FOX XXXXX & COMPANY, LLC
000 Xxxxx Xxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
January 31, 2000
Xxxxxxx-Xxxxxxx Company
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger (the "MERGER
AGREEMENT"), between XX-XX Acquisition Corp. and Xxxxxxx-Xxxxxxx Company (the
"COMPANY"), dated October 25, 1999. As a result of the transactions contemplated
by the Merger Agreement and certain related transactions (the "TRANSACTIONS"),
Fox Xxxxx Capital Fund, L.P. and its affiliates and certain other investors
permitted by Fox Xxxxx Capital Fund, L.P. to participate (collectively, the
"INVESTORS") will beneficially own in excess of ninety percent (90%) of the
outstanding shares of common stock of the Company immediately following such
Transactions.
In connection with the consummation of the Transactions and
the ongoing operations of the Company subsequent thereto, the Company agrees to
pay Fox Xxxxx & Company, LLC ("FOX XXXXX") (a) a closing fee of $3,500,000 as
set forth on EXHIBIT 1 hereto plus reimbursement of Fox Xxxxx'x expenses in
connection with the Transactions, payable at the closing of the Transactions,
and (b) as compensation for Fox Xxxxx'x ongoing provision of certain financial
and strategic consulting, advisory and other services to the Company (the
"SERVICES"), an amount equal to the Fee Amount (as defined below), which shall
be billed to the Company by Fox Xxxxx, payable annually on or before the date
hereof and each anniversary thereof and continuing until the earlier of (i) such
time as the Investors no longer hold an equity investment in the Company or the
Investors and their affiliates and managing entities no longer have
representation on the Company's board of directors (after which time Fox Xxxxx
will cease to provide the Services) and (ii) such time as Fox Xxxxx and the
Company agree in writing to modify or terminate the arrangements contemplated
hereby. The "FEE AMOUNT" shall be equal to $110,000 for fiscal year 2000 and,
for each fiscal year thereafter, one percent (1%) of the annual Consolidated
EBITDA (as defined in the Company's credit agreement dated as of the date
hereof) of the Company, calculated based on the audited financial statements for
the prior fiscal year. In addition, the Company will reimburse Fox Xxxxx for its
expenses in connection with the provision of the Services. Payments made by the
Company pursuant to this agreement shall be made by wire transfer of immediately
available funds to such account as Fox Xxxxx shall designate to the Company in
writing from time to time.
Fox Xxxxx may assign its rights and obligations hereunder to
any of its affiliates, and shall provide written notice to the Company of any
such assignment.
Simultaneously herewith, the parties hereto are entering into
an indemnification letter (the "INDEMNIFICATION LETTER") in the form attached
hereto as EXHIBIT 2. The Indemnification Letter shall survive any termination,
expiration or assignment of this agreement.
This agreement shall be governed by and construed and enforced
in accordance with the laws of the State of California applicable to contracts
made and to be performed entirely within that state.
Please confirm that the foregoing is in accordance with your
understandings and agreements with Fox Xxxxx by signing a copy of this agreement
in the space provided below.
Very truly yours,
FOX XXXXX & COMPANY, LLC
By:
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Name: X. Xxxxxx Xxxxx, III
Title: President
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
XXXXXXX-XXXXXXX COMPANY
By:
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Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
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