FINANCIAL ADVISORY AGREEMENT
This Agreement is made and entered into as of ____________, 199_,
between First United Equities Corporation ("First United") and U.S. Golf and
Entertainment Inc., a Delaware corporation, (the "Company").
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Company hereby engages First United 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. Except as otherwise specified in Paragraph 7 hereof, this Agreement
shall be effective for a period of three years, commencing as of the
date hereof.
3. During the term of this Agreement, First United shall provide the
Company with such regular and customary consulting advice as is
reasonably requested by the Company, provided that First United shall
not be required to undertake duties not reasonably within the scope of
the financial advisory services contemplated by this Agreement. It is
understood and acknowledged by the parties that the value of First
United's advice is not readily quantifiable, and that First United
shall be obligated to render advice upon the request of the Company, in
good faith, but shall not be obligated to spend any specific amount of
time in so doing. First United's duties may include, but will not
necessarily be limited to, providing recommendations concerning the
following financial and related matters:
A. Disseminating information about the Company to the investment
community at large;
B. Rendering advice and assistance in connection with the
preparation of annual and interim reports and press releases;
C. Assisting in the Company's financial public relations;
D. Arranging, on behalf of the Company, at appropriate times,
meetings with securities analysts of major regional investment
banking firms;
E. Rendering advice with regard to internal operations,
including:
1. the formation of corporate goals and their
implementation;
2. the Company's financial structure and its divisions
or subsidiaries;
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3. securing, when and if necessary and possible,
additional financing through banks and/or insurance
companies; and
4. corporate organization and personnel; and
F. Rendering advice with regard to any of the following corporate
finance matters:
1. changes in the capitalization of the Company;
2. changes in the Company's corporate structure;
3. redistribution of shareholdings of the Company's
stock;
4. offerings of securities in public transactions;
5. sales of securities in private transactions;
6. alternative uses of corporate assets;
7. structure and use of debt; and
8. sales of stock by insiders pursuant to Rule 144
under the Securities Act of 1933, as amended, or
otherwise.
In addition to the foregoing, First United agrees to furnish advice to
the Company in connection with (i) the acquisition and/or merger of or
with other companies, divestiture or any other similar transaction, or
the sale of the Company itself (or any significant percentage, assets,
subsidiaries or affiliates thereof), and (ii) bank financings or any
other financing from financial institutions (including but not limited
to lines of credit, letters of credit, loans or other financings not
provided for in Paragraph 5 hereof).
4. First United shall render such other financial advisory and investment
and/or investment banking services as may from time to time be agreed
upon by First United and the Company.
5. In consideration for the services rendered by First United to the
Company pursuant to this Agreement (and in addition to the expenses
provided for in Paragraph 8 hereof), the Company shall compensate First
United as follows:
(a) A retainer fee of $3,000 per month for 36 months, payable
monthly no later than the fifth day of each month.
(b) An additional transaction fee with respect to any actual
or proposed transaction arising from this engagement as follows:
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Consideration Fee
------------- ---
$ -0- to $ 5,000,000 5% of Consideration
$ 5,000,001 or more $250,000 plus 2 1/2% of the
Consideration in excess of
$5,000,000
If the Company identifies the other party to such a transaction during
the term of this Agreement, the Company shall pay fees to First United
to be mutually agreed upon, but in any event not less than $25,000.
For the purposes of this Agreement, "Consideration" shall mean the
total market value on the day of 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, including without limitation any amounts paid by
the Company or any person or entity to holders of warrants, stock
purchase rights, straight or convertible securities of the Company,
whether or not vested, and to holders of any other securities of any
kind whatsoever of the Company, or pursuant to any employment
agreement, consulting agreement, covenant not to compete, earn-out or
contingent payment right or similar arrangement, agreement or
understanding, whether oral or written. Any co-broker retained by First
United shall be paid by First United.
In the event First United originates a line of credit with an
institutional lender, the Company and First United will mutually agree
on a satisfactory fee and the terms of payment of such fee; provided,
however, that in the event the Company is introduced to a corporate
partner in connection with a merger, acquisition or financing and a
credit line develops directly as a result of the introduction, the
appropriate fee shall be the amount set forth in the schedule above. In
the event First United 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 cash
receipts less any applicable refunds, returns, allowances, credits and
shipping charges and monies paid by the Company by way of settlement or
judgment arising out of claims made or threatened against the Company.
Commission payments shall be paid on the 15th day of each month
following the receipt of customer's payment. 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 due under this Agreement.
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6. Fees and expenses payable to First United with regard to fairness
opinions and valuations, will be determined by mutual agreement at such
time as the nature and terms of such financing are affirmed.
7. All fees to be paid pursuant to this Agreement, with the exception of
the retainer specified in Paragraph 5(a) above, are due and payable to
First United in cash at the closing or closings of any transaction
specified in Paragraph 5 or 6 hereof. In the event that this Agreement
shall not be renewed or if terminated for any reason notwithstanding
any such renewal or termination, First United shall be entitled to a
full fee as provided under Paragraphs 5 and 6 hereof, for any
transaction for which the discussions were initiated during the term of
this Agreement and which is consummated within a period of 12 months
after non-renewal or termination of this Agreement.
8. In addition to the fees payable hereunder, and regardless whether any
transaction set forth in Paragraphs 5 or 6 hereof is proposed or
consummated, the Company shall reimburse First United for all fees and
disbursements of First United's counsel and First United's travel and
out-of-pocket expenses incurred in connection with the services
performed by First United pursuant to this Agreement, including without
limitation, hotel, food and associated expenses and long-distance
telephone calls.
9. In the event that the Company fails to pay the retainer set forth in
Paragraph 5(a) hereof of any month by the end of the fifth day of such
month, First United may at any time prior to the payment in full of any
such monthly payment, demand payment of all or any portion of the past
due monthly retainers in Common Stock of the Company valued at one-half
(1/2) times the fair market value thereof determined on the date such
demand is made by First United on the Company. Fair market value shall
be determined as follows: (i) if the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the fair market value shall be the closing inside bid price
of the Common Stock as quoted on NASDAQ; (ii) if the Common Stock is
traded in the over the counter market, but not quoted on NASDAQ, the
fair market value shall be the average closing bid price of the Common
Stock; (iii) if the Common Stock is publicly traded in any market other
than NASDAQ, the fair market value shall be the closing bid
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price of the Common Stock; (iv) if the Common Stock is not publicly
traded, but the Company has concluded a private placement of shares of
Common Stock within the past 24 months, the fair market value shall be
based upon the gross sales price of shares of Common Stock in the last
such private placement. In the event that First United makes such a
demand for payment in Common Stock, then the Company shall either make
all past due payments to First United within five (5) days of receipt
of such notice or promptly shall deliver restricted shares of its
Common Stock to First United in payment of such retainer obligations.
First United agrees that any Common Stock so received will be purchased
for investment purposes only and not with a view to distribution.
10. (a) The Company acknowledges that all opinions and advice (written or
oral) given by First United to the Company in connection with First
United'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 First United 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 First United, or use First United's name in any
annual reports or any other reports or releases of the Company without
First United's prior written consent.
(b) The Company acknowledges that First United makes no commitment to
make a market in the Company's securities and that none of First
United's affiliates makes any 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 First United will,
when and if prepared, be done solely on the merits or judgment of
analysts of First United or any senior corporate finance personnel of
First United.
11. The Company acknowledges that First United and 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 First United in conducting such business with respect to
others, or in rendering such advice to others.
12. The Company recognizes and confirms that, in advising the Company and
in fulfilling its engagement hereunder, First United will use and rely
on data, material and other information furnished to First United by
the Company. The Company acknowledges and agrees that in performing its
services under this engagement, First United may rely upon the data,
material and other information supplied by the Company without
independently verifying the accuracy, completeness or veracity of same.
13. Since First United will be acting on behalf of the Company in
connection with its engagement hereunder, the Company and First United
have entered into a separate
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indemnification agreement substantially in the form attached hereto as
Schedule A and dated the date hereof, providing for the indemnification
of First United by the Company. First United has entered into this
Agreement in reliance on the indemnities set forth in such
indemnification agreement.
14. First United shall perform its services hereunder as an independent
contractor and not as an employee of the Company or an affiliate
thereof. Any duties of First United arising out of its engagement
hereunder shall be owed solely to the Company. It is expressly
understood and agreed to by the parties hereto that First United 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.
15. (a) This Agreement and the Exhibit attached hereto constitute the
entire agreement and understanding of the parties hereto, and supersede
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
or sent (i) postage prepaid by registered mail, return receipt
requested, or (ii) by facsimile, to the respective parties as set forth
below, or to such other address as either party may notify the other of
in writing;
If to the Company, to: U.S. Golf and Entertainment Inc.
0 Xxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxx, Chairman
with a copy to: Ruskin, Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
If to First United, to: First United Securities, Inc.
000 Xxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxx Xxxx 00000
Attn: _____________________
(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 continue one and the same original document.
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(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
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 15(b) hereof.
THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT.
FIRST UNITED EQUITIES CORPORATION
By:
----------------------------
Name:
Title:
U.S. GOLF AND ENTERTAINMENT INC.
By:
----------------------------
Name:
Title:
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Schedule A
First United Equities, Inc.
000 Xxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxx Xxxx 00000
Attn: _____________________
Ladies and Gentlemen:
In connection with our engagement of First United Equities Corporation
("First United") as our financial advisor and investment banker, we hereby agree
to indemnify and hold harmless First United and its affiliates, and the
respective directors, officers, shareholders, agents and employees of First
United and its affiliates (collectively the "Indemnified Persons"), from and
against any and all claims, actions, suits, proceedings (including those of
stockholders), damages, liabilities, costs and expenses as incurred by any of
them (including the fees and expenses of counsel) which are (A) related to or
arise out of (i) any actions taken or omitted to be taken (including any untrue
statements made or any statements omitted to be made) by the Company, or (ii)
any actions taken or omitted to be taken by any Indemnified Person in connection
with our engagement of First United, or (B) otherwise relate to or arise out of
First United's activities on our behalf under First United's engagement, and we
shall reimburse any Indemnified Person for all costs and expenses (including the
fees and expenses of counsel) as incurred by such Indemnified Person in
connection with investigating, preparing or defending any such claim, action,
suit or proceeding (collectively a "Claim"), whether or not in connection with
pending or threatened litigation in which any Indemnified Person is a party. We
will not, however, be responsible for any Claim to the extent that it is finally
judicially determined by a court of competent jurisdiction to have resulted from
the gross negligence, bad faith or willful misconduct of any person seeking
indemnification hereunder. We further agree that no Indemnified Person shall
have any liability to us for or in connection with our engagement of First
United except to the extent any Claim is determined in a final judgment by a
court of competent jurisdiction to have directly resulted from any Indemnified
Person's gross negligence, bad faith or willful misconduct.
We further agree that we will not, without the prior written consent of
First United, settle, compromise or consent to the entry of any judgment in any
pending or threatened Claim in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such Claim), unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person hereunder from any
and all liability arising out of such Claim.
Promptly upon receipt by an Indemnified Person of notice of any
complaint or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
us in writing of such complaint or of such assertion or institution,
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but failure to so notify us shall not relieve us from any obligation we may have
hereunder, unless and only to the extent such failure results in the forfeiture
by us of substantial rights and defenses, and will not in any event relieve us
from any other obligation or liability we may have to any Indemnified Person
otherwise than under this Agreement. If we so elect or are requested by such
Indemnified Person, we will assume the defense of such Claim, including the
employment of counsel reasonably satisfactory to such Indemnified Person and the
payment of the fees and expenses of such counsel. In the event, however, that
such Indemnified Person reasonably determines in its sole judgment that having
common counsel would present such counsel with a conflict of interest or if the
defendant in, or target of, any such Claim, includes an Indemnified Person and
us, and such Indemnified Person reasonably concludes that there may be legal
defenses available to it or other Indemnified Persons different from or in
addition to those available to us, then such Indemnified Person may employ its
own separate counsel to represent or defend it in any such Claim and we shall
pay the fees and expenses of such counsel. Notwithstanding anything herein to
the contrary, if we fail timely or diligently to defend, contest, or otherwise
protect against any Claim, the relevant Indemnified Person shall have the right,
but not the obligation, to defend, contest, compromise, settle, assert
crossclaims, or counterclaims or otherwise protect against the same, and shall
be fully indemnified by us therefor, including without limitation, for the fees
and expenses of its counsel and all amounts paid as a result of such Claim or
the compromise or settlement thereof. In any Claim in which we assume the
defense, the Indemnified Person shall have the right to participate in such
Claim and to retain its own counsel therefor at its own expense.
We agree that if any indemnity sought by an Indemnified Person
hereunder is held by a court to be unavailable for any reason, then (whether or
not First United is the Indemnified Person), we and First United shall
contribute to the Claim for which such indemnity is held unavailable in such
proportion as is appropriate to reflect (i) the relative benefits to us, on the
one hand, and First United on the other, in connection with First United's
engagement referred to above or (ii) if (but only if) the allocation provided
for in clause (i) is for any reason held unenforceable, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of us, on the one hand, and First United, on the
other, as well as any other relevant equitable considerations, subject to the
limitation that in no event shall the amount of First United's contribution to
such Claim exceed the amount of fees actually received by First United from us
pursuant to First United's engagement. We hereby agree that the relative
benefits to us, on the one hand, and First United on the other, with respect to
First United's engagement shall be deemed to be in the same proportion as (a)
the total value paid or proposed to be paid or received by us or our
stockholders as the case may be, pursuant to the transaction (whether or not
consummated) for which you are engaged to render services bears to (b) the fee
paid or proposed to be paid to First United in connection with such engagement.
Our indemnity, reimbursement and contribution obligations under this
Agreement shall be in addition to, and shall in no way limit or otherwise
adversely affect any rights that any Indemnified Party may have at law or at
equity.
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Should First United or its personnel be required or requested by us to
provide documentary evidence or testimony in connection with any proceeding
arising from or relating to First United's engagement, we agree to pay all
reasonable expenses (including fees incurred for legal counsel) in complying
therewith and $5,000 per day for sworn testimony or preparation therefor,
payable in advance.
We hereby consent to personal jurisdiction and service of process and
venue in any court in which any claim for indemnity is brought by any
Indemnified Person.
It is understood that, in connection with First United's engagement,
First United may be engaged to act in one or more additional capacities and that
the terms of the original engagement or any such additional engagement may be
embodied in one or more separate written agreements. The provisions of this
Agreement shall apply to the original engagement, any such additional engagement
and any modification of the original engagement or such additional engagement
and shall remain in full force and effect following the completion or
termination of First United's engagement(s).
Very truly yours,
U.S. GOLF AND ENTERTAINMENT INC.
By:
----------------------------
Name:
Title:
Confirmed and agreed to:
FIRST UNITED EQUITIES CORPORATION
By: _________________________________
Name:
Title:
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