Jefferies & Co, Inc.
000 Xxxxxxx Xxx. 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
Telephone (212) 000-000X Fax (000) 000-0000
CORPORATE FINANCE
April 29, 2002
FLOOR DECOR, INC.
0000 Xxxxxxxxx Xxxx
Xxxx Xxxxxxxxxx, XX 00000
Attention. Xx. X.X Xxxxxx, President
Ladies and Gentlemen:
1. Retention. This letter agreement (the Agreement) confirms that Floor Decor,
Inc. (the "Company") a Delaware corporation, has engaged ("Jefferies") to act as
exclusive financial advisor to and sole placement agent for the company in
connection with the structuring, issuance and sale (the transaction) of up to
$10,000,000 of equity securities of the Company (the "Securities"). During the
term of the agreement, the Company agrees that it will not, directly or
indirectly offer any of the securities or any similar securities for sale to, or
solicit any offer to purchase any of the same from, or otherwise contact,
approach or negotiate with respect thereto with any person or persons, other
than through Jefferies as agent.
2. Information on the Company. In connection with Jefferies' activities
hereunder, the Company will furnish Jefferies and its counsel with all materials
and information regarding the business and financial condition of the Company
(all such information so furnished being the "Information") and with a private
placement memorandum with respect to the company and the Securities (such
memorandum, including all exhibits or supplements thereto, the " Offering
Materials"). The Company recognizes and confirms that Jefferies: (a) will use
and rely solely on the information, the Offering Materials and on information
available from generally recognized public sources in performing the services
contemplated by this agreement without having independently verified the same;
(b) is authorized as the company's exclusive financial advisor and sole
placement agent to transmit to any prospective purchaser of the securities a
copy or copies of the Offering Materials, and the forms of purchase agreement
and other legal documentation necessary or advisable in connection with the
transactions contemplated hereby; (c) does not assume responsibility for the
accuracy or completeness of the information, the Offering Materials or such
other information; (d) will not make an appraisal of any assets or liabilities
of the Company; and (e) retains the right to continue to perform due diligence
on the Company during the course of the engagement.
3. Use of Name. The Company agrees that any reference to Jefferies in any
release, communication, or other material is subject to Jefferies prior written
approval, which may be given or withheld in its sole discretion. If Jefferies
resigns prior to the dissemination of any such release, communication or
material, no reference shall be made therein to Jefferies, despite any prior
written approval that may have been give therefore.
4. Use of Advice. No statements made or advised render by Jefferies in
connection with the services performed by Jefferies pursuant to this agreement
will be quoted by, nor will any such statements or advice be referred to, in any
report, document, release or other communication, whether written or oral,
prepared, issued or transmitted by, the Company or any person or corporation
controlling, controlled by or under common control with, the company or any
director, officer, employee, agent or representative of any such person, without
the prior written authorization of Jefferies, which may be given or withheld in
its sole discretion, except to the extent required by law (in which case the
appropriate party shall so advise Jefferies in writing prior to such use and
shall consult with Jefferies with respect to the form and timing of disclosure).
5. Compensation. In payment for services rendered and to be rendered
hereunder by Jefferies, the
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Company agrees to pay to Jefferies as follows:
(a) Upon consummation of the sale of the securities, the company shall pay to
Jefferies in cash a fee in an amount that is equal to 10% of the aggregate gross
proceeds from the issuance of the Securities plus a portion to be paid in the
stock of the company that is equal to the 3% of the aggregate proceeds from the
issuance of the securities. In addition, if within two years of the date of this
Agreement the Company undertakes (i)a financing, Jefferies shall be give the
right, but not the obligation, to act as lead manager, co manager or financing
advisor for such an offering and to receive an amount of the gross spread that
is usual or customary in the circumstances for the role performed by Jefferies
(such xxxxx spread in such transactions will be mutually determined in good
faith by such company and Jefferies and shall be based on the prevailing market
for similar services; or (ii) a merger with or into, a consolidation with, a
sale of all or substantially all of its assets to, or an acquisition of all or
substantially all of the assets of, another person or group of affiliated
persons (other than the company or its subsidiaries) in a transaction or series
of related transactions (any such transaction, a "sale"), then Jefferies shall
be given the right, but not the obligation, to act as a financial advisor to the
company for such transaction or transactions. The retention and compensation of
Jefferies for such subsequent transactions shall be outlined in a mutually
agreeable separate agreement or agreements not considered part of this
Agreement.
(b) In addition to the compensation to be paid to Jefferies as provided in
Section 5(a) hereof, without regard to whether any transaction is consummated or
this agreement expires or is terminated, the Company shall pay to, or on behalf
of Jefferies, promptly as billed, all fees, disbursements and out of pocket
expenses incurred by Jefferies in connection with its services to be rendered
hereunder (including without limitation the fees disbursements of Jefferies'
counsel, travel and lodging expenses, word processing charges, messenger and
duplicating services, facsimile expenses and other customary expenditures) which
shall not exceed $20,000 without the prior consent of the company not to be
unreasonably withheld.
(c) Jefferies may resign at any time and the company may terminate Jefferies'
services at any time, each by giving prior written notice to the other. If this
agreement expires, Jefferies resigns or the Company terminates Jefferies
services for any reason, Jefferies and its counsel shall be entitled to receive
all of the amounts due pursuant to section 5(a) and 5(b) hereof up to and
including the effective date of such expiration, termination or resignation, as
the case may be. If Jefferies' services hereunder are terminated by the Company
or this agreement expires and the Company completes a transaction similar to the
transaction contemplated herein within one year of such termination or
expiration, then the company shall pay Jefferies concurrently with the closing
of such transaction in cash the fees as outlined in section 5(a).
d) No fee paid or payable to Jefferies or any of its affiliates shall be
credited against any other fee paid or payable to Jefferies or any of its
affiliates.
6. Representations and Warranties. The company represents and warrants to
Jefferies that (a) this Agreement has been duly authorized, executed and
delivered by the Company, and, assuming the due execution by Jefferies,
constitutes a legal, valid and binding agreement of the Company, enforceable
against the company in accordance with its terms, and (b) the Information and
the Offering Materials will not, when delivered nor at any time prior to or at
the closing of the sale of the Securities, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The company shall advise Jefferies promptly of the occurrence of any
event or any other change prior to the closing which results in the Information
or the Offering Materials containing any untrue statement of a material fact or
omitting to state any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
7 Indemnity, Limitations of Liability. In partial consideration of the services
to be rendered hereunder the Company shall indemnify Jefferies and certain other
indemnified persons (as defined in Schedule A hereto) in accordance with
Schedule A attached hereto. The company shall not and shall cause its affiliates
and their respective directors, officers, employees, shareholders and agents not
to, initiate any action or proceeding against Jefferies or any other Indemnified
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Person in connection with this engagement or the transactions unless such action
or proceeding is based solely upon the bad faith or gross negligence of
Jefferies or any such Indemnified Person. The parties hereto agree that
Jefferies and the Indemnified Persons shall not, and shall not be deemed to,
owe any fiduciary duties to the company under this agreement or otherwise.
8. Conditions of Placement. It is understood that the execution of this
agreement shall not be deemed or construed as obligating Jefferies to purchase
any of the securities and there is no obligation on the part of Jefferies to
p1ace the securities. Without limiting the foregoing, Jefferies services to be
performed her under are subject to certain conditions, including, among others,
(i) approval of Jefferies' underwriting assistance committee to be given or
withheld in its sole discretion, (ii) satisfactory completion of due diligence
on the Company by Jefferies, (iii) the form and terms of the securities being
mutually acceptable to the Company, Jefferies and prospective purchasers of the
securities, (iv) market conditions, and (v) no adverse change in the condition
of the Company.
9. Survival of Certain Provisions. The indemnity and contribution agreements
contained in Schedule A to this Agreement and the provision of Sections
2,3,4,5,6,7,12,13, 14, 15 and 18 of this Agreement and this Section 9 shall
remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of Jefferies, or by or on behalf of any
affiliate of Jefferies or any person controlling or controlled by either, (b)
completion of the sale of the Securities, (c) the resignation of Jefferies
services or (d) any amendment, expiration or termination of this agreement and
shall be biding upon, and shall inure to the benefit of, any successors,
assigns, heirs and personal representatives of the Company, Jefferies, and the
Indemnified Persons.
10. Notices. Notice given pursuant to any of the provisions of this
agreement shall be in writing and shall be mailed or delivered (a) if to the
company, at the address set forth above, and (b) if to Jefferies, at the offices
of Jefferies at 00000 Xxxxx Xxxxxx Xxxx. Xxx. 0000. Xxx Xxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxx X. Xxxxx Executive Vice President and General Counsel.
11. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument
12. Assignment. This Agreement may not be assigned by either party hereto
without the prior written consent of the other, to be given in the sole
discretion of the party from whom such consent is being requested. Any attempted
assignment of this agreementmade without such consent may be void, at the option
of the non assigning party.
13. Third Party Beneficiaries. This Agreement has been and is made solely for
the benefit of the company, Jefferies and the other Indemnified persons referred
to in schedule A hereof and their respective successors, assigns, heirs and
personal representatives, and no other person shall acquire or have any right
under or by virtue of this agreement.
14. Construction and Choice of Law. This agreement, together with Schedule A
attached hereto, incorporates the entire understanding of the parties and
supercedes all previous agreements relating to the subject matter hereof should
they exist. This agreement and any issue arising out of or relating to the
parties relationship hereunder shall be governed by, and construed in accordance
with, the laws of the State of New York without regards to priciples conflicts
of law.
15. Jurisdiction and Venue. Each party hereto consents specifically to the
exclusive jurisdiction of the federal courts of the United States sitting in the
Southern District of New York, or if such federal court declines to exercise
jurisdiction over any action filed pursuant to this Agreement, the courts of the
State of New York sitting in the county of New York, and any court to which an
appeal may be taken in connection with any action filed pursuant to this
Agreement, for the purposes of all legal proceedings arising out of all relating
to this agreement. In connection with the foregoing consent, each party
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the court's exercise of personal jurisdiction
over each party to this Agreement or the line of venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. Each party further irrevocably
waives its right to a trial by jury and consents that service of process maybe
effected in any manner permitted under the laws of the State of New York.
16. Headings. The section headings in this agreement have been insert as a
matter of convenience of reference and are not part of this Agreement.
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17. Press Announcements. At any time after the consummation or other public
announcement of the sale of the Securities, Jefferies may place an announcement
in such newspapers and publications as it may choose, stating that Jefferies has
acted as exclusive financial advisor and sole placement agent to the Company in
connection with the transaction.
18. Amendment. This Agreement may not be modified or amended except in a
writing duly executed by the parties hereto.
19. Term. Except as provided herein, this agreement shall run from the date
of this letter to a date of one year thereafter, unless extended by mutual
consent of the parties (the Term).
Please sign and return an original and one copy of this letter to the
undersigned to indicate your acceptance of the terms set forth herein, whereupon
this letter and your acceptance shall constitute a binding agreement between the
Company and Jefferies as of the date first above written.
Sincerely,
XXXXXXXXX & COMPANY, INC.
Name: Xxxxxxxx Xxxxxx
Accepted and Agreeed
FLOOR DECOR, INC.
XX Xxxxxx
President
