (each
such person, including Forum, an "Indemnified Person"). If any
claim, action or proceeding is brought or asserted against an
Indemnified Person in respect of which indemnity may be sought
from the Company, such Indemnified Person will promptly notify
the Company in writing of such claim, action or proceeding;
provided, however, that the failure to notify the Company shall
not relieve the Company from any liability or obligation that it
may have under this Section 7 or otherwise to such Indemnified
Person (except to the extent that such failure prejudices the
Company's ability to defend such action, claim, complaint or
proceeding).
(b) In case any such investigation, litigation,
proceeding or other action within the scope of this Section 7
shall be brought against any Indemnified Person, the Company
shall be entitled to participate in such investigation,
litigation, proceeding or other action and, after written notice
from the Company to such Indemnified Person, to assume the
defense of such investigation, litigation, proceeding or other
action with counsel of its choice at the Company's expense;
provided, however, that such counsel shall be reasonably
satisfactory to such Indemnified Person. Notwithstanding the
election of the Company to assume the defense of such
investigation, litigation, proceeding or action, such Indemnified
Person shall have the right to employ separate counsel and to
participate in the defense of such investigation, litigation,
proceeding or action, and the Company shall bear the fees, costs
and expenses of such separate counsel if (i) the use of counsel
chosen by the Company to represent such Indemnified Person would
present such counsel with a conflict of interest; (ii) the
defendants in, or targets of, any such investigation, litigation,
proceeding or action include both an Indemnified Person and the
Company, and such Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it which
are different from or additional to those available to the
Company; (iii) the Company shall not have employed counsel
satisfactory to such Indemnified Person in the exercise of such
Indemnified Person's reasonable judgment; or (iv) the Company
shall have notified the Indemnified Person that it may employ
separate counsel at the expense of the Company. In each such
case the Company shall not have the right to direct the defense
of such investigation, litigation, proceeding or action on behalf
of such Indemnified Person. In addition, the Indemnified Person
shall have the right to participate in any such investigation,
litigation, proceeding or action, and to employ separate counsel
in connection therewith, at any time at the Indemnified Person's
own cost and expense.
(c) In the event that the indemnity provided in this
Section 7 is unavailable or insufficient to hold harmless any
Indemnified Person, then the Company shall contribute to amounts
paid or payable by such Indemnified Person in respect of such
Indemnified Person's losses, claims, damages and liabilities as
to which such indemnity is unavailable or insufficient (i) in
such proportion as appropriately reflects the relative benefits
received by the Company, on the one hand, and Forum, on the other
hand, in connection with the matters as to which such losses,
claims, damages or liabilities relate, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law,
in such proportion as appropriately reflects not only the
relative benefits referred to in clause (i) above, but also the
relative fault of the Company, on the one hand, and Forum, on the
other hand, as well as any other equitable considerations. The
amounts paid or payable by a party in respect of losses, claims,
damages and liabilities referred to above shall be deemed to
include any legal or other fees and expenses incurred in any
investigation of and in defending any litigation, proceeding or
other action or claim. Notwithstanding the foregoing, the
Indemnified Persons' aggregate share of the liability hereunder
shall not be in excess of the amount of fees actually received by
Forum under this Agreement (excluding any amounts received as
reimbursement of expenses incurred by Forum).
(d) This Section 7 shall remain in full force and
effect whether or not any of the transactions contemplated by
this Agreement are consummated, shall survive the expiration or
termination of this Agreement and shall be in addition to any
liability that the Company might otherwise have to any
Indemnified Person under this Agreement or otherwise.
8. Use of Name. The Company agrees that any reference to
Forum or any affiliate of Forum in any Exchange Offer Document,
or any other release or communication, is subject to Forum's
prior approval. Except as required by law or regulations, if
Forum resigns prior to the dissemination of any Exchange Offer
Document or any other release or communication, no reference
shall be made therein to Forum.
9. Termination or Resignation. The term of Forum's
engagement hereunder commences on the date hereof and expires six
months from the date hereof. In addition, Forum shall have the
right to resign, and the Company shall have the right to
discharge Forum, at any time for any reason, by giving prior
written notice. If this Agreement is terminated prior to the
mailing of the Exchange Offer Documents to the Holders, Forum
shall not be entitled to receive the amounts provided in Section
3 hereof. If this Agreement is terminated or expires after
mailing of the Exchange Offer Documents to the Holders, Forum
shall be entitled to receive all of the amounts provided in
Section 3 hereof. Regardless of whether this Agreement is
terminated before or after the mailing of the Exchange Offer
Documents to the Holders, Forum and its counsel shall be entitled
to receive all of the amounts provided in Section 4 hereof up to
and including the effective date of such termination.
10. Notice. Notice given pursuant to any of the provisions
of this Agreement shall be in writing and shall be mailed or
delivered (a) to the Company, at its offices at 00X000 Xxxxxxxxx
Xxxx, XxXxx, Xxxxxxxx 00000, Attention: Xx. Xxxxxx X. Xxxxxxxxxx,
Chief Executive Officer; and (b) to Forum at 00 Xxxxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xx. Xxxxxxx X.
XxXxxxx, Managing Director.
11. Entire Agreement and Governing Law. This Agreement
incorporates the entire understanding of the parties and
supersedes all previous agreements between Forum and the Company
with respect to the subject matter hereof, and this Agreement
shall be governed by, and construed in accordance with, the laws
of the State of Connecticut without regard to principles of
conflicts of law.
12. Survival of Certain Provisions. Notwithstanding
anything to the contrary contained herein, the provisions hereof
concerning confidentiality, indemnity and the obligations of the
Company to pay accrued fees and reimburse expenses (including,
without limitation, those contained in Sections 3, 4, 6, 7 and 9
hereof) shall survive the termination or expiration of this
Agreement.
13. No Third Party Beneficiaries. This Agreement has been
and is made solely for the benefit of the Company, Forum and the
other indemnified persons referred to in Section 7 hereof and
their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this
Agreement.
Please confirm that the foregoing is in accordance with your
understanding of our agreement by signing and returning to Forum
the duplicate of this letter enclosed herewith.
Very truly yours,
FORUM CAPITAL MARKETS L.P.
By: /s/ Xxxxxxx X. XxXxxxx
Xxxxxxx X. XxXxxxx
Managing Director
Agreed to and accepted as of
the date first written above:
XXXXXXXXXX ELECTRONICS, LTD.
By: /s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
Chief Executive Officer
