EXHIBIT 10.7
[EXECUTION COPY]
ADVISORY AGREEMENT
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This Advisory Agreement (this "Agreement") is made and entered into as
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of July 22, 1998, by and between Xxxxxxx Xxxxx Rental Holdings, L.P., a
Pennsylvania limited partnership ("Xxxxxxx Holdings"), Xxxxxxx Xxxxx Rental,
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L.P., a Pennsylvania limited partnership ("Xxxxxxx Xxxxx" and, together with
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Xxxxxxx Holdings, the "Companies"), and Xxxx Capital, Inc., a Delaware
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corporation ("Bain").
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WHEREAS, the Companies desire to retain Bain and Bain desires to
perform for the Companies, their subsidiaries and affiliates certain services
following the recapitalization of the Companies pursuant to that certain
Recapitalization Agreement dated June 1, 1998, and amended as of July 21, 1998,
between Xxxxxxx Xxxxx and the other persons a party thereto (the
"Recapitalization Agreement");
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. Term. This Agreement shall be in effect for an initial term
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commencing on the date hereof and ending on the tenth anniversary hereof (the
"Term"), and shall be automatically extended thereafter on a year to year basis
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unless Xxxxxxx Holdings or Bain provides written notice of its desire to
terminate this Agreement to the other party 90 days prior to the expiration of
the Term or any extension thereof; provided that the Term shall automatically
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expire, and no further payment will be due hereunder, upon consummation of (i) a
sale of all or substantially all of the assets of the Companies and their
subsidiaries, (ii) a sale of all or substantially all of the partnership
interests of the Companies or (iii) a merger, consolidation or other transaction
which accomplishes one of the foregoing. If this Agreement is terminated before
the end of the Term or any extension thereof by the agreement of the parties,
such termination shall be without compensation after payment of accrued but
unpaid fees and expenses, and Bain agrees not to request, demand or accept any
compensation or consideration in connection therewith.
2. Services. Bain shall perform or cause to be performed such
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services for the Companies, their subsidiaries and affiliates as directed by the
Board of Managers of the Companies' general partner (the "Board"), which may
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include, without limitation, the following:
(a) general executive and management services;
(b) identification, support, negotiation and analysis of acquisitions
and dispositions by the Companies, their subsidiaries or affiliates;
(c) negotiating, entering into, modifying and terminating contracts
and agreements to which the Companies and their subsidiaries are (or are to
become) a party;
(d) support, negotiation and analysis of financing alternatives,
including, without limitation, in connection with acquisitions, capital
expenditures and refinancing of existing indebtedness;
(e) finance functions, including assistance in the preparation of
financial projections, and monitoring of compliance with financing
agreements;
(f) marketing functions, including monitoring of marketing plans and
strategies;
(g) human resource functions, including searching and hiring of
executives; and
(h) other services for the Companies, their subsidiaries and
affiliates upon which the Board and Bain agree.
3. Advisory Fee. Payment for services rendered by Bain and/or its
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affiliates incurred in connection with the performance of services pursuant to
this Agreement shall initially be $1,000,000 per annum (subject to increase as
determined from time to time by a majority vote of the Board, so long as one
non-Bain appointed director votes in favor of such increase), plus reasonable
out-of-pocket expenses of Bain and/or its affiliates, payable by the Companies
to Bain or its designees on a calendar quarterly basis in advance (with the
first payment of such fee to be paid on the date hereof on a pro rata basis
based on the number of days remaining until the next calendar quarter begins
divided by the number of days in the current calendar quarter) so long as Bain
and/or its affiliates (or its/their permitted assignee) is providing services as
requested by the Board. If at any time when a payment is due under this
Agreement the Companies (i) do not have sufficient available cash to make such
payment or (ii) are prohibited from making such payment pursuant to the terms of
the Companies' loan agreements, part or all of such payment, as the case may be,
shall be deferred. Any amount so deferred shall be added to the amount due
under this Agreement in the quarter following the quarter in which the amount
was deferred.
4. Transaction Fees.
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(a) Upon the closing of the Recapitalization Agreement, the Companies
shall pay to Bain or its designees a fee for services rendered in
connection with the structuring of the Recapitalization Agreement in the
amount of 1% of the total uses of funds for the transactions contemplated
therein.
(b) In addition, during the term of this Agreement, the Companies
shall pay to Bain or its designees a transaction fee in connection with the
consummation of each acquisition, divestiture or financing by the
Companies, their subsidiaries or its affiliates (but excluding sales and
purchases of equipment in the ordinary course of business) in an amount
equal to 1% of the aggregate value of such transaction, plus reasonable
out-of-pocket expenses of Bain and/or its affiliates for its services in
negotiating, analyzing, arranging financing and executing such acquisitions
and, divestitures; provided that such 1% transaction fee may be increased
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from time to time by a majority vote of the Board (so long as one non-Bain
appointed director votes in favor of such increase) to reflect industry
practice with respect to such fees.
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5. Personnel. Bain shall provide and devote to the performance of
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this Agreement such partners, employees and agents of Bain as Bain shall xxxx
appropriate to the furnishing of the services required.
6. Liability. Neither Bain nor any of its affiliates, stockholders,
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partners, employees or agents shall be liable to the Companies or their
subsidiaries or affiliates for any loss, liability, damage or expense arising
out of or in connection with the performance of services contemplated by this
Agreement, unless such loss, liability, damage or expense shall be proven to
result directly from gross negligence, willful misconduct or bad faith on the
part of Bain, its affiliates, stockholders, partners, employees or agents acting
within the scope of their employment or authority.
7. Indemnity. The Companies, their subsidiaries and affiliates
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shall defend, indemnify and hold harmless each of Bain, its affiliates,
stockholders, partners, employees and agents from and against any and all loss,
liability, damage or expenses arising from any claim by any person with respect
to, or in any way related to, the performance of services contemplated by this
Agreement (including attorneys' fees) (collectively, "Claims") resulting from
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any act or omission of Bain, its affiliates, stockholders, partners, employees
or agents, other than for Claims which shall be proven to be the direct result
of gross negligence, bad faith or willful misconduct by Bain, its affiliates,
stockholders, partners, employees or agents. The Companies, their subsidiaries
and affiliates shall defend at their own cost and expense any and all suits or
actions (just or unjust) which may be brought against the Companies, their
subsidiaries or affiliates and Bain, its officers, directors, affiliates,
stockholders, partners, employees or agents or in which Bain, its affiliates,
stockholders, partners, employees or agents may be impleaded with others upon
any Claims, or upon any matter, directly or indirectly, related to or arising
out of this Agreement or the performance hereof by Bain, its affiliates,
stockholders, partners, employees or agents, except that if such damage shall be
proven to be the direct result of gross negligence, bad faith or willful
misconduct by Bain, its affiliates, stockholders, partners, employees or agents,
then Bain shall reimburse the Companies, their subsidiaries and affiliates for
the costs of defense and other costs incurred by the Companies, their
subsidiaries and affiliates.
8. Notices. All notices, demands and other communications to be
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given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when personally delivered,
sent by telecopy (with receipt confirmed) on a business day during regular
business hours of the recipient (or, if not, on the next succeeding business
day) or one business day after being sent by reputable overnight courier service
(charges prepaid).
To the Companies:
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Xxxxxxx Xxxxx Rental, L.P.
0000 Xxxx Xxxxxx Xxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
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with a copy to (which shall not constitute notice hereunder):
Xxxx X. Xxxxxxx
Xxxxxxxx Xxxxxxx
Two Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
If to Bain:
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c/o Bain Capital, Inc.
Two Xxxxxx Place
Boston, Massachusetts 02116
Attention: Xxxx Xxxxxxxx
Xxxxxx Xxxxxx
with a copy to (which shall not constitute notice hereunder):
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Learner
E. Xxxx Xxxxx
9. Assignment. Neither party may assign any obligations hereunder
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to any other party without the prior written consent of the other party (which
consent shall not be unreasonably withheld); provided that Bain may, without
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consent of either of the Companies, assign its rights and obligations under this
Agreement to any of its affiliates (but only if such affiliate is a person or
entity controlled by Bain, or in the case of an affiliate which is a
partnership, Bain is the ultimate general partner of such partnership). The
assignor shall remain liable for the performance of any assignee.
10. Successors. This Agreement and all the obligations and benefits
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hereunder shall inure to the successors and assigns of the parties.
11. Counterparts. This Agreement may be executed and delivered by
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each party hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original and all of which taken together shall
constitute but one and the same agreement.
12. Entire Agreement; Modification; Governing Law. The terms and
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conditions hereof constitute the entire agreement between the parties hereto
with respect to the subject matter of this Agreement and supersede all previous
communications, either oral or written, representations or warranties of any
kind whatsoever, except as expressly set forth herein. No modifications of this
Agreement nor waiver of the terms or conditions thereof shall be binding upon
either party unless approved in writing by an authorized representative of such
party. All issues concerning this agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether of the
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State of New York or any other jurisdiction) that would cause the application of
the law of any jurisdiction other than the State of New York.
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IN WITNESS WHEREOF, the parties have executed this Advisory Agreement as of
the date first written above.
XXXXXXX XXXXX RENTAL HOLDINGS, L.P.
By: ACR Management, L.L.C., its general partner
By: /s/ Xxxxxx X. Xxxxxx
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Its: Secretary
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XXXXXXX XXXXX RENTAL, L.P.
By: ACR Management, L.L.C., its general partner
By: /s/ Xxxxxx X. Xxxxxx
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Its: Secretary
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XXXX CAPITAL, INC.
By: Xxxx Capital Investors VI, L.P.
Its: General Partner
By: Xxxx Capital Investors VI, Inc.
Its: General Partner
By: /s/ Xxxxxx X. Xxx
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A Managing Director
