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Exhibit 10.8
ADVISORY AGREEMENT
This Advisory Agreement (this "Agreement") is entered into as of the
29th day of October, 1998 by and between Xxxxxxx Holdings, Inc., a Delaware
corporation (the "Holdings"), Xxxxxxx Company, a Delaware corporation (the
"Company") and Fenway Partners, Inc., a Delaware corporation ("Fenway").
WHEREAS, Fenway has provided advisory and other services to
Holdings and the Company in connection with the acquisition by funds
affiliated with Fenway (the "Fenway Funds") of Xxxxxxx Holdings, Inc.
(the "Acquisition") and the senior secured financing (the "Senior
Financing") being provided for the Acquisition pursuant to a credit
agreement dated on or about the date hereof by Xxxxxxx Sachs Credit
Partners L.P. as joint lead arranger and syndication agent, Warburg
Dillon Read LLC, as joint lead arranger, and UBS A.G., Stamford Branch
as administrative agent and the lending institutions from time to time
party thereto;
WHEREAS, subject to the terms and conditions of this
Agreement, Holdings and the Company desire to retain Fenway to provide
certain management and advisory services to Holdings and the Company,
and Fenway desires to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. SERVICES. Fenway hereby agrees that, during the term of this Agreement
(the "Term"), it will:
a. provide Holdings and the Company with advice in connection
with the negotiation and consummation of agreements,
contracts, documents and instruments necessary to provide the
Company with senior secured financing from banks or other
financial institutions or other entities on terms and
conditions satisfactory to Holdings and the Company; and
b. provide Holdings and the Company with financial, managerial
and operational advice in connection with its day-to-day
operations, including, without limitation:
(i) advice with respect to the investment of funds; and
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(ii) advice with respect to the development and
implementation of strategies for improving the
operating, marketing and financial performance of
Holdings and the Company.
2. PAYMENT OF FEES. The Company hereby agrees to:
a. pay to Fenway (or its designee) a fee in the amount of five
million, one hundred thousand dollars ($5,100,000) and
379,119.069 shares of Class B Common Stock of Holdings in
connection with the structuring of the Acquisition and the
Senior Financing, together with reimbursement of Fenway's
reasonable out-of-pocket expenses incurred on behalf of the
Company through the closing date in connection with the
Acquisition, such fees and expenses being payable by the
Company at the closing of the Acquisition;
b. during the Term, pay to Fenway (or its designee) management
fees as follows (subject to adjustment as provided below): for
the Term of this Agreement, for each fiscal year, an amount
equal to 1/4 of 1% of net sales for the immediately preceding
fiscal year or such other amount (or formula) as may be
mutually agreed among Holdings, the Company and Fenway, in
each case in exchange for the services provided to Holdings
and the Company by Fenway, as more fully described in Section
1 of this Agreement, such fees being payable by Holdings and
the Company quarterly in advance, the first such payment to be
made at or promptly after the closing of the Acquisition;
c. during the Term, allow Fenway to participate in the
negotiation and consummation of any acquisition transactions
by Holdings or the Company or any of its direct or indirect
subsidiaries, and pay to Fenway (or an affiliate of Fenway
designated by it) such customary fee as may be charged
therefor by Fenway in connection therewith; provided, however,
that in each case such fee shall not exceed the greater of (i)
$1,000,000 or (ii) one and one-half percent (1 1/2%) of the
aggregate transaction value (including liabilities assumed);
and provided further that such fee shall be due and payable
for the foregoing services at the closing of such transaction;
and
d. in the event of an acquisition or series of acquisitions of
another business or businesses (whether by stock or asset
purchase, merger or otherwise) wherein the acquired entities
or businesses have an aggregate enterprise value in excess of
$25,000,000, thereafter, if appropriate under the
circumstances, pay to Fenway an increase to the management
fees payable pursuant to Section 2(b) above as is mutually
agreed by the Company and Fenway (it being agreed that the
amount of any such increase will be negotiated in good faith
between the Company and Fenway).
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e. in the event of an initial public offering of Common Stock of
Holdings or the Company, the parties agree to negotiate in
good faith any adjustments to the fee as may be customary and
appropriate based upon market conditions and the participation
of Fenway in the business, financings and acquisition of
Holdings and the Company (including, if applicable the
termination of the Agreement); provided, however, that,
nothing contained herein shall require Holdings or the Company
to pay Fenway the present value of future payments under this
Agreement through the term of this Agreement or any other fee
in respect of such termination or adjustment.
Each payment made pursuant to this Section 2 shall be paid by wire
transfer of immediately available federal funds to such account(s) as
Fenway may specify to the Company in writing prior to such payment.
3. TERM. This Agreement shall continue in full force and effect, unless
and until terminated by mutual consent of the parties, for a minimum of
ten years; and thereafter for so long as Fenway (or any successor or
permitted assign, as the case may be) continues to carry on the
business of providing services of the type described in Section 1
above; provided, however, that:
a. either party may terminate this Agreement following a material
breach of the terms of this Agreement by the other party
hereto and a failure to cure such breach within 30 days
following written notice thereof;
b. this Agreement shall terminate automatically upon the earliest
date upon which the Fenway Funds and their respective
affiliates shall cease to retain the power to elect or cause
the election of a majority of the board of directors of
Holdings; and
c. each of (i) the obligations of Holdings and the Company under
Section 4 below, (ii) any and all accrued and unpaid
obligations of Holdings and the Company owed under Section 2
above and (iii) the provisions of Sections 4(b) and 7 shall
survive any termination of this Agreement to the maximum
extent permitted under applicable law.
4. EXPENSES; INDEMNIFICATION.
a. Expenses. Whether or not the Acquisition or any of the other
transactions contemplated by this Agreement or any other
agreement executed in connection herewith shall be
consummated, Holdings and the Company agree to pay on demand
reasonable expenses incurred by Fenway and the Fenway Funds in
connection with this Agreement, the Acquisition and such other
transactions and
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all operations hereunder or otherwise incurred in connection
with the Acquisition or the Company, including but not limited
to:
(i) the reasonable fees and disbursements of: (A) Ropes &
Xxxx, special counsel to Fenway and the Fenway Funds,
(B) Ernst & Young, accountant to Fenway and the
Fenway Funds, and (C) any other consultants or
advisors retained by Fenway, the Fenway Funds or
either of the parties identified in clauses (A) and
(B) arising in connection therewith (including but
not limited to the preparation, negotiation and
execution of this Agreement and any other agreement
executed in connection herewith or in connection with
the Acquisition, the Senior Financing or the
consummation of the other transactions contemplated
hereby (and any and all amendments, modifications,
restructurings and waivers, and exercises and
preservations of rights and remedies hereunder or
thereunder) and the operations of Holdings and the
Company and any of its subsidiaries), and
(ii) any out-of-pocket expenses incurred by Fenway in
connection with the provision of services hereunder
or the attendance at any meeting of the board of
directors (or any committee thereof) of Holdings and
the Company or any of its affiliates.
b. Indemnity and Liability. Holdings and the Company hereby agree
to indemnify, exonerate and hold each of Fenway, and the
Fenway Funds, and each of their respective partners,
shareholders, affiliates, directors, officers, fiduciaries,
employees and agents and each of the partners, shareholders,
affiliates, directors, officers, fiduciaries, employees and
agents of each of the foregoing (collectively, the
"Indemnitees") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities and
damages, and expenses in connection therewith, including
without limitation reasonable attorneys' fees and
disbursements (collectively, the "Indemnified Liabilities"),
incurred by the Indemnitees or any of them as a result of, or
arising out of, or relating to the Acquisition, the execution,
delivery, performance, enforcement or existence of this
Agreement or the transactions contemplated hereby except for
any such Indemnified Liabilities arising on account of such
Indemnitee's gross negligence or willful misconduct, and if
and to the extent that the foregoing undertaking may be
unenforceable for any reason, Holdings and the Company hereby
agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. None of the Indemnitees
shall be liable to Holdings and the Company or any of its
affiliates for any act or omission suffered or taken by such
Indemnitee that does not constitute gross negligence or
willful misconduct.
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5. ASSIGNMENT, ETC. Neither party shall have the right to assign this
Agreement; provided, however, that notwithstanding the foregoing
prohibition, (a) Fenway may assign all or part of its rights and
obligations hereunder to any affiliate of Fenway which provides
services similar to those called for by this Agreement, in which event
Fenway shall be released of all of its rights and obligations
hereunder, and (b) the provisions hereof for the benefit of the Fenway
Fund shall inure to the benefit of their successors and assigns.
6. AMENDMENTS AND WAIVERS. No amendment or waiver of any term, provision
or condition of this Agreement shall be effective, unless in writing
and executed by each of Fenway and the Company. No waiver on any one
occasion shall extend to or effect or be construed as a waiver of any
right or remedy on any future occasion. No course of dealing of any
person nor any delay or omission in exercising any right or remedy
shall constitute an amendment of this Agreement or a waiver of any
right or remedy of any party hereto.
7. MISCELLANEOUS.
a. Choice of Law. This Agreement shall be governed by and
construed in accordance with the domestic substantive laws of
the State of New York without giving effect to any choice or
conflict of law provision or rule that would cause the
application of the domestic substantive laws of any other
jurisdiction.
b. Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon
this Agreement or the subject matter hereof shall be brought
and maintained exclusively in the federal and state courts of
the State of New York. Each of the parties hereto by execution
hereof (i) hereby irrevocably submits to the jurisdiction of
the federal and state courts in the State of New York for the
purpose of any action, suit or proceeding arising out of or
based upon this Agreement or the subject matter hereof and
(ii) hereby waives to the extent not prohibited by applicable
law, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such action, suit or proceeding, any
claim that it is not subject personally to the jurisdiction of
the above-named courts, that it is immune from
extraterritorial injunctive relief or other injunctive relief,
that its property is exempt or immune from attachment or
execution, that any such action, suit or proceeding may not be
brought or maintained in one of the above-named courts, that
any such action, suit or proceeding brought or maintained in
one of the above-named courts should be dismissed on grounds
of FORUM NON CONVENIENS, should be transferred to any court
other than one of the above-named courts, should be stayed by
virtue of the pendency of any other action, suit or proceeding
in any court other than one of the above-named courts, or that
this Agreement or the subject matter hereof may not be
enforced in or by any of the above-named courts. Each of the
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parties hereto hereby consents to service of process in any
such suit, action or proceeding in any manner permitted by the
laws of the State of New York, agrees that service of process
by registered or certified mail, return receipt requested, at
the address specified in or pursuant to Section 9 is
reasonably calculated to give actual notice and waives and
agrees not to assert by way of motion, as a defense or
otherwise, in any such action, suit or proceeding any claim
that service of process made in accordance with Section 9 does
not constitute good and sufficient service of process. The
provisions of this Section 7(b) shall not restrict the ability
of any party to enforce in any court any judgment obtained in
a federal or state court of the State of New York.
c. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES
HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM,
DEMAND, CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING ARISING
OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING
AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each of the
parties hereto acknowledges that it has been informed by each
other party that the provisions of this Section 7(c)
constitute a material inducement upon which such party is
relying and will rely in entering into this Agreement and the
transactions contemplated hereby. Any of the parties hereto
may file an original counterpart or a copy of this Agreement
with any court as written evidence of the consent of each of
the parties hereto to the waiver of its right to trial by
jury.
8. MERGER/ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof
and supersedes any prior communication or agreement with respect
thereto.
9. NOTICE. All notices, demands, and communications of any kind which any
party may require or desire to serve upon any other party under this
Agreement shall be in writing and shall be served upon such other party
and such other party's copied persons as specified below by personal
delivery to the address set forth for it below or to such other address
as such party shall have specified by notice to each other party or by
mailing a copy thereof by certified or registered mail, or by Federal
Express or any other reputable overnight courier service, postage
prepaid, with return receipt requested, addressed to such party and
copied persons at such addresses. In the case of service by personal
delivery, it shall be deemed complete on the first business day after
the date of actual delivery to such address. In case of service by mail
or by overnight courier, it shall be deemed complete, whether or not
received, on the third day after the date of mailing as shown by the
registered or certified mail receipt or courier service
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receipt. Notwithstanding the foregoing, notice to any party or copied
person of change of address shall be deemed complete only upon actual
receipt by an officer or agent of such party or copied person.
If to Holdings or the Company, to it at:
Xxxxxxx Holdings, Inc.
Xxxxxxx Company
Xxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxx
With a Copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
Xxxxx 0000
Xxx XxxXxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
If to Fenway, to it at:
Fenway Partners, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
With a Copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
10. SEVERABILITY. If in any judicial or arbitral proceedings a court or
arbitrator shall refuse to enforce any provision of this Agreement,
then such unenforceable provision shall be deemed eliminated from this
Agreement for the purpose of such proceedings to the extent necessary
to permit the remaining provisions to be enforced. To the full extent,
however, that the provisions of any applicable law may be waived, they
are hereby waived to the end that this Agreement be deemed to be valid
and binding agreement enforceable in accordance with its terms, and in
the event that any provision hereof shall be found to be invalid or
unenforceable, such provision shall be construed by
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limiting it so as to be valid and enforceable to the maximum extent
consistent with and possible under applicable law.
11. DISCLAIMER AND LIMITATION OF LIABILITY.
a. Disclaimer. Fenway makes no representations or warranties,
express or implied, in respect of the services to be provided
by it hereunder.
b. Standard of Care. In no event shall Fenway be liable to
Holdings or the Company or any of its affiliates for any act,
alleged act, omission or alleged omission on the part of
Fenway that does not constitute gross negligence or willful
misconduct.
c. Freedom to Pursue Opportunities, Etc. In anticipation that
Holdings, the Company and Fenway (or one or more affiliates,
associated investment funds or portfolio companies, or clients
of Fenway) may engage in the same or similar activities or
lines of business and have an interest in the same areas of
corporate opportunities and in recognition of the difficulties
which may confront any advisor who desires and endeavors fully
to satisfy such advisor's duties in determining the full scope
of such duties in any particular situation, the provisions of
this clause (c) are set forth to regulate, define and guide
the conduct of certain affairs of Holdings and the Company as
they may involve Fenway. Except as Fenway may otherwise agree
in writing after the date hereof:
(i) Fenway shall have the right to, and shall have no
duty (contractual or otherwise) not to, directly or
indirectly: (A) engage in the same or similar
business activities or lines of business as Holdings
or the Company, including those competing with
Holdings or the Company, and (B) do business with any
client or customer of Holdings or the Company;
(ii) Neither Fenway nor any officer, director, employee,
partner, affiliate or associated entity thereof shall
be liable to Holdings or the Company or its
affiliates for breach of any duty (contractual or
otherwise) by reason of any such activities of or of
such person's participation therein; and
(iii) In the event that Fenway acquires knowledge of a
potential transaction or matter that may be a
corporate opportunity for Holdings or the Company and
Fenway or any other person, Fenway shall have no duty
(contractual or otherwise) to communicate or present
such corporate opportunity to Holdings or the Company
and, notwithstanding any provision of this Agreement
to the contrary, shall not be liable to Holdings or
the
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Company or any of its affiliates for breach of any
duty (contractual or otherwise) by reason of the fact
that Fenway directly or indirectly pursues or
acquires such opportunity for itself, directs such
opportunity to another person, or does not present
such opportunity to Holdings or the Company.
d. Limitation of Liability. In no event will any party hereto be
liable to the other for any indirect, special, incidental or
consequential damages, including lost profits or savings,
whether or not such damages are foreseeable, or for any third
party claims (whether based in contract, tort or otherwise),
relating to the services to be provided by Fenway hereunder.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by each of the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which together shall constitute one and the same
agreement.
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[Advisory Agreement]
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.
HOLDINGS: XXXXXXX HOLDINGS, INC.
By /s/ Xxxxx X. Xxx
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Title: Chief Executive Officer
The Company: XXXXXXX COMPANY
By /s/ Xxxxx X. Xxx
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Title: Chief Executive Officer
FENWAY: FENWAY PARTNERS, INC.
By /s/ Xxxxxxx X. Xxxxxxxx
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Title: Managing Director
