EXHIBIT 10.19
FEE AGREEMENT
June 26, 2002
Childtime Learning Centers, Inc.
00000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Ladies and Gentlemen:
In connection with (a) services Xxxxxxxx Partners ("Xxxxxxxx") has provided to
Childtime Learning Centers, Inc. ("Childtime") during the previous twenty-one
months in connection with the preparation of the bid by TT Acquisition LLC ("TT
Acquisition"), a subsidiary of Childtime, to acquire specified assets and
liabilities of Tutor Time Learning Systems, Inc. ("Tutor Time") out of
bankruptcy as well as in connection with previous negotiations between Childtime
and Tutor Time, including the conduct of a due diligence review of Tutor Time
and its operations and negotiations with Tutor Time's primary secured lender and
(b) such additional services to be provided by Xxxxxxxx from the date hereof
through the Closing Date (as such term is defined in the proposed Asset Purchase
Agreement, dated as of June __, 2002 among TT Acquisition, Tutor Time and the
other Sellers named therein) and thereafter, relating to the acquisition of the
assets of Tutor Time (assuming TT Acquisition or an affiliate thereof is
selected as the winning bidder to purchase the assets of Tutor Time out of
bankruptcy), including those services described on the attached Exhibit A,
Childtime agrees to pay to Xxxxxxxx a fee of $1 million as follows:
Upon the Closing Date, Childtime shall deliver to Xxxxxxxx (i) $333,334 in
immediately available funds and (ii) 175,438 shares of the common stock, no par
value, of Childtime (the "Common Stock") registered in the name of Xxxxxxxx or
its designee (such number of shares determined based on the 5-day average
closing price of a share of Common Stock for the period ended February 15, 2002
(the date upon which such fee was initially discussed by the parties in
connection with Childtime's previous negotiations with Tutor Time, which basis
of determination was subsequently approved by Childtime's board of directors)).
It is agreed and understood that if TT Acquisition (or an
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affiliate thereof) is not selected as the winning bidder in the auction to
purchase the assets of Tutor Time out of bankruptcy or such purchase by TT
Acquisition (or another affiliate thereof) is not consummated, no fee shall be
payable hereunder and Xxxxxxxx shall be under no obligation to continue to
provide services hereunder.
Notwithstanding the foregoing, the delivery of any shares of Common Stock, as
contemplated under clause (ii) above, will be subject to, and effected only
after, the expiration of the fifteen day period following the filing by
Childtime, with respect to such shares, of the notification form for listing
additional securities with Nasdaq.
Childtime represents and warrants to Xxxxxxxx as follows:
Childtime is a corporation duly organized, validly existing and in good
standing under the laws of the State of Michigan and has all requisite
corporate power and authority to own and operate its properties and
assets, to carry on its business as now and heretofore conducted and to
issue to Xxxxxxxx all of the shares (the "Fee Shares") of Common Stock
to be issued in accordance with this Fee Agreement. Childtime is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership of its properties
or the nature of its business make such qualification necessary and
where a failure to be so qualified would have material adverse effect
on the results of operations, business, assets or financial condition
of Childtime.
(a) the execution, delivery and performance of this Fee Agreement by
Childtime and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action of
Childtime, and (b) this Fee Agreement, when duly executed and delivered
by Xxxxxxxx Partners, will constitute a valid and legally binding
instrument of Childtime enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(a) the Fee Shares have been duly authorized by all necessary corporate
action of Childtime, and (b) when issued in accordance with such
authorization and delivered by Childtime against payment therefor will
be validly issued, fully paid and nonassessable, free and clear of all
liens, encumbrances and rights of first refusal or any kind; and the
holders of the capital stock of Childtime have no preemptive rights
with respect to the Fee Shares. The Fee Shares will be free of
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restrictions on transfer except for restrictions under applicable
federal and state securities laws.
Xxxxxxxx understands that the shares of Common Stock are being issued pursuant
to an exemption from the registration requirements of the Securities Act of
1933, as amended, and are restricted securities. Xxxxxxxx represents that it is
an accredited investor within the meaning of the rules under the Securities Act
of 1933, as amended, and that Xxxxxxxx is acquiring such securities for its own
account for investment and without a view to the distribution thereof.
This letter agreement contains the entire agreement between Childtime and
Xxxxxxxx concerning the subject matter hereof, and no modifications of this
agreement or waiver of the terms and conditions hereof will be binding upon
Childtime or Xxxxxxxx, unless approved in writing by each of Childtime and
Xxxxxxxx. This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to principles of
conflicts of laws.
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Please confirm that the foregoing is in accordance with the understandings and
agreements of Childtime with Xxxxxxxx by signing and returning to Xxxxxxxx the
duplicate of this letter enclosed herewith.
Very truly yours,
XXXXXXXX PARTNERS
By: /s/ Xxxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Partner
CONFIRMED AND AGREED:
CHILDTIME LEARNING CENTERS, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Interim Chief Financial Officer
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EXHIBIT A
Services to be rendered by Xxxxxxxx Partners
1. Proposing and assisting in the implementation of integration and
consolidation strategies relating to Tutor Time assets and operations.
2. Monitoring and managing the relationship with Tutor Time franchisees.
3. Assisting Childtime in the recruitment of senior management for the
operation of Tutor Time.
4. Assisting Childtime in negotiations with Bank One concerning the
amendment of Childtime's Credit Agreement to be entered into in
connection with the acquisition of the assets of Tutor Time.
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