EXHIBIT (c)(2)
JL Advisors, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
December 1, 1997
Collectible Certificates LLC
Gentlemen:
This letter will set forth the agreement between us.
JL Advisors, LLC ("JL") intends to create, from time to time, entities
which will invest (by way of tender for shares, or otherwise) in shares or other
interests (the "Interests") of existing or formerly existing entities that have
asserted either directly, or derivatively, claims for breach of contract against
the United States, or agencies thereof, in connection with so called bank
"goodwill" accounting cases.
Collectible Certificates LLC ("Collectible") and its principal,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") have expertise in these so called "goodwill" cases,
and is desirous of consulting with and advising JL, and its designees, in (i)
the acquisition of the Interests, (ii) the subsequent ownership and management
of the entities which acquire the Interests, and (iii) the operation of the
entities to which the Interest relate; (the activities described in (i), (ii)
and (iii), above, are hereinafter referred to individually as "Acquisition
Activities", "Ownership and Management Activities" and "Operating Activities",
respectively, and are hereinafter collectively referred to as "Activities").
We have agreed as follows, in connection with the foregoing:
1. JL will form one or more entities (the "JL Vehicle(s)") to engage
in the Activities. JL presently intends to create, (as the "Initial JL
Vehicle"), a Delaware limited liability company. All interests in the Initial JL
Vehicle, and any other JL Vehicle, will be controlled by JL. Collectible will
reimburse JL for the legal and other costs of organizing the Initial JL Vehicle
and those incurred in connection with the preparation of this Agreement.
2. Collectible will cause its principal, ▇▇▇▇▇▇, to consult with and
advise JL and the JL Vehicle(s) with respect to the Activities. (Such advice and
consultation is
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hereinafter referred to as the "Collectible Consultation".) ▇▇▇▇▇▇ agrees that
he shall provide all services required in connection with, and related to, the
Collectible Consultation.
3. The term of the Collectible Consultation shall commence on the date
hereof, and shall terminate on November 30, 1998 with respect to Acquisition
Activities. Until November 30, 1998, (but subject to the provisions of Paragraph
5C, below), JL, Collectible and ▇▇▇▇▇▇ shall present to one another all
opportunities coming to their respective attention for the acquisition of
Interests. The Collectible Consultation shall continue with respect to Ownership
and Management Activities and Operating Activities so long as any JL Vehicle
shall retain all or any portion of an Interest.
4. During the period from the date hereof through November 30, 1998,
other than the sale of a children's book/publishing deal, ▇▇▇▇▇▇ shall devote
his full time and attention to the Activities, and shall engage in no other
business, employment, or competing activity in connection with the so called
"goodwill" cases. Commencing December 1, 1998, and whether or not this Agreement
remains in full force and effect, for so long as JL or a JL Vehicle shall own
all or any portion of an Interest, ▇▇▇▇▇▇ shall devote so much time as is
reasonably necessary to Ownership and Management Activities and Operating
Activities.
5. A. From the date hereof through November 30, 1998, Collectible
shall receive "Basic Compensation" at the rate of $100,000 per annum, payable
monthly in arrears. No Basic Compensation shall be due or payable on account of
any services rendered in connection with the Collectible Consultation after
November 30, 1998.
B. In addition to such Basic Compensation, Collectible shall
receive,as "Additional Compensation," 7 1/2% of the "Realized Net Profits," such
amountto be determined and paid as provided in this section 5(b).
i. The term "Realized Net Profits" shall be determined on a
cumulative basis and, as of any date, shall mean:
(1)(1)all gross receipts actually received from the date
hereof to such date by all JL Vehicles on a combined basis without double
counting on account of the acquisition, ownership and disposition by JL Vehicles
of Interests, less
(2)(2) the sum without double counting of:
(a)(a) all capital investment made from the date
hereof to such date by all JL Vehicles on a combined basis in acquiring
Interests from the date hereof to such date,
(b)(b) all expenses incurred from the date hereof to
such date by JL or any JL Vehicle on a combined basis in connection with the
acquisition, ownership
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or disposition of Interests, including but not limited to all Basic
Compensation, acquisition costs, travel expenses and legal, accounting and other
professional fees and expenses,
(c)(c) interest calculated at overnight LIBOR in
effect from time to time, on the amounts described in sections 5(b)(i)(2)(a) and
(b) hereof, in the case of each such amount, from the date such amount is
expended until the date such amount is recouped by JL or its financing sources
ii. JL shall calculate Realized Net Profits as of the end of each
calendar year as promptly as practicable following the end of each calendar year
for so long as any JL Vehicle owns any Interests. JL's accountants shall certify
such calculation as having been made in accordance with the terms of this
agreement. As soon as available, JL shall furnish to Collectible a schedule
showing such calculation, a copy of the accountant's certificate (such
certificate and schedule hereinafter referred to as the "Realized Net Profit
Certificate and Schedule") and, if such calculation shows that Additional
Compensation is due to Collectible, a check in the amount of such Additional
Compensation. Conversely, if such schedule shall show Collectible has received
an overpayment of Additional Compensation (i.e., that all amounts of Additional
Compensation theretofore received by Collectible hereunder exceed 7-1/2% of
Realized Net Profits as of the end of such prior fiscal year), Collectible shall
promptly remit such the amount of such overpayment to JL.
The calculation by JL's accountant with respect to Realized Net
Profits for a given year shall be binding and conclusive upon, and deemed
accepted by, Collectible unless Collectible shall have notified JL in writing of
any objections thereto consistent with the provisions of this Section within 20
days after receipt of the Realized Net Profit Schedule and Certificate for that
year. The written notice under this Section (the "Realized Net Profits Objection
Letter") shall specify in reasonable detail each item on the relevant Realized
Net Profit Schedule and Certificate that Collectible disputes, and a summary of
Collectible's reasons for such dispute.
Disputes between Collectible and JL relating to Realized Net Profits
which cannot be resolved by them within 20 days after receipt by JL of a
Realized Net Profits Objection Letter may be referred no later than 20 days
after such receipt for decision at the insistence of either party to Price
Waterhouse ("PW"). If PW accepts the appointment, it shall be the "Auditor." If
PW does not accept the appointment, the parties shall request PW to designate
one or more independent nationally recognized accounting firms to act as
Auditor, until an Auditor is selected. If PW declines to make such
designation(s), or if its designee(s) shall not accept the appointment, then the
American Arbitration Association (New York City) shall select the Auditor. Prior
to referring the matter to the Auditor, the parties shall agree on the
procedures to be followed by the Auditor (including procedures with regard to
presentation of evidence). Such procedures shall not alter the accounting
practices, principles and policies to be applied in the calculation of the
Realized Net Profits for any given year, which will be those required by this
Agreement. If the parties are unable to agree upon procedures before the end of
20 days after referral of the dispute to
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the Auditor, the Auditor shall establish such procedures giving due regard to
the intention of the parties to resolve disputes as quickly, efficiently and
inexpensively as possible, which procedures may be, but need not be, those
proposed by either party. The parties shall then submit evidence in accordance
with the procedures established, and the Auditor shall decide the dispute in
accordance therewith. The Auditor's decision on any matter referred to shall be
final and binding on Collectible and JL. The fee of the Auditor shall be borne
by Collectible and JL in equal portions, unless the Auditor decides, based on
its determination with respect to the reasonableness of the respective positions
of the parties, that the fee shall be borne in unequal proportions.
iii. Notwithstanding anything herein to the contrary, the
obligation of JL to pay Additional Compensation and the obligation of
Collectible to remit overpayments thereof, as provided in this Agreement shall
survive the termination hereof, including termination pursuant to Section 11,
below.
C. Notwithstanding anything herein contained to the contrary, (i)
no additional compensation shall be paid or payable in connection with
securities transactions, whether or not involving "good will" accounting cases,
if such securities transactions involve the purchase and sale of such securities
by JL Advisors, LLC or JL Associates, LLC in the ordinary course of its
business; and (ii) any entity which is an "affiliate" (as such term is defined
under theSecurities Exchange Act of 1934) of JL that engages in the Activities
shall be deemed to be a JL Vehicle.
6. JL shall provide to ▇▇▇▇▇▇, until November 30, 1998, without
charge, an office within JL's office space, computer access and telephone usage,
as well as reimbursement for travel and other out-of-pocket expenses previously
approved by JL. Neither Collectible nor ▇▇▇▇▇▇ is authorized, nor shall they
incur, any other expenses on JL's behalf without JL's express written
authorization.
7. It is understood by the parties hereto that during the performance
of the Collectible Consultation, Collectible and ▇▇▇▇▇▇ may receive from JL, its
employees or agents, or otherwise acquire, certain confidential, proprietary
and/or trade secret information which is the property of JL ("Confidential
Information"). Any and all reports, summaries, notes, applications, filings
and/or other information prepared and/or gathered in connection with the
performance of the Collectible Consultation whatever the form or medium, shall
be deemed Confidential Information as well. It is acknowledged and agreed that
the Confidential Information is the sole and exclusive property of JL.
Collectible and ▇▇▇▇▇▇, jointly and severally, hereby warrant and affirm that
they shall neither use, nor disclose to any third party, the Confidential
Information for any purpose. Upon the expiration or termination of this
Agreement, Collectible and ▇▇▇▇▇▇ shall return to JL all tangible forms of
Confidential Information or derivations or abstracts thereof, any and all copies
of Confidential Information made by or on behalf of either of them in whatever
form or medium. Neither of them shall disclose to any third party or otherwise
make public the terms of this Agreement, except as necessary to secure
enforcement of the terms of this
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Agreement, or in response to a lawful subpoena, or as otherwise required by law;
provided that prior to responding to such subpoena, JL shall be provided with a
copy of such subpoena and JL shall have the opportunity to file a motion for a
protective order. The obligations as set forth in this Section 7 shall be
continuing and shall survive the expiration or termination of this Agreement.
Notwithstanding anything to the contrary contained in this Agreement,
Confidential Information shall not include information (i) that is in the public
domain, or (ii) that relates to "goodwill" targets with respect to which no
Interests have been acquired pursuant to the terms hereof at the time of
termination of this Agreement.
8. Collectible and ▇▇▇▇▇▇ agree that they will not, either directly or
indirectly, solicit any employee, investor or client of JL during the term of
this Agreement, or subsequent thereto.
9. JL, Collectible and ▇▇▇▇▇▇ agree that in addition to a right to
seek damages on account of any breach of this Agreement, (i) JL shall be
entitled to injunctive relief in enforcing the provisions of paragraphs 3, 4, 7
and 8, hereof, since the breach of such provisions could cause irreparable
injury to JL, and (ii) Collectible shall be entitled to injunctive relief in
enforcing the provisions of paragraph 3, since the breach thereof could cause
irreparable injury to Collectible.
10. Both Collectible and ▇▇▇▇▇▇ are and shall be deemed to be
independent contractors and not employees of JL, for all purposes and at all
times, and will not be entitled or eligible to participate in any benefits or
privileges extended by JL to its employees.
11. This Agreement is non-assignable and no party may assign any
rights or obligations hereunder without the prior written consent of the other,
except that the transfer of rights and obligations hereunder to a JL Vehicle
shall not require such consent. If ▇▇▇▇▇▇, for whatever reason, becomes unable
to perform the services to be performed by him as described herein, this
Agreement shall immediately terminate, it being understood that the services to
be provided by ▇▇▇▇▇▇ are personal.
12. Collectible acknowledges and agrees that it shall be solely
responsible for paying the appropriate amount of all federal, state and local
income taxes with respect to all compensation paid to it pursuant to this
Agreement, and that JL shall have no responsibility whatsoever for withholding
or paying any such taxes for or on its behalf. Collectible further agrees to
indemnify, defend and hold JL harmless from and against any and all damages,
losses, expenses or penalties (including attorneys' fees and costs) arising from
or in connection with any claim brought by any federal, state or local taxing
authority with regard to its failure to file required forms with regard to
compensation paid by JL pursuant to this Agreement.
13. (a) Each party hereto indemnifies and shall hold harmless the
other parties against any and all liabilities, losses, claims, damages, costs
and expenses,
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including any and all legal fees, to the extent such liabilities, losses,
claims, damages, costs and expenses are determined by a court of competent
jurisdiction to be the result of such party's violation of law, gross
negligence, bad faith or intentional misconduct, and shall reimburse the other
parties hereto for any legal or other costs or expenses reasonably incurred by
such other parties in connection with investigating or defending any action or
claim, to the extent such expenses relate to issues with respect to such
liabilities.
(b) Promptly after receipt by an indemnified party under
paragraph (a) above of notice of the commencement of any action, suit or
proceeding, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under paragraph (a) above, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under paragraph (a) above.
In case any such action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under paragraph (a) above for any legal expenses of other counsel or any
other expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs and expenses of
investigation and in connection with preparation for and appearances at
depositions, trials and other proceedings in which the indemnified party
participates. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(c) If the indemnification provided for in this agreement is
unavailable to or insufficient to hold harmless an indemnified party under
paragraph (a) above in respect of any liabilities, losses, claims, damages or
costs or expenses (or actions in respect thereof) referred to therein, then each
party hereto shall contribute to the amount paid or payable by such indemnified
party as a result of such liabilities, losses, claims, damages or costs or
expenses or actions in respect thereof) in such proportion as is appropriate to
reflect not only the relative benefits received by each party in engaging in the
activities hereunder giving rise to such liabilities, losses, claims, damages or
costs or expenses (or actions in respect thereof) but also the relative fault of
each party in connection with the acts or omissions resulting in such
liabilities, losses, claims, damages or costs or expenses (or
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actions in respect thereof), as well as any other relevant equitable
considerations. The amount paid or payable by an indemnified party as a result
of the liabilities, losses, claims, damages or costs or expenses (or actions in
respect thereof) referred to above in this paragraph (c) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act of 1933, as amended, shall be entitled to
contribution under this paragraph (c) from any person who was not guilty of such
fraudulent misrepresentation.
14. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given upon receipt of: hand
delivery; certified or registered mail, return receipt requested; or telecopy
transmission with confirmation of receipt:
If to Collectible, to:
Collectible Certificates
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone : (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
(with a copy to)
Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
One Battery Park Plaza
New York, New York 10004--1490
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to JL, to
JL Advisors, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(with a copy to)
Battle ▇▇▇▇▇▇ LLP
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Such names and addresses may be changed by written notice to each person listed
above.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal substantive laws and not the choice of law rules
of the State of New York.
16. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original but all of which
together with shall constitute one and the same instrument.
17. Entire Agreement. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the
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parties with respect to such subject matter.
If the foregoing correctly sets forth our agreement, please execute
and return a copy of this letter.
Very truly yours,
JL ADVISORS, LLC
By: _______________________________________
AGREED AND ACCEPTED
COLLECTIBLE, LLC
By: _______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Managing Member
_______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, individually
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