EXHIBIT 10.10
FINANCIAL ADVISORY SERVICES AGREEMENT, dated as of February 14,
1997 (the "Agreement") between Windward Capital Partners, L.P., a Delaware
limited partnership (the "Advisor"), and HCC Industries Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H:
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WHEREAS, the Company has entered into the First Amendment and
Restatement of the Stock Purchase and Sale Agreement (the "Purchase Agreement"),
dated as of December 23, 1996, as amended, among Windward Capital Associates,
L.P. ("Windward Associates"), Windward/Merchant, L.P. ("Windward/Merchant"),
Windward/Park HCC, L.L.C. ("Windward/Park"), Windward/Merban, L.P.
("Windward/Merban", and collectively with Windward Associates, Windward/Merchant
and Windward/Park, the "Windward Entities"), HCC Windward L.L.C., Metropolitan
Life Insurance Company ("MetLife"), the Company and each of the stockholders of
the Company set forth on the signature pages thereto (the "Sellers");
WHEREAS, the Company has entered into a Stockholders Agreement,
dated as of the date hereof, among Windward Associates, Windward/Merchant,
Windward/Park, Windward/Merban, the Company, the Sellers and the other
stockholders of the Company listed therein (the "Stockholders Agreement");
WHEREAS, the Company has requested that the Advisor make
available to the Company certain management and financial advisory services
commencing on the date hereof; and
WHEREAS, the Advisor desires to provide such management and
financial advisory services to the Company commencing on the date hereof;
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, it is agreed as follows:
1. Engagement and Duties
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(a) The Company hereby appoints the Advisor as an advisor
to the Company, whereby the Advisor
shall, from time to time, to the extent reasonably requested by the Company,
provide those management and financial advisory services to the Company which
are set forth in Section l(b) hereof. The Advisor hereby accepts such
appointment and agrees to provide each of the services required to be provided
by it under this Agreement and to make itself available from time-to-time, on a
part-time basis, to consult with the management and Board of Directors of the
Company in connection with such services. In addition to the services of its own
personnel, the Advisor shall be permitted, to the extent that it determines in
its sole discretion that it would be advisable or appropriate in order to
perform its services hereunder, to arrange for and coordinate the services of
other professionals, experts and consultants.
(b) Upon the reasonable request of the Board of Directors
of the Company, the Advisor hereby agrees to provide the following services to
the Company and its subsidiaries:
(i) review periodically the business, operations,
financial condition and prospects of the Company and its subsidiaries,
including, without limitation: (A) reviewing the strategic direction and
plans of the Company and its subsidiaries; (B) reviewing and evaluating
the annual business plan and budget of the Company and its subsidiaries;
(C) reviewing and evaluating the sales, profitability and working
capital and other financing requirements of the Company and its
subsidiaries; and (D) reviewing the salary and benefit levels of the
senior management of the Company and its subsidiaries and reviewing and
evaluating the performance of the senior management of the Company and
its subsidiaries;
(ii) assist the Company in the planning, structuring
and negotiation of each potential acquisition by the Company of another
business operating within the Company's industry or any related
industry;
(iii) assist the Company in seeking out and
negotiating with potential financing sources in connection with the
financing of any transaction referred to in clause (ii) above;
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(iv) provide to the Company such other management
and financial advisory services as may be reasonably requested by the
Board of Directors of the Company; and
(v) assist the Company and its subsidiaries
regarding any claims for indemnification on behalf of the Company or its
subsidiaries pursuant to the Purchase Agreement.
2. Nature of Relationship. Notwithstanding the services
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provided by the Advisor, the Advisor shall be deemed to be an independent
contractor and, unless otherwise expressly authorized by the Company's Board of
Directors, shall not be authorized to manage the affairs of, act in the name of,
or bind the Company. The Company shall not be obligated to follow or accept any
advice or recommendation made by the Advisor, and the management, policies and
operations of the Company shall be the sole responsibility of the Board of
Directors and the management of the Company. The obligations of the Advisor to
the Company are not exclusive, and the Advisor may, in its sole discretion,
render the same or similar services to any other person or entity. Nothing set
forth in this Agreement shall be deemed to prohibit the Advisor from serving any
other person or entity in any capacity the Advisor may deem appropriate or from
conducting its business and affairs in any manner it may elect, whether or not
such activities might involve an actual or potential conflict of interest vis-a-
vis the Company or any of its subsidiaries (other than with respect to a direct
competitor who manufactures glass-to-metal seals).
3. Term. Subject to the termination provisions of Section 6
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hereof, the initial term of this Agreement shall commence on the date hereof and
continue for a period of three (3) years following the date hereof;
thereafter, the term of this Agreement shall be extended automatically for
successive one-year periods unless the Board of Directors of the Company or the
Advisor shall give written notice to the other party at least six (6) months
prior to the end of the initial three-year term or prior to the end of any
one-year extended period then in effect (as the case may be).
4. Compensation and Expenses.
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(a) In consideration of the services to be provided by the
Advisor to the Company, the Company shall pay the Advisor an annual management
fee of $125,000 (the "Management Fee"), payable in semi-annual installments of
$62,500 each on February 14 and August 14 of each year. Such semi-annual
installments shall be paid at the beginning of each such semi-annual period with
the first such semi-annual installment paid on the date hereof. The Company
shall also pay or reimburse the Advisor for all Expenses (as defined below) in
accordance with Section 4(b) below. Notwithstanding the foregoing, the payment
of such semi-annual installments of the Management Fee shall be subject to any
reasonable restrictions set forth in the Credit Agreement (as defined in the
Purchase Agreement) as in effect on the date hereof. Upon any termination of
this Agreement, the Management Fee payable with respect to the then-current
semi-annual period shall be prorated to reflect the actual number of days during
which this Agreement was in effect; provided that no proration shall be made by
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the Company if the Company elects to terminate this Agreement as provided under
Section 6(a) or if this Agreement is terminated as the result of the operation
of Section 6(b) and the Advisor shall be entitled to the full Management Fee for
such semi-annual period.
(b) The term "Expenses" shall mean all fees, costs and
expenses reasonably incurred by the Advisor in connection with its provision of
services hereunder, including, without limitation: (i) all fees and expenses of
legal counsel, accountants and other consultants and experts retained by the
Advisor in connection with its provision of services hereunder, (ii) all travel
and other out-of-pocket costs and expenses incurred by the Advisor in connection
herewith, and (iii) all Losses that are the subject of indemnification pursuant
to this Agreement. The Company shall reimburse the Advisor promptly for all
Expenses upon the Advisor's presentation of invoices or other documents
reasonably evidencing such Expenses.
5. Indemnification, Etc.
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(a) The Company shall, to the fullest extent permitted by
law, indemnify the Advisor and each officer, director, employee, partner,
Affiliate (as defined in the Purchase Agreement), agent and representative
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of the Advisor (collectively, the "Indemnitees") against, and the Company
will hold harmless and will release each Indemnitee from, any and all Losses (as
defined below), including any incurred in connection with any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or commission, whether pending or threatened, whether or not any Indemnitee
is or may be a party thereto, which arise out of, relate to or are in connection
with the provision of any services hereunder or otherwise relate to this
Agreement or the management or conduct of the business or affairs of the Company
or any of its subsidiaries, except for any Losses that are found by a court of
competent jurisdiction to have resulted primarily from the gross negligence or
willful misconduct of the Indemnitee seeking indemnification. The term "Losses"
shall mean all losses, claims, damages or liabilities of each Indemnitee, joint
or several, and all judgments, fines, penalties, interest and charges, and all
costs and expenses incurred in connection with the investigation, defense or
settlement of any pending or threatened claims (including, without limitation,
attorneys' fees and expenses related thereto).
(b) The termination of any proceeding by settlement shall
not, of itself, create a presumption that the Indemnitee acted in a manner which
constituted gross negligence, willful misconduct or a knowing violation of law.
The right of any Indemnitee to the indemnification provided herein shall be
cumulative of, and in addition to, any and all rights to which such Indemnitee
may otherwise be entitled by contract or as a matter of law or equity and shall
extend to his heirs, successors, assigns and legal representatives.
(c) Promptly after receipt by an Indemnitee hereunder of
written notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Section 5, such
Indemnitee will, if a claim in respect thereof is to be made against the
Company, promptly give written notice to the Company of the commencement of such
action; provided that the failure of any Indemnitee to give notice as provided
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herein shall not relieve the Company of its obligations under this Section 5,
except to the extent that the Company is actually and materially prejudiced
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by such failure to give notice. In case any such action is brought against
an Indemnitee, unless in such Indemnitee's reasonable judgment a conflict of
interest between such Indemnitee and the Company may exist in respect of such
claim, the Company will be entitled to participate in and to assume the defense
thereof, to the extent that it may wish, with counsel reasonably satisfactory to
such Indemnitee, and after notice from the Company of its election so to assume
the defense thereof, the Company will not be liable to such Indemnitee for any
legal or other expenses subsequently incurred by the Indemnitee in connection
with the defense thereof, unless in such Indemnitee's reasonable judgment a
conflict of interest between the Indemnitee and the Company arises in respect of
such claim after the assumption of the defense thereof (in which case, the
Company shall not assume the defense thereof, but shall be responsible for the
fees and expenses of one counsel in each jurisdiction for all parties
indemnified by the Company, subject to the same exception as is set forth in the
last sentence of this subsection (c)), and the Company will not be subject to
any liability for any settlement made without its consent (which consent shall
not be unreasonably withheld). The Company will not consent to entry of any
judgment or enter into any settlement (i) which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such claim or
litigation, and (ii) that imposes any obligation on an Indemnitee (except any
obligation to make payments which the Company shall, and promptly does, pay). If
the Company elects not to assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by the Company with respect to such claim, unless in the reasonable
judgment of any Indemnitee a conflict of interest may exist between such
Indemnitee and any other of such Indemnitees with respect to such claim, in
which event the Company shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) Notwithstanding any termination of this Agreement
pursuant to Section 6, the expiration of the term hereof pursuant to Section 2
or otherwise, the indemnification provided under this Agreement shall remain in
full force and effect thereafter.
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(e) No Indemnitee shall be liable to the Company or its
subsidiaries for any error of judgment or mistake of law or for any loss
incurred by the Company or its subsidiaries or any of their respective
Affiliates in connection with the matters to which this Agreement relates,
except for any damages that are found by a court of competent jurisdiction to
have resulted primarily from the gross negligence or willful misconduct of the
Indemnitee seeking indemnification. In no event shall the Advisor or any
Indemnitee be liable for any indirect, special or consequential damages arising
out of or in connection with this Agreement. The Advisor and the Indemnitees may
consult with legal counsel, accountants and other consultants and experts in
respect of the affairs of the Company and its subsidiaries and shall be fully
protected and justified in acting, or failing to act, in a manner consistent
with the advice or opinion of such legal counsel, accountants and other
consultants and experts.
6. Termination. Notwithstanding anything to the contrary
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contained in this Agreement, (a) this Agreement may be terminated by either the
Advisor or the Company upon at least six (6) months prior written notice to the
other party, and (b) this Agreement shall terminate automatically without any
action on the part of either party hereto upon (i) the consummation of an IPO
Event or a Compelled Sale (such terms, as defined in the Stockholders
Agreement), (ii) Windward Entities no longer control at least 25% of the
outstanding Common Stock (as defined in the Purchase Agreement) or (iii) any
termination of the Stockholders Agreement in accordance with the terms
thereof.
7. Notices. Any notice, request, demand, waiver, consent,
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approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given only if delivered personally to the
address set forth below (to the attention of the person identified below) or
sent by telefax, telegram or by registered or certified mail, postage prepaid,
return receipt requested as follows:
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If to the Company:
HCC Industries Inc.
0000 Xxxxxx Xxxx Xxxx.
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to the Advisor:
Windward Capital Partners, L.P.
Eleven Madison Avenue, 28th floor
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or to such other address as the addressee may have specified in a notice duly
given to the sender and to counsel as provided herein. Any notice, request,
demand, waiver, consent, approval or other communication given (a) personally
shall be effective when delivered, (b) by mail or telegram shall be effective
when received and (c) by telecopy shall be effective when the appropriate
telecopy answer back or confirmation is received.
8. Entire Agreement. This Agreement constitutes the entire
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agreement among the parties with respect to the subject matter hereof. It
supersedes any prior agreement or understanding among them, and it may not be
modified or amended in any manner other than by an instrument in writing signed
by both parties hereto, or their respective successors or assigns, or otherwise
as provided herein.
9. Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
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INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF.
10. Successors and Assigns. Except as herein otherwise
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specifically provided, this Agreement shall be binding upon and inure to the
benefit of the parties and their legal representatives, heirs, administrators,
executors, successors and assigns.
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11. Force Majeure. If the performance by the Advisor of any of
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its services hereunder is prevented, restricted or interfered with in whole or
in part by reason of any event or cause whatsoever beyond the reasonable
control of the Advisor, then in any such event, the Advisor shall be excused
from such performance to the extent of such prevention, restriction or
interference, and the Management Fee payable hereunder shall be reduced
proportionately.
12. Captions. Captions contained in this Agreement are inserted
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only as a matter of convenience and in no way define, limit or extend the scope
or intent of this Agreement or any provision hereof.
13. Severability. If any provision of this Agreement, or the
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application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
14. Waivers. No provision of this Agreement shall be deemed to
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have been waived unless such waiver is contained in a written notice given to
the party claiming such waiver, and no such waiver shall be deemed to be a
waiver of any other or further obligation or liability of the party or parties
in whose favor the waiver was given.
15. Counterparts. This Agreement may be executed in
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counterparts, each of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
WINDWARD CAPITAL PARTNERS, L.P.
By: Windward Management, Inc.,
its general partner
By:_________________________________
Name:
Title:
HCC INDUSTRIES INC.
By:_________________________________
Name:
Title:
