ADVISORY AND INVESTMENT BANKING AGREEMENT
This Agreement is made and entered into as of the __ day
of_____ , 1997 by and between Duke & Co., Inc., a Florida corporation ("Duke")
and Briarwood Investment counsel, a ___________ corporation ("Briarwood"), and
Phoenix Preschool Holdings, Inc., a Delaware corporation (the "Company").
In consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Purpose: The Company hereby engages Duke and Briarwood for
the term specified in Paragraph 2 hereof to render consulting advice to the
Company as investment bankers relating to financial and similar matters upon the
terms and conditions set forth herein.
2. Term: Except as otherwise specified in paragraph 4 hereof,
this Agreement shall be effective from _________, 1997 to___________ , 1999.
3. Duties of Duke and Briarwood: During the term of this
Agreement, Duke and Briarwood shall seek out Transactions (as hereinafter
defined) on behalf of the Company and shall furnish advice to the Company in
connection with any such Transactions.
4. Compensation: In consideration for the services rendered by
Duke and Briarwood to the Company pursuant to this Agreement (and in addition to
the expenses provided for in Paragraph 5 hereof), the Company shall compensate
Duke and Briarwood as follows:
(a) The Company shall pay Duke and Briarwood a fee of
$4,166 per month during the term of this Agreement. The sum of $99,984 shall be
payable in full on the date of this Agreement. In the event that Duke and
Briarwood ceases its business operations as a financial advisor and investment
banker, materially breaches or is unable to satisfy its performance obligations
hereunder, then Duke and Briarwood shall repay to the Company the pro rata
unearned portion of foregoing fee, based on the number of months for which
performance was delivered and the remaining number of months in the term.
(b) In the event that any Transaction (as hereinafter
defined) occurs during the term of this Agreement or one year thereafter, the
Company shall pay fees to Duke and Briarwood as follows:
Consideration Fee
------------- ---
$ - 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 1% of the
Consideration in excess of
$5,000,000
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For the purposes of this Agreement, "Consideration" shall mean
the total market value on the day of the 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. Any co-broker or brokers retained by Duke and Briarwood shall be
paid by Duke and Briarwood.
For the purposes of the Agreement, a "Transaction" shall mean
(a) any transaction originated by Duke and Briarwood, other than in the ordinary
course of trade or business of the Company, whereby, directly or indirectly,
control of or a material interest in the Company or any of its businesses or any
of their respective assets, is transferred for Consideration, (b) any
transaction originated by Duke and Briarwood whereby the Company acquires any
other company or the assets of any other company or an interest in any other
company (an "Acquisition") or (c) any sale or Acquisition in connection with
which the Company engages an investment banker other than Duke and Briarwood and
pays such investment banker a fee in respect of such Transaction unless Duke and
Briarwood was unwilling or unable to so act.
In the event Duke and Briarwood originates a line of credit
with a lender, the Company and Duke and Briarwood will mutually agree on a
satisfactory fee for such services provided based upon reasonable and customary
practice in the industry and the terms of payment of such fee; provided,
however, that in the event the Company is introduced to a corporate partner by
Duke and Briarwood in
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connection with a merger, acquisition or financing and a credit line develops
directly as a result of the introduction, the appropriate fee shall be the
amount set forth in the schedule above with consideration to be based upon the
amount of the line of credit. In the event Duke and Briarwood 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 five percent (5%) of total
sales generated directly from this introduction during the first two years
following the date of the first sale, in lieu of the fees set forth in the
schedule above. Total sales shall mean cash receipts less any applicable
refunds, returns, allowances, credits and shipping charges and monies paid by
the Company by way of settlement or judgment arising out of claims made by or
threatened against the Company. Commission payments shall be paid on the 15th
day of each month following the receipt of customers' 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 under this Agreement. All fees to be paid pursuant to this Agreement,
except as otherwise specified, are due and payable to Duke and Briarwood in cash
at the closing or closings of any transaction specified in Paragraph 4 hereof.
In the event that this Agreement shall not be renewed or if terminated for any
reason, notwithstanding any such non-renewal or termination, Duke and Briarwood
shall be entitled to a full fee as provided under Paragraphs 4 and 5 hereof, for
any transaction for which the discussions were
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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. Expenses of Duke and Briarwood: In addition to the fees
payable hereunder, and regardless of whether any transaction set forth in
Paragraph 4 hereof is proposed or consummated the Company shall reimburse Duke
and Briarwood for all fees and disbursements of Duke and Briarwood's counsel and
Duke and Briarwood's travel and reasonable out-of-pocket expenses incurred in
connection with and in direct furtherance of the services performed by Duke and
Briarwood pursuant to this Agreement, including without limitation, hotels, food
and associated expenses and long-distance telephone calls. Duke and Briarwood
shall obtain the consent of the Company before incurring any expense over $200.
6. Liability of Duke and Briarwood:
(1) The Company acknowledges that all opinions and advice
(written or oral) given by Duke and Briarwood to the Company in connection with
Duke and Briarwood's engagement are intended solely for the benefit and use of
the Company in considering the transaction to which they relate, and the Company
agrees that no person or entity other than the Company shall be entitled to make
use of or rely upon the advice of Duke and Briarwood to be given hereunder, and
no such opinion or advice shall be used for any other purpose or reproduced,
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disseminated, quoted or referred to at any time, in any manner or for any
purpose, nor may the Company make any public references to Duke and Briarwood,
or use Duke and Briarwood's name in any annual reports or any other reports or
releases of the Company without Duke and Briarwood's prior written consent.
(2) The Company acknowledges that Duke and Briarwood makes
no commitment whatsoever as to making a market in the Company's securities or to
recommending or advising its clients to purchase the Company's securities,
except that Duke and Briarwood has committed to make a market in the Company's
securities for at least 45 days after the effective date of the Company's
initial public offering. Research reports or corporate finance reports that may
be prepared by Duke and Briarwood will, when and if prepared, be done solely on
the merits or judgment of analysis of Duke and Briarwood or any senior corporate
finance personnel of Duke and Briarwood.
7. Duke and Briarwood's Services to Others: The Company
acknowledges that Duke and Briarwood's or its affiliates are in the business of
providing financial services and consulting advice to others. Nothing herein
contained shall be construed to limit or restrict Duke and Briarwood in
conducting such business with respect to others, or in rendering such advice to
others.
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8. Company Information:
(a) The Company recognizes and confirms that, in advising
the Company and in fulfilling its engagement hereunder, Duke and Briarwood will
use and rely on data, material and other information furnished to Duke and
Briarwood by the Company. The Company acknowledges and agrees that in performing
its services under this engagement, Duke and Briarwood may rely upon the data,
material and other information supplied by the Company without independently
verifying the accuracy, completeness or veracity of same.
(b) Except as contemplated by the terms hereof or as
required by applicable law, Duke and Briarwood shall keep confidential all
material non-public information provided to it by the Company, and shall not
disclose such information to any third party, other than such of its employees
and advisors as Duke and Briarwood determines to have a need to know. Upon
termination of this Agreement, at the request of the Company, Duke and Briarwood
shall deliver to the Company all non-public material in its possession relating
to the business affairs of the Company.
9. Indemnification:
a. The Company shall indemnify and hold Duke and Briarwood
and its directors, officers, employees and agents harmless against any and all
liabilities, claims, lawsuits, including any and all awards and/or judgments to
which it may become subject under the Securities Act of 1933, as amended (the
"1933 Act"), the Securities Exchange Act of 1934, as amended (the "Act") or any
other federal or
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state statute, at common law or otherwise, insofar as said liabilities, claims
and lawsuits (including awards and/or judgments) arise out of or are in
connection with the services rendered by Duke and Briarwood or any transactions
in connection with this Agreement, except for any liabilities, claims and
lawsuits (including awards judgments and related costs and expenses), arising
out of acts or omissions of Duke and Briarwood. In addition, the Company shall
also indemnify and hold Duke and Briarwood harmless against any and all
reasonable costs and expenses, including reasonable counsel fees, incurred or
relating to the foregoing. If it is finally judicially determined that the
Company will not be responsible for any liabilities, claims and lawsuits or
expenses related thereto, the indemnified party, by his or its acceptance of
such amounts, agrees to repay the Company all amounts previously paid by the
Company to the indemnified person and will pay all costs of collection thereof,
including but not limited to reasonable attorneys' fees related thereto.
Duke and Briarwood shall give the Company prompt notice of any
such liability, claim or lawsuit which Duke and Briarwood contends is the
subject matter of the Company's indemnification and the Company thereupon shall
be granted the right to take any and all necessary and proper action, at its
sole cost and expense, with respect to such liability, claim and lawsuit,
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including the right to settle, compromise and dispose of such liability, claim
or lawsuit, excepting therefrom any and all proceedings or hearings before any
regulatory bodies and/or authorities.
Duke and Briarwood shall indemnify and hold the Company and
its directors, officers, employees and agents harmless against any and all
liabilities, claims and lawsuits, including any and all awards and/or judgments
to which it may become subject under the 1933 Act, the Act or any other federal
or state statute, at common law or otherwise, insofar as said liabilities,
claims and lawsuits (including awards and/or judgments) arise out of or are
based upon Duke and Briarwood's gross negligence, useful misconduct, bad faith
or any untrue statement or alleged untrue statement of a material fact or
omission at a material fact required to be stated or necessary to make the
statement provided by Duke and Briarwood, not misleading, which statement or
omission was made in reliance upon information furnished in writing to the
Company by or on behalf of Duke and Briarwood for inclusion in any registration
statement or prospectus or any amendment or supplement thereto in connection
with any transaction to which this Agreement applies. In addition, Duke and
Briarwood shall also indemnify and hold the Company harmless against any and all
costs and expenses, including reasonable counsel fees, incurred or relating to
the foregoing.
The Company shall give to Duke and Briarwood prompt notice of
any such liability, claim or lawsuit which the Company contends is the subject
matter of Duke and Briarwood's indemnification and Duke and Briarwood thereupon
shall be granted the right to a take
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any and all necessary and proper action, at its sole cost and expense, with
respect to such liability, claim and lawsuit, including the right to settle,
compromise or dispose of such liability, claim or lawsuit, excepting therefrom
any and all proceedings or hearings before any regulatory bodies and/or
authorities.
b. In order to provide for just and equitable contribution
under the Act in any case in which (i) any person entitled to indemnification
under this Section 9 makes claim for indemnification pursuant hereto but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 10 provides for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
such person in circumstances for which indemnification is provided under this
Section 10, then, and in each such case, the Company and Duke and Briarwood
shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after any contribution from others) in such
proportion taking into consideration the relative benefits received by each
party from the offering covered by the prospectus with respect to any
transactions in connection with this Agreement (taking into account the portion
of the proceeds of the offering realized by each), the parties' relative
knowledge and access to information concerning the matter with respect to which
the claim was assessed, the opportunity
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to correct and prevent any statement or omission and other equitable
considerations appropriate under the circumstances; provided, however, that
notwithstanding the above in no event shall Duke and Briarwood be required to
contribute any amount in excess of 10% of the public offering price of any
securities to which such Prospectus applies; and provided, that, in any such
case, no person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
Within fifteen (15) days after receipt by any party to this
Agreement (or its representative) of notice of the commencement of any action,
suit or proceeding, such party will, if a claim for contribution in respect
thereof is to be made against another party (the "Contributing Party"), notify
the Contributing Party of the commencement thereof, but the omission so to
notify the Contributing Party will not relieve it from any liability which it
may have to any other party other than for contribution hereunder. In case any
such action, suit or proceeding is brought against any party, and such party
notifies a Contributing Party or his or its representative of the commencement
thereof within the aforesaid fifteen (15) days, the Contributing Party will be
entitled to participate therein with the notifying party and any other
Contributing Party similarly notified. Any such Contributing Party shall not be
liable to any party seeking contribution on account of any settlement of any
claim, action or proceeding effected by such party seeking contribution without
the
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written consent of the Contributing Party. The indemnification provisions
contained in this Section 10 are in addition to any other rights or remedies
which either party hereto may have with respect to the other or hereunder.
10. Duke and Briarwood an Independent Contractor : Duke and
Briarwood shall perform its services hereunder as an independent contractor and
not as an employee of the Company or an affiliate thereof. It is expressly
understood and agreed to by the parties hereto that Duke and Briarwood shall
have no authority to act for, represent or bind the Company or any affiliate
thereof in any manner, except as may be agreed to expressly by the Company in
writing from time to time.
11. Miscellaneous:
(1) This Agreement between the Company and Duke and
Briarwood constitutes the entire agreement and understanding of the parties
hereto, and supersedes any and all previous agreements and understandings,
whether oral or written, between the parties with respect to the matters set
forth herein.
(2) Any notice or communication permitted or required
hereunder shall be in writing and shall be deemed sufficiently given if
hand-delivered or sent (i) postage prepaid by registered mail, return receipt
requested, or (ii) by facsimile, to the respective
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parties as set forth below, or to such other address as either party may notify
the other in writing:
If to the Company, to: Phoenix Preschool Holdings,
Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xx.
Xxx Xxxx, Xxx Xxxx 00000
with a copy to: Xxxxxxxxx X. Xxxxxx
Blank Rome Xxxxxxx & XxXxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to Duke and Briarwood, to: Duke & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Briarwood Investment Counsel
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
with a copy to: XXX X. XXXXXXXXX
Gersten, Savage, Xxxxxxxxx &
Xxxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(3) This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors, legal
representatives and assigns.
(4) This Agreement may be executed in any number of
counterparts, each of which together shall constitute one and the same original
document.
(5) No provision of this Agreement may be amended, modified
or waived, except in a writing signed by all of the parties hereto.
(6) This Agreement shall be construed in accordance with
and governed by the laws of the State of New York, without giving
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effect to conflict of law principles. The parties hereby agree that any dispute
which may arise between them arising out of or in connection with this Agreement
shall be adjudicated before a court located in New York City, and they hereby
submit to the exclusive jurisdiction of the courts of the State of New York
located in New York, New York and of the federal courts in the Southern District
of New York with respect to any action or legal proceeding commenced by any
party, and irrevocably waive any objection they now or hereafter may have
respecting the venue of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum, relating to or
arising out of this Agreement, and consent to the service of process in any such
action or legal proceeding by means of registered or certified mail, return
receipt requested, in care of the address set forth in Paragraph 11(b) hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
DUKE & CO., INC.
By:________________________________
BRIARWOOD INVESTMENT COUNSEL
By:_________________________________
PHOENIX PRESCHOOL HOLDINGS, INC.
By:________________________________
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