Exhibit 10.16
COPS WORLDWIDE, INC.
CASTLE, OVERMYER, XXXXX & XXXXXXXX
MERCHANT BANKING
000 00XX Xxxxxx, Xxxxx0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000 E-mail: xxxx@xxxx-xxxxxx.xxx
Facsimilie: (000) 000-0000
INVESTMENT BANKING AND CORPORATE FINANCIAL
ADVISORY AGREEMENT
September 21, 2004
Xx. Xxx Xxxxxxxxx, CEO
American Pallet Leasing, Inc.
0000 Xxxxxxxxx Xxxxx X.X.
Xxxxx Xxxxxx, XX 00000
Dear Xx. Xxxxxxxxx:
THIS INVESTMENT BANKING AND CORPORATE FINANCIAL ADVISORY AGREEMENT (the
"Agreement") is made effective the 22nd day of September, 2004 (the "Effective
Date") by and between COPS WORLDWIDE, INC, a Delaware corporation whose
principal offices are located at 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000
(hereinafter referred to as "COPS" or "Consultant") and Literary Playpen, Inc.
(also known as American Pallet Leasing, Inc.), a Delaware corporation whose
principal offices are located at 000 Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000
(hereinafter referred to as the "Client" or the "Company")
RECITALS
A. WHEREAS Consultant is experienced in providing advice and assistance in
investment banking, corporate finance, mergers & acquisitions, broker
and investor relations and other related investment banking and
corporate financial advisory services to business organizations,
institutions and firms.
B. WHEREAS Consultant is experienced in advising and assisting business to
manager institute, structure and otherwise effectuate capital
structuring, such services to include without limitation the
introduction of such entities to institutional and individual investors
for the purpose of raising debt and equity capital.
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C. WHEREAS Consultant is experienced in providing advice and assistance to
private and public companies for equity private placements,
acquisitions, and initial and secondary public offerings.
D. WHEREAS Client wishes to engage the investment banking and corporate
financial advisory services of Consultant specifically to advise,
assist, consult and provide the services discussed in Sections A thru
C.
E. Consultant agrees to be retained for the foregoing purposes, subject to
the terms and conditions provided in this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements Contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are expressly acknowledged, Client and
Consultant agree as follows:
(1) SCOPE OF REPRESENTATION. Client grants Consultant permission to provide
Client the investment banking and corporate financial advisory services on a
non-exclusive basis described in Sections A through C below. CLIENT HEREBY
ACKNOWLEDGES THAT CONSULTANT IS NOT A REGISTERED BROKER/DEALER AND WILL ACT
SOLELY AS A CONSULTANT.
(2) ENGAGEMENT AND SERVICES OF CONSULTANT. Consultant agrees to utilize its
best efforts to advise the Client and facilitate the execution therewith of the
following services: investment banking, corporate finance, mergers &
acquisitions and advice in order to manage, institute, structure and otherwise
effectuate capital structuring. Such services to include without limitation the
introduction of the Client to broker/deals, institutional and individual
investors for the purpose of raising debt and equity capital via equity and debt
private placements, acquisitions and secondary public offerings
Consultant, in its capacity as a corporate advisor to the Company, will perform
such of the following advisory services as the Company may reasonably request:
(a) Familiarize itself to the extent it reasonably deems
necessary, appropriate and feasible with the business,
operations, properties, financial condition and prospects of
the Company in order to better determine ways in which
Consultant can facilitate the Company's objectives;
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(b) Advise and assist the Company in identifying, evaluation and
implementing various financial options available to the
Company in the private equity and debt markets, specifically
as such options relate to debt or equity offerings ("Financing
Transaction"). If the Company determines to undertake one or
more Financing Transactions, Consultant will advise and assist
the Company in considering the desirability of undertaking
such Financial Transaction(s);
(c) Identify and introduce the Company of institutional and retail
vendors;
(d) Advise and assist the Company in locating, identifying and
evaluating potential acquisition candidates and/or potential
suitors;
(e) Advise and assist the Company in restructuring, investing in,
or spinning off any of its subsidiaries, if any;
(f) Advise and assist the Company in any merger and acquisition
activity.
(3) In conducting the foregoing efforts, Consultant will rely on the Client
to provide all necessary information regarding the Client and its business. The
Client will furnish Consultant with all relevant publicly available material and
information regarding the business and financial condition of Client that will
be accurate and complete in all material respects at the time furnished and will
represent their best estimates of future performance in the context of all
applicable U.S. Federal and State securities laws and the Securities Exchange
Act of 1934, as amended (hereinafter the "Act"), with specific reference to
required material disclosures and standard disclaimers regarding estimates of
future performance. Consultant will be relying, without independent
verification, on the accuracy and completeness of all financial and other
information that is and will be furnished to Consultant by the Client. Any
advice rendered by Consultant pursuant to this Agreement may not be disclosed
publicly in any manner without Consultant's prior written approval and will be
treated by Client and Consultant as confidential.
(4) In the event the Client provides any non-public information to the
Consultant, in connection with this Agreement or otherwise, the Consultant
agrees to maintain such information in confidence in compliance with Regulation
FD.
(5) THE SERVICES, AMERICAN PALLET LEASING, INC. HEREBY AGREES TO RETAIN
COPS WORLDWIDE, INC. on a non-exclusive basis to provide financial advisory,
investment banking and other consulting services in connection with Clients
efforts to raise capital and/or to effect a Transaction, as defined in Appendix
I. The total amount to be raised is $20,000,000 USD. Such services will include
a due diligence review of Client's business.
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(6) FEES. In connection with the services specified HEREIN, Client shall
pay COPS (i) a due diligence fee of $42,600.00 USD in cash, in two payments; one
on signing and the other 45 days later. ADDITIONALLY, COPS will charge five
percent (5%) of ANY money raised. This will be paid from the proceeds at
closing. In addition, Client shall pay COPS two percent (2%) of the Company's
common shares issued and outstanding as of September 22, 2004 or 227,723 (two
hundred and twenty-seven thousand, seven hundred and twenty three) common shares
(hereinafter the "Equity Fee") UPON THE SUCCESSFUL COMPLETION OF THE COMPANY'S
PRIVATE PLACEMENT OF CASH EQUITY (OR CONVERTIBLE SUBORDINATED DEBT) AMOUNTING TO
A MINIMUM OF $3 MILLION CASH, ONLY IF THE INVESTOR(S) ARE INTRODUCED TO THE
CLIENT BY COPS. THE AFORESAID EQUITY FEE TO COPS WILL BE PAID ON A PRO RATA
BASIS (E.G. 100% OF THE EQUITY FEE IF $3 MILLION IS RAISED, 66% OF THE EQUITY
FEE IF $2 MILLION IS RAISED, ETC.). THIS WILL BE PAID FROM THE PROCEEDS AT
CLOSING.
(7) CONSULTANT'S EXPENSES. Throughout the term of this Agreement, the
Consultant shall provide the types of services AS DESCRIBED HEREIN. Consultant
shall perform such services at and from its principal place of business.
Consultant shall be solely responsible for ordinary and reasonable expenses
incurred during the performance of this Agreement, including but not limited to
traveling, entertainment, telephone, facsimile and copying expenses. Consultant
shall be entitled to reimbursement for any expenses incurred by Consultant only
if Consultant obtains Client's prior written authorization to incur such
expenses and agreement to reimburse Consultant for such expenses.
(8) CORPORATION. Client agrees to cooperate fully with COPS in connection
with the assignment and to make available such current and historical
information as COPS may reasonably request and, if requested by COPS, prepare a
private placement memorandum. Client recognizes and confirms that COPS may use
and rely upon data, material and other information furnished to COPS by Client
without independent verification. COPS AGREES TO UTILIZE ALL INFORMATION
RECEIVED FROM THE CLIENT ONLY AS CONTEMPLATED HEREIN AND TO TREAT ALL
INFORMATION RECEIVED FROM CLIENT IN A STRICTLY CONFIDENTIAL MANNER; SUCH
INFORMATION WILL NOT BE DISSEMINATED PUBLICLY OR PROVIDED TO ANY THIRD PARTY
WITHOUT CLIENT'S WRITTEN CONSENT, UNLESS OTHERWISE REQUIRED BY LAW. CLIENT
AGREES THAT ALL MATERIAL, WRITTEN OR ORAL, provided by COPS is for Client's
exclusive use and will not be disseminated publicly or provided to any third
party without COPS' express written consent, unless otherwise require by law.
(9) INDEPENDENT CONTRACTOR - NO FIDUCIARY DUTY. Client acknowledges and
agrees that it is a sophisticated business enterprise and that COPS has been
retained pursuant to this agreement to act as adviser to, but not an agent of,
Client solely with respect to the matters set forth herein. In such capacity,
COPS shall act as an independent contractor, and any duties of COPS arising out
of its engagement pursuant to this agreement shall be contractual in nature and
shall be owed solely to Client. Each party disclaims any intention to impose any
fiduciary duty on the other. Consultant does not have the right or authority to
create a contract or obligation either express or implied, on behalf of, in the
name of or binding upon the Client or to pledge the Client's credit, or to
extend credit in the Client's name unless otherwise agreed in writing.
Consultant shall have no right or authority to commit Client in any manner
without the prior written consent of the Client.
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(10) TERM. Client can, six months after the date hereof, terminate this
engagement if Client chooses, in its sole and absolute discretion, to do so,
COPS can terminate this engagement if it determines that the result of Due
Diligence do not confirm the viability of the assignment. Termination shall be
without liability or continuing obligation to Client or to COPS, except all fees
shall be payable for any Transaction with a person or entity introduced to
Client by COPS if such occurs within 12 months of termination, and except for
any expenses incurred by COPS up to the date of termination, provided that the
indemnity and confidentiality provisions contained herein remain operative and
in full force and effect regardless of any termination. If this agreement is not
executed within 15 days of the date above, the agreement will automatically
terminate.
(11) INDEMNIFICATION. Since COPS will be acting on Client's behalf, Client
agrees to indemnify and hold COPS (including its respective officers, directors
and employees) harmless as provided in Appendix II.
(12) ARBITRATION. In the event of any dispute arising out of this Agreement,
the parties shall meet and confer prior to the institution of any proceedings to
attempt to resolve the dispute without incurring the costs of arbitration.
Should the dispute not be resolved, all parties agree to submit the dispute and
all surrounding issues to binding arbitration in NEW YORK, NEW YORK pursuant to
the rules of the American Arbitration Association. The decision of the
arbitrator(s) shall be binding and judgment may be entered in any court of
competent jurisdiction. All parties shall cooperate with the arbitration and
promptly pay all necessary fees. Until a final decision on distribution of
costs, all fees shall be paid equally by all parties. The arbitrator shall award
reasonable attorney's fees to the prevailing party.
(13) WARRANTIES AND REPRESENTATIONS. Consultant's investment banking and
corporate financial advisory services are provided on a best effort basis and
are based on Consultant's personal experience and expertise. THERE ARE NO
GUARANTEES, WARRANTIES AND REPRESENTATIONS OF ANY KIND THAT CONSULTANT'S ADVICE
OR SERVICES WILL PRODUCE ANY SPECIFIC RESULTS FOR THE BENEFIT OF THE CLIENT.
Actual results may substantially and materially differ from those suggested by
the Consultant. Consultant represents and warrants to the Client that:
(a) Consultant is under no contractual restriction or other
restrictions or obligation that are inconsistent with this
Agreement, the performance of its duties and the covenants
hereunder;
(b) Consultant's management is under no physical or mental disability
that would interfere with its keeping and performing all of the
agreements, covenants and conditions to be kept or performed
hereunder;
(c) Consultant is familiar with all federal and state securities laws
applicable to the performance of its services as contemplated in
this Agreement, including Sections 17(b) of the Securities Act of
1933, as amended (the "Securities Act"), Sections 9 and 10(b) of
the Exchange Act and Regulation FD;
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(d) Consultant will comply with all applicable federal and state
securities laws in the performance of the services under this
Agreement; and
(e) Consultant will cause any person to whom any of the Compensation
Shares or other compensation are transferred to agree and
undertake for the benefit of the Client to comply with all
applicable federal and state securities laws in connection with
their ownership or disposition of the Compensation Shares
(including compliance with Section 17(b) of the Securities Act to
the extent applicable) The Client acknowledges that the
Consultant may provide financial services and consulting advice
(of the type contemplated by this Agreement) to others and that
nothing herein contained shall be construed to limit or restrict
the Consultant in providing financial services to others, or
rendering such advice to others
(14) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of NEW YORK, applicable to contracts
executed and to be wholly performed therein without giving effect to its
conflicts-of-laws, principles or rules.
(15) AMENDMENTS. This Agreement may be modified or amended, or its
provisions waived, only by a writing signed by the person or persons against
whom enforcement of the modifications, amendment or waiver is sought.
(16) NO COMMITMENT. This Agreement does not and will not constitute any
Agreement, commitment or undertaking express or implied on the part of COPS or
any affiliate to purchase or to sell any securities.
(17) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes and cancels any and all prior or
contemporaneous arrangements, understandings and agreements, written or oral,
between them relating to the subject matter hereof.
(18) SEVERABILITY. If any portion of this Agreement shall be held or made
unenforceable or invalid by a statute, rule, regulation, decision of a tribunal
or otherwise, the remainder of this Agreement shall not be affected thereby and
shall remain in full force and effect, and, to the fullest extent, the
provisions of this Agreement shall be severable.
(19) HEADINGS. The descriptive headings of the paragraphs, subparagraphs and
appendices of this Agreement are inserted for convenience only, and do not
constitute a part of this Agreement, and shall not affect in any way the meaning
or interpretation of this Agreement.
(20) FAILURE OR DELAY - NO WAIVER. It is understood and agreed that failure
to delay by either Client or COPS in exercising any right, power or privilege
hereunder shall not operate as a waiver thereof, nor shall any single or partial
exercise preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.
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(21) INTERPRETATION. Each of the parties acknowledge that it has been
represented by independent counsel of its choice throughout all negotiations
that have preceded the execution of this Agreement, and that it has executed the
same with consent and upon the advice of said independent counsel. Each party
and its counsel cooperated in the drafting and preparation of this Agreement and
the documents referred to herein, and any and all drafts relating hereto shall
be deemed work product of the parties and may not be construed against any party
by reason of its preparation. Accordingly, any rule of law, including but not
limited to any decision that would require interpretation of any ambiguities in
this Agreement against the party that drafted it, is of no application and is
hereby expressly waived. The provisions of this Agreement shall be construed as
a whole and in accordance with its fair meaning to affect the intentions of the
parties and this Agreement.
IN WITNESS WHEREOF, the parties hereto have agreed and executed this Agreement
on September 22, 2004.
COPS WORLDWIDE, INC
By: /s/ Xxxxx X. Xxxxxxxx COPS WORLDWIDE, INC.
---------------------------- 1994 SEAL
Xxxxx X. Xxxxxxxx, President DELAWARE
AMERICAN PALLET LEASING, INC
By: /s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx, Chairman of the Board and CEO
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APPENDIX I
"TOTAL CONSIDERATION" shall mean the sum of cash, fair value of
securities, services or equipment provided (or given, as the case may be) to
Client, its security holders and its employees, including the assumption of
debt, excluding any amounts contributed by Client or any affiliate of Client.
Non-cash consideration shall be valued as follows:
(i) in the case of an exchange of securities in a transaction in which the
number of securities of the acquirer to be received will vary in a
manner designed to produce a fixed value to be received in exchange for
each security of the target company, the number of securities of the
target company exchanged in such transaction shall be multiplied by the
value per share specified in the agreement between the target company
and the acquirer;
(ii) in the case of an exchange of securities in a transaction in which the
number of securities of the acquirer to be received in exchange for
each security of the target company is fixed and the value of the
securities may vary,
(A) for securities traded on a national securities exchange, the
average closing price of the securities for the 20 trading
days ending on the fifth trading day prior to the closing of
the transaction shall be multiplied by the number of
securities of the acquirer to be issued upon exchange of the
target company's securities in the transaction, and
(B) for securities quoted by a national quotation service, the
average of the closing bid and ask prices for the securities
for a period of 20 trading days ending on the fifth trading
day prior to the closing of the transaction shall be
multiplied by the number of securities of the acquirer
to be issued in the transaction; and
(iii) for any other securities, the value shall be reasonably determined by
COPS, provided that if such securities are promissory notes, the
securities shall be valued at face value
"TRANSACTION" shall mean any dealing or series or combination of
dealings, whereby directly or indirectly, capital stock, debentures, or other
evidence if indebtedness, businesses or assets (hereinafter referred to
collectively and individually as "Assets" are transferred for consideration. A
transaction shall include, without limitation, a sale or exchange of capital
stock or tangible or intangible assets, leases, licenses of Assets, with or
without purchase options, a merger or consolidation, the formation of a public
company, joint venture or partnership; the undertaking of a cooperative project
development program; the investment of cash; other liquid funds or their
equivalent; the issuance of straight or convertible debt; or any other similar
dealing.
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APPENDIX II
Client agrees to indemnify and hold harmless COPS and its affiliates
and their respective directors, officers, employees, agents and controlling
persons (COPS and each such person being an "Indemnified Party") from and
against all losses, claims, damages and liabilities (or actions, including
shareholder actions, in respect thereof), joint or several, to which such
Indemnified Party may become subject under any applicable federal or state law,
or otherwise, which are related to or result from the performance of COPS of the
services contemplated by or the engagement of COPS pursuant to this Agreement,
and will promptly reimburse any Indemnified Party for all reasonable expenses
(including reasonable counsel fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense arising from
any threatened or pending claim, whether or not such Indemnified Party is a
party and whether or not such claim, action or proceeding is initiated or
brought by Client. Client will not be liable to any Indemnified Party under the
foregoing indemnification and reimbursement provisions for any settlement by and
Indemnified Party effected without its prior written consent (not to be
unreasonably withheld). CLIENT ALSO AGREES THAT NO INDEMNIFIED PARTY SHALL HAVE
ANY LIABILITY (WHETHER DIRECT OR INDIRECT, IN CONTRACT OR TORT OR OTHERWISE) TO
CLIENT, ITS SECURITY HOLDERS, ITS CREDITORS OR ANY THIRD PARTY RELATED TO OR
ARISING OUT OF THE ENGAGEMENT OF COPS PURSUANT TO, OR THE PERFORMANCE BY COPS OF
THE SERVICES CONTEMPLATED BY THIS AGREEMENT, EXCEPT TO THE EXTENT THAT ANY LOSS,
CLAIM, DAMAGE OR LIABILITY IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A
COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM COPS' WILLFUL
MISCONDUCT OR NEGLIGENCE.
COPS agrees to indemnify and hold harmless Clients and it's affiliates
and their respective directors, officers, employees, agents and controlling
persons (Client and each such person being an Indemnified Party) from and
against all losses, claims and damages and liabilities (or actions, including
shareholder actions, in respect thereof) joint or several, to which such
indemnified Party may become subject under any applicable federal or state, or
law, or otherwise, which is related to or result from the willful misconduct, or
negligent performance of COPS related to the services contemplated by this
Agreement and will promptly reimburse any Indemnified Party for all reasonable
expenses (including reasonable counsel fees and expenses) as they are incurred
in connection with the investigation of, preparation for or defense arising from
any threatened or pending claim, whether or not such Indemnified Party is a
party. COPS will not be liable to any Indemnified Party under the forgoing
indemnification and reimbursement provisions for any settlement by an
Indemnified Party effected without its prior written consent (not to be
unreasonably withheld).
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