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EXHIBIT 3
FINANCIAL ADVISORY AGREEMENT
This Financial Advisory Agreement (the "Agreement") is made June 30, 2000, by
and between RODGER O. RINEY (the "Client"), and SANDERS MORRIS HARRIS INC. (the
"Advisor").
1. Engagement of Advisor. The Client hereby engages the Advisor, and the Advisor
hereby agrees, to advise, consult with, and assist the Client in the
identification, structuring, negotiation and/or consummation of one or more
prospective financing, strategic partnership, stock or asset purchase or sale
transactions involving any of the companies listed on Exhibit A hereto (singly,
a "Candidate"), as such list may be appended from time to time by mutual
agreement of the Client and the Advisor.
2. Compensation. As compensation for services rendered to the Client under this
Agreement, the Client shall pay to the Advisor the following compensation:
2.1 The Client agrees to pay to the Advisor a fee for any transaction involving
the Client and a Candidate (whether in the form of an asset purchase or sale, a
stock purchase or sale, or a merger, consolidation or any other business
combination transaction, and regardless of whether the consideration is paid by
the Client or the other party to the transaction) which is consummated during
the term of this Agreement or within one year thereafter. The fee payable to the
Advisor for any such transaction shall be as follows:
In the event the Client consummates an acquisition, business
combination, or other transaction involving the Client and a Candidate,
then the Client shall pay to the Advisor a fee with respect to such
transaction equal to a percentage amount of the Purchase Price (as
defined below) paid in the transaction, which percentage amount shall
be the sum of 5% of the first $1 million or portion thereof of the
Purchase Price, 4% of the next $1 million or portion thereof of the
Purchase Price, 3% of the next $1 million or portion thereof of the
Purchase Price, 2% of the next $1 million or portion thereof of the
Purchase Price, and 1% of the next $1 million or the balance of the
Purchase Price; however, in no case will the aggregate fee be less than
$150,000 unless mutually agreed by the parties. Any fee payable to the
Advisor shall be payable in cash at the closing of the transaction
unless otherwise agreed. As used herein, "Purchase Price" shall include
(i) cash paid to sellers, (ii) the fair market value of any securities
issued to sellers, (iii) the fair market value of any other property
transferred to sellers in connection with the acquisition, (iv) balance
sheet indebtedness assumed by the Client in connection with the
acquisition and (v) cash or the fair market value of property paid by
the Client to any officers, directors, employees or affiliates of
seller as consideration for any covenant not to compete or similar
agreement related to the transaction. In the event the Client agrees to
pay any contingent consideration in connection with such transaction
(such as, for example, consideration payable upon the fulfillment of
some condition or event which may or may not occur in the future), then
such contingent consideration shall be included in the Purchase Price,
and the Advisor shall be paid its fee with respect to that contingent
consideration as and when it is paid by the Client.
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Any fee payable to the Advisor under this section 2.1 will be due and payable in
cash at the closing of the transaction and shall be payable directly to the
Advisor; provided, however, that the Advisor shall not be entitled to any fee
under this section 2.1 unless the closing of the transaction occurs not later
than one year after termination of this Agreement. If the Client desires to
engage the Advisor to furnish any opinion as to the financial aspects of any
transaction (e.g., a fairness opinion), such engagement shall be in addition to
the services contemplated hereunder and shall be under separate agreement
containing terms and provisions, including the terms of compensation, to be
mutually agreed upon.
2.2 The Client agrees to pay, or reimburse the Advisor for, all reasonable out
of pocket costs and expenses incurred by the Advisor in performing its
obligations under this Agreement, which costs and expenses shall include, but
not be limited to, travel expenses, expenses incurred in performing due
diligence in connection with transactions, legal expenses, and all other
expenses reasonably incurred by the Advisor in performing its obligations under
this Agreement; provided however, that the Advisor shall obtain the prior
approval of the Client for any expenditure in excess of $1,500, which approval
shall not be unreasonably withheld. In seeking reimbursement for expenses, the
Advisor shall provide to the Client a written statement or statements detailing
expenses for which reimbursement is sought and, upon request by the Client,
shall provide copies of invoices and other documentation supporting such
expenses. Reimbursable expenses shall be payable by the Client within 10 days of
receipt by the Client of such written statement or, if requested by the Client,
copies of supporting documentation.
3. Term of Agreement. This Agreement shall terminate six months after the date
hereof. Upon termination of this Agreement, neither party shall have any further
rights or obligations to the other, except that (i) the Client shall be
obligated to pay fees relating to transactions closed within one year from the
date of termination if such transaction is specified herein, (ii) the Client
shall be obligated to reimburse those expenses specified under section 2.2
hereof incurred by the Advisor during the period prior to termination of this
Agreement, and (iii) the Advisor and the Client shall continue to be bound by
the provisions of sections 5 and 6 hereof.
4. Nonexclusivity. The Client recognizes that the Advisor is in the business of
advising and consulting with other businesses, some of which businesses may be
in competition with the Client. The Client acknowledges and agrees that the
Advisor may advise and consult with other businesses, including those in
competition with the Client, and shall not be required to devote its full time
and resources to performing services on behalf of the Client under this
Agreement or to introducing potential acquisitions or financing transactions to
the Client. The Advisor shall only be required to expend such time and resources
as are reasonably appropriate to advise and assist the Client as provided
herein.
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5. Confidentiality. Except for information which becomes generally available to
the public other than as a result of disclosure by the Advisor in violation of
this Agreement, or which was obtained by the Advisor from a person that was not
subject to any confidentiality agreement with the Client, the Advisor agrees
that all information provided by the Client to it will be used solely by the
Advisor, its officers, directors, employees and agents for the purposes of
providing services to the Client pursuant to this Agreement and that, except as
required by law, such information will not be disclosed to any person for any
other reason. The Advisor agrees to return all copies of non-public information
provided to it hereunder upon completion of the engagement.
6. Indemnification. The Client agrees to indemnify and hold harmless the Advisor
and its affiliates, agents, and advisors, and their respective directors,
officers, employees, agents and controlling persons (each such person is
hereinafter referred to as an "Indemnified Party"), from and against any and all
losses, claims, damages, liabilities and expenses whatsoever, joint or several,
to which any such Indemnified Party may become subject under any applicable
federal or state law of the United States of America or otherwise, caused by,
relating to or arising out of the engagement evidenced hereby. The Client will
reimburse any Indemnified Party for all expenses (including reasonable counsel
fees and expenses) as they are incurred by an Indemnified Party in connection
with the investigation of, preparation for or defense of any pending or
threatened claim or any action or proceeding arising therefrom, whether or not
resulting in liability; provided, however, that at the time of such
reimbursement the Indemnified Party shall have entered into an agreement with
the Client whereby the Indemnified Party agrees to repay all such reimbursed
amounts if it is determined in a final judgement by a court of competent
jurisdiction that the Indemnified Party is not entitled to indemnity from the
Client. Notwithstanding the foregoing, the Client shall not be liable to any
Indemnified Party under the foregoing indemnification provision to the extent
that any loss, claim, damage, liability or expense results directly from any
such Indemnified Party's willful misconduct or gross negligence.
If for any reason (other than a final non-appealable judgement finding any
Indemnified Party liable for any loss, claim, damage, liability or expense for
its gross negligence or willful misconduct) the foregoing indemnity is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless, then the other party shall contribute to the amount paid or payable by
an Indemnified Party as a result of such loss, claim, damage, liability or
expense in such proportion as is appropriate to reflect not only the relative
benefits received by the Indemnified Party on the one hand and the other party
on the other, but also the relative fault by each party as well as any relevant
equitable considerations, subject to the limitation that in no event shall the
total contribution of all Indemnified Parties to all such losses, claims,
damages, liabilities or expenses exceed the amount of fees actually received and
retained by the Advisor hereunder.
7. Relationship of Parties. The parties agree that their relationship under this
Agreement is an advisory relationship only, and nothing herein shall cause the
Advisor to be partners, agents or fiduciaries of, or joint venturers with, the
Client or with each other.
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8. Notices. All notices required or permitted herein must be in writing and
shall be deemed to have been duly given the first business day following the
date of service if served personally, on the first business day following the
date of actual receipt if delivered by telecopier, telex or other similar
communication to the party or parties to whom notice is to be given, or on the
third business day after mailing if mailed to the party or parties to whom
notice is to be given by registered or certified mail, return receipt requested,
postage prepaid, to the Advisor and to the Client at the addresses set forth
below, or to such other addresses as either party hereto may designate to the
other by notice from time to time for this purpose.
Advisor: SANDERS MORRIS HARRIS INC.
3100 Chase Tower
Houston, Texas 77002
Attn: Ben T. Morris, President
Telecopy no. (713) 250-4294
Client: RODGER O. RINEY
c/o Scottrade Securities, Inc.
12855 Flushing Meadow Drive
St. Louis, MO 63131
Telecopy no. (314) 965-7835
9. Parties. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
10. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of Texas, except for its conflicts of law principles.
11. Entire Agreement, Waiver. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements relating to the
subject matter hereof. This Agreement may not be amended or modified in any way
except by subsequent agreement executed in writing. Either the Client or the
Advisor may waive in writing any term, condition, or requirement under this
Agreement which is intended for its own benefit, and written waiver of any
breach of such term or condition of this Agreement shall not operate as a waiver
of any other breach of such term or condition, nor shall any failure to enforce
any provision hereof operate as a waiver of such provision or of any other
provision hereof.
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SANDERS MORRIS HARRIS INC.
/s/ Bruce R. McMaken
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BY: Bruce R. McMaken
Senior Vice President
RODGER O. RINEY
/s/ Rodger O. Riney
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BY: Rodger O. Riney
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EXHIBIT A
List of Candidates
Computer Research, Inc.
