General Statement of Beneficial Ownership — Schedule 13D
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 13D General Statement of Beneficial Ownership 8 31K
2: EX-99.1 Stock Purchase Agreement 31 86K
3: EX-99.2 Certificate of Designation 25 63K
4: EX-99.3 Stockholders Agreement 20 51K
5: EX-99.4 Registration Rights Agreement 23 71K
6: EX-99.5 Monitoring Agreement 9 25K
EX-99.5 — Monitoring Agreement
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MONITORING AGREEMENT
MONITORING AGREEMENT, dated as of June 2, 1999 (this "Agreement")
made and entered into between Franklin Covey Co., a Utah corporation (the
"Company") and Hampstead Interests, LP, a Texas limited partnership ("HI").
A. Knowledge Capital Investment Group, a Texas general partnership,
related to HI ("Purchaser"), has made a substantial equity investment in the
Company pursuant to a Stock Purchase Agreement, dated as of the date hereof,
between Purchaser and the Company (the "SPA");
B. HI, by and through itself, its affiliates and their respective
officers, employees and representatives, has expertise in the areas of
management, finance, strategy, investment and acquisitions relating to the
business of the Company; and
C. Pursuant to the terms of the SPA, the Company desires to avail
itself, for the term of this Agreement, of the expertise of HI in the aforesaid
areas and HI wishes to provide the services to the Company as herein set forth.
NOW, THEREFORE, in consideration of the foregoing, the parties
hereto agree as follows:
1. Monitoring Services. (a) HI will use reasonable efforts to advise
and assist the Company in connection with the development of its strategic plan,
including acquisitions, divestitures, new development and financing matters. The
precise nature of the services to be performed hereunder by HI will be
determined from time to time by mutual agreement of HI and the Company. The
Company hereby acknowledges that the persons performing the foregoing services
are full-time employees of HI or other entities and will not be expected to
devote substantially all of their efforts to the Company but rather only so much
of their efforts as, from time to time, HI determines in its sole discretion to
be appropriate in the circumstances.
(b) HI and the individuals acting on its behalf that are actually
providing the services contemplated hereby will be independent contractors,
rather than employees or agents, and will have only such authority as is
incident to the discharge of
the duties herein contemplated or specifically authorized from time to time by
the Board of Directors of the Company (the "Board").
2. Consideration. (a) In consideration of the services to be
provided by HI, the Company will pay to HI a monitoring fee of $100,000 per
quarter, payable during the term of this Agreement on the first day of each
fiscal quarter of the Company (the "Fee").
(b) HI's rights under this Section 2 will not be subject to offset
or reduction by reason of any obligation of the Company or any of its affiliates
to pay any other financial advisory fee or other compensation to any other
person or entity, including without limitation any entity affiliated with HI and
will not limit such other rights and obligations to which the Company and HI or
their respective affiliates may from time to time agree in the future.
3. Reimbursements. In addition to the Fee, the Company will, pay
directly or reimburse HI for its Out-of-Pocket Expenses. Promptly following the
Company's request therefor, HI will provide written substantiation in reasonable
detail relating to any Out-of-Pocket Expenses to be paid or reimbursed by the
Company pursuant to this Agreement. For the purposes of this Agreement, the term
"Out-of-Pocket Expenses" means the reasonable out-of-pocket costs and expenses
for travel that are actually and reasonably incurred by HI or its affiliates in
connection with the services rendered hereunder. All reimbursements for
Out-of-Pocket Expenses will be made promptly upon or as soon as practicable
after presentation by HI to the Company of a written statement therefor.
4. Indemnification. (a) The Company will indemnify and hold harmless
HI, its affiliates, including without limitation Purchaser, and their respective
partners (both general and limited), members (both managing and otherwise),
officers, directors, employees, agents and representatives (each such person
being an "Indemnified Party") from and against any and all losses, claims,
damages and liabilities, whether joint or several (the "Indemnifiable Losses"),
related to, arising out of or in connection with the services contemplated by
this Agreement or the engagement of HI pursuant to, and the performance by HI of
the services contemplated by, this Agreement, whether or not pending or
threatened, whether or not an Indemnified Party is a party and whether or not
such action, claim, suit, investigation or proceeding is initiated or brought
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by the Company directly, derivatively or otherwise, including without limitation
any action, suit, proceeding or investigation arising out of any action or
failure to take action by the Company or any of its subsidiaries, whether or not
based on a theory of primary or secondary liability, and will reimburse any
Indemnified Party for all reasonable costs and expenses (including reasonable
attorneys' fees and expenses) as they are incurred in connection with
investigating, preparing, pursuing, defending or assisting in the defense of any
action, claim, suit, investigation or proceeding for which the Indemnified Party
would be entitled to indemnification under the terms of this sentence, or any
action or proceeding arising therefrom, whether or not such Indemnified Party is
a party thereto, provided that, subject to the following sentence, the Company,
upon execution of a written undertaking reasonably satisfactory to HI confirming
the Company's indemnity obligations hereunder (without any reservation of
rights) and expressly releasing all Indemnified Parties from any and all
liability related to the matter in question (such undertaking, an "Indemnity
Undertaking") will be entitled to assume the defense thereof at its own expense,
with counsel satisfactory to such Indemnified Party in its reasonable judgment.
Any Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense, and in any action, claim, suit, investigation or
proceeding in which both the Company and/or one or more of its subsidiaries, on
the one hand, and an Indemnified Party, on the other hand, is, or is reasonably
likely to become, a party, such Indemnified Party will have the right to employ
separate counsel at the expense of the Company and to control its own defense of
such action, suit, claim, investigation or proceeding if, in the reasonable
opinion of counsel to such Indemnified Party, a conflict or potential conflict
exists between the Company, on the one hand, and such Indemnified Party, on the
other hand, that would make such separate representation advisable. The Company
will not, without the prior written consent of the applicable Indemnified Party,
settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, suit, investigation, action or proceeding relating to the
matters contemplated hereby (if any Indemnified Party is a party thereto or has
been threatened to be made a party thereto) unless such settlement, compromise
or consent includes an unconditional release of the applicable Indemnified Party
and each other Indemnified Party from all liability arising or that may arise
out of such claim, suit, investigation, action or proceeding. Provided the
Company is not in breach of its indemnification obligations hereunder, no
Indemnified Party may settle or compromise any claim subject to indemnification
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hereunder without the consent of the Company provided that prior thereto such
Indemnified Party has been furnished with an Indemnity Undertaking.
(b) If any indemnification sought by any Indemnified Party pursuant
to this Section is unavailable for any reason or is insufficient to hold the
Indemnified Party harmless against any Indemnifiable Losses referred to herein,
then the Company will contribute to the Indemnifiable Losses for which such
indemnification is held unavailable or insufficient in such proportion as is
appropriate to reflect the relative benefits received (or anticipated to be
received) by the Company, on the one hand, and HI, on the other hand, in
connection with the transactions which gave rise to such Indemnifiable Losses
or, if such allocation is not permitted by applicable law, not only such
relative benefits but also the relative faults of the Company, on the one hand,
and HI, on the other hand, as well as any other equitable considerations,
subject to the limitation that in any event the aggregate contribution by the
Indemnified Parties to all Indemnifiable Losses with respect to which
contribution is available hereunder will not exceed the Fees Paid through the
date on which (or, if more than one date, the last date on which the conduct
occurred that gave rise to the Indemnifiable Loss).
(c) Notwithstanding any other provision hereof, none of HI nor any
employee, officer, director or other related person or entity will have any
liability or obligation by reason of this agreement for performance or
nonperformance of services contemplated hereby except and solely to the extent
that it is judicially determined by a court of competent jurisdiction that such
person intentionally breached or caused to be breached a material provision of
this Agreement. The parties hereto hereby expressly disclaim any liability or
obligation of HI and its affiliates or any of their respective employees,
officers, directors and other related persons or entities for actual or alleged
negligence of any character in connection with the services contemplated by this
Agreement.
(d) The provisions of this Section 4 will be in addition to and in
no manner limit or otherwise affect any other right that HI or any other
Indemnified Party may have, whether by contract, or arising as a matter of law
or the constituent documents of any other entity.
6. Term. This Agreement will become effective on the date first
written above and will continue such date on which
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Purchaser and its affiliates together own less than one-half of the 750,000
shares of Series A Preferred Stock of the Company ("Series A Preferred")
purchased by Purchaser pursuant to the SPA plus the Series A Preferred
equivalent of any shares of Common Stock received by Purchaser or any of its
affiliates upon conversion of such Shares of Series A Preferred (which
equivalent number of shares of Series A Preferred will be equal to the product
of (a) the total number of shares of Common Stock, if any, in to which any such
Series A Preferred has been converted, (b) multiplied by the conversion price in
effect at the time of conversion, and (b) divided by $100), in each case giving
effect to any stock split, stock dividend or similar event. Notwithstanding any
other provision hereof, HI may terminate its obligations under Section 1 with or
without cause on 60 calendar days prior notice to the Company. The termination
or expiration of the term of this Agreement (i) will not affect HI's rights
under Sections 3 or 4 hereof (which will survive any termination or expiration
of this Agreement) and (ii) will terminate HI's rights under Section 2 hereof
(except that for the period during which such expiration or termination occurs
the quarterly fee will be prorated based on the number of days in such quarter
prior to such termination or expiration divided by 90).
7. Miscellaneous. (a) No amendment or waiver of any provision of
this Agreement, or consent to any departure by either party hereto from any such
provision, shall be effective unless the same shall be in writing and signed by
each of the parties hereto. Any amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. The
waiver by any party of any breach of this Agreement shall not operate as or be
construed to be a waiver by such party of any subsequent breach.
(b) Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered personally or sent by
facsimile, Federal Express or other overnight courier, addressed as follows or
to such other address of which the parties may have given notice:
If to HI: Hampstead Interests, LP
4200 Texas Commerce Center
Dallas, Texas 75201
Attention: Mr. Daniel A. Decker
Facsimile: (214) 220-4949
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If to the Company: Franklin Covey Co.
2200 West Parkway Boulevard
Salt Lake City, Utah 84119-2311
Attention: Val J. Christensen
Facsimile: (801) 817-8723
Unless otherwise specified herein, such notices or other communications shall be
deemed received (i) on the date delivered, if delivered personally or sent by
facsimile, and (ii) one business day after being sent by Federal Express or
other overnight courier.
(c) This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Texas. This Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
respective successors and assigns. The provisions of Section 4 shall inure to
the benefit of each Indemnified Party.
(d) This Agreement may be executed by one or more parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
(e) The waiver by any party of any breach of this Agreement shall
not operate as or be construed to be a waiver by such party of any subsequent
breach.
(f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall be not invalidate or render unenforceable such provision in
any other jurisdiction.
(g) For purposes of this Agreement, (i) "affiliate" of any person
means another person that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with such
first person and (ii) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
(h) When a reference is made in this Agreement to an Article,
Section, Exhibit or Schedule, such reference is to an
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Section of this Agreement unless otherwise indicated. Whenever the words
"include", "includes" or "including" are used in this Agreement, they will be
deemed to be followed by the words "without limitation". The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
will refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement will have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term. References to a person are also to its permitted successors and
assigns.
(i) This Agreement (including the documents and instruments referred
to herein) (i) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement and (ii) except for the
provisions of Section 4, are not intended to confer upon any person other than
the parties any rights or remedies.
(j) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement may be assigned, in whole or in part, by
operation of Law or otherwise by either of the parties hereto without the prior
written consent of the other party. Any assignment in violation of the preceding
sentence will be void. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
(k) The parties agree that irreparable damage would occur and that
the parties would not have any adequate remedy at Law in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties will be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any federal court located in the State of Texas or in Texas state
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located in the State of
Texas or any Texas state court in the event any dispute arises out of this
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Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting
in the State of Texas or a Texas state court.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above by their respective officers thereto
duly authorized.
FRANKLIN COVEY CO.
By: /s/ Jon Rowberry
----------------------------------
Name: Jon Rowberry
Title: Chief Executive Officer
HAMPSTEAD INTERESTS, LP
By: /s/ Kym Irvin
----------------------------------
Kym Irvin
Duly Authorized
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Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
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| This ‘SC 13D’ Filing | | Date | | First | | Last | | | Other Filings |
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| |  |
| Filed on: | | 6/14/99 | | | | | | | 3 |
| | 6/2/99 | | 1 | | | | | 3 |
| List all Filings |
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