` CONSULTING 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" or
"Consultant"), and EPI Technologies, 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. DUTIES OF CONSULTANT. The Consultant shall, at the request of the
Company, upon reasonable notice, render the following services to the Company
from time to time.
(a) CONSULTING SERVICES. The Consultant will provide such financial
consulting services and advice pertaining to the Company's business affairs as
the Company may from time to time reasonably request. Without limiting the
generality of the foregoing, the Consultant will assist the Company in
developing, studying and evaluating financing, merger and acquisition proposals
and assist in negotiations and discussions pertaining thereto.
(b) FINANCING. The Consultant will assist and represent the Company
in obtaining both short and long-term financing if, as and when requested by the
Company. The Consultant will be entitled to additional compensation under
certain circumstances in accordance with the terms set forth in Section 3
hereof.
The services described in this Section 1 shall be rendered by the
Consultant without any direct supervision by the Company and at such time and
place and in such manner (whether by conference, telephone, letter or otherwise)
as the Consultant may determine.
2. TERM. Except as otherwise specified in Paragraph 4 hereof, this
Agreement shall be effective for a two (2) year period commencing on the date
hereof and ending __________, 1999.
3. COMPENSATION.
(a) As compensation for the Consultant's services hereunder, the
Company shall pay to the Consultant a fee of Fifty Thousand Dollars ($50,000)
per year for the term of this Agreement, payable annually in advance with the
first payment due upon the First Closing date (as defined in the Underwriting
Agreement dated ___________, 1997 by and between Duke and the Company (the
"Underwriting Agreement")) and the remaining $50,000 due on the first
anniversary of the First Closing Date.
(b) In addition to the financial consulting services described in
Section 1 above, the Consultant may, at the request of the Company, bring the
Company in contact with persons, whether individuals or entities, that may be
suitable candidates for providing the Company with, or may lead the Company to
other individuals or entities that may provide the Company with, debt or equity
financing or that may be suitable candidates, or may lead the Company to such
suitable candidates, to purchase substantially all of the stock or assets of the
Company, merge with the Company, or enter into a joint venture or other
transaction with the Company. If, at any time during the term of this
Agreement, the Company enters into an agreement with any such persons or their
affiliates, or with any persons introduced to the Company by any such persons or
their affiliates, pursuant to which the Company obtains debt or equity financing
or pursuant to which substantially all of the Company's stock or assets is
purchased or the Company is merged with or into another entity, or pursuant to
which the Company enters into a joint venture or other transaction, the Company
will pay to the Consultant, in accordance with the formula set forth below,
additional compensation based on the aggregate Transaction Value (as defined
below) of such transaction (the "Transaction"). Nothing herein shall be deemed
or construed to obligate or require the Company to complete or consummate any
Transaction for which the Consultant would be compensated hereunder or to pay
the Consultant any fee or compensation for any Transaction which is not
consummated.
(c) The additional compensation to be paid will be paid upon the
closing of the Transaction, by certified check, in the following amounts:
5% of the first $5,000,000 of Transaction Value in the Transaction;
4% of the Transaction Value in excess of $5,000,000 and up to
$6,000,000;
3% of the Transaction Value in excess of $6,000,000 and up to
$7,000,000;
2% of the Transaction Value in excess of $7,000,000 and up to
$8,000,000; and
1% of any Transaction Value in excess of $8,000,000.
(d) "Transaction Value" shall mean the aggregate value of all cash,
securities and other property (i) paid to the Company, its affiliates, or their
securityholders in connection with any Transaction involving an investment in or
acquisition of the Company or any affiliate (or the assets of either), (ii) paid
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by the Company or any affiliate in any such Transaction involving an investment
in or acquisition of another party or its equity holdings by the Company or any
affiliate, or (iii) paid or contributed by the Company or any affiliate and by
the other party or parties in the event of any such Transaction involving a
joint venture or similar joint enterprise or undertaking. The value of any such
securities (whether debt or equity) or other property shall be the fair market
value thereof as determined by agreement of the Consultant and the Company or by
an independent appraiser jointly selected by the Consultant and the Company.
"Transaction Value" shall also include the principal amount of any indebtedness
assumed or forgiven as part of a Transaction.
(e) In the event the Company engages in a transaction during the
three year period commencing on the First Closing Date which is originated by a
party other than Duke, the Company will engage Duke to review and otherwise
participate in such transaction and compensate Duke on such terms as agreed to
by the Company and Duke; notwithstanding the foregoing, it is acknowledged and
agreed that Duke shall not be entitled to a fee pursuant to this sentence in
respect of either of the transactions described on Exhibit A hereto in the event
such transaction is consummated during such three year period.
(f) In the event Duke originates, at the Company's request, a line of
credit with a lender or a corporate partner, the Company and Duke will mutually
agree on a satisfactory fee and the terms of payment of such fee. In the event
Duke introduces the Company to a customer, at the request of the Company, and
sales develop as a result of the introduction, the Company agrees to pay a fee
of two percent (2%) of total sales generated directly from this introduction
during the first two years following the date of the first sale. Total sales
shall mean gross receipts less any applicable refunds, returns, allowances,
credits, taxes 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 third month
following the receipt of the customers' payments. In the event any adjustments
are made to the total sales after the commission has been paid, the Company
shall be entitled, at its option, to an appropriate refund or credit against
future payments under this Agreement.
(g) All fees to be paid pursuant to this Agreement, except as
otherwise specified, are due and payable to Duke in cash or company check at the
closing or closings of any Transaction specified herein. In the event that the
consideration in respect of a Transaction is paid out over a period of time,
Duke shall be paid its pro-rata portion of such consideration as the Company is
paid. In the event that this Agreement shall not be renewed or if terminated
for any reason, notwithstanding any such non-renewal or termination, Duke shall
be entitled to a full fee as provided under
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Paragraphs 3 and 4 hereof, for any Transaction for which the discussions were
initiated with a third party at the request of the Company during the term of
this Agreement and which is consummated within a period of twelve months after
non-renewal or termination of this Agreement.
4. EXPENSES OF DUKE. In addition to the fees payable hereunder and
regardless of whether any Transaction set forth in Paragraph 3 hereof is
proposed or consummated, the Company shall reimburse Duke for Duke's reasonable
travel and out-of-pocket expenses incurred in connection with the services
performed by Duke pursuant to this Agreement and at the request of the Company,
including without limitation, hotels, food and associated expenses and
long-distance telephone calls.
5. AVAILABLE TIME. The Consultant shall make available such time as it,
in its sole discretion, shall deem appropriate for the performance of its
obligations under this Agreement.
6. LIABILITY OF DUKE.
(1) The Company acknowledges that all opinions and advice (written or
oral) given by Duke to the Company in connection with Duke'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 to be given hereunder, and no such opinion or advice shall be
used for any other purpose or reproduced, 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, or use Duke's name in any annual reports or any other
reports or releases of the Company without Duke's prior written consent or as
required by law.
(2) The Company acknowledges that Duke 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. Research reports or corporate
finance reports that may be prepared by Duke will, when and if prepared, be done
solely on the merits or judgement of analysis of Duke or any senior corporate
finance personnel of Duke.
7. DUKE'S SERVICES TO OTHERS. The Company acknowledges that Duke 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 in conducting such business with respect to others, or in
rendering such advice to others, except that Duke will not provide services to
others when such services may materially and adversely affect the Company.
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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 will use and rely on data,
material and other information furnished to Duke by the Company. The Company
acknowledges and agrees that in performing its services under this engagement,
Duke 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 required by applicable law, Duke shall keep confidential
all non-public information provided to it by the Company, and shall not disclose
such information to any third party without the Company's prior written consent,
other than such of its employees and advisors as Duke reasonably determines to
have a need to know, provided that Duke shall instruct such employees and
advisors to keep such information confidential and Duke shall be liable for any
breach of such confidentiality. In the event that Duke is required by subpoena
to disclose such information, the Company shall be afforded an opportunity to
seek an order preserving the confidentiality of such information.
9. INDEMNIFICATION.
(a) The Company shall indemnify and hold Duke 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
"1934 Act") or any other federal or state statute, at common law or otherwise,
insofar as said liabilities, claims and lawsuits (including costs, expenses,
awards and/or judgments) arise out of or are in connection with the services
rendered by Duke or any transactions in connection with this Agreement, except
for any liabilities, claims and lawsuits (including awards and/or judgments),
arising out of acts or omissions of Duke. In addition, the Company shall also
indemnify and hold Duke harmless against any and all costs and expenses,
including reasonable counsel fees, incurred relating to the foregoing.
Duke shall give the Company prompt notice of any such liability, claim or
lawsuit which Duke 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, 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 and
provided that no such settlement shall be made without the prior consent of
Duke.
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Duke shall indemnify and hold the Company 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 1934 Act or any other
federal or state statute, at common law or otherwise, insofar as said
liabilities, claims and lawsuits (including costs, expenses, awards and/or
judgments) arise out of or are in connection with the services rendered by Duke
or any transactions in connection with this Agreement. In addition, Duke shall
also indemnify and hold the Company harmless against any and all costs and
expenses, including reasonable counsel fees, incurred relating to the foregoing.
The Company shall give Duke prompt notice of any such liability, claim or
lawsuit which the Company contends is the subject matter of Duke's
indemnification and Duke 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 or 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 and
provided that no such settlement shall be made without the prior consent of the
Company.
(b) In order to provide for just and equitable contribution in any
case in which (i) any person entitled to indemnification under this Paragraph 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 Paragraph 9 provides for indemnification in such case, or (ii)
contribution may be required on the part of any such person in circumstances for
which indemnification is provided under this Paragraph 9, then, and in each such
case, the Company and Duke 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 transactions undertaken in connection with this
Agreement (taking into account the portion of the proceeds realized by each),
the parties' relative knowledge and access to information concerning the matter
with respect to which the claim was assessed, the opportunity to correct and
prevent any statement or omission and other equitable considerations appropriate
under the circumstances; and provided, that, in any such case, no person guilty
of a fraudulent misrepresentation (within the meaning of Section 11(f) of the
▇▇▇▇ ▇▇▇) 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
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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 written consent of the Contributing
Party. The indemnification provisions contained in this Paragraph 9 are in
addition to any other rights or remedies which either party hereto may have with
respect to the other or hereunder.
10. DUKE AN INDEPENDENT CONTRACTOR. Duke shall perform its services
hereunder as an independent contractor and not as an employee of the Company or
an affiliate thereof. The parties hereto expressly understand and agree that
Duke 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.
(a) This Agreement between the Company and Duke 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.
(b) All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and, if sent to Duke, shall be
mailed, delivered or telegraphed and confirmed to Duke & Co., Inc., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: President, with a copy to Zimet,
Haines, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., and if to the Company, shall be mailed,
delivered or telegraphed and confirmed to EPI Technologies, Inc., ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: President, with a copy to Benesch,
Friedlander, ▇▇▇▇▇▇ & Aronoff LLP, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(c) This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors, legal
representatives and permitted assigns. This
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Agreement shall not be assignable by any party without the prior written consent
of the other party; provided, however, that Duke shall be entitled to assign its
obligations under this Agreement to another member of the National Association
of Securities Dealers, Inc. with the Company's consent, which consent shall not
be unreasonably withheld.
(d) This Agreement may be executed in any number of counterparts,
each of which together shall constitute one and the same original document.
(e) No provision of this Agreement may be amended, modified or
waived, except in a writing signed by all of the parties hereto.
(f) This Agreement shall be construed in accordance with and governed
by the laws of the State of New York, without giving effect to its 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:_________________________
Name:
Title:
EPI TECHNOLOGIES, INC.
By:_________________________
Name:
Title:
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EXHIBIT A
EXCLUDED TRANSACTIONS
The Company is currently in discussions with ▇▇▇▇▇▇▇ Environmental Inc.,
Columbia, South Carolina, and Texo Corporation, Cincinnati, Ohio, regarding
joint marketing arrangements, joint ventures and participation in the Public
Offering (as defined in the Underwriting Agreement).
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