Josephberg Xxxxx & Co., Inc.
Investment Bankers
000 Xxxxxxx Xxxxxx x Xxx Xxxx, XX 00000
(000) 000-0000 Fax (000) 000-0000
December 2, 1996
Xxxxxxx Xxxxxxx
Chairman, CEO
BCAM International, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Xxxx:
I. The purpose of this letter is to set forth the terms of our agreement (the
"Agreement") with respect to the compensation which Josephberg Xxxxx & Co., Inc.
or its designees ("JGC") is to receive for assisting and advising BCAM
International, Inc. or related entities, direct or indirect (the "Company"), on
its acquisition of Drew Shoe Corporation ("DS") and in obtaining a capital
infusion of equity, debt, letter or line of credit, lease financing or other
types of financial transactions, including any transactions of financial value
as it relates to DS and the Company (the "Financing"). Our focus will be on
advising the Company and providing Financing of $8,500,000 (less any dollar
amount raised by the Company through the conversion of its warrants and also
before JGC's fees) for your acquisition of Xxxx Xxxx Corporation and capital for
your Company after the acquisition. With senior debt already in place of
approximately $2,500,000, the capital will probably be in the form of equity or
subordinated debt, including a special class of convertible preferred stock.
Based on the representations you have made on DS financials, the Company's
future business and joint venture prospects ant the projected use of proceeds,
we are highly confident that the following general terms for the Financing will
be acceptable to the Investor: an 8% cumulative convertible preferred stock: the
preferred will be convertible twelve months from the anniversary date of the
investment at a 25% discount to the average bid / ask price over the preceding
10 day period; the 8% dividend would be offered at the end of the 12 month
period in cash or stock (we should decide) but could, depending on negotiations,
be due earlier. At the end of the 12 month period, put / call provisions may be
negotiated along with additional holding periods with negotiated conversion
prices. Piggy-back and registration rights (if at least 2/3 of the investment
group request it) in addition to dilution provisions are also key factors to be
addressed. Obviously, we will attempt to minimize dilution and not strap the
Company's cash flow. We also understand that it is the Company's objective to
close the acquisition and have the Financing in place prior to February 1, 1997.
II. To assist and advise the Company in the acquisition and obtaining Financing,
the Company agrees to engage JGC as its investment advisor with respect to
Financing sources, direct or indirect, (the "Investor"). When such Financing
from the Investor (other than a Financing in the nature of one described in
paragraphs III & IV below) is provided, JGC will be compensated
Xxxxxxx Xxxxxxx
December 2, 1996
Page Two
by the Company, in full, at the closing of the Financing, by receiving a total
fee of 8%, including both a cash fee of 6% and a fee of 2% in the form of common
stock of the Company, the total fees (8%) equal to the total gross dollar value
received or to be received (including any form of equity, stock, convertible
securities or subordinated debt Financing) by the Company. Any and all common
stock to be received by JGC as a fee shall have appropriate piggy-back-rights
and be priced at the closing of the Financing based on the same valuation as the
Financing (i.e. $8,500,000 Financing provided; JGC receives a cash fee of 6%, to
be $510,000 and a 2% fee equal to $170,000 in the form of common stock of the
Company). In addition, JGC will have the right to invest in the Company by
receiving a five year warrant for a total dollar amount equal to 10% of the
total Financing provided by the Investor at the same price as the Investor and
the same rights as the Investor.
III. For senior debt, credit facilities, guarantees; lease financing and letter
or line of credit Financing, JGC's cash fee, if such is provided by an Investor
introduced by JGC, directly or indirectly, shall be 2.0% of the total dollar
value received or made available to the Company.
IV. In the event the Company enters into a merger, acquisition or joint venture
with an Investor, introduced by JGC, directly or indirectly, JGC will be
compensated by the Company, in full, at the closing thereof, in accordance with
the 5/4/3 Formula, (i.e. by receiving a cash fee of 5% of the first $1,000,000
of Value received by the Company or the Investor, whichever is applicable, 4% of
the second $1,000,000 and 3% of all Value received in excess of $3,000,000).
While not all inclusive, Value shall include total cash, notes, debt, stock,
consulting, non-compete, earn-out, sales and royalty agreements.
V. The fees in paragraphs II, III and IV above are totally independent of one
another and are based upon the type or types of transactions JGC arranges.
VI. In addition, if JGC is successful in obtaining such Financing, (i.e., the
fees in paragraphs II), JGC shall receive, at closing, a 1% cash expense
reimbursement, (i.e. $8,500,000 total Financing provided or made available, JGC
receives 1%, to be $85,000). In addition, JGC shall be reimbursed for all
out-of-pocket expenses from the date of the execution of this Agreement until
its termination. However, all expenses to be reimbursed must be approved by the
Company in advance.
VII. Upon the execution of this Agreement, the Company agrees to pay JGC a fee
of $13,000 and an additional $12,000 thirty days from the signing of this
Agreement, for a total of $25,000. Such fee is to advise the Company on its
acquisition of Drew and to provide
Xxxxxxx Xxxxxxx
December 2, 1996
Page Three
Financing for the Drew acquisition and capital for the Company. JGC will also
advise the Company on its Business Plan for the Financing of the Drew
acquisition and capital for the Company.
VIII. This Agreement may be terminated or amended by the Company on January 10,
1997 or anytime thereafter with ten days prior written notice. Termination of
this Agreement shall not release the Company of its obligation to compensate JGC
for its services rendered including the completion of the Financing as it
relates to this Agreement, including paragraphs two, three and four. In other
words JGC shall be compensated if any party introduced as it relates to this
Agreement, enters into a transaction or provides Financing as long as the
transaction (transactions) or Financing (Financings) was provided by those
parties within one year after termination of this Agreement.
IX. It is understood and agreed that you shall have the right to accept or
reject in your judgement the terms of any Financing or transaction proposed by
any Financing Sources, Investors, strategic partners and/or corporations
presented to you. If such Financing is provided by the Investor to the Company
and accepted, the Company agrees to represent to the Investor prior to the
closing of the transaction that the fees due and payable to JGC as they apply to
this Agreement will be paid to JGC at the closing of the transaction.
X. This Agreement shall be governed and construed in accordance with the laws of
the State of New York. In the event of any dispute between us regarding the
subject matter of this Agreement, such dispute shall be submitted to arbitration
before a single arbitrator in New York City in accordance with the rules of the
American Arbitration Association. Any decision or award shall be final and
binding upon the parties hereto. All legal fees and expenses shall be paid to
the prevailing party by the losing party.
Sincerely,
Josephberg Xxxxx & Co., Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxxx 12/2/96
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Xxxxxxx X. Xxxxxxxxxx Date
Chairman
AGREED AND ACCEPTED:
BCAM International, Inc.
By: /s/Xxxxxxx Xxxxxxx 12/4/96
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Xxxxxxx Xxxxxxx Date
Chairman
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