FINANCIAL ADVISORY AND INVESTMENT BANKING AGREEMENT
This Agreement is made and entered into as of the ____ day of
_________ , 1996 by and between The Thornwater Company, L.P. ("Consultant"), and
Room Plus, Inc., a New York 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 Consultant for the term
specified in Paragraph 2 hereof to render consulting advice to the Company as an
investment banker 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 for a two (2) year period commencing , 1996 and
ending to _________ , 1998.
3. Duties of Consultant: During the term of this Agreement, Consultant
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
Consultant to the Company pursuant to this Agreement (and in addition to the
expenses provided for in Paragraph 5 hereof), the Company shall compensate
Consultant as follows:
(a) The Company shall pay Consultant a fee of $4,766.67 per
month for the term of this Agreement. The aggregate sum of $114,400 shall be due
and payable upon the execution of this Agreement.
(b) In the event that any Transaction occurs during the term
of this Agreement or one year thereafter, the Company shall pay fees to
Consultant 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
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 retained by Consultant shall be paid by Consultant.
(c) For the purposes of the Agreement, a "Transaction" shall
mean (i) any transaction originated by Consultant, 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, or (ii) any
transaction originated by Consultant whereby the Company acquires any other
company or the assets of any other company or an interest in any other company
(an "Acquisition").
In the event Consultant originates a line of credit with a
lender or a corporate partner, the Company and Consultant will mutually agree on
a satisfactory fee and the terms of payment of such fee. In the event 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 five percent
(5%) 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
-2-
of customers' payments. 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.
(d) All fees to be paid pursuant to this Agreement, except as
otherwise specified, are due and payable to Consultant in cash or company check
at the closing or closings of any Transaction specified in Paragraph 4. In the
event that this Agreement shall not be renewed or if terminated for any reason,
notwithstanding any such non-renewal or termination, Consultant shall be
entitled to a full fee as provided under Paragraphs 4 and 5 hereof, 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. Nothing herein shall impose any
obligation on the part of the Company to enter into any Transaction.
5. Expenses of Consultant: 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 Consultant for the
reasonable fees and disbursements of Consultant's counsel and Consultant's
reasonable travel and out-of-pocket expenses incurred in connection with the
services performed by Consultant pursuant to this Agreement and at the request
of the Company, including without limitation, hotels, food and associated
expenses and long-distance telephone calls, except that all expenses exceeding
$500 must be pre-approved in writing by the Company.
6. Liability of Consultant: The Company acknowledges that all opinions
and advice (written or oral) given by Consultant to the Company in connection
with Consultant'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 Consultant 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 Consultant, or use
Consultant's name in any annual reports or any other reports or releases of the
Company without Consultant's prior written consent.
-3-
The Company acknowledges that Consultant 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 Consultant will, when and if prepared,
be done solely on the merits or judgment of analysis of Consultant or any senior
corporate finance personnel of Consultant.
7. Consultant's Services to Others: The Company acknowledges that
Consultant 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 Consultant in conducting such business with respect to others,
or in rendering such advice to others, except that Consultant will not provide
services to others when such services may materially and adversely affect the
Company.
8. Company Information:
(a) The Company recognizes and confirms that, in advising the
Company and in fulfilling its engagement hereunder, Consultant will use and rely
on data, material and other information furnished to Consultant by the Company.
The Company acknowledges and agrees that in performing its services under this
engagement, Consultant 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, Consultant 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 Consultant reasonably determines to have a need to
know.
9. Indemnification:
(a) The Company shall indemnify and hold Consultant 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
-4-
1933, as amended (the "1933 Act"), the Securities Exchange Act of 1934, as
amended (the "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 Consultant 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 Consultant. In addition,
the Company shall also indemnify and hold Consultant harmless against any and
all costs and expenses, including reasonable counsel fees, incurred relating to
the foregoing.
Consultant shall give the Company prompt notice of any such
liability, claim or lawsuit which Consultant 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.
Consultant 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
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 based upon any untrue statement or alleged
untrue statement of a material fact required to be stated or necessary to make
the statement therein, not misleading, which statement or omission was made in
reliance upon information furnished in writing to the Company by or on behalf of
Consultant for inclusion in any registration statement or prospectus or any
amendment or supplement thereto or in connection with any Transaction to which
this Agreement applies or which otherwise arises. In addition, Consultant shall
also indemnify and hold the Company harmless against any and all costs and
expenses, including reasonable counsel fees, incurred relating to the foregoing.
-5-
The Company shall give Consultant prompt notice of
any such liability, claim or lawsuit which
the Company contends is the subject matter of Consultant's indemnification and
Consultant 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 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 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 under the Act 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 Consultant 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 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
-6-
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, which consent shall not be
unreasonably withheld. 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. Consultant an Independent Contractor: Consultant 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 Consultant 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 Consultant
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) Any notice or communication permitted or required
hereunder shall be in writing and shall be deemed sufficiently given if
hand-delivered (i) five calendar days after being sent postage prepaid by
registered mail, return receipt requested, or (ii) one business day after being
sent by facsimile with confirmatory notice by U.S. mail, to the respective
parties as set forth below, or to such other address as either party may notify
the other in writing:
-7-
If to the Company, to: Room Plus Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Att: Chairman
Telecopy No.:
If to Consultant, to: The Thornwater Company, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Att: Managing Director
Telecopy No.:
with a copy to: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Gersten, Savage, Kaplowitz
& ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(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 assigns.
(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
-8-
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(2) hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
THE ▇▇▇▇▇▇▇▇ COMPANY, L.P.
By:________________________________
Name: ▇▇▇▇▇▇ ▇'▇▇▇▇▇
Title: Managing Director
ROOM PLUS INC.
By:________________________________
Marc Zucken, Chairman