Sellside ADVISORY SERVICES AGREEMENT

 TRANSACTION ADVISORY SERVICES AGREEMENT

 

 

 

Strictly Confidential

 

 

THIS AGREEMENT (the "Agreement") is entered into as of February [ ], 2009 between [ ] with its address at [ ] and [ ] with its address at [ ] collectively hereinafter referred to as the "Parties", and sets forth the terms and conditions mandating  [Mandator] to originate for and/or advise [Client] subject to the terms and conditions contained herein, on its contemplated Transaction (the “Transaction”) with [Target Company]  (the “Company”).

 

 

Scope of Services

 

Advisory (“Advisory Mandated Transaction”)

 

 Mandator and CLIENT mutually agree that  Mandator, will perform the role of adviser to advise and/or assist CLIENT in:

 

a.     securing access to the appropriate decision makers related to the Company;

b.       preparing a term sheet;

c.        proposing  Transaction structures;

d.       finding Buyer;

d.     performing a valuation and financial analysis of CLIENT;

e.        coordinating discussion with legal, financial and other professional Advisors;

f.        negotiating the purchase price and other terms and conditions with the buying party and its Advisors;

g.        preparing CLIENT’s internal  Transaction memorandum; and

h.       negotiating, preparing and executing  definitive Transaction documentation.

 

Term

 

This agreement shall terminate [ ] months from the date of this agreement (the “Termination Date”), renewable upon mutual written consent.  However, the terms of this agreement (including but not limited to services, fees, expenses, exclusivity and confidentiality) applicable to any Transaction initiated and agreed within the term of this agreement, shall survive this agreement for [ ] months from the date that the Transaction is agreed or while a Transaction is in earnest being pursued by CLIENT, unless otherwise agreed in writing by  Mandator and CLIENT.

 

Fees

 

In consideration of the services provided by  Mandator as described above, CLIENT agrees that:

 

Success Fee

 

(Comment: We propose a Success Fee structure that has two components as follows:

1. Basic Success Fee = [ ]% of the aggregate cash equity consideration (X) PLUS;

2. Additional Success Fee = (X – 150 bn KrW) multiplied by [ ]%

The value added tax, if applicable, arising from the services provided by Mandator shall be paid by CLIENT in accordance with Korean law.)

 

The percentage will be of the aggregate cash equity consideration invested by CLIENT  in the Company, whether in the form of primary or secondary shares, and whether in the form of common, preferred or convertible preferred or other equity, and/or an equity earn out on the part of the selling party.  The Fee shall be become due and payable only at the definitive closing of a transaction, and CLIENT shall in its sole discretion pay any such fee as either an immediate Transaction Cost under uses of proceeds payable by the target company, simultaneous upon closing any transaction, or directly by CLIENT to Mandator, within 10 business days of any such closing.  In an earn out or other staged investment program, fees will be paid as investment arises.  In the event that a Special Purpose Vehicle (“SPV”) is established for the purposes of acquiring or investing in the Company, CLIENT shall cause the SPV to pay to  Mandator the Fee, in the event that CLIENT does not pay the Fee to  Mandator directly.

 

Notwithstanding the foregoing, CLIENT may at any time prior to closing decide, in its sole discretion, not to pursue the Transaction, in which case, no Fees shall be payable to  Mandator.

 

 

Expenses

 

CLIENT agrees that it shall bear its own expenses in relation to pursuing any Transaction contemplated under this Agreement including out-of-pocket, business due diligence, and legal and accounting expenses. (Comment: Out-of-pocket shall include, but not limited to, travel, accommodation, meals, printing and telecommucation expenses incurred by Mandator for the purpose of carrying out the Transaction.) Mandator shall have no liability for such expenses.   Mandator agrees that it shall not commit CLIENT to any Transaction expenses, without the prior written request or permission of CLIENT.

 

(Comment: Mandator shall send the invoice to CLIENT of the out-of-pocket expenses every two months with all relevant receipts evidencing such expenses.  All fees and expenses are paid in Korean Won.)

 

No Obligation

 

Nothing in this Agreement shall be construed as an offer, agreement or obligation by either  Mandator, CLIENT to invest in any Transaction or other investment.

 

Exclusivity

 

 Mandator shall act exclusively on behalf of CLIENT on any Transaction unless explicated released as described above.

 

Non-Circumvention

 

CLIENT agrees for any Transactions as defined under this Agreement, CLIENT shall not seek to pursue such Transaction independently of  Mandator during the Term of this Agreement.

 

Confidentiality

 

 Mandator agrees to treat all information in relation to this Agreement, including the nature and existence of this agreement, as well as all information related to any Transaction as confidential (the “Confidential Information”).   Mandator agrees that the Confidential Information will be used solely for the purposes of advising CLIENT in connection with any Transaction and that such information will be kept confidential and will not be disclosed by  Mandator to anyone for any reason, except as permitted herein and except as required by law, regulation or legal process.

 

Publicity

 

 Mandator shall not make any public announcements in relation to a Transaction, this Agreement or the nature or existence of its relationship with CLIENT without the express written consent of CLIENT.

 

Miscellaneous

 

CLIENT shall not indemnify Mandator for any acts or omissions constituting gross negligence or willful misconduct and provided further that CLIENT and its affiliates shall have no liability (whether direct or indirect, in contract, tort or otherwise) for any damages hereunder except for direct damages (as opposed to indirect or consequential damages).

 

This Agreement contemplates that the relationship created hereunder between CLIENT and  Mandator shall be that of an independent contractor, and not that of principal and agent, employer and employee or partnership and joint venture, and confers no authority or authority to legally bind or commit CLIENT.

 

This Agreement shall he governed by, construed in accordance with, and enforced under, the laws of [Republic of Korea].

 

Neither Party may assign its rights or obligations under this Agreement without the prior written consent of the other, except that CLIENT may assign its rights or obligations hereunder to an affiliate, or to a target company.  This Agreement shall inure to the benefit of, and be binding upon, the successors, permitted assigns and administrators of the Parties.

 

If any provision of this Agreement is held to be unenforceable, the meaning of that provision shall be construed, to the extent feasible, so as to render the provision enforceable, and if no feasible interpretation would save that provision, it shall be severed from the remainder of this Agreement which shall remain in full force and effect unless the severed provision is material to the rights and benefits received by any Party.  In such event, the Parties shall use best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement that most nearly affects the Parties' intent in entering into this Agreement.

 

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.

 

This Agreement (i) may only be modified or amended by an instrument in writing signed by both parties hereto, and (ii) constitutes the entire agreement between the parties hereto with respect to the matters that are the subject hereof.

 

Please confirm your agreement to the foregoing by signing and returning the enclosed copy of this Agreement.

 

                                                                                                         

 

                                                                                                          Very truly yours,

 

Client’s Name

 

                                                    

                                                                                                          By:__________________

                                                                                                          Name

                                                                                                          Title

 

Accepted and agreed to:

 

 

Date:­­­­­­­­­­­­­­­­­­­­­­­­­­­­__________________________

 

 

By:____________________________

[Name]

[Title]

Mandator Party