FINANCIAL CONSULTING AGREEMENT
AGREEMENT made the _________ day of November, 1996, by and between GKN
Securities Corp., a New York corporation, having an address at 00 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("GKN"), and TearDrop Golf Company, a Delaware
corporation, having an address at 00 Xxx Xxxxxx, Xxxxxxxx #0, Xxxxxx Xxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000 (the "Company").
WHEREAS, the Company has filed a registration statement with the
Securities and Exchange Commission for a proposed public offering of its
securities to be underwritten by GKN ("IPO"); and
WHEREAS, pursuant to the Underwriting Agreement between the Company
and GKN, the Company has agreed to retain GKN as a financial consultant;
NOW, THEREFORE, the parties hereto agree as follows:
1. The Company retains GKN as a nonexclusive financial
consultant to provide to the Company when requested by the Company from time to
time, during normal business hours, upon reasonable notice, consultation
concerning but not limited to shareholder relations, including preparation of
reports and other releases, assisting in long term financial planning, corporate
reorganization and expansion, capital structure, borrowings and other financial
assistance. These services shall be rendered by GKN without any direct
supervision by the Company and at such time and place and in such manner
(whether by conference, telephone, letter or otherwise) as GKN may determine.
GKN shall make available such time as it, in its sole
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discretion, shall deem appropriate for the performance of its obligations under
this Agreement.
2. This Agreement shall become effective as of the closing date
of the IPO and shall continue for a period of two (2) years thereafter.
3. As compensation for its services, the Company shall pay GKN
the sum of $2,500 per month, for an aggregate sum of $60,000 over the term of
this Agreement. The Company agrees to pay such aggregate amount, in advance, at
the closing of the IPO.
4. (a) In the event that any acquisition of and/or merger with
other companies or joint ventures or other contracts or arrangements with any
third parties including, without limitation, the sale of the business, assets or
stock of the Company or any of its subsidiaries or affiliates or any significant
portion thereof (collectively, a "Transaction"), occur which result from or are
caused by, and occur within eighteen (18) months of, introductions made by the
Consultant during the term of this Agreement, the Company shall pay the
Consultant as follows: five percent of the first $5,000,000, four percent of the
next $2,000,000, three percent of the next $2,000,000 and two percent of the
excess, if any, over $9,000,000 of the consideration involved in any such
transaction ("Legal Consideration").
If the Company believes that an introduction made to it by the
Consultant is not subject to the terms of this Section 4, then it shall, within
ten (10) business days after such introduction, give written notice thereof to
the Consultant.
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The phrase "Legal Consideration" for the purpose of this Section 4,
shall mean the total value of the securities (valued as determined in the
applicable agreement governing the terms of the Transaction or, if not so
valued, at market on the day of closing, or if there is no public market, valued
as set forth herein for other property), cash and assets and property or other
benefits exchanged by the Company or received by the Company or its shareholders
as consideration as a result of or arising out of the Transaction, irrespective
of the period of payment or terms (all valued at fair market present value as
agreed or, if not, by an independent appraiser.)
(b) All fees payable under this Section 4 are due and
payable to the Consultant, in cash or by certified check, at the closing or
closings of any Transaction; provided, that if the Legal Consideration on any
Transaction is other than all cash, the payment to the Consultant shall be, at
the option of the Company, either the cash equivalent or such other
consideration proportionate with the types of Legal Consideration paid on such
Transaction. No fees shall be payable under this Section 4 or otherwise if, for
any reason, the Transaction is not consummated.
(c) This Section 4 shall have a term of five years from the
date of the closing of the IPO.
5. GKN covenants that all proprietary or confidential
information which it obtains knowledge of as a result of the services rendered
pursuant to this Agreement shall be kept confidential and shall not be used by
GKN or disclosed by GKN to any third party without the prior written approval of
the Company, except as otherwise required by law.
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6. All expenses incurred by GKN in rendering services hereunder
shall be for the account of GKN, unless otherwise agreed to by the Company.
7. GKN and the Company acknowledge that GKN is an independent
contractor. GKN shall not hold itself out as, nor shall it take any action from
which others might infer that it is, a partner, agent or joint venturer of the
Company. GKN shall not take any action which binds, or purports to bind, the
Company.
8. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof. It may not be changed except
by agreement in writing signed by the party against whom enforcement or any
waiver, change, discharge, or modification is sought. Waiver of or failure to
exercise any rights provided by this Agreement in any respect shall not be
deemed a waiver of any further or future rights.
9. In the event of any dispute under this Agreement, then and
in such event, each party hereto agrees that the same shall be submitted to the
American Arbitration Association in the City of New York, for its decision and
determination in accordance with its rules and regulations then in effect. Each
of the parties agrees that the decision and/or award made by the Association may
be entered as judgment of the Courts or the State of New York, and shall be
enforceable as such.
10. This Agreement shall be construed and enforced in accordance
with the laws of the State of New York without giving effect to conflict of
laws.
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11. This Agreement shall be binding upon the parties and their
successors and assigns provided, however, that GKN shall not permit any other
person or entity to assume its obligations hereunder without the prior written
consent of the Company. Notice of the Company's position shall be given within
ten (10) days after such consent has been requested.
12. This Agreement may be terminated by the Company at any time
upon thirty days' prior written notice to GKN; provided, however, that no such
termination shall reduce the amount payable under Section 3 or result in any
refund of amounts previously paid under Section 3, which latter amounts shall be
deemed earned in all respects prior to termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
GKN SECURITIES CORP.
By:
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Name:
Title:
TEARDROP GOLF COMPANY
By:
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Name: Xxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
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