Execution Copy
ADVISORY FEE AGREEMENT
This Advisory Fee Agreement is made as of December 26, 2003 by and between
PHIBRO ANIMAL HEALTH CORPORATION (formerly known as Philipp Brothers Chemicals,
Inc.), a New York corporation ("Phibro"), and PRINCE MINERAL COMPANY, INC., a
Delaware corporation ("Acquisition Company").
WHEREAS, Acquisition Company desires to avail itself, for the term of this
Agreement, of the expertise of Phibro; and
WHEREAS, Phibro is willing to provide the Services to Acquisition Company
as herein set forth.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth and other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto covenant and
agree as follows:
ss.1. Services. (a) During the term of this Agreement, upon written
request of Acquisition Company, Phibro shall render to Acquisition Company, by
and through itself, its affiliates and their respective officers, employees and
representatives the services described on Schedule 1 attached hereto
(collectively, the "Services").
(b) Upon request of Acquisition Company, Phibro will provide up to 90
hours of Services per calendar quarter during the first Contract Year, up to 40
hours of Services per calendar quarter during the second Contract Year and up to
20 hours of Services per calendar quarter during the third Contract Year. Except
as set forth below, if during any calendar quarter Acquisition Company requests
Services that do not exceed the applicable hourly limits for such calendar
quarter and Phibro for any reason is unable to provide such Services, the number
of hours of such requested Services that were not provided during such calendar
quarter shall be carried forward and shall increase the hourly limits for the
immediately succeeding calendar quarter. The parties acknowledge and agree that
value of the Services to be provide hereunder exceed the hourly rate for the
Services determined pursuant hereto, and therefore Acquisition Company's sole
remedy with respect to any requested Services that are not provided in
accordance with the terms of this Agreement shall be the right to seek specific
performance of such Services. If the number of hours of Services that are
requested by Acquisition Company during any calendar quarter is less than the
hourly limit for Services during such calendar quarter, Acquisition Company
shall have no right to such unused and unrequested hours of Services in any
future calendar quarter. Phibro will not be required to provide any amount of
Services in excess of the hourly limits described above during any calendar
quarter. If at any time Phibro believes that Acquisition Company is requesting
Services that are or will be in excess of the applicable hourly limits, Phibro
shall promptly notify Acquisition Company of such event and of the time when
such limits will be met. The Additional Fees provided for hereunder shall
commence for Services after such time. Within 20 days following the end of each
calendar month, Acquisition Company shall provide Phibro with a statement
indicating its calculation of the number of hours of Services provided under
this Agreement during such month. Notwithstanding the foregoing, within two (2)
business days following the end of any calendar quarter in which Acquisition
Company requests Services that do not exceed the applicable hourly limits for
such calendar quarter and Phibro for any reason is
unable to provide such Services, Acquisition Company shall provide Phibro with
written notice of the number hours of such requested Services that were not
provided; provided, however, if Acquisition Company shall fail to provide such
notice within such time period, the number of hours of such requested Services
that were not provided during such calendar quarter shall not be carried forward
and shall not increase the hourly limits for the immediately succeeding calendar
quarter. Acquisition Company acknowledges that Phibro may provide Services
hereunder during such times and using such means of communications as are
convenient for the individuals designated by Phibro to provide these Services,
and shall in any event not be required to provide services outside of normal
business hours. If Acquisition Company requires Services in excess of the hourly
limits described above for any calendar quarter (the "Additional Requested
Services"), Phibro shall be entitled to additional compensation (the "Additional
Fees") for such Services at an hourly rate of $2,700 per hour.
(c) Phibro shall not have any liability to Acquisition Company for or in
connection with the Services provided by Phibro pursuant to this Agreement,
except for any such liabilities arising out of the willful misconduct or gross
negligence of Phibro.
ss.2. Advisory Fees. (a) In consideration of the Services within the
hourly limits contemplated by Section 1, Acquisition Company shall pay the
following fees to Phibro (the "Advisory Fees") for each Contract Year (as
defined below): (i) $1,000,000 for the first Contract Year; (ii) $500,000 for
the second Contract Year; and (iii) $200,000 for the third Contract Year. The
Advisory Fees set forth in this paragraph (a) for each Contract Year shall be
payable to Phibro in arrears in quarterly installments in the amounts and on the
dates set forth on Exhibit A attached hereto.
(b) In consideration of the Additional Requested Services, Acquisition
Company shall pay the Additional Fees to Phibro within 30 days following the end
of the calendar quarter in which the applicable Services are rendered.
(c) Acquisition Company shall pay to Phibro interest at the rate of two
percent (2.0%) over the "base rate" as announced by Citibank N.A. (determined
and calculated on a daily basis) or the maximum permitted by law, whichever is
less, on all overdue amounts of any installment payment from the due date of
such installment until the installment is paid in full. Such interest shall be
due and payable upon demand.
(d) Acquisition Company's payment obligations under this Agreement are
absolute and unconditional and shall not be subject to any diminution by
set-off, abatement, counterclaim, withholding, deduction or otherwise, whether
in connection with or arising out of this Agreement or any other agreement among
or between the parties or their affiliates.
ss.3. Reimbursements. In addition to the Advisory Fees and the Additional
Fees payable pursuant to this Agreement, Acquisition Company shall pay directly
or reimburse Phibro for its out-of-pocket expenses, that are approved in writing
by Acquisition Company. All reimbursements for Out-of-Pocket Expenses shall be
made promptly upon or as soon as practicable after presentation by Acquisition
Company to Phibro of a written statement and appropriate documentation thereof,
but in no event later than fifteen (15) days after presentation. Anything to the
contrary notwithstanding, in no event shall Acquisition Company be obligated to
make any expense reimbursements under this Agreement except in respect of
services that are requested and actually performed pursuant to Section 1.
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ss.4. Indemnification. Acquisition Company will indemnify and hold
harmless Phibro, its affiliates and their respective stockholders, partners
(both general and limited), members (both managing and otherwise), officers,
directors, employees, agents and representatives (each such person being an
"Indemnified Party") from and against any and all losses, claims, damages,
liabilities, costs and expenses, whether joint or several (the "Liabilities"),
related to, arising out of or in connection with the advisory and consulting
services contemplated by this Agreement or the engagement of Phibro pursuant to,
and the performance by Phibro of the services contemplated by, this Agreement,
whether or not pending or threatened, whether or not an Indemnified Party is a
party, whether or not resulting in any liability and whether or not an action,
claim, suit, investigation or proceeding is initiated or brought by Acquisition
Company, provided, however, that the foregoing shall not apply to any
Liabilities arising directly or indirectly out of any disclosure or reporting by
any Indemnified Party of the arrangements contemplated hereby, or any tax
obligations of any Indemnified Party in respect of any payments hereunder.
Acquisition Company will reimburse any Indemnified Party for all reasonable
costs and expenses (including reasonable attorneys' fees and expenses) as they
are incurred in connection with investigating, preparing, pursuing, defending or
assisting in the defense of any action, claim, suit, investigation or proceeding
for which the Indemnified Party would be entitled to indemnification under the
terms of the previous sentence, or any action or proceeding arising therefrom,
whether or not such Indemnified Party is a party thereto; provided that, subject
to the following sentence, Acquisition Company shall be entitled to assume the
defense thereof at their own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment. Any Indemnified Party may, at its
own expense, retain separate counsel to participate in such defense; and in any
action, claim, suit, investigation or proceeding in which both Acquisition
Company and or one or more of its subsidiaries or both, on the one hand, and an
Indemnified Party, on the other hand, is, or is reasonably likely to become, a
party, such Indemnified Party shall have the right to employ separate counsel at
the expense of Acquisition Company and to control its own defense of such
action, claim, suit, investigation or proceeding if, in the reasonable opinion
of counsel to such Indemnified Party, a conflict or potential conflict exists
between the Palladium Parties or one or more of their subsidiaries or affiliates
or both, on the one hand, and such Indemnified Party, on the other hand, that
would make such separate representation advisable. Acquisition Company agrees
that it will not, without the prior written consent of the applicable
Indemnified Party, settle, compromise or consent to the entry of any judgment in
any pending or threatened action, claim, suit, investigation or proceeding
relating to the matters contemplated hereby (if any Indemnified Party is a party
thereto or has been threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of the
applicable Indemnified Party and each other Indemnified Party from all liability
arising or that may arise out of such action, claim, suit, investigation or
proceeding. Provided Acquisition Company is not in breach of its indemnification
obligations hereunder, no Indemnified Party shall settle or compromise any claim
subject to indemnification hereunder without the consent of Acquisition Company.
Acquisition Company will not be liable under the foregoing indemnification
provisions with respect to any Indemnified Party, to the extent that any loss,
claim, damage, liability, cost or expense is determined by a court, in a final
judgment from which no further appeal may be taken, to have resulted primarily
from the gross negligence or willful misconduct of Phibro. Anything to the
contrary notwithstanding, in no event shall Acquisition Company be liable under
the foregoing indemnification provisions except in respect of services that are
actually performed pursuant to Section 1.
ss.5. Accuracy of Information. Acquisition Company shall furnish or cause
to be furnished to Phibro such information as Phibro believes appropriate to its
assignment (all such
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information so furnished being the "Information"). Acquisition Company
recognizes and confirms that Phibro (i) will use and rely primarily on the
Information and on information available from generally recognized public course
in performing the services contemplated by this Agreement without having
independently verified the same; (ii) does not assume responsibility for the
accuracy or completeness of the Information and such other information; and
(iii) is entitled to rely upon the Information without independent verification.
ss.6. Permissible Activities. Subject to applicable law, and except as
otherwise provided in that certain Purchase and Sale Agreement of even date
among Phibro, Prince Mfg LLC, The Prince Manufacturing Company, Acquisition
Company and the Investor Stockholders party thereto, nothing herein shall in any
way preclude Phibro, its affiliates or their respective partners (both general
and limited), members (both managing and otherwise), officers, directors,
employees, agents or representatives from engaging in any business activities or
from performing services for its or their own account or for the account of
others, including for companies that may be in competition with the business
conducted by Acquisition Company.
ss.7. Additional Services. Nothing herein contained shall be deemed to
prevent Acquisition Company and Phibro from entering into agreements regarding
the provision of additional services by Phibro and its affiliates to Acquisition
Company, which services may be outside the scope of the Services provided for in
this Agreement, and for which Phibro and its affiliates may receive additional
reasonable compensation.
ss.8. Term. This Agreement shall begin January 1, 2004 and end on December
31, 2006. For purposes of this Agreement, the term "Contract Year" means the one
(1) year period beginning on January 1, 2004 or any one (1) year period during
the Term beginning on January 1; provided that Section 3 shall remain in effect
with respect to Out-of-Pocket Expenses required to be paid hereunder and
incurred prior to the termination of this Agreement and Section 2 shall remain
in effect with respect to Advisory Fees and Additional Fees and interest on
overdue installment of Advisory Fees or Additional Fees required to be paid
hereunder until payment in full of all Advisory Fees and Additional Fees payable
in respect of any period prior to the termination of this Agreement. The
provisions of Sections 4, 6, 9 and 10 shall survive the termination of this
Agreement
ss.9. Confidentiality. Except as contemplated by the terms hereof or as
required by applicable law or legal process, Phibro shall keep confidential all
material non-public information provided to it by or at the request of
Acquisition Company, and shall not disclose such information to any third party
or to any of its employees or advisors except to those person who have a need to
know such information in connection with Phibro's performance of its
responsibilities hereunder.
ss.10. Miscellaneous.
(a) Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York. No suit, action or proceeding with respect to this
Agreement may be brought in any court or before any similar authority other than
in a court of competent jurisdiction in the State of New York, and the parties
hereto submit to the exclusive jurisdiction of these courts for the purpose of
such suit, proceeding or judgment. The parties hereto irrevocably waive any
right which they may have to bring such an action in any other court, domestic
or foreign, or before any similar domestic
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or foreign authority. Each of the parties hereto irrevocably and unconditionally
waives trial by jury in any legal action or proceeding in relation to this
Agreement and for any counterclaim therein.
(b) Successors and Assigns; Assignment. Neither this Agreement nor
any of the rights, interests or obligations hereunder may be assigned by any of
the parties hereto, in whole or in part (whether by operation of law or
otherwise), without the prior written consent of the other parties, and any
attempt to make any such assignment without such consent shall be null and void.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
(c) Entire Agreement; Third Parties. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
This Agreement shall be binding upon and inure solely to the benefit of the
parties hereto, and nothing in this Agreement, express or implied, is intended
to confer upon any other person any right, benefit or remedy of any nature under
or by reason of this Agreement.
(d) Severability. If any term or provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
(e) Amendment and Waiver. This Agreement may be amended only by the
written consent of all the parties hereto. Any waiver, consent or approval of
any kind by any party hereto of any breach, default or noncompliance under this
Agreement or any waiver by such party of any provision or condition of this
Agreement must be in writing and is effective only to the extent specifically
set forth in such writing.
(f) Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. All remedies,
either under this Agreement, by law, or otherwise afforded to any party, shall
be cumulative and not alternative.
(g) Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (c) five calendar days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; or (d) one business day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications are to be
sent to the addresses set forth below:
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If to Phibro:
Phibro Animal Health Corporation
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx, President
with copies to:
Golenbock, Eiseman, Assor, Xxxx & Peskoe LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxxx X. Xxxx
If to Acquisition Company:
Prince Mineral Company, Inc.
Xxx Xxxxxx Xxxxx, 000 Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: President
with a copy to:
Palladium Capital Management, L.L.C.
Prince Mineral Company, Inc.
1270 Avenue of the Americas
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxx
and to:
Xxxxxxx XxXxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx
(h) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to Section of this Agreement unless otherwise
indicated. The table of contents titles and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the
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words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
(i) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered.
(j) Relationship of the Parties. The parties are independent
contractors under this Agreement. Except as expressly set forth herein, neither
party has the authority to, and each party agrees that it shall not, directly or
indirectly contract any obligations of any kind in the name of or chargeable
against the other party without such party's prior written consent.
(k) Prepayment of Advisory Fees. Anything to the contrary set forth
in Section 2 above notwithstanding, at any time during the period commencing on
the date hereof and ending on January 9, 2004, Acquisition Company may prepay
the Advisory Fees payable under Section 2(a) for the entire term of this
Agreement by paying to Phibro the net present value of such Advisory Fees
(calculated using a discount rate of 15%). The foregoing prepayment shall not
apply to any Additional Fees that may arise in connection with Additional
Requested Services.
[Remainder of page intentionally left blank.]
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Execution Copy
IN WITNESS WHEREOF, the parties have executed this Agreement, under seal,
as of the date first above written.
PHIBRO ANIMAL HEALTH CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
PRINCE MINERAL COMPANY, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
[Advisory Fee Agreement]
Schedule 1
For purposes of this Agreement, the term "Services" shall mean advisory or
consulting services relating to strategic and operational matters (including,
without limitation, advice relating to sales and marketing and processing,
procurement, distribution, contract administration and operating procedures). In
rendering the Services (including the Additional Services), Phibro shall use
reasonable efforts to make its personnel and the personnel of Prince Agri
Products, Inc and its other affiliates that Phibro designates to provide the
Services available during normal business hours and at such times as are
convenient to Phibro and its affiliates taking into account the business and
operational needs of Phibro and its affiliates. Such personnel will be made
available at such times by telephone, telefax or e-mail, and such personnel
shall not be required to travel or attend any meetings in person.
