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EXHIBIT 10.1
Engagement Agreement
FIELDWORKS, INCORPORATED (THE "COMPANY")
The parties to this Engagement Agreement (the "Agreement") include Goldsmith,
Agio, Helms & Lynner, Ltd. ("GAH") on the one hand and the COMPANY on the other
hand. This is to confirm the COMPANY's retention of GAH for a minimum period of
six months from the date hereof, as its exclusive agent to assist it with a
merger, sale, or any similar transaction related to the COMPANY. After six
months, GAH will proceed on a month-to-month basis until the COMPANY provides
GAH with written 30-day notice of termination of this Agreement.
1. GAH's Performance. Throughout the course of its engagement, GAH will follow
all Process Guidelines set forth in Exhibit A.
2. Types of Transactions Covered. Transactions covered under this Agreement
(individually, a "Transaction" and collectively, "Transactions") include
any sale, exchange or other disposition of all or a material (equal to or
greater than 50 percent) portion of the COMPANY, whether accomplished by a
sale of assets or stock by or through the COMPANY and/or its shareholders
(in piecemeal fashion or in a single transaction), and shall include
without limitation any merger, tender or exchange offer, joint venture,
equity investment, or recapitalization, or any other transaction, the
effect of which is to change the control of the COMPANY. If a Transaction
is completed during the term of this Agreement, GAH shall be entitled to
its Accomplishment Fee provided herein. If, within a period of 18 months
following the termination of this Agreement, a GAH Prospect acquires an
equity interest greater than 10% but less than 50 percent, the GAH will be
entitled to a fee payable immediately by the Company equal to 5 percent of
the value of the total equity interest acquired by the GAH Prospect.
3. Equitable Agency Protection Period. If within a period of 18 months
following termination of this Agreement, the COMPANY enters into a
definitive agreement in principle to consummate a Transaction with a GAH
Prospect, GAH's Accomplishment Fee shall be due and payable in full upon
closing of such Transaction pursuant to Paragraph 6 below. For purposes of
record-keeping and monitoring only, within approximately 30 days of the
expiration of this Agreement, GAH will provide the COMPANY with a
protective list of GAH Prospects.
4. GAH Prospect Defined. For purposes of this Agreement, "GAH Prospect"
includes any party or parties: (i) whom GAH contacts on the COMPANY's
behalf hereunder or whom GAH proposes to contact but does not as a result
of the Company's withholding its approval; or (ii) with whom the COMPANY
has any discussions relative to a possible Transaction during the term of
this Agreement. GAH Prospects also include companies and individuals
affiliated with any party described in (i) or (ii) above. The COMPANY
agrees to provide to GAH the names of all parties who have contacted the
COMPANY or whom the COMPANY has contacted relative to a possible
Transaction in the one-year term prior to the date of this Agreement, or
during the term of this Agreement for the purpose of pursuing a
Transaction.
5. Accomplishment Fee and Total Consideration. The Full Accomplishment Fee
shall be calculated as provided below:
$650,000 plus
o 4.0% of the amount of Total Consideration (as defined below in
Paragraph 5) as of closing in excess of the Tier 1 Threshold Price (as
defined below) up to the Tier 2 Threshold Price (as defined below),
plus
o 6.0% of the amount of Total Consideration as of closing in excess of
the Tier 2 Threshold Price up to the Tier 3 Threshold Price (as
defined below), plus
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o 8.0% the amount of Total Consideration as of closing in excess of the
Tier 3 Threshold Price.
The Tier 1 Threshold Price assumes a $2.00 per share purchase price of the
COMPANY's common shares and equals the sum of (a) the COMPANY's resulting
fully diluted shares outstanding (defined below) as of the date of this
Agreement (assuming the COMPANY's ongoing rights offering is terminated)
multiplied by $2.00 per share, and (b) the COMPANY's borrowings, net of its
cash in excess of $100,000, as of the date of this Agreement. The number of
resulting fully diluted shares shall be calculated based on the fractional
method, whereby it is assumed that the cash that would otherwise be paid to
the COMPANY upon the exercise of the options and warrants having exercise
prices less than $2.00 is used to repurchase the COMPANY's shares at $2.00
per share.
The Tier 2 Threshold Price assumes a $2.50 per share purchase price of the
COMPANY's common shares and equals the sum of (a) the COMPANY's resulting
fully diluted shares outstanding (defined below) as of the date of this
Agreement (assuming the COMPANY's ongoing rights offering is terminated)
multiplied by $2.50 per share, and (b) the COMPANY's borrowings, net of its
cash in excess of $100,000, as of the date of this Agreement. The number of
resulting fully diluted shares shall be calculated based on the fractional
method, whereby it is assumed that the cash that would otherwise be paid to
the COMPANY upon the exercise of the options and warrants having exercise
prices less than $2.50 is used to repurchase the COMPANY's shares at $2.50
per share.
The Tier 3 Threshold Price assumes a $3.00 per share purchase price of the
COMPANY's common shares and equals the sum of (a) the COMPANY's resulting
fully diluted shares outstanding (defined below) as of the date of this
Agreement (assuming the COMPANY's ongoing rights offering is terminated)
multiplied by $3.00 per share, and (b) the COMPANY's borrowings, net of its
cash in excess of $100,000, as of the date of this Agreement. The number of
resulting fully diluted shares shall be calculated based on the fractional
method, whereby it is assumed that the cash that would otherwise be paid to
the COMPANY upon the exercise of the options and warrants having exercise
prices less than $3.00 is used to repurchase the COMPANY's shares at $3.00
per share.
The Accomplishment Fee shall be payable by the COMPANY to GAH at closing of
a Transaction. The Accomplishment Fee will equal the Full Accomplishment
Fee unless the COMPANY executes a definitive purchase and sale agreement
with any party named in a separate letter from David Mell to GAH dated
April 28, 2000 on or before June 4, 2000, in which case the Accomplishment
Fee will equal either 33.33 percent of the Full Accomplishment Fee if the
COMPANY executes such a definitive agreement on or before May 14, 2000 or
66.67 percent of the Full Accomplishment Fee if the COMPANY executes such a
definitive agreement after May 14, 2000 but on or before June 4, 2000. As
described in Paragraph 7, the Accomplishment Fee may be reduced by up to
$25,000 as an offset for the first $25,000 of retainers paid by the Company
to GAH.
GAH's Accomplishment Fee shall be based upon the total consideration
("Total Consideration") paid or payable directly or indirectly to the
COMPANY and/or its shareholders (including holders of options or other
stock rights), in connection with, or in anticipation of, the Transaction,
regardless of how allocated or the form of consideration, and shall
specifically include without limitation:
(a) Cash paid and securities transferred to the COMPANY and/or holders of
its securities at closing, including the cash value of any outstanding
vested, by their terms or as a result of the Transaction, stock
options or warrants that are "rolled over" or "carved out" as part of
this Transaction;
(b) In the case of a sale of stock by the COMPANY's shareholders, all
liabilities of the COMPANY, other than trade payables and operating
expenses accrued in the ordinary course of business, provided,
however, that to the extent that the Company has cash in excess of
$100,000, such cash shall offset, to the extent that the Company has
borrowings, the amount of these borrowings. In the case of a sale of
assets, all liabilities
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of the COMPANY, other than trade payables and accrued operating
expenses, which are assumed by the buyer;
(c) The net present value (applying a discount rate equal to the then
prevailing prime rate as quoted in The Wall Street Journal) of
scheduled payments provided for in any leases by the purchaser of
assets owned and retained by the COMPANY, its shareholders, or any
affiliates thereof;
(d) All deferred installments of the purchase price including promissory
notes;
(e) Any portion of the Total Consideration held in escrow subsequent to
closing, included and payable as and when paid;
(f) All non-compete compensation and the like, included and payable as and
when paid;
(g) Future payments that are contingent on the future earnings or
operations of the COMPANY (or in the case of an asset sale, the
underlying assets), included and payable as and when paid;
(h) The fair market value of COMPANY assets retained after closing
(including accounts receivable and real property) or transferred to
its shareholders or any affiliates thereof after the date of this
Agreement (including extraordinary bonuses, dividends, or other
distributions of property or capital);
(i) The value of any retained or acquired interest in the COMPANY or its
successor, or the right to acquire such interest; and
(j) Any extraordinary compensation to be paid to COMPANY and/or the
Shareholder or affiliates thereof for services rendered subsequent to
closing.
6. Payment of Accomplishment Fee. Except as otherwise provided below, GAH's
Accomplishment Fee shall be paid in cash at closing. In the event that all
or a portion of the Total Consideration includes capital stock, securities
or other property (other than installment notes), the portion of GAH's
Accomplishment Fee attributable thereto, shall be payable at closing in
cash, based on the fair market value of such non-cash items as determined
by mutual agreement of the parties. In the event the parties are unable to
agree on the fair market value, GAH shall have the option to receive
payment in like kind, or to cause an independent appraiser acceptable to
the COMPANY to determine fair market value, the expense of which appraisal
shall be shared equally by the parties. As noted above, any portion of the
Accomplishment Fee due under parts (e), (f), and (g) of Paragraph 5 shall
be paid to GAH as and when such amounts are paid to the Company or its
shareholders.
7. Retainers and Expenses. The COMPANY shall pay to GAH a retainer, monthly in
advance, of $15,000 per month for the term of this Agreement or until the
earlier signing of a definitive agreement for a Transaction. The first
$25,000 in retainers paid to GAH will offset by $25,000 the Accomplishment
Fee, as defined in Paragraph 5. The COMPANY shall also reimburse GAH
monthly in arrears for all reasonable out-of-pocket expenses incurred on
behalf of the COMPANY. GAH shall provide detailed monthly itemized
summaries of expenses for which reimbursement is requested by GAH. The
COMPANY agrees that any unpaid payment (or portion thereof) of any fee,
expense, retainer, or other amount payable to GAH shall bear interest
payable at the highest rate of interest permissible by law, but not to
exceed 12 percent per annum, from the date that such payment is due
hereunder to the date that said payment is paid in full.
8. Indemnification. The COMPANY agrees not to assert claims against or recover
from GAH (which term, for purposes of this paragraph, includes its
directors, officers, shareholders, partners, limited partners, members and
employees) for losses, claims, damages or liability to the COMPANY or its
shareholders, arising out of or in connection with this engagement or
performance by GAH of services hereunder, and to indemnify and hold GAH
harmless against and from all losses, claims, damages or liabilities, and
all actions, claims, proceedings and investigations in respect thereof
(collectively, "Losses"), arising out of or in connection with this
engagement or the performance by GAH of services hereunder, and to
reimburse GAH for all reasonable legal and other out-of-pocket expenses as
incurred by GAH in connection with investigating, preparing or defending
any such Losses, whether or not GAH is named as a party thereto; provided,
however, that the COMPANY shall not be liable to the extent such Losses are
finally determined by arbitration as herein provided to have arisen out of
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GAH's gross negligence or willful misconduct. In any event, if such
indemnification is insufficient or unavailable pursuant to the foregoing
sentence or otherwise, the COMPANY agrees to make contributions to any
Losses paid or payable such that GAH will not be liable for more than the
Accomplishment Fee paid to GAH. The foregoing rights to indemnification
shall not limit any other rights that GAH may have at law or otherwise.
9. Reliance and Confidentiality. The COMPANY represents to GAH that any
information provided to GAH does not and will not at any time contain any
misstatement or untrue statements of a material fact or omit to state any
and all material facts necessary to make the statements contained therein
not false or misleading in light of the circumstances in which they were
made. The COMPANY will continue to inform GAH of any material developments
or matters that occur or come to the attention of the COMPANY, its
shareholders, directors, officers, employees or affiliates. Additionally,
once the final draft of the Confidential Memorandum has been prepared, the
COMPANY will provide an approval letter that states that the material in
the Confidential Memorandum is "true and not false or misleading and there
are no omissions of material fact." In performing its services hereunder,
GAH shall be entitled to rely without investigation upon all information
that is available from public sources as well as all other information
supplied to it by or on behalf of the COMPANY or its advisors and shall not
in any respect be responsible for the accuracy or completeness of, or have
any obligation to verify, the same or to conduct any appraisal of assets.
To the extent consistent with legal requirements, all information given to
GAH by the COMPANY, unless publicly available or otherwise available to GAH
without restriction or breach of any Confidentiality Agreement, will be
held by GAH in confidence and will not be disclosed to anyone other than
GAH's agents and advisors without the COMPANY's prior approval or used for
any purpose other than those referred to in this Agreement.
10. Arbitration. The COMPANY and GAH both agree that any dispute between them
in any way relating to this Agreement shall be determined and settled by
arbitration in accordance with the rules of the American Arbitration
Association. All costs associated with any such disputes (including both
parties' legal fees) shall be allocated between the parties by the
arbitrators. All decisions and awards of the arbitrators shall be final and
binding on both parties, and may be enforced by any court with
jurisdiction.
11. Fairness Opinion. In contemplation of a Transaction, the COMPANY and GAH's
subsidiary Goldsmith, Agio, Helms Securities, Inc. ("GAHS") will enter into
a separate engagement agreement pursuant to which GAHS will provide an
opinion to the Board of Directors of the COMPANY as to the fairness of the
Transaction from a financial point of view. Such engagement agreement will
provide for a fee payable to GAHS of $100,000 upon delivery of the opinion,
reimbursement of expenses (including legal counsel fees), and customary
indemnification provisions.
12. Miscellaneous. This Agreement is transferable and assignable by GAH to any
corporation under common control and ownership with GAH. All questions
arising hereunder shall be determined according to Minnesota Law. Facsimile
copies of this Agreement signed in counterpart shall be considered for all
purposes, including delivery, as originals. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction. The provisions of this paragraph and Paragraphs 3, 6, 8, and
10 will survive the termination of this Agreement.
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Read and agreed to this 28th day of April, 2000 by:
FIELDWORKS, INCORPORATED: GOLDSMITH, AGIO, HELMS & LYNNER, LTD.:
/s/ David G. Mell /s/ Jack P. Helms
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By: David G. Mell By: Jack P. Helms
Its: President & CEO President and Chief Operating Officer
of Goldsmith, Agio, Helms and Company,
its General Partner
/s/ William S. Jarrett, Jr.
-----------------------------------------
By: William S. Jarrett, Jr.
Managing Director
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EXHIBIT A
to
Engagement Agreement
GOLDSMITH, AGIO, HELMS & LYNNER, LTD.
and
FIELDWORKS, INCOPORATED
PROCESS GUIDELINES
In the course of GAH's engagement hereunder, GAH will exercise its best efforts
to:
(a) Maintain strict confidentiality of all financial and other proprietary
information, data, and materials relating to the COMPANY except as provided
below.
(b) Familiarize itself with the business, operations, physical assets,
financial condition and prospects of the COMPANY.
(c) Develop a list of potential buyers of the COMPANY whom GAH believes in good
faith to be financially qualified and potentially interested in
participating in a Transaction.
(d) Not share with any GAH Prospect the identity of the COMPANY or any
confidential information relating to the COMPANY unless the GAH Prospect
has executed a Confidentiality Agreement in a form pre-approved by the
COMPANY.
(e) Contact GAH Prospects on the COMPANY's behalf and, as appropriate, arrange
for and orchestrate meetings between GAH Prospects and the COMPANY.
(f) Prepare a Confidential Memorandum for the COMPANY, and other analyses and
data as may be reasonably requested by GAH Prospects, the final drafts of
which will be presented to the COMPANY for its approval (which approval
will take the form of a letter, from the COMPANY to GAH, representing that
the material in the Confidential Memorandum is "true and not false or
misleading and there are no omissions of material fact"); provided,
however, that the Confidential Memorandum prepared by GAH is the joint
property of GAH and the Company and may not be reproduced or distributed to
parties other than the COMPANY's officers, directors, employees and
representatives without the prior written consent of GAH and the Company.
(g) Work in the capacity outlined above with the COMPANY's legal counsel,
accountants, and other advisors as reasonably requested and directed by the
COMPANY.
(h) Present to the COMPANY all proposals from GAH Prospects and make
recommendations as to the COMPANY's appropriate negotiating strategy and
course of conduct.
(i) Assist in all negotiations and in all document review as reasonably
requested and directed by the COMPANY.
(j) The COMPANY has the right to reject any and all offers submitted to GAH.
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