ADVISORY AGREEMENT, dated as of
December 23, 1998 (this "Agreement"),
---------
between BUILDING ONE SERVICES CORPORATION,
a Delaware corporation (the "Company"),
-------
and APOLLO MANAGEMENT, L.P., a Delaware
limited partnership ("Apollo").
------
The Company and an affiliate of Apollo have entered into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement").
----------------
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Merger Agreement.
The Company desires to avail itself of Apollo's expertise from and after
the Effective Time and consequently has requested Apollo to make such expertise
available from time to time in rendering certain management consulting and
advisory services related to the business and affairs of the Company and its
Subsidiaries and the review and analysis of certain financial and other
transactions. Apollo and the Company agree that it is in their respective best
interests to enter into this Agreement whereby, for the consideration specified
herein, Apollo shall provide such services as independent consultant to the
Company and its Subsidiaries.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the Company and Apollo agree as follows:
SECTION 1. RETENTION OF APOLLO.
-------------------
The Company hereby retains Apollo and Apollo accepts such retention, upon
the terms and conditions set forth in this Agreement.
SECTION 2. TERM.
----
This Agreement shall commence at the Effective Time and, unless earlier
terminated pursuant to the final sentence of this Section 2 or extended by
mutual consent of the parties, shall terminate on December 31, 2003 (the
"Term"). Notwithstanding the foregoing, the Company may terminate this Agreement
----
concurrently with any sale of the Company as a going concern to an unaffiliated
third party (whether by merger, sale of substantially all of its assets or
otherwise), if after such transaction none of Apollo, any affiliate of Apollo,
any limited or general partner of Apollo or any of their respective Affiliates
owns, directly or indirectly, individually or in the aggregate, more than five
percent of the equity interest in the Company.
SECTION 3. MANAGEMENT CONSULTING SERVICES.
------------------------------
(a) Apollo shall advise the Company concerning matters that relate to
mergers and acquisitions, as the Company shall reasonably and specifically
request by way of written notice to Apollo, which notice shall specify the
services required of Apollo and shall include all background material necessary
for Apollo to complete such services. Apollo shall devote such time to any such
written request as Apollo shall deem, in its discretion, necessary.
Such consulting services, in Apollo's discretion, shall be rendered in person or
by telephone or other communication. Apollo shall have no obligation to the
Company or any Subsidiary as to the manner and time of rendering its services
hereunder, and neither the Company nor any Subsidiary shall have any right to
dictate or direct the details of the services rendered hereunder.
(b) The Company acknowledges and agrees that Apollo has structured
the Merger and the financing and other transactions contemplated by the Merger
Agreement. Apollo agrees to use its commercially reasonable efforts to arrange
for the debt and equity financing in connection with the Merger and to continue
to provide services to the Company in connection with the consummation of the
transactions contemplated by the Merger Agreement.
(c) Apollo shall perform all services to be provided hereunder as an
independent contractor to the Company and its Subsidiaries and not as an
employee, agent or representative of the Company or any Subsidiary. Apollo shall
have no authority to act for or to bind the Company or its Subsidiaries, without
the prior written consent of the Company.
(d) This Agreement shall in no way prohibit Apollo or any of its
partners or Affiliates or any director, officer, partner or employee of Apollo
or any of its partners or Affiliates from engaging in other activities, whether
or not competitive with any business of the Company or any Subsidiary.
SECTION 4. COMPENSATION.
------------
(a) As consideration for Apollo's agreement to render the services
set forth in Section 3(a) of this Agreement and as compensation for any such
services rendered by Apollo prior to the date hereof, the Company shall pay to
Apollo an annual fee of $1,000,000, payable in equal quarterly installments of
$250,000 each on the first day of each fiscal quarter (or, if such date is not a
business day, on the next business day thereafter).
(b) As consideration for services rendered and Apollo's agreement to
render services as set forth in Section 3(b), the Company shall pay to Apollo a
fee of $6,000,000, which shall be payable at the Effective Time.
(c) Upon presentation by Apollo to the Company of such documentation
as may be reasonably requested by the Company, the Company shall reimburse
Apollo for all out-of-pocket expenses, including, without limitation, legal fees
and expenses, and other disbursements incurred by Apollo, its Affiliates or any
of its Affiliates' directors, officers, employees or agents in the performance
of Apollo's obligations hereunder, whether incurred on or prior to the date
hereof, including, without limitation, out-of-pocket expenses incurred in
connection with the transactions contemplated by the Merger Agreement.
(d) Nothing in this Agreement shall have the effect of prohibiting
Apollo or any of its Affiliates from receiving from the Company or any of its
Subsidiaries any other fees.
(e) Any portion of the fees payable to Apollo under this Agreement
which the Company is prohibited from paying pursuant to the agreements relating
to the
Indebtedness incurred in connection with the consummation of the Merger (the
"Credit Documents") shall be deferred, shall accrue and shall be payable at the
----------------
earliest time permitted under the Credit Documents or upon the payment in full
of all obligations thereunder. The Company shall notify Apollo if the Company
shall be unable to pay any fees pursuant to the Credit Documents on each date on
which the Company would otherwise make a payment of fees under this Agreement to
Apollo.
SECTION 5. INDEMNIFICATION.
---------------
The Company agrees that it shall indemnify and hold harmless Apollo, its
Affiliates and its Affiliates' directors, officers, employees and agents
(collectively, the "Indemnified Persons") on demand from and against any and all
-------------------
liabilities, costs, expenses and disbursements (collectively, "Claims") of any
------
kind with respect to or arising from this Agreement or the performance by any
Indemnified Person of any services in connection herewith.
SECTION 6. NOTICES.
-------
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed sufficient if personally delivered, sent by
nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed, if to
the Company, at the address set forth in the Merger Agreement and, if to Apollo,
as follows:
Apollo Management, L.P.
1301 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx Xxxxxx
Telecopier: (000) 000-0000;
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of nationally-
recognized overnight courier, on the next business day after the date when sent,
(c) in the case of telecopy transmission, when received, and (d) in the case of
mailing, on the third business day following that on which the piece of mail
containing such communication is posted.
SECTION 7. BENEFITS OF AGREEMENT.
---------------------
This Agreement shall bind and inure to the benefit of Apollo, the Company,
the Indemnified Persons and any successors to or assigns of Apollo and the
Company; provided, however, that this Agreement may not be assigned by either
-----------------
party hereto without the prior written consent of the other party, which consent
will not be unreasonably withheld in the case of any assignment by Apollo.
SECTION 8. GOVERNING LAW.
-------------
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York (without giving effect to
principles of conflicts of laws).
SECTION 9. HEADINGS.
--------
Section headings are used for convenience only and shall in no way affect
the construction of this Agreement.
SECTION 10. ENTIRE AGREEMENT; AMENDMENTS.
----------------------------
This Agreement contains the entire understanding of the parties with
respect to its subject matter, and neither it nor any part of it may in any way
be altered, amended, extended, waived, discharged or terminated except by a
written agreement signed by each of the parties hereto.
SECTION 11. COUNTERPARTS.
------------
This Agreement may be executed in counterparts, and each such counterpart
shall be deemed to be an original instrument, but all such counterparts together
shall constitute but one agreement.
SECTION 12. WAIVERS.
-------
Any party to this Agreement may, by written notice to the other party,
waive any provision of this Agreement. The waiver by any party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
SECTION 13. AFFILIATES.
----------
For purposes of this Agreement, the term "Affiliate," with respect to
Apollo, shall include, without limitation, any fund that is an investor in the
Investor (collectively, the "Funds"), the general partner of Apollo, the general
-----
partner of each of the Funds and each person controlling, controlled by or under
common control with any of the foregoing persons.
IN WITNESS WHEREOF, the parties have duly executed this Advisory Agreement
as of the date first above written.
BUILDING ONE SERVICES CORPORATION
By:
-------------------------------------
Name:
Title:
APOLLO MANAGEMENT, L.P.
By:
By:
-------------------------------------
Name:
Title:
