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EXHIBIT 10.4
August 10, 1999
Mr. Carey F. Daly II
The Pathways Group, Inc.
14201 N.E. 200th Street
Woodinville, WA 98072
Dear Mr. Daly:
We are pleased to confirm our mutual understanding concerning
the retention by The Pathways Group, Inc. (collectively with its subsidiaries
and affiliates, the "Company") of Mitchum, Jones & Templeton, Inc. ("Mitchum")
to act as the Company's private placement agent with respect to a preferred
stock with warrants offering.
1. SCOPE OF ENGAGEMENT
(a) In connection with the engagement, Mitchum
will assist the Company in raising capital
as described in Exhibit "A" to this
Agreement, made a part hereto by this
reference.
2. FEES AND EXPENSES: In consideration for the services
described in paragraph 1(a), the Company shall pay to Mitchum
fees described in Exhibit "A" hereto.
In addition to any fees described above, whether or
not any transaction is consummated, the Company shall
reimburse Mitchum, upon request, for all reasonable,
previously approved, out-of-pocket expenses incurred pursuant
in our engagement hereunder, including fees and disbursements
of our counsel, as well as any other consultants and advisors
retained by us with your company.
3. TERM AND TERMINATION. The term of this engagement shall be
for a period of seventy-five days from the date hereof. Any
termination of this engagement shall be without liability or
continuing obligation for either party, except for fees or
other compensation earned or expenses incurred by Mitchum up
to the date of termination. The provisions of paragraph 6
relating to indemnification and contribution shall be
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operative and in full force and effect, notwithstanding the
termination of this engagement of the completion of any or all
assignments hereunder.
4. PUBLIC ANNOUNCEMENTS. Prior to any press release or other
public disclosure relating to our services hereunder, the
Company and Mitchum shall confer and reach an agreement upon
the contents of any such disclosure. Notwithstanding the
foregoing, except as required by any applicable law, rule or
regulation, no party shall make any public announcement
regarding this engagement or our relationship with the Company
hereunder without the prior consent of the other party.
5. RESPONSIBILITY FOR DISCLOSURE. The Company shall provide
Mitchum all information material to its business is well as
any other relevant information that Mitchum reasonably
requests in connection with the performance of its services
hereunder. The Company represent and warrants to Mitchum that
all such information, and all information released to the
public or filed by the Company with any government agency or
regulatory body will be accurate and complete at the time it
is furnished or filed, and the Company agrees to keep Mitchum
fully apprised of all material developments affecting the
Company through the length of the term of our engagement or
the completion of any transaction in which Mitchum is
involved. The Company understands that Mitchum, in performing
its obligation to represent the Company, will be providing
prospective purchasers or other appropriate parties with
information supplied by the Company, but that Mitchum shall
not in any respect be responsible for the accuracy or
completeness of any and all such information. The Company
acknowledges that Mitchum, in rendering services to the
Company, will be relying on information provided by the
Company and the other parties to any purposed transaction, as
well as public source information deemed reliable by Mitchum,
without independent verification by Mitchum. Mitchum does not
assume responsibility for the accuracy or completeness of any
such information.
6. IDENTIFICATION AND CONTRIBUTION. The Company agrees that in
the event Mitchum or any of Mitchum's officers, employees,
agents, affiliates or controlling persons, if any (each of the
foregoing, including Mitchum an "Indemnified Person"), becomes
involved in any capacity (whether or not as a party) in any
action, claim, proceeding or investigation (including any
security holder action or claim or any action brought by or in
the right of the Company) related to or arising out of our
engagement, including any related services already performed
and any indemnifications or future additions to such
engagements, the Company will promptly reimburse each such
Indemnified Person for its legal and other expenses (including
the cost of any investigation and preparation) as and when
they are incurred in connection therewith.
The Company will indemnify and hold harmless each
indemnified Person from and against, and no Indemnified Person
shall have any liability (whether direct or
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indirect, in contract or tort or otherwise) in the Company or
its security holders or creditors for, any losses, claims,
damages, liabilities or expenses related to or arising out of
our engagement, any services provided thereunder or any
transaction or proposed transactions related thereto,
including any related services already performed and any
modifications or future additions to such engagement, whether
or not any pending or threatened action, claim, proceeding or
investigation giving rise to such losses, claims, damages,
liabilities or expenses is initiated or brought by or on
behalf of the Company and whether or not in connection with
any action, claim, proceeding or investigation in which the
Company or any Indemnified Person is a party, except to the
extent that any such loss, claim, damage, liability or expense
is found by a court of competent jurisdiction in a judgment
that has become final in that it is no longer subject to
appeal or review to have resulted directly and primarily form
such Indemnified Person's bad faith, willful misconduct or
gross negligence.
If for any reason the foregoing indemnification is
held unenforceable, then the Company shall contribute to the
loss, claim, damage, liability or expense for which such
indemnification is held unenforceable in such proportion as is
appropriate to reflect the relative benefits received, or
sought to be received, by the Company and its security holders
on the one hand and the party entitled to contribution on the
other hand in the matters contemplated by this engagement, as
well as the relative fault of the Company and such party with
respect to such loss, claim, damage, liability or expense and
any other relevant equitable considerations. The Company
agrees that, to the extent permitted by applicable law, in no
event shall the Indemnified Persons be responsible for or be
required to contribute amounts which in the aggregate exceed
the fees actually received by Mitchum for such investment
banking services.
The Company's reimbursement, indemnity and
contribution obligations under this letter shall be in
addition to any liability that the Company may otherwise have
and shall not be limited by any rights Mitchum or any other
Indemnified Person may otherwise have. The Company agrees
that, without Mitchum's prior written consent, which will not
be unreasonably withheld, the Company will not settle,
compromise or consent to the entry of any judgment in any
pending or threatened claim, action, proceeding or
investigation in respect of which indemnification or
contribution could be sought hereunder (whether or not Mitchum
or any other Indemnified Person is an actual or potential
party to such claim, action, proceeding or investigation),
unless, such settlement, compromise or consent includes an
unconditional release of each Indemnified Person from all
liability arising out of such claim, action, proceeding or
investigation.
The provisions of this paragraph 6 shall remain in
effect indefinitely, notwithstanding the completion of this
engagement, the expiration of the term hereof or any
termination of this engagement.
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7. MISCELLANEOUS. No waiver, amendment or other modification
of this agreement shall be effective unless it is in writing
and signed by each party to be bound hereby. The laws of the
State of California shall govern this agreement, and any claim
related directly or indirectly to this agreement. No such
claim shall be commenced, prosecuted or continued in any court
other than the courts of this State of California. The
obligations of this agreement shall be binding upon and shall
inure to the benefit of the parties hereto, the Indemnified
Persons hereunder and any of their successors, assigns, heirs
and personal representatives.
Please confirm that the foregoing represents your
understanding of the terms of our engagement with your
signature below.
Sincerely,
MITCHUM, JONES & TEMPLETON, INC.
By: /s/ GLENN A. OKUN
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Glenn A. Okun
President and Chief Executive Officer
Accepted and agreed to by:
The Pathways Group, Inc.
By: /s/ CAREY F. DALY II
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Carey F. Daly II
President and Chief Executive Officer
