EXHIBIT 10.17
STRATEGIC SERVICES AGREEMENT
STRATEGIC SERVICES AGREEMENT, dated as of July 1, 1997, by and
between JEH ACQUISITION CORP., a Delaware corporation (the "Corporation"),
and TDA INDUSTRIES, INC., a New York corporation (the "Manager").
WITNESSETH:
WHEREAS, the Corporation, contemporaneously herewith, is acquiring,
pursuant to that certain Asset Purchase Agreement by and among the
Corporation as "Buyer", JEH Company, a Texas corporation, as "Seller", and
Xxxxx X. Xxxxxx as "Shareholder" of Seller, dated July 8, 1997 (the "Asset
Purchase Agreement"), substantially all of the assets of Seller, including
Seller's business operations in Texas, Colorado, Indiana and other states
(the "Acquired Business"); and
WHEREAS, the Manager advises other companies in the same or similar
business as the Acquired Business, including, without limitation, its own
business, Eagle Supply, Inc., a Florida corporation, which is in the
identical business as the Acquired Business; and
WHEREAS, the Corporation desires to engage the Manager to perform
certain management, strategic planning, and other advisory services for the
Corporation in connection with the Acquired Business under the terms and
subject to the conditions hereinafter set forth, and the Manager desires to
be so engaged.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. ENGAGEMENT AND DUTIES. (a) The Corporation hereby engages the
Manager to provide to the Corporation management and strategic planning and
direction services, banking negotiation services, investor relation services,
and advisory services regarding acquisitions, which such services may
include, without limitation, (i) identifying and evaluating business entities
and enterprises which may present appropriate investment or acquisition
opportunities for the Corporation, (ii) negotiating the terms and conditions
of, and arranging financing for, acquisitions ("Acquisitions"), and (iii)
generally advising and assisting the Corporation's management with respect to
the foregoing and the business and affairs of the Corporation.
(b) With respect to the performance of its duties
hereunder, the Manager shall at all times be subject to the direction and
control of the Corporation's Board of Directors, and observe and comply with
such rules, regulations, policies and practices as the Corporation's Board of
Directors may from time to time establish. In particular, without the
prior approval of the Corporation's Board of Directors, the Manager shall not
have authority (i) to commit the Corporation to make any Acquisition, (ii) to
sell, exchange or otherwise dispose of any asset acquired through an
Acquisition, (iii) to waive any right or take or consent to any action that
would materially and adversely affect the rights of the Corporation in
respect of any actual or proposed Acquisition, or (iv) incur reimbursable
expenses on behalf of the Corporation.
(c) From time to time, the Manager shall consult with the
Board of Directors of the Corporation with respect to the administration of
the business of the Corporation, and shall prepare and furnish to the Board
of Directors such summary reports as may be reasonably requested by the
Corporation. The Corporation's management shall cooperate with the Manager
and shall furnish to it any documents or information necessary or appropriate
for the performance of its duties hereunder.
(d) Neither the Manager nor any employee or agent thereof
shall be required to devote any minimum amount of time to the performance of
its duties hereunder, or report on or perform its duties hereunder on a fixed
or periodic basis. The Manager or any employee or agent thereof may engage or
participate in such other activities incidental to any other employment,
occupation or business venture or enterprise which do not materially
interfere with its ability to perform its duties hereunder.
(e) The Manager hereby accepts such engagement and agrees
that throughout the period of its engagement it shall perform the duties
incidental to its engagement hereunder.
2. TERM. The engagement of the Manager hereunder shall commence on
the Closing Date (as defined in the Asset Purchase Agreement) and continue
until the fifth anniversary of the date thereof; PROVIDED, HOWEVER, that the
Corporation may terminate this Agreement for cause. For purposes hereof,
cause for removal of the Manager shall mean (a) any action by the Manager
which has been found by a final judicial determination of a court of
competent jurisdiction, not subject to further appeal, to constitute fraud
against the Corporation, (b) the conviction of the Manager or any affiliate
thereof in connection with his, her or its services with respect to
Corporation matters of a felony, or (c) any willful or reckless material
violation by the Manager of its obligations to the Corporation pursuant to
this Agreement, as found by a final judicial determination of a court of
competent jurisdiction, not subject to further appeal. Five (5) business days
prior written notice of termination of this Agreement for cause, specifically
setting forth the cause for removal, shall be given to the Manager.
3. MANAGEMENT FEE. In consideration for the Manager's services
hereunder, the Corporation shall pay to the Manager a monthly fee during the
term of this Agreement. Such fee shall be $15,000 per month during the period
commencing on the date hereof and continuing until December 31, 1999.
Commencing on January 1, 2000, the monthly fee shall increase to $20,000.
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4. EXPENSES. The Manager shall pay all of its ordinary day-to-day
out-of-pocket expenses incurred in providing services to the Corporation. The
Manager may provide for and receive reimbursement from any third party of any
such expenses.
5. EXCULPATION; INDEMNIFICATION. (a) Neither the Manager nor any of
its respective affiliates, nor any of their respective officers, directors,
partners, employees or agents, shall be liable, in damages or otherwise, to
the Corporation for any act or omission performed or omitted by any such
person pursuant to authority granted by this Agreement, except if such act or
omission results from gross negligence, willful misconduct or bad faith, or a
knowing and material violation of the provisions of this Agreement. The
Manager shall be entitled to rely in good faith on the advice of counsel to
the Corporation, the Corporation's accountants or other independent experts
retained by the Corporation experienced in the matter at issue, and any act
or omission of the Manager in reasonable reliance on such advice shall in no
event subject the Manager to liability to the Corporation.
(b) The Corporation, to the fullest extent permitted by
law, shall indemnify and hold harmless the Manager, its affiliates, and their
respective officers, directors, partners, employees and agents (collectively,
the "Indemnified Persons") from and against any and all claims or liabilities
of any nature whatsoever, including legal fees and other expenses reasonably
incurred, arising out of, or in connection with any action taken or omitted
by any such Indemnified Person by or on behalf of the Corporation pursuant to
authority granted by this Agreement, except where found by a court of
competent jurisdiction to be attributable to the gross negligence, willful
misconduct or bad faith of any such person, or a knowing and material
violation by such person of the provisions of this Agreement.
(c) Any Indemnified Person entitled to indemnification from
the Corporation hereunder shall obtain the written consent of the Board of
Directors of the Corporation prior to entering into any compromise or
settlement which would result in an obligation of the Corporation to
indemnify such Indemnified Person. If such Indemnified Person shall actually
recover any amounts under any applicable insurance policies, it shall offset
the net proceeds so received against any amounts owed by the Corporation by
reason of the indemnification provided hereunder or, if all such amounts
shall have been paid by the Corporation in full prior to the actual receipt
of such net insurance proceeds, it shall pay over such proceeds (up to the
amount of indemnification paid by the Corporation to such Indemnified Person)
to the Corporation.
(d) The satisfaction of any indemnification pursuant to
this Section 5 shall be from and limited to Corporation assets.
6. NATURE OF ENGAGEMENT. The Manager is engaged as, and shall be
deemed for all purposes to be, an independent contractor with respect to the
Corporation. In particular, the Corporation shall not withhold, deduct or
otherwise be obligated to pay, or be accountable for, any federal, state or
local taxes or FICA contributions due from or on behalf of the Manager or any
of its employees or agents. Except as expressly provided
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herein, no provision hereof is intended, or shall be deemed, to create any
corporation, joint venture or association among the parties hereto, or to
authorize or empower any party hereto to act on behalf of, obligate, or bind
any other party hereto.
7. PERMITTED ACTIVITIES OF MANAGER. The Corporation acknowledges
that the Manager, certain affiliates of the Manager, and certain personnel of
the Manager are currently providing and will continue to provide services
similar to those being provided to Corporation hereunder to other entities
which may be deemed to be in competition with the Corporation, including,
without limitation, Eagle Supply, Inc. Nothing in this Agreement shall limit
the Manager, its affiliates, or its personnel from continuing or expanding
such services to any other businesses, whether or not in the same industry as
the Corporation.
8. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned, in
whole or in part, by any party hereto, without the prior written consent of
the other parties hereto, and any purported assignment without such consent
shall be void and without effect; provided, however, that the Corporation's
consent shall not be required if the Manager assigns this Agreement to any of
its subsidiaries, including, without limitation, Eagle Supply, Inc. (a
Florida corporation), Eagle Supply Group, Inc. (a Delaware corporation), or
Pemberton Services Corp. (a Florida corporation). This Agreement shall be
binding upon and inure to the benefit of, and be enforceable by, the parties
hereto and their respective successors and permitted assigns. This Agreement
is not intended, and shall not be deemed, to create or confer any right or
interest for the benefit of any person not a party hereto.
9. NOTICES. Any notice or demand required or permitted to be given
or made to or upon any party hereto pursuant to any of the provisions of this
Agreement shall be deemed to have been duly given or made for all purposes if
(i) in writing and delivered by hand against receipt, or sent by certified or
registered mail, postage prepaid, return receipt requested, or (ii) sent by
telegram, telecopy, telex or other electronic means and followed by a copy
delivered or sent in the manner provided in clause (i) above, as follows:
To the Corporation, at: JEH Acquisition Corp.
c/o TDA Industries
000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxxx
To the Manager, at: TDA Industries, Inc.
000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx
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with a copy to: Xxxxxxxxx X. Xxxxxxx
Carlton, Fields, Xxxx,
Xxxxxxxx, Xxxxx & Xxxxxx, P.A.
Xxx Xxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxx, Xxxxxxx 00000-0000
or to such other address as any party hereto may at any time, or from time to
time, direct by notice given to the other party in accordance with this
Section. The date of giving or making of any such notice or demand shall be
the earlier of the date of actual receipt, or five business days after such
notice or demand is sent, or, if sent in accordance with clause (ii), the
business day next following the day such notice or demand is actually
transmitted.
10. AMENDMENT. Except as otherwise provided herein, no amendment
of this Agreement shall be valid or effective, unless in writing and signed
by or on behalf of the parties hereto.
11. WAIVER. No course of dealing or omission or delay on the part of
any party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any
provision hereof shall be effective unless in writing and signed by or on
behalf of the party to be charged therewith. No waiver shall be deemed a
continuing waiver or waiver in respect of any other or subsequent breach or
default, unless expressly so stated in writing.
12. GOVERNING LAW. This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of New
York, without giving effect to the provisions thereof relating to choice or
conflict of laws.
13. JURISDICTION; SERVICE OF PROCESS. Each party hereto hereby
irrevocably (a) consents to the exclusive jurisdiction of the courts of the
County of New York, State of New York, and of any federal court located
therein in connection with any suit, action or other proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby, (b)
waives any objection to venue in the County of New York, State of New York,
and (c) agrees that service of process in connection with any such proceeding
may be effected by mailing same in the manner provided in Section 9 hereof.
14. SEVERABILITY. The parties hereto intend that each provision
hereof constitutes a separate agreement among them. Accordingly, the
provisions hereof are severable and in the event that any provision of this
Agreement shall be deemed invalid or unenforceable in any respect by a court
of competent jurisdiction, the remaining provisions hereof shall not be
affected, but shall, subject to the discretion of such court, remain in full
force and effect, and any invalid or unenforceable provision shall be deemed,
without further action on the part of
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the parties hereto, amended and limited to the extent necessary to render the
same valid and enforceable.
15. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
of the parties hereto with respect to the subject matter hereof and
supersedes any prior agreement, commitment or arrangement relating thereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
JEH ACQUISITION CORP.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Executive Vice President
TDA INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
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FIRST AMENDMENT TO STRATEGIC SERVICES AGREEMENT
THIS FIRST AMENDMENT TO STRATEGIC SERVICES AGREEMENT (this "First
Amendment") is made effective as of the 30th day of April, 1998, by
JEH/EAGLE SUPPLY, INC., a Delaware Corporation, formerly known as JEH
Acquisition Corp. (the "Company"), and TDA INDUSTRIES, INC., a New York
Corporation (the "Manager") amending that certain Strategic Services Agreement
between the parties dated as of July 1, 1997 (the "Agreement").
1. Section 3 (A) of the Agreement is amended in its entirety to read as
follows:
(A) MANAGEMENT FEE. In consideration for the
Manager's services hereunder, commencing upon the closing
of the proposed initial public offering of securities of
Eagle Supply Group, Inc., a Delaware Corporation ("ESG"),
and the consummation of the sale and transfer of the
Company to ESG, and until December 31, 1999, the Company
shall pay to the Manager a monthly fee of Three Thousand
Dollars ($3,000). Commencing on January 1, 2000, and
during the remaining term of this Agreement, the Company
shall pay to the Manager a monthly fee of Fifteen Thousand
Dollars ($15,000).
2. Except for this First Amendment, the Agreement remains unchanged,
and is in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment as of the date first above written.
JEH/EAGLE SUPPLY, INC.
By: /s/ Xxxxxxx X. Xxxxxx, CEO
--------------------------
Xxxxxxx X. Xxxxxx,
Chief Executive Officer
TDA INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx, President
--------------------------------
Xxxxxxx X. Xxxxxx
President
