FINANCIAL CONSULTING AGREEMENT
The parties to this Agreement are Xxxxxx & Co. Securities Inc., a New
Jersey corporation (the "Consultant"), and Paradise Music and Entertainment,
Inc., a Delaware corporation (the "Company"). The Company intends to undertake a
public offering of its securities (the "Offering") and desires to contract with
the Consultant for certain financial services, and the Consultant is willing to
render such services as hereinafter more fully set forth.
THEREFORE, in consideration of the mutual agreements and covenants set
forth in this Agreement, the parties agree as follows:
1. ENGAGEMENT OF THE CONSULTANT. The Company hereby engages and retains
the Consultant to render to the Company the financial services described in
Section 2 hereof (the "Financial Services") for the period of two years
commencing on the consummation of the Offering (the "Consulting Period").
2. DESCRIPTION OF FINANCIAL SERVICES. The Financial Services rendered by
the Consultant hereunder shall consist of consultations with management of the
Company which consultations management may from time to time require during the
term of this Agreement, provided that the Consultant shall not be required to
undertake duties not reasonably within the scope of the financial advisory or
investment banking services contemplated by this Agreement. It is understood
and acknowledged by the parties that the value of the Consultant's advice is not
readily quantifiable, and that the Consultant shall be obligated to render
advice upon the request of the Company, in good faith, but shall not be
obligated to spend any specific amount of time so doing. The Consultant's
duties may include, but will not necessarily be limited to, providing
recommendations concerning the following financial and related matters:
A. Disseminating information about the Company to the investment
community at large;
B. Rendering advice and assistance in connection with the
preparation of annual and interim reports and press releases;
C. Assisting in the Company's financial public relations;
D. Arranging, on behalf of the Company, at appropriate times,
meetings with securities analysts of major regional investment
banking firms;
E. Rendering advice with regard to internal operations, including:
1. the formation of corporate goals and their implementation;
2. the Company's financial structure and its divisions or
subsidiaries;
3. securing, when and if necessary and possible, additional
financing through banks and/or insurance companies; and
4. corporate organization and personnel; and
F. Rendering advise with regard to any of the following corporate
finance matters:
1. changes in the capitalization of the Company;
2. changes in the Company's corporate structure;
3. redistribution of holdings of the Company's stock;
4. offerings of securities in public transactions;
5. sales of securities in private transactions;
6. alternative uses of corporate assets;
7. structure and use of debt; and
8. sales of stock by insiders pursuant to Rule 144 or
otherwise.
In addition to the foregoing, the Consultant agrees to furnish advice
to the Company in connection with (i) the acquisition and/or merger of or with
other companies, divestiture or any other similar transaction, or the sale of
the Company itself (or any significant percentage, assets, subsidiaries or
affiliates thereof) (a "Transaction"), and (ii) bank financings or any other
financing from financial institutions (including but not limited to liens of
credit, performance bonds, letters of credit, loans or other financings not
provided for in Paragraph 4 hereof).
3. PAYMENT FOR SERVICES RENDERED. The Company agrees to pay the
Consultant for the Financial Services hereunder the sum of $36,000 per annum;
payable $3,000 per month in advance of each month commencing upon consummation
of the Offering for the twenty four months subsequent to the consummation of the
Offering. In addition, if the Company requests that the Consultant provide
financial services to the Company not contemplated by this Agreement, the
Consultant shall be compensated for such additional financial services in an
amount agreed to by the Consultant and the Company.
4. ADDITIONAL SERVICES. (a) In the event that any Transaction is
directly originated by the Consultant during the term of this Agreement, the
Company shall pay fees to the Consultant upon the consummation of such
Transaction as follows:
Consideration Fee
------------- ---
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$ -0- to $ 500,000 Minimum fee of $25,000
$ 500,000 to $5,000,000 5% of Consideration
$5,000,000 or more $250,000 plus 2-1/2% of the Consideration
in excess of $5,000,000
Notwithstanding anything to the contrary, the Company shall have no
obligation to consummate any Transaction that is originated by the Consultant.
Notwithstanding the provisions of Section 4 hereof, if the Company
identifies the other party and seeks investment banking services to such a
Transaction during the term of this Agreement, the Company shall engage the
Consultant to render investment advisory services and shall pay fees to the
Consultant to be mutually agreed upon.
For the purposes of this Agreement, "Consideration" shall mean the total
market value on the day of closing of stock, cash, assets and all other property
(real or personal) exchanged or received, directly or indirectly by the Company
or any of its security holders in connection with any transaction, including
without limitation any amounts paid by the Company or any person or entity to
holders of warrants, stock purchase rights, straight or convertible securities
of the Company or any affiliate thereof, options or stock appreciation rights
issued by the Company or any affiliate thereof, whether or not vested, and to
holders of any other securities of any kind whatsoever of the Company, or
pursuant to any employment agreement, royalty, consulting agreement, covenant
not to compete, earnout or contingent payment right or similar arrangement,
agreement or understanding, whether oral or written. Any co-broker retained by
the Consultant shall be paid by the Consultant.
In the event the Consultant originates a line of credit with an
institutional lender, the Company and the Consultant will mutually agree on a
satisfactory fee and the terms of payment of such fee; provided, however, that
in the event the Company is introduced to a corporate partner in connection with
a merger, acquisition or financing and a credit line is established directly in
connection with such transaction no later than the closing date thereof, and, in
any case, develops directly as a result of the introduction, the appropriate fee
shall be the amount set forth in the schedule above. In the event the
Consultant introduces the Company to a joint venture partner or customer and
sales develop as a result of the introduction, the Company agrees to pay a fee
of ten percent (10%) of the pre-tax income (before any deduction of interest
charges or expenses) generated directly from this introduction during the first
two years following the date of the first sale. Commission payments shall be
paid on the 15th day of each month following the receipt of customer's payment.
In the event any adjustments are made to the total sales after the commission
has been paid, the Company shall be entitled to an appropriate refund or credit
against future payments due under this Agreement.
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(b) Fees and expenses payable to the Consultant with regard to
fairness opinions and evaluations, will be determined by mutual agreement at
such time as the nature and terms of such financing are affirmed.
All fees to be paid pursuant to this Agreement, except as otherwise
specified, are due and payable to the Consultant in cash at the closing or
closings of any transaction specified in this Section 4. In the event that this
Agreement shall not be renewed or if terminated for any reason notwithstanding
any such renewal or termination, the Consultant shall be entitled to a full fee
as provided under this Section 4 for any transaction for which the discussions
were initiated during the term of this Agreement and which is consummated within
a period of twelve months after non-renewal or termination of this Agreement.
5. COMPENSATION FOR OUT-OF-POCKET EXPENSES. The Consultant shall be
entitled to reimbursement by the Company of such reasonable, accountable
out-of-pocket expenses as the Consultant may incur in performing Financial
Services requested by the Company under this Agreement. Such reimbursement shall
be in addition to any fees otherwise earned by the Consultant hereunder. Any
expense in excess of $1,000 in any calendar month for which the Consultant shall
be entitled to reimbursement hereunder shall be approved in advance by the
Company.
6. NONEXCLUSIVITY OF THIS AGREEMENT. The Company expressly understands
and agrees that the Consultant shall not be prevented or barred from rendering
services of the same nature as, or a similar nature to, those described herein,
or of any nature whatsoever, for or on behalf of any person, firm, corporation
or entity other than the Company. The Consultant understands and agrees that the
Company shall not be prevented or barred from retaining other persons or
entities to provide services of the same nature or similar nature as those
described herein or of any nature whatsoever.
7. DISCLAIMER OF RESPONSIBILITY FOR ACTS OF THE COMPANY. The obligations
of the Consultant described in this Agreement consist solely of the furnishing
of information and advice to the Company. In no event shall the Consultant be
required by this Agreement to act as the agent of the Company or otherwise to
represent or make decisions for the Company. All final decisions with respect
to acts of the Company, its subsidiaries or its affiliates, whether or not made
pursuant to or in reliance on information or advice furnished by the Consultant
hereunder, shall be those of the Company or such subsidiaries or affiliates and
the Consultant shall under no circumstances be liable for any expense incurred
or loss suffered by the Company as a consequence of such decisions. Since the
Consultant will be acting on behalf of the Company in connection with its
engagement hereunder, the Company and the Consultant have entered into a
separate indemnification agreement substantially in the form attached hereto as
Exhibit A and dated the date hereof, providing for the indemnification of the
Consultant by the Company. The
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Consultant has entered into this Agreement in reliance on the indemnities set
forth in such indemnification agreement.
8. TERMINATION. The Consultant may terminate this Agreement by giving
notice to the Company, accompanied by the pro-rata share of the payment
described in Section 3 hereof, based on the number of months remaining in the
original term of this Agreement on the effective date of the termination,
without interest. In the event of termination pursuant to this Section 8,
neither party shall have any rights or obligations hereunder after the date of
such termination except that the obligation of the Company to make any payment
required with respect to Additional Financial Services performed by the
Consultant prior to such termination shall continue in effect until such payment
is made.
Any termination pursuant to this Section 8 shall be effective at the close
of business on the first day of the third month following the date of receipt of
notice thereof by the receiving party.
9. CONFIDENTIALITY. The Consultant will not disclose to any other
person, firm, or corporation, nor use for its own benefit, during or after the
term of this Agreement, any trade secrets or other information designated as
confidential by the Company which is acquired by the Consultant in the course of
performing services hereunder. (A trade secret is information not generally
known to the trade which gives the Company an advantage over its competitors.
Trade secrets can include, by way of example, products or services under
development, production methods and processes, sources of supply, customer lists
and marketing plans.) Any financial advice rendered by the Consultant pursuant
to this Agreement may not be disclosed publicly in any manner without the prior
written approval of the Consultant. Any information, which (i) at or prior to
the time of disclosure by the Company to the Consultant was generally available
to the public through no breach of this Agreement, (ii) was available to the
public on a nonconfidential basis prior to its disclosure by the Company to the
Consultant or (iii) was made available to the public from a third party provided
that such party did not obtain or disseminate such information in breach of any
legal obligation of the Consultant shall not be deemed confidential information
of the Company for purposes hereof.
10. AMENDMENT. No amendment to this Agreement shall be valid unless such
amendment is in writing and is signed by authorized representatives of all the
parties to this Agreement.
11. WAIVER. Any of the terms and conditions of this Agreement may be
waived at any time and from time to time in writing by the party entitled to the
benefit thereof, but a waiver in one instance shall not be deemed to constitute
a waiver in any other instance. A failure to enforce any provision of this
Agreement shall not operate as a waiver of the provision or of any other
provision hereof.
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12. SEVERABILITY. In the event that any provision of this Agreement shall
be held to be invalid, illegal or unenforceable in any circumstances, the
remaining provisions shall nevertheless remain in full force and effect and
shall be construed as if the unenforceable portion or portions were deleted.
13. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York.
14. NOTICES. All notices, requests, payments, instructions, claims or
other communications hereunder shall be in writing and shall be deemed to be
given or made when delivered by first-class, registered or certified mail to the
following address or addresses or such other address or addresses as the parties
may designate in writing in accordance with this Section:
If to the Company: 000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx, President
If to the Consultant: Park Avenue Tower
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx, President
15. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns; provided,
however, that this Agreement shall not be binding on or inure to the benefit of
any successor or assign of the Consultant where, as a result of such succession
or assignment, control of the entity which would otherwise succeed to the rights
and obligations of this Agreement is materially different from the control of
the entity having such rights and obligations prior to such succession or
assignment.
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16. EXECUTION IN COUNTERPARTS. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which when taken together shall
constitute one and the same agreement.
DATED as of _______________, 1996
PARADISE MUSIC AND ENTERTAINMENT, INC.
By:
---------------------------------------
Xxxx Xxxxxxxx,
President
XXXXXX & CO. SECURITIES INC.
By:
---------------------------------------
Xxxxxxx X. Xxxx,
President
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___________, 1996
Xxxxxx & Co. Securities Inc.
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Gentlemen:
In connection with our engagement of Xxxxxx & Co. Securities Inc. (the
"Consultant") as our financial advisor and investment banker, we hereby agree to
indemnify and hold the Consultant and its affiliates, and their respective
directors, officers, shareholders, agents and employees of the Consultant
(collectively, the "Indemnified Persons"), harmless from and against any and all
claims, actions, suits, proceedings (including those of shareholders), damages,
liabilities and expenses incurred by any of them (including reasonable fees and
expenses of counsel) which are (A) related to or arise out of (i) any actions
taken or omitted to be taken (including any untrue statements made or any
statements omitted to be made) by us, or (ii) any actions taken or omitted to be
taken by any Indemnified Person in connection with the engagement of the
Consultant hereunder, or (B) otherwise related to or arising out of the
Consultant's activities on our behalf under the Consultant's engagement
hereunder, and we shall reimburse any Indemnified Person for all expenses
(including the reasonable fees and expenses of counsel) incurred by such
Indemnified Person in connection with investigating, preparing or defending any
such claim, action, suit or proceeding (collectively a "Claim"), whether or not
in connection with pending or threatened litigation in which any Indemnified
Person is a party. We will not, however, be responsible for any Claim which is
finally judicially determined to have resulted exclusively from the gross
negligence or willful misconduct of any person seeking indemnification
hereunder. We further agree that no Indemnified Person shall have any liability
to us for or in connection with the Consultant's engagement except for any Claim
incurred by us solely as a direct result of any Indemnified Person's gross
negligence or willful misconduct.
We further agree that we will not, without prior written consent of the
Consultant, settle, compromise or consent to the entry of any judgment in any
pending or threatened Claim in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such Claim), unless such settlement, compromise or consent includes a legally
binding, unconditional, and irrevocable release of each Indemnified Person
hereunder from any and all liability arising out of such Claim. Anything to the
contrary herein notwithstanding, we shall have no indemnification obligations
hereunder in connection with the settlement of any claim without our prior
written consent.
Promptly upon receipt by an Indemnified Person of notice of any complaint
or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
us in writing of such complaint or of such assertion or institution but failure
to so notify us shall not relieve us from any obligation we may have hereunder,
unless and only to the extent such failure results in the forfeiture by us of
substantial rights and defenses, and will not in any event relieve us from any
other obligation or liability we may have to any Indemnified Person otherwise
than under this Agreement. If we so elect or are requested by such Indemnified
Person, we will assume the defense of such Claim, including the employment of
counsel reasonably satisfactory to such Indemnified Person and payment of the
reasonable fees and expenses of such counsel. In the event, however, that such
Indemnified Person reasonably determines in its sole judgment that having common
counsel would present such counsel with a conflict of interest or such
Indemnified Person concludes that there may be legal defenses available to it or
other Indemnified Persons different from or in addition to those available to
us, then such Indemnified Person may employ its own separate counsel to
represent or defend it in any such Claim and we shall pay the reasonable fees
and expenses of such counsel. Notwithstanding anything herein to the contrary,
if we fail timely or diligently to defend, contest, or otherwise protect against
any Claim, the relevant Indemnified Party shall have the right, but not the
obligation, to defend, contest, compromise, settle, assert cross claims or
counterclaims, or otherwise protect against the same, and shall be fully
indemnified by us therefor, including without limitation, for the fees and
expenses of its counsel and all amounts paid as a result of such Claim or the
compromise or settlement thereof. In any Claim in which we assume the defense,
the Indemnified Person shall have the right to participate in such defense and
to retain its own counsel therefor at its own expense.
We agree that if any indemnity sought by an Indemnified Person hereunder is
held by a court to be unavailable for any reason, then (whether or not the
Consultant is the Indemnified Person) we and the Consultant shall contribute to
the Claim for which such indemnity is held unavailable in such proportion as is
appropriate to reflect the relative benefits to us, on the one hand, and the
Consultant on the other, in connection with the Consultant's engagement
hereunder, subject to the limitation that in no event shall the amount of the
Consultant's contribution to such Claim exceed the amount of fees actually
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received by the Consultant from us pursuant to the Consultant's engagement. We
hereby agree that the relative benefits to us, on the one hand, and the
Consultant on the other, with respect to the Consultant's engagement hereunder
shall be deemed to be in the same proportion as (a) the total value paid or
proposed to be paid or received by us or our stockholders as the case may be,
pursuant to the transaction (whether or not consummated) for which the
Consultant is engaged to render services bears to (b) the fee paid or proposed
to be paid to the Consultant in connection with such agreement.
Our indemnity, reimbursement and contribution obligations under this
Agreement shall be in addition to, and shall in no way limit or otherwise
adversely affect any rights that any Indemnified Person may have at law or at
equity.
We hereby consent to personal jurisdiction and service of process and venue
in any court in which any claim for indemnity is brought by any Indemnified
Person.
It is understood that, in connection with the Consultant's engagement, the
Consultant may be engaged to act in one or more additional capacities and that
the terms of the original engagement or any such additional engagement may be
embodied in one or more separate written agreements. The provisions of this
Agreement shall apply to the original engagement, any such additional engagement
and any modification of the original engagement or such additional engagement
and shall remain in full force and effect following the completion or
termination of the Consultant's engagement(s).
Very truly yours,
PARADISE MUSIC AND ENTERTAINMENT, INC.
By:
------------------------------------
Xxxx Xxxxxxxx,
President
Confirmed and Agreed to:
XXXXXX & CO., SECURITIES INC.
By:
--------------------------
Xxxxxxx X. Xxxx,
President
Date: As of __________, 1996
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