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ACQUISITION CONSULTING AND INVESTOR RELATIONS AGREEMENT
THIS ACQUISITION CONSULTING AND INVESTOR RELATIONS AGREEMENT (the
"Agreement") is entered into as of the 14th day of April, 1995 (the "Effective
Date") by and between SUNRISE PRESCHOOLS, INC., a Delaware corporation
("Sunrise"), and XXXXXX CAPITAL CORPORATION, an Arizona corporation d/b/a The
Xxxxxx Group ("TMG").
In consideration of the mutual premises, covenants and undertakings
set forth herein, the parties hereby agree as follows:
I. RESPONSIBILITIES OF TMG.
1.1 Subject to the terms and conditions hereof, Sunrise hereby
retains TMG to provide investor relations and acquisitions consulting services
to Sunrise and TMG agrees to provide such services to Sunrise. The services to
be provided to Sunrise by TMG shall consist of the following: (i) assisting
Sunrise with the identification of acquisition candidates and with negotiating
and structuring acquisitions all in accordance with Sunrise's expansion plans
as may be in effect from time to time (the "Acquisition Consulting Services")
and (ii) preparing and disseminating financial information and annual and
interim reports to Sunrise's stockholders and the financial community,
consulting with management of Sunrise on issues relating to the financial
community, preparing, reviewing and disseminating press releases and assisting
Sunrise in all necessary or appropriate ways with regard to its communications
with its stockholders (the "Investor Relations Services").
1.2 Information to be released by TMG will be disseminated to
general, financial and trade media, the investment banking community, banks and
statistical organizations, all as recommended by TMG and approved by Sunrise.
All information to be disseminated through TMG will be based upon material
furnished by Sunrise and will be released only after receipt by TMG of final
approval from Sunrise.
1.3 Sunrise recognizes that TMG may have, either at the present
time or in the future, obligations imposed upon it by the Federal securities
laws to independently verify certain of the information contained in releases
being made through TMG. Accordingly, Sunrise agrees that TMG shall have the
right to make such reasonable inquiries as TMG shall deem necessary or
appropriate of officers and employees of Sunrise and Sunrise's legal counsel
and auditors with respect to information to be released by TMG. Sunrise
recognizes that the accuracy and completeness of all information contained in
releases ultimately rests with Sunrise. Accordingly, Sunrise agrees to
indemnify and hold harmless TMG from and against any loss or expense arising
out of a claim that any information released by TMG is inaccurate or
incomplete, provided that the release of such information received the prior
approval of Sunrise.
EXHIBIT 10.41
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1.4 Sunrise acknowledges and understands that TMG, in order to
perform its services effectively under this Agreement, and to satisfy such
obligations as may be imposed upon it by the Federal securities laws, requires
the prompt receipt of all material information with respect to Sunrise, its
operations and prospects. Accordingly, Sunrise agrees to furnish promptly to
TMG copies of all publicly available reports and filings made with the
Securities and Exchange Commission (the "SEC"), all communications with
stockholders (in the stockholders' capacity as a stockholder) and all reports
received from Sunrise's auditors that have significance to the scope of TMG's
services hereunder; provided, however, Sunrise shall have no obligation to
provide TMG with any information that Sunrise deems confidential. Sunrise
recognizes the necessity of promptly notifying TMG of all material developments
concerning Sunrise, its business and prospects and to supply TMG with
sufficient information necessary for TMG to make a determination as to its
compliance with its own procedures as well as any legal requirements. TMG
agrees that it shall keep confidential all information received from Sunrise
until such time that TMG is authorized to release such information.
II. COMPENSATION TO TMG.
2.1 Unless this Agreement is terminated pursuant to Section 6,
Sunrise shall pay to TMG the following compensation:
(a) As compensation for the Acquisition Consulting
Services, Sunrise shall pay to TMG a consulting fee of $15,000 per
school for each of the schools acquired during the Acquisition
Consulting Services portion of the term of this Agreement. The fee
set forth in this Section 2.1(a) shall be paid to TMG as follows: (i)
$50,000 in the form of a non-refundable retainer, which shall be
applied at a rate of $10,000 per school to the first five schools
acquired by Sunrise during the Acquisition Consulting Services portion
of the term of this Agreement; (ii) an additional $5,000 upon the
closing of each of the first five school acquisitions during the
Acquisition Consulting Services portion of the term of this Agreement;
and (iii) $15,000 per school for each additional school acquired by
Sunrise during the Acquisition Consulting Services portion of the term
of this Agreement.
(b) As compensation for the Investor Relations Services,
Sunrise shall pay to TMG a fee of (i) $3,000 per month from the
Effective Date of this Agreement through December 31, 1995 and (ii)
$5,700 per month from January 1, 1996 until the expiration of the term
of this Agreement pursuant to Section 6.1. As additional compensation
for Investor Relations Services, Sunrise hereby grants to TMG (or its
assigns acceptable to Sunrise) a warrant (the "Warrant") to purchase
145,000 shares of Sunrise's common stock at a price of $1.21875 per
share, which was the closing price of Sunrise's common stock on April
13, 1995. The number of shares subject to the Warrant shall be
adjusted in the event of (i) a subdivision or combination of Sunrise's
outstanding common stock or (ii) any distributions by Sunrise of a
stock dividend to the holders of Sunrise's common stock. The Warrant
shall be in a form mutually acceptable to the parties.
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III. EXPENSE REIMBURSEMENT
Sunrise agrees to reimburse TMG all amounts due and owing TMG under
the terms of this Agreement, no later than fifteen (15) days after receiving an
invoice for all customary and reasonable out-of-pocket expenses including but
not limited to, the cost of telephone calls, travel, facsimile transmissions,
translation, interpretation, paper duplication, postage and delivery services,
or fees of counsel incurred in connection with the performance by TMG of its
duties in accordance with the terms of this Agreement. TMG shall also provide
Sunrise with copies of all receipts relating to expenses to be reimbursed by
Sunrise. All travel, counsel or third party consultant fees, and other
significant expenses over $250 dollars, must be approved by Sunrise in advance.
If TMG must file a lawsuit to collect any outstanding fees, out-of-pocket
expenses, or other expenses due from Sunrise, and is successful, Sunrise agrees
to pay reasonable costs and attorneys fees for such action.
IV. EXCLUSIVITY
During the term of this Agreement, Sunrise will not engage any other
person or entity to serve as its investor relations agent without the prior
written consent of TMG.
V. ASSIGNMENT AND TRANSFER OF OBLIGATIONS
In the event that Sunrise transfers or otherwise conveys all or
substantially all of its assets (including without limitation the assets of its
subsidiaries) or grants the authority to operate its business(es) or affiliated
business(es) to a new entity, whether a corporation, partnership, or natural
person ("New Entity") all of Sunrise's obligations under this Agreement will be
binding upon such New Entity and Sunrise will not enter into or create an
agreement, undertaking or legal obligation with a New Entity without requiring
such New Entity to accept and satisfy Sunrise's obligations under this
Agreement. Notwithstanding anything to the contrary contained in this Article
V, this Article V shall not be applicable and will be of no force or effect if
compliance with this Article V would result in the violation of any law or
statute, the breach of any Agreement to which Sunrise or its affiliates is a
party, or the inability of Sunrise to operate in accordance with its usual and
customary practices; including but not limited to (i) all forms of public or
private grants or similar fundings which Sunrise currently receives or may
receive in the future, and (ii) any transaction or funding arising out of or
related to Sunrise's relationship with Preschool Services, Inc.
VI. TERMINATION
6.1 Unless extended by a writing signed by both parties, this
Agreement shall terminate on December 31, 1996; provided, however, that Sunrise
may terminate the Acquisition Consulting Services portion of this Agreement
immediately upon written notice to TMG in which case TMG shall have no further
obligation to perform Acquisition Consulting Services for Sunrise and Sunrise
shall have no obligation to pay TMG the fees specified in Section 2.1(a)(ii)
and (iii) with respect to any schools acquired thereafter. TMG shall be paid by
Sunrise all fees
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earned through the date of termination together with reimbursement of all
expenses due. All such fees and reimbursements due TMG shall be paid on or
before the date of termination.
6.2 Sunrise shall have the right to terminate this Agreement at
any time, upon ten (10) days written notice, "for cause." During the ten (10)
day period following such notice, TMG shall have the opportunity to correct, if
possible and to Sunrise's reasonable satisfaction, all of the issues raised in
the termination notice. "For cause" shall mean (i) TMG's breach of this
Agreement, which TMG fails to cure within ten days of the receipt of the
termination notice describing such breach, (ii) fraud, (iii) conviction of
criminal acts, or (iv) behavior by TMG or its employees that is materially
injurious to Sunrise's business; provided, however, that actions by TMG
occurring prior to the date of this Agreement shall not give rise to
termination for cause. Upon termination pursuant to this Section 6.2, this
Agreement shall be of no further force or effect.
6.3 No amounts paid by Sunrise to TMG hereunder shall be subject
to reimbursement in the event of termination of this Agreement.
VII. INDEMNIFICATION
7.1 In connection with the terms and agreements set forth herein,
Sunrise agrees to indemnify and hold harmless TMG, its officers, directors,
employees, agents and legal counsel (collectively, the "TMG Parties"), against
any and all losses, claims, damages, liabilities or costs (and any reasonable
legal or other expenses in giving testimony or furnishing documents in response
to a subpoena or otherwise), including the costs of investigation, preparing or
defending any action or claim, directly or indirectly, caused by, relating to,
based upon or arising out of this Agreement; provided, however, such
indemnification shall not apply to any such loss, claim, damage, liability or
cost to the extent it is found to have resulted from the gross negligence or
wilful misconduct of a TMG Party. Sunrise also agrees that the TMG Parties
shall not have any liability (whether direct or indirect, in contract, tort or
otherwise) to Sunrise for or in connection with the engagement of TMG, except
for any such liability for losses, claims, damages, liabilities, costs that are
found to have resulted from a TMG Party's gross negligence or wilful
misconduct.
7.2 TMG agrees to indemnify Sunrise and hold harmless Sunrise, its
officers, directors, employees, agents and legal counsel (collectively, the
"Sunrise Parties") against any and all liabilities, expenses, costs and damages
(including the cost of defense) alleged against or incurred by any Sunrise
Party in connection with this Agreement to the extent that such liability,
expense, cost, or damage was incurred or is alleged to have been incurred in
whole or in part, directly or indirectly, due to any action or omission to act
by TMG, which action or omission is determined to be the result of TMG's gross
negligence or wilful misconduct.
7.3 If any action, proceeding, or investigation is commenced or
claim is made as to which either a TMG Party or a Sunrise Party proposes to
demand indemnification, the party claiming indemnification (the "Indemnified
Party") will notify the party against whom
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indemnification is claimed (the "Indemnifying Party") with reasonable
promptness. The Indemnifying Party reserves the right to assume the defense of
the Indemnified Party with counsel of its choosing, which counsel shall be
reasonably acceptable to the Indemnified Party. The Indemnifying Party will
not be liable for any settlement of any claim against any Indemnified Party
made without the Indemnifying Party's written consent.
VIII. NOTICES.
8.1 All notices and other written communications required to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given if delivered to the addressee in person or mailed by registered or
certified mail, return receipt requested, to the following addresses:
If to TMG: Xx. Xxxx X. Xxxxxx
Chairman, President and CEO
The Xxxxxx Group
0000 Xxxx XxXxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
If to Sunrise: Xx. Xxxxx X. Xxxxx
President
Sunrise Preschools, Inc.
9128 Ease Xxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Either party may change the address at which notice is to be given by notifying
the other party in writing. Notices shall be deemed delivered upon delivery,
if personally delivered, or, if mailed, three (3) days after deposit in the
United States mail.
IX. APPLICABLE LAW.
This Agreement shall be governed in all respects by the laws of the
State of Arizona as such laws are applied to agreements between Arizona
residents entered into and to be performed entirely within Arizona.
X. MISCELLANEOUS.
10.1 Assignment. TMG shall not assign this Agreement to a third
party without the prior written consent of a duly authorized representative of
Sunrise, which consent shall not be unreasonably withheld.
10.2 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject hereof and this Agreement
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supersedes, merges and renders void every other prior written and/or oral
understanding or Agreement relating to the subject hereof among or between the
parties hereto.
10.3 Amendment. This Agreement shall not be altered or amended
except by a written Agreement signed by the parties hereto.
10.4 Severability. In the event any term or provision of this
Agreement is declared to be invalid or illegal for any reason, this Agreement
shall remain in full force and effect and the same shall be interpreted as
though such invalid and illegal provision were not a part hereof. The
remaining provisions shall be construed to preserve the intent and purpose of
this Agreement and the parties shall negotiate in good faith to modify the
provisions held to be invalid or illegal to preserve each party's anticipated
benefits thereunder.
10.5 Titles and Subtitles. The titles of articles and sections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
10.7 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party shall impair any such right, power
or remedy of such party, nor shall it be construed to be a waiver of any breach
or default under this Agreement, or an acquiescence therein, or in any similar
breach or default thereafter occurring; nor shall any delay or omission to
exercise any right, power or remedy or any waiver of any single breach or
default be deemed a waiver of any other right, power or remedy or breach or
default theretofore or thereafter occurring.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SUNRISE PRESCHOOLS, INC.
By /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx,
Chairman & President
XXXXXX CAPITAL CORPORATION
By /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Chairman, President & CEO
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