EXHIBIT 10.12
AMENDED AND RESTATED MANAGEMENT AGREEMENT
This Amended and Restated Management Agreement (this "Agreement") is
entered into as of the 26th day of February 1997 by and among Iron Age
Corporation, a Delaware corporation (the "Company"), Iron Age Holdings
Corporation, a Delaware corporation, ("Holdings") and Fenway Partners, Inc., a
Delaware corporation ("Fenway").
WHEREAS, IAH Acquisition Corp., a company formed by Fenway ("IAH
Acquisition Corp.,") acquired all of the outstanding capital stock of Iron
Age Holdings Corporation ("Old Iron Age Holdings") (such transactions being
referred to herein as the "Acquisition"), all on the terms and subject to
the conditions of that certain Stock Purchase Agreement dated as of
December 26, 1996 among IAH Acquisition Corp., Old Iron Age Holdings, the
stockholders of Old Iron Age Holdings and certain of their respective
affiliates;
WHEREAS, IAH Acquisition Corp. was a wholly-owned subsidiary of IA
Holdings Corp., a Delaware corporation;
WHEREAS, Fenway provided advisory and other services to IAH
Acquisition Corp. in connection with the Acquisition and the senior secured
financing (the "Senior Financing") that was provided for the Acquisition
pursuant to a credit agreement dated February 26, 1997 by Banque Nationale
de Paris, as agent and initial issuing bank and the lending institutions
from time to time party thereto;
WHEREAS, (i) immediately after the consummation of the Acquisition,
IAH Acquisition Corp. merged with and into Old Iron Age Holdings, (ii)
immediately after such merger, Old Iron Age Holdings, as successor by
merger, merged with and into the Company, (iii) the Company executed an
assumption agreement confirming its assumption of, among other things, all
obligations of IAH Acquisition Corp. hereunder and (iv) IA Holdings Corp.
changed its name to "Iron Age Holdings Corporation";
WHEREAS, pursuant to the Assumption Agreement dated as of February 26,
1997, the Company became successor by merger to IAH Acquisition Corp.; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Company and Holdings desire that Fenway provide certain management and
advisory services to the Company and Holdings, 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; PAYMENT OF FEES.
a. Fenway hereby agrees that, during the term of this Agreement (the
"Term"), it will:
(i) provide the Company and Holdings with advice in connection
with the negotiation and consummation of agreements,
contracts, documents and instruments necessary to provide
the Company and Holdings with senior secured financing from
banks or other financial institutions or other entities on
terms and conditions satisfactory to the Company and
Holdings; and
(ii) provide the Company and Holdings with financial, managerial
and operational advice in connection with its day-to-day
operations, including, without limitation:
(1) advice with respect to the investment of funds; and
(2) advice with respect to the development and
implementation of strategies for improving the
operating, marketing and financial performance of the
Company and Holdings.
b. The Company and Holdings hereby agree that, during the Term, the
Company and Holdings will pay to Fenway (or its designee)
management fees in the aggregate as follows (subject to
adjustment as provided below): (i) for the current fiscal year,
two hundred fifty thousand dollars ($250,000); (ii) for next
fiscal year, two hundred fifty thousand dollars ($250,000), (iii)
for the next succeeding fiscal year, two hundred seventy-five
thousand dollars ($275,000), (iv) for the next succeeding fiscal
year, three hundred thousand dollars ($300,000) and (v)
thereafter for the Term of this Agreement, for each subsequent
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 between the Company, Holdings
and Fenway, in each case in exchange for the services provided to
the Company and Holdings by Fenway, as more fully described in
Section 1.a of this Agreement, such fees being payable by the
Company and Holdings quarterly in advance, the first such payment
having been made at or promptly after the closing of the
Acquisition.
c. The Company and Holdings hereby agree that, during the Term, the
Company and Holdings will allow Fenway to participate in the
negotiation and consummation of senior financing for any
acquisition transactions by the Company, Holdings or any of their
direct or indirect subsidiaries, and will pay to Fenway (or an
affiliate of Fenway designated by it) such customary fee as
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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, whether or not any such senior financing is actually
committed or drawn upon.
d. The Company and Holdings hereby agree that, in the event of an
acquisition of another business (whether by stock or asset
purchase, merger or otherwise) wherein the acquired entity or
business has an enterprise value in excess of $50,000,000, the
Company and Holdings thereafter will pay to Fenway such increase
to the management fees payable pursuant to Section 1.b above as
is mutually agreed by the Company, Holdings and Fenway (it being
agreed that the amount of any such increase will be negotiated in
good faith between the Company, Holdings and Fenway).
e. The Company hereby agrees to pay to Fenway (or its designee) a
fee in the amount of two million, seventy thousand dollars
($2,070,000) in connection with the structuring of the
Acquisition and the Senior Financing, together with reimbursement
of Fenway's 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 or, if the Acquisition is not consummated, promptly
after the time the Company has abandoned the Acquisition.
f. Notwithstanding the foregoing provisions of this Section 1, the
Company and Holdings shall not make any payment to Fenway under
Section 1.b or 1.d if at the time of such payment:
(i) any Default or Event of Default (each as defined in any
Indenture) has occurred and is continuing or would result
therefrom; or
(ii) the Consolidated Coverage Ratio (as defined in any
Indenture) does not exceed 1.5 to 1.0;
provided, however, that any such payment which is not made
pursuant to this Section 1.f shall accrue until, and shall be
payable at, such time as the conditions in clauses (i) and (ii)
above have been satisfied. For purposes of this Agreement, the
term "Indenture" means the indenture pursuant to which the
Company has issued or may issue subordinated debt in aggregate
principal amount of $100 million or Holdings has issued or may
issue discount notes with gross proceeds of $25 million in a Rule
144A transaction or registered offering.
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g. Each payment made pursuant to this Section 1 shall be paid by
wire transfer of immediately available federal funds to such
account(s) as Fenway may specify to the Company and Holdings in
writing prior to such payment.
2. 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.a
above; provided, however, that:
a. any party may terminate this Agreement following a material
breach of the terms of this Agreement by another 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 initial Investors (as defined in the
Stockholders Agreement dated as of February 26, 1997 among
Holdings and its initial stockholders) 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 the Company
or Holdings; and
c. each of (i) the obligations of the Company or Holdings under
Section 3 below, (ii) any and all accrued and unpaid obligations
of the Company or Holdings owed under Section 1 above and (iii)
the provisions of Section 6 shall survive any termination of this
Agreement to the maximum extent permitted under applicable law.
3. EXPENSES; INDEMNIFICATION.
a. The Company and Holdings agree to pay on demand all expenses
incurred by Fenway and Fenway Partners Capital Fund, L.P. (the
"Fenway Fund") in connection with this Agreement, the Acquisition
and such other transactions and all operations hereunder or
otherwise incurred in connection with the Acquisition or the
Company or Holdings, including but not limited to:
(i) the fees and disbursements of: (1) Ropes & ▇▇▇▇, special
counsel to Fenway and the Fenway Fund, (2) Ernst & Young,
accountant to Fenway and the Fenway Fund, and (3) any other
consultants or advisors retained by Fenway, the Fenway Fund
or either of the parties identified in clauses (1) and (2)
above 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 thereby (and any
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and all amendments, modifications, restructurings and
waivers, and exercises and preservations of rights and
remedies hereunder or thereunder) and the operations of the
Company, Holdings and any of their 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 the Company, Holdings or any of their
affiliates.
b. The Company and Holdings hereby agree to indemnify, exonerate and
hold each of Fenway, and the Fenway Fund, 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 (including but not
limited to any indemnification obligations assumed or incurred by
any Indemnitee to or on behalf of Seller, or any of its
accountants or other representatives, agents or affiliates)
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, the Company and Holdings hereby
agree 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 the Company, Holdings or any of their affiliates for
any act or omission suffered or taken by such Indemnitee that
does not constitute gross negligence or willful misconduct.
4. 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.
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5. 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, Holdings 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.
6. MISCELLANEOUS.
a. 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. 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 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 8 does not
constitute good and sufficient service of process. The provisions
of this Section 6.b shall not restrict the ability of any party
to enforce
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in any court any judgment obtained in a federal or state court of
the State of New York.
c. 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 6.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.
7. 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.
8. 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 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.
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If to the Company or Holdings, to it at:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
If to Fenway, to it at:
Fenway Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
9. 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 limiting it so as
to be valid and enforceable to the maximum extent consistent with and
possible under applicable law.
10. DISCLAIMER AND LIMITATION OF LIABILITY.
a. Fenway makes no representations or warranties, express or
implied, in respect of the services to be provided by it
hereunder.
b. In no event shall Fenway be liable to the Company, Holdings or
any of their 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. In anticipation that the Company, Holdings and Fenway (or one or
more affiliates, associated investment funds or portfolio
companies, or clients of
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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 the Company and Holdings 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:
(1) engage in the same or similar business activities or
lines of business as the Company or Holdings, including
those competing with the Company or Holdings, and (2) do
business with any client or customer of the Company or
Holdings;
(ii) neither Fenway nor any officer, director, employee,
partner, affiliate or associated entity thereof shall be
liable to the Company, Holdings or their 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 the Company, Holdings and Fenway or any other person,
Fenway shall have no duty (contractual or otherwise) to
communicate or present such corporate opportunity to the
Company or Holdings and, notwithstanding any provision of
this Agreement to the contrary, shall not be liable to the
Company, Holdings or their 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 the Company
or Holdings.
d. 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.
11. 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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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.
IRON AGE CORPORATION
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President, CFO
IRON AGE HOLDINGS CORPORATION
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
FENWAY PARTNERS, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
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