EXHIBIT 11
EXECUTION COPY
MANAGEMENT ADVISORY AGREEMENT
This MANAGEMENT ADVISORY AGREEMENT (the "Agreement") is made
and entered into and effective as of November 13, 2001, between MEMC Electronic
Materials, Inc., a Delaware corporation (the "Company") and TPG GenPar III,
L.P., a Delaware limited partnership (together with its successors and assigns,
"TPG").
1. Retention. The Company hereby acknowledges that it has
retained TPG, and TPG acknowledges that TPG will provide management and
financial advisory services to the Company as requested by the Board of
Directors of the Company during the term of this Agreement.
2. Term. The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof, or (ii) the
date on which TPG Wafer Holdings LLC, a Delaware limited company and its
affiliates, members or successors cease to own beneficially, directly or
indirectly, at least fifteen percent (15%) of the voting power of the securities
of the Company or its successors.
3. Compensation.
(a) As compensation for TPG's services under this
Agreement, the Company shall be obligated to pay to TPG an annual fee (the
"Management Advisory Fee") of $2 million (the "Base Fee") (subject to adjustment
pursuant to paragraph (c) below) and prorated on a daily basis for any partial
calendar year during the term of this Agreement. The Management Advisory Fee
shall be payable in equal quarterly installments on each January 1, April 1,
July 1, and October 1 during the term of this Agreement (each a "Payment Date"),
beginning with the first Payment Date following the date hereof. All payments
shall be made by wire transfer of immediately available funds to such account as
TPG may designate from time to time in writing.
(b) In addition to the Base Fee, as compensation for TPG's
services as financial advisor to the Company with respect to any future
proposals, if any, for a tender offer, acquisition, sale, merger, exchange
offer, recapitalization, restructuring or any debt or equity financing directly
or indirectly involving the Company or any of its subsidiaries, on the one hand,
and any other person or entity, on the other hand, (each such transaction, an
"Add-on Transaction"), the Company shall be obligated to pay to TPG, at the
closing of each such Add-on Transaction, a cash fee in the amount representing a
percentage of the Transaction Value of each such Add-on Transaction (which
percentage shall be agreed by TPG and the Company prior to the closing of each
such Add-on Transaction). As used herein, the term "Transaction Value" means the
total value of the Add-on Transaction, including without limitation, the
aggregate amount of the funds required to complete the Add-on Transaction
(excluding any fees payable pursuant to this Section 3(b)), including the amount
of any indebtedness, preferred stock or similar items assumed (or remaining
outstanding).
(c) All past due payments in respect of the Management
Advisory Fee and any fees received in connection with any Add-on Transactions
shall bear interest at the lesser of the highest rate of interest which may be
charged under applicable law or the prime commercial lending rate per annum
Chase Manhattan Bank or its successors (which rate is a reference rate and is
not necessarily its lowest or best rate of interest actually charged to any
customer) (the "Prime Rate") as in effect from time to time, plus two percent
(2%), from the due date of such payment to and including the date on which
payment is made to TPG in full, including such interest accrued thereon.
(e) Any or all of the fees provided for in this Section 3
may be waived in full or in part by TPG in its sole and absolute discretion.
4. Reimbursement of Expenses. In addition to the compensation
to be paid pursuant to Section 3 hereof, the Company agrees to pay or reimburse
TPG for all "Reimbursable Expenses", which shall consist of all reasonable
disbursement and out-of-pocket expenses (including without limitation, costs of
travel, postage, deliveries and communications and fees and expenses of counsel,
accountants and consultants incurred by TPG or its affiliates for the account of
the Company or in connection with the performance by TPG of the services
contemplated by Section 1 hereof. Promptly (but not more than 10 days) after
request by or notice from TPG, the Company shall pay TPG, by wire transfer of
immediately available funds to an account designated by TPG, the Reimbursable
Expenses for which TPG has provided the Company invoices or reasonably detailed
descriptions. All past due payments in respect of the Reimbursable Expenses
shall bear interest at the lesser of the highest rate of interest which may be
charged under applicable law or the Prime Rate plus 2% from the date which is 10
days following the request or notice from TPG in respect of such Reimbursable
Expenses to and including the date on which such Reimbursable Expenses plus
accrued interest thereon, are fully paid to TPG.
5. Indemnification. The Company shall indemnify and hold
harmless each of TPG, its affiliates and partners, and the respective directors,
officers, controlling persons (within the meaning of Section 15 of the
Securities Act of 1933 or Section 20(a) of the Securities Exchange Act of 1934),
if any, agents and employees of each of TPG, its affiliates and partners (TPG,
its affiliates and shareholders, and such other specified persons being
collectively referred to as "Indemnified Persons", and individually as an
"Indemnified Person") from and against any and all claims, liabilities, losses,
damages and expenses incurred by any Indemnified Person (including those arising
out of an Indemnified Person's negligence and fees and disbursements of the
respective Indemnified Person's counsel) which (A) are related to or arise out
of (i) actions taken or omitted to be taken (including any untrue statements
made or any statements omitted to be made) by the Company or (ii) actions taken
or omitted to be taken by an Indemnified Person with the Company's consent or in
conformity with the Company's instructions or the Company's actions or omissions
or (B) are otherwise related to or arise out of TPG's engagement, and will
reimburse each Indemnified Person for all costs and expenses, including fees and
disbursements of any Indemnified Person's counsel, as they are incurred, in
connection with investigating, preparing for, defending, or appealing any
action, formal or informal claim, investigation, inquiry, or other proceeding,
whether or not in connection with pending or threatened litigation, caused by or
arising out of or in connection with TPG's acting pursuant to the engagement,
whether or not any Indemnified Person is named as a party thereto and whether or
not any liability results therefrom. The Company will not, however, be
responsible for any claims, liabilities, losses, damages, or expenses pursuant
to clause (B) of the preceding sentence that have resulted primarily from TPG's
gross negligence or willful misconduct. The Company also agrees that neither TPG
nor any other Indemnified Person shall have any liability to the Company for or
in connection with such engagement except for any such liability for claims,
liabilities, losses, damages, or expenses incurred by the Company that have
resulted primarily from TPG's gross negligence or willful misconduct. The
Company further agrees that it will not, without the prior written consent of
TPG, settle or compromise or consent to the entry of any judgment in any pending
or threatened claim, action, suit, or proceeding in respect of which
indemnifications may be sought hereunder (whether or not any Indemnified Person
is an actual or potential party to such claim, action, suit, or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of TPG and each other Indemnified Person hereunder from all liability arising
out of such claim, action, suit or proceeding. THE COMPANY HEREBY ACKNOWLEDGES
THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ANY CLAIMS, LIABILITIES,
LOSSES, DAMAGES, OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE
RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT, OR CONCURRENT ORDINARY
NEGLIGENCE OF TPG OR ANY OTHER INDEMNIFIED PERSON.
The foregoing right to indemnity shall be in addition to any
rights that TPG or any other Indemnified Person may have at common law or
otherwise and shall remain in full force and effect following the completion or
any termination of the engagement. The Company hereby consents to personal
jurisdiction and to service and venue in any court in which any claim, which is
subject to this agreement, is brought against TPG or any other Indemnified
Person.
It is understood that, in connection with TPG's engagement,
TPG may also be engaged to act for the Company in one or more additional
capacities, and that the terms of this engagement or any such additional
engagement(s) may be embodied in one or more separate written agreements. This
indemnification shall apply to the engagement specified in the first paragraph
hereof as well as to any such additional engagement(s) (whether written or oral)
and any modification of said engagement or such additional engagement(s) and
shall remain in full force and effect following the completion or termination of
said engagement or such additional engagements.
6. Confidential Information. In connection with the
performance of the services hereunder, TPG agrees not to divulge any
confidential information, secret processes, or trade secrets disclosed by the
Company to it solely in its capacity as a financial advisor, unless the Company
consents to the divulging thereof or such information, secret processes, or
trade secrets are publicly available or otherwise available to TPG without
restriction or breach of any confidentiality agreement or unless required by any
governmental authority or in response to any valid legal process.
7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the State of New York,
excluding any choice-of-law provisions thereof.
8. Assignment. This Agreement and all provisions contained
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned (other than with respect to the rights and obligations of TPG, which
may be assigned to any one or more of its partners or affiliates) by any of the
parties without the prior written consent of the other party.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.
10. Other Understandings. All discussions, understandings, and
agreements theretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the agreement of the parties hereto. All calculations of
the Management Advisory Fee and Reimbursable Expenses shall be made by TPG and,
in the absence of manifest error, shall be final and conclusive. The Company
expressly acknowledges that TPG has been retained solely as an advisor to the
Company, and not as an advisor to or agent of any other person, and that the
Company's engagement of TPG is not intended to confer any rights upon any person
not a party hereto, including shareholders, employees or creditors of the
Company, as against TPG, TPG's affiliates or partners or any of their respective
directors, officers, agents and employees.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date and year first above written.
TPG GENPAR III, L.P.
By: TPG Advisors III, Inc.,
its General Partner
By: /s/ XXXXXXX XXXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
MEMC ELECTRONIC MATERIALS, INC.
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
