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Exhibit 10.2
FINANCIAL ADVISORY SERVICES AGREEMENT
THIS FINANCIAL ADVISORY SERVICES AGREEMENT (this "AGREEMENT")
dated May 3, 2000, by and between Element K Holdings LLC (f/k/a WBT Holdings
LLC), a Delaware limited liability company ("HOLDINGS") and Element K LLC (f/k/a
WBT Operating LLC), a Delaware limited liability company (together with
Holdings, the "COMPANY") and WP Management Partners, L.L.C., a Delaware limited
liability company ("WP").
WHEREAS, pursuant to that certain Purchase Agreement dated as
of November 17, 1999, as amended (the "PURCHASE AGREEMENT"), by and between ZD
INC., a Delaware corporation and WP Education Holdings LLC, a Delaware limited
liability company ("WP EDUCATION"), ZD INC. has agreed to sell, convey, assign,
transfer and deliver all of its right, title and interest in certain assets to
WP Education and WP Education has agreed to purchase and acquire such assets
from Seller, all as more fully described in the Purchase Agreement;
WHEREAS, pursuant to the terms of the Purchase Agreement, WP
Education proposes to assign to the Company, an Affiliate (as such term is
defined in the Purchase Agreement) of WP Education, the right to purchase from
Seller those certain assets, and the Company desires to accept such assignment
from WP Education;
WHEREAS, the Company has requested that WP make available to
the Company and its affiliates certain management and financial advisory
services commencing on the date hereof; and
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, it is agreed as follows:
1. Retention as Advisor. Subject to each of the terms, conditions and
provisions of this Agreement, the Company hereby retains WP and WP hereby agrees
to be retained by the Company, on an exclusive basis to perform those functions
set forth in Section 4 of this Agreement.
2. Term.
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2.1 Subject to the provisions for termination set forth herein, this
Agreement shall be in effect from the date hereof and for so long as WP, or any
of its affiliates or any funds controlled by WP shall control, directly or
indirectly, individually or in the aggregate, at least ten percent (10%) of the
equity interest of Company and/or any of its affiliates, unless earlier
terminated by the Company due to a material breach by WP of its obligations
hereunder, WP's gross negligence or willful misconduct in the performance of its
services for the Company hereunder.
2.2 WP, by thirty (30) days' prior written notice to the Company, may
terminate this Agreement at any time.
2.3 It is understood and agreed that (i) termination of this Agreement
shall not affect the Company's continuing obligation to indemnify WP and certain
Indemnified Persons as provided in paragraph 7 below, and its continuing
obligations and agreements under paragraph 6 hereof, (ii) notwithstanding any
such termination, WP shall be entitled to the full fees paid (and then due and
payable) to it as specified hereunder, and (iii) termination of this Agreement
shall not affect the Company's obligation to reimburse the expenses accruing
prior to such termination to the extent provided for herein.
3. Compensation.
3.1 As compensation to WP in respect of Monitoring Services (as defined
in Section 4) provided under this Agreement, the Company agrees to pay to WP an
annual fee (the "MONITORING FEE") in the amount of $500,000 per year. Such fee
shall be payable in equal quarterly installments, in advance, on the last day of
each calendar quarter with the first such payment commencing on the date hereof
in the amount of the full quarterly payment; provided, however, that the amount
payable for the first quarterly payment shall also include all payments due and
owing for Monitoring Services previously provided by WP to the Company and shall
be computed based on the Monitoring Fee from February 10, 2000 to the date
hereof.
3.2 WP shall also be entitled to be reimbursed by the Company for all
reasonable out-of-pocket costs and expenses incurred by WP, its affiliates and
any of their respective partners, employees or officers or any legal counsel,
accountants and other consultants retained by WP in connection with the
provision of services under this Agreement in connection with (a) providing the
Monitoring Services under this Agreement, or (b) serving as a member of the
Board of Directors or as an officer of the Company, including, without
limitation, all travel and other out-of-pocket costs and expenses. Reimbursement
shall be provided promptly upon receipt by the Company of invoices with respect
to such costs and expenses.
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4. Duties as Management Advisor. WP's duties as an advisor to the
Company under the provisions of this Agreement shall include providing directly
and/or through an affiliate advisory services to assist management in developing
and implementing strategies related to the operating, marketing, and financial
performance of the Company (the "MONITORING SERVICES").
5. Decisions. In rendering its services to the Company hereunder, WP and
its affiliates are not assuming any responsibility for the Company's underlying
business decision to pursue any business strategy or to effect any transaction.
6. Independent Contractor. Each of WP and its affiliates has been retained
under this Agreement as an independent contractor with no fiduciary or agency
relationship to the Company or to any other party. The advice (written or oral)
rendered by WP and its affiliates pursuant to this Agreement is intended solely
for the benefit and use of the Board of Managers or sole manager of the Company,
as the case may be, in considering the matters to which this Agreement relates,
and the Company agrees that such advice may not be relied upon by any other
person, used for any other purpose or reproduced, disseminated, quoted or
referred to at any time, in any manner or for any purpose. The obligations of WP
to the Company are not exclusive, and WP and its affiliates may, in its, or
their, sole discretion, render the same or similar services to any other person
or entity. Nothing set forth in this Agreement shall be deemed to prohibit WP or
its affiliates from serving any other person or entity in any capacity WP may
deem appropriate or from conducting its business and affairs in any manner it
may elect, whether or not such activities might involve an actual or potential
conflict of interest with respect to the Company or any of its affiliates.
7. Indemnification. The Company agrees to indemnify and hold WP and its
affiliates and their respective partners, members, officers, directors,
employees and agents and each of their respective successors and assigns
(collectively, "INDEMNIFIED PERSONS") harmless from damages, losses or expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred or paid directly or indirectly, by any Indemnified Person as a result
or arising out of any actions taken by any Indemnified Person in connection with
the performance of any services contemplated under this Agreement, including the
Monitoring Services, except to the extent that such actions result solely from
the gross negligence or willful misconduct of any Indemnified Person. The
Company hereby further agrees to reimburse any Indemnified Person for all
reasonable fees and expenses (including attorneys fees) incurred in connection
with defending any such claim to which any Indemnified Person is a party, as
such fees and expenses are incurred by such Indemnified
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Persons. The Company shall be liable for the reasonable fees and expenses of no
more than one counsel (in addition to local counsel) in connection with the
defense of indemnifiable damages hereunder, except that the Company shall be
liable for the fees and expenses of additional separate counsel to the extent
the Indemnified Person concludes reasonably based upon advice of counsel that
(a) a conflict of interest exists between the Indemnified Person and the Company
or (b) the named parties to such action include both the Company and the
Indemnified Person and there may be one or more legal defenses available to such
Indemnified Person which are not available to the Company, or available to the
Company, but the assertion of which would be adverse to the interests of the
Company. The Company also agrees that no Indemnified Person shall have any
liability to it for or in connection with any services provided under this
Agreement or any transactions or conduct in connection with any services
provided under this Agreement or any transactions or conduct in connection
therewith except for losses, claims, damages, liabilities or expenses incurred
by the Company which are finally judicially determined to have resulted
primarily from the gross negligence or willful misconduct of such Indemnified
Person; provided, however, that in no event shall the Indemnified Persons'
aggregate liability to the Company exceed the fees WP actually receives from the
Company pursuant to this Agreement, unless there is a final judicial
determination of willful misconduct specified in this sentence.
8. Miscellaneous.
8.1 Choice Of Law. This Agreement shall be deemed made in New York.
This Agreement and all controversies arising from or relating to performance
under this Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to such state's rules
concerning conflicts of laws. The Company hereby irrevocably consents to
personal jurisdiction in any court of the State of New York or any Federal court
sitting in the Southern District of New York for the purposes of any suit,
action or other proceeding arising out of this Agreement or any of the
agreements or transactions contemplated hereby, which is brought by or against
the Company, hereby waives any objection to venue with respect thereto, and
hereby agrees that all claims in respect to any such suit, action or proceeding
may be heard and determined in any such court. The Company hereby irrevocably
consents to the service of process of any of the aforementioned courts in any
such suit, action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to the Company at its address set forth
above, such service to become effective ten (10) days after such mailing. ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR ACTION ARISING OUT OF THIS
AGREEMENT NOR CONDUCT IN CONNECTION WITH THIS ENGAGEMENT IS HEREBY WAIVED.
8.2 Counterparts. This Agreement may be executed in counterparts, each
of which together shall be considered a single document.
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8.3 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally to the address set forth
below (to the attention of the person identified below) or sent by telefax,
telegram or by registered or certified mail, postage prepaid, return receipt
requested as follows:
If to the Company:
Element K Holdings LLC and
Element K LLC
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▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to WP:
WP Management Partners, L.L.C.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the addressee may have specified in a notice duly
given to the sender and to counsel as provided herein. Any notice, request,
demand, waiver, consent, approval or other communication given (a) personally
shall be effective when delivered, (b) by mail or telegram shall be effective
when received and (c) by telecopy shall be effective when the appropriate
telecopy answer back or confirmation is received.
8.4 Entire Agreement. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF. IT SUPERSEDES ANY
PRIOR AGREEMENT OR UNDERSTANDING AMONG THEM, AND IT MAY NOT BE MODIFIED OR
AMENDED IN ANY MANNER OTHER THAN BY AN INSTRUMENT IN WRITING SIGNED BY BOTH
PARTIES HERETO, OR THEIR RESPECTIVE SUCCESSORS OR ASSIGNS, OR OTHERWISE AS
PROVIDED HEREIN.
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8.5 Successor and Assigns. This Agreement shall be binding upon WP and
the Company and their respective successors and assigns. This Agreement is not
intended to confer any rights upon any shareholder, owner, partner of the
Company, or any other person not a party hereto other than the Indemnified
Persons referenced in the indemnification agreement referred to in Paragraph 7
above.
8.6 Force Majeure. If the performance by WP of any of its services
hereunder is prevented, restricted or interfered with in whole or in part by
reason of any event or cause whatsoever beyond the reasonable control of WP,
then in any such event, WP shall be excused from such performance to the extent
of such prevention, restriction or interference, and the amount payable
hereunder shall be reduced proportionately.
8.7 Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
ELEMENT K LLC
By:
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Name:
Title:
ELEMENT K HOLDINGS LLC
By:
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Name:
Title:
WP MANAGEMENT PARTNERS, L.L.C.
By:
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Name:
Title:
