Exhibit 10.10
ADVISORY SERVICES AGREEMENT
THIS ADVISORY SERVICES AGREEMENT (this "Agreement") is entered into as
of June 26, 1998, by and between DMAC ACQUISITION CORP., a Delaware corporation
(the "Company") and MDC MANAGEMENT COMPANY IV, LLC, a California limited
liability company ("MDC").
A. Contemporaneously with the execution of this Agreement, certain
affiliates of MDC will acquire general control of the Company.
B. Execution and delivery of this agreement is a condition precedent
to consummation of the foregoing described transactions.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereinafter set forth, MDC and the Company hereto agree as follows:
1. Retention as Advisor. Subject to each of the terms, conditions
and provisions of this Agreement, the Company hereby retains MDC to perform,
and MDC hereby agrees to perform, those financial, advisory and managerial
functions set forth in Section 4 of this Agreement.
2. Term.
2.1. Subject to the provisions for termination set forth herein,
this Agreement shall be effective as of the date hereof and expire on the
fifth anniversary of the date hereof; provided, however, that this Agreement
shall be renewable automatically annually for one-year terms unless MDC
receives notice of the termination prior to the renewal date.
2.2. The Company, by written notice to MDC, authorized by a
majority of the directors other than those who are representatives of MDC,
may terminate this Agreement for justifiable cause, which shall mean any of
the following events: (i) material breach by MDC of any of its obligations
hereunder; (ii) misappropriation by MDC of funds or property of the Company
or other willful breach in the course of the consultantcy; or (iii) gross
neglect by MDC in the fulfillment of its obligations hereunder.
2.3. MDC, by thirty (30) days prior written notice to the Company,
may terminate this Agreement at any time.
3. Change of Control Payment. Notwithstanding any other provision
herein, upon the occurrence of a Change of Control (as such term is
hereinafter defined), this Agreement shall terminate and all amounts, which
but for such termination would otherwise have become due and payable to MDC
during the remaining term of this Agreement (in the case of the annual fee
under Section 4.2, based upon the annual fee than in existence) shall become
due and
payable by the Company on the effective date of such termination. For purposes
of this Section, a "Change of Control" shall be defined as (i) a stock sale,
merger, consolidation, combination, reorganization or other transaction
resulting in more than fifty percent (50%) of the combined voting power of the
surviving or resulting entity being owned, directly or indirectly by persons
other than the stockholders of the Company immediately prior to any such
transaction (other than in connection with a public offering of common stock of
the Company pursuant to a registration statement declared effective under the
Securities Act), or (ii) the liquidation or dissolution of the Company or the
sale or other disposition of all or substantially all of the assets or business
of the Company
4. Compensation.
4.1. For services rendered in connection with the acquisition of
the Company, the Company shall pay to MDC a transaction fee equal to
$9,900,000, payable upon the execution and delivery of this Agreement.
4.2. As compensation to MDC for its management and advisory
services to the Company under this Agreement, the Company agrees to pay to
MDC an annual fee equal to the greater of (i) $550,000 per annum and (ii)
1.06% of the pro forma EBITDA of the Company for the immediately preceding
fiscal year (such EBITDA to be calculated without any deduction in respect of
the annual fee payable to MDC in respect of such fiscal year); it being
understood that prior to the fiscal year commencing January 1, 1999 the
annual fee payable to MDC pursuant to this Agreement shall be $550,000
multiplied by a fraction, the numerator of which shall be the number of days
in the period beginning on the date hereof and ending on and including
December 31, 1998, and the denominator of which shall be 360. From and after
January 1, 1999, such fee shall be recalculated at the beginning of each
fiscal year of the Company in accordance with the immediately preceding
sentence; provided that in no event shall the annual fee exceed $1,000,000 in
any year. Such fee shall be payable in advance (a) on the date hereof for the
period from the date hereof through September 30, 1998, and (b) thereafter in
quarterly installments, on or before the first day of January, April, July
and October, which payment shall be prorated for the actual number of days in
such fiscal quarter that this Agreement is in effect.
4.3. From time to time, the Company may request MDC to provide
significant additional services, such as in connection with a major
acquisition, debt restructuring or an initial public offering. MDC will be
entitled to receive additional compensation for such services. The Company
and MDC agree to negotiate in good faith concerning the scope and
compensation for such additional services, based upon compensation
customarily received by independent investment banking firms for providing
similar assistance. Any agreement regarding additional compensation shall be
in writing and signed by MDC and the Company.
4.4. The Company agrees to pay actual and direct out-of-pocket
expenses (including, but not limited to, reasonable fees and disbursements of
attorneys, accountants and other professionals and consultants retained by
MDC in connection with the services provided hereunder) incurred by MDC and
its personnel in performing services hereunder to the Company and its
subsidiaries which shall be reimbursed to it by the Company upon MDC's
rendering of an
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invoice statement therefor together with such supporting data as the Company
reasonably shall require.
4.5. Notwithstanding any other provision of this Section, the
Company shall not be required to pay any of the foregoing fees, or make the
foregoing reimbursements, if and to the extent such is payment expressly
prohibited by the provisions of any credit, stock, financing or other
agreements or instruments binding upon the Company, its subsidiaries or their
properties; provided, however, that if, as a result of the operation of such
prohibitions, nonpayments or postponements, payments otherwise owed hereunder
are not made, such payments shall not be canceled but rather shall accrue,
and shall be payable by the Company promptly when, and to the extent, that
the Company is no longer prohibited from making such payments.
5. Duties as Advisor.
MDC's duties as a financial and management advisor to the Company
under the provisions of this Agreement shall include providing services in
obtaining equity, debt, lease and acquisition financing, as well as providing
other financial, advisory and consulting services for the operation and growth
of the Company at any time during the term of this Agreement (the "Services").
Such Services shall be rendered upon the reasonable request of the Company. MDC
shall devote as much time as reasonably necessary to the affairs of the Company.
6. Decisions.
The Company reserves the right to make all decisions with regard to
any matter upon which MDC has rendered its advice and consultation, and there
shall be no liability to MDC for any such advice accepted by the Company
pursuant to the provisions of this Agreement.
7. Authority of Advisor.
MDC shall have authority only to act as a consultant and advisor to
the Company. MDC shall have no authority to enter into any agreement or to make
any representation, commitment or warranty binding upon the Company or to obtain
or incur any right, obligation or liability on behalf of the Company. Nothing
contained herein shall be interpreted as restricting, modifying or waiving the
rights, privileges or obligations of MDC or any of its affiliates as a
shareholder, director or officer of the Company.
8. Independent Contractor.
Except as may be expressly provided elsewhere in this Agreement, MDC
shall act as an independent contractor and shall have complete charge of its
personnel engaged in the performance of the Services.
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9. Books and Records.
MDC's books and records with respect to the Services ("Books and
Records") shall be kept at MDC's office located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Books and Records shall be kept
in accordance with recognized accounting principles and practices, consistently
applied, and shall be made available for the Company or the Company's
representatives' inspection and copying at all times during regular office
hours. MDC shall not be required to maintain the Books and Records for more than
three (3) years after termination of this Agreement.
10. Confidential Information.
The parties acknowledge that during the course of provision of the
Services, the Company may disclose information to MDC or its affiliated
companies. MDC shall treat such information as the Company's confidential
property and safeguard and keep secret all such information about the Company,
including reports and records, customer lists, trade lists, trade practices, and
prices pertaining to the Company's business coming to the attention or knowledge
of MDC because of any activities conducted by MDC under or pursuant to this
Agreement; provided, however, that nothing contained herein shall be construed
as prohibiting MDC from disclosing information regarding the Company to its
investors and other affiliates as MDC may deem necessary, advisable or
convenient.
11. Notices and Communications.
11.1. All communications relating to the day-to-day activities
necessary to render the Services shall be exchanged between the respective
representatives of the Company and MDC, who will be designated by the parties
promptly upon commencement of the Services.
11.2. All other notices, demands, and communications required or
permitted hereunder shall be in writing and shall be delivered personally to
the respective representatives of the Company and MDC set forth below or
shall be mailed by registered mail, postage prepaid, return receipt
requested. Notices, demands and communications hereunder shall be effective:
(i) if delivered personally, on delivery; or (ii) if mailed, forty-eight (48)
hours after deposit thereof in the United States mail addressed to the party
to whom such notice, demand, or communication is given. Until changed by
written notice, all such notices, demands and communications shall be
addressed as follows:
If to the Company: DMAC Acquisition Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
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If to MDC: ▇▇▇▇▇▇ De Leeuw & Co.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
and
▇▇▇▇▇▇ De Leeuw & Co.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
With copies to: White & Case
1155 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
12. Assignments.
MDC shall not assign this Agreement in whole or in part without the
prior written consent of the Company; provided, however, that such consent shall
not be unreasonably withheld with respect to assignments to MDC's affiliates or
wholly-owned subsidiaries.
Subject to the foregoing, all the terms and conditions contained
herein shall inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, personal representatives, successors and
assigns.
13. Limitation of Liability; Indemnity.
MDC shall have no liability to the Company on account of any advice
which it rendered to the Company provided MDC believed in good faith that such
advice was useful or beneficial to the Company at the time it was rendered. The
Company will indemnify and hold harmless MDC and its affiliates, and each of
their respective directors, officers, partners, principals, employees, agents
and representatives, from and against any actual or threatened claims, lawsuits,
actions or liabilities (including the fees and expenses of counsel and other
litigation costs) of any kind or nature, arising as a result of or in connection
with this Agreement and their services, activities and decisions hereunder,
except that the Company will not be obligated to so indemnify any indemnified
party if, and to the extent that, such claims, lawsuits, actions or liabilities
against such indemnified party directly result from the gross negligence or
willful misconduct of such indemnified party as admitted in any settlement by
such indemnified party or held in any final, non-appealable judicial or
administrative decision. In connection with such indemnification, the Company
will promptly remit or pay to MDC any amounts which
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MDC certifies to the Company in writing are payable to MDC or other indemnified
parties hereunder.
14. Applicable Law and Severability.
This document shall, in all respects, be governed by the laws of the
State of California applicable to agreements executed and to be wholly performed
within the State of California. Nothing contained herein shall be construed so
as to require the commission of any act contrary to law, and wherever there is
any conflict between any provisions contained herein and any contrary present or
future statute, law, ordinance or regulation, the latter shall prevail, but the
provision of this document which is affected shall be curtailed and limited only
to the extent necessary to bring it within the requirements of the law.
15. Further Assurances.
Each of the parties hereto shall execute and deliver any and all
additional papers, documents and other assurances, and shall do any and all acts
and things reasonably necessary in connection with the performance of their
obligations hereunder and to carry out the intent of the parties hereto.
16. Attorneys' Fees and Costs.
The prevailing party in any proceeding brought to enforce or interpret
any provision of this Agreement shall be entitled to recover its reasonable
attorneys' fees, costs and disbursements incurred in connection with such
proceeding, including but not limited to the reasonable costs of experts,
accountants and consultants and all other reasonable costs and services related
to the proceeding, including those incurred in any appeal, jointly and
severally, from the nonprevailing party or parties.
17. Time of the Essence.
Time is of the essence of this Agreement and all the terms,
provisions, covenants and conditions hereof.
18. Captions.
The captions appearing at the commencement of the Sections hereof are
descriptive only and for convenience and reference. Should there be any
conflicts between any such caption and the Section at the head of which it
appears, the Section and not such caption shall control and govern in the
construction of this document.
19. Modifications or Amendments.
No amendment, change or modification of this document shall be valid
unless it is in writing and signed by all the parties hereto and expressly
states that it is an amendment, change or modification of this Agreement is
intended.
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20. Separate Counterparts.
This document may be executed in one or more separate counterparts,
each of which, when so executed, shall be deemed to be an original. Such
counterparts shall, together, constitute and be one and the same.
21. Entire Agreement.
This Agreement shall constitute the entire understanding and agreement
between the parties hereto and shall supersede the Amended and Restated Advisory
Services Agreement, dated as of June 28, 1996 by and between AmeriComm Direct
Marketing, Inc. (formerly National Fiberstok Corporation), MDC Management
Company II, L.P. and MDC Management Company, and any and all letters of intent,
whether written or oral, pertaining to the subject matter of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers on the date first appearing above.
DMAC ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇▇
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Name: ▇▇▇▇▇ ▇▇
Title: Assistant Secretary
MDC MANAGEMENT COMPANY IV,
LLC, a California limited liability company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:Member
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