Exhibit 10.4
TRANSACTION ADVISORY AGREEMENT
THIS TRANSACTION ADVISORY AGREEMENT ("Agreement"), is executed as of the
14th day of December, 2001 by and among Jordan Industries, Inc., an Illinois
corporation (the "Consultant") and each of the other parties a signatory hereto
(hereinafter collectively referred to as the "Company").
WITNESSETH
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WHEREAS, the Consultant has and/or has access to personnel who are
highly skilled in the field of rendering advice, financial and otherwise, to the
Company;
WHEREAS, the Board of Directors of the Company has been made fully aware of
the relationships of certain members of the Company's Board of Directors to the
Consultant;
WHEREAS, the Company's Board of Directors has reviewed in detail and
discussed the terms and provisions of this Agreement and the fairness of this
Agreement and whether more favorable agreements for the Company could be
obtained from unaffiliated third parties; and
WHEREAS, on the basis of its review of this Agreement, the Board of
Directors of the Company deemed it advisable and in the best interests of the
Company and necessary to the conduct, promotion, and attainment of the business
objectives of the Company that the Company retain Consultant to provide business
and financial advice to the Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto do hereby agree as follows:
1. The Company hereby retains the Consultant, through the Consultant's own
personnel or through personnel available to the Consultant, to render consulting
services from time to time to the Company and its direct and indirect
subsidiaries, (whether now existing or hereafter acquired) in connection with
their acquisitions, divestitures and investments, their financial and business
affairs, their relationships with their lenders, stockholders and other
third-party associates or affiliates, and the expansion of their businesses.
Consultant shall render such services to the Company and/or its direct and
indirect subsidiaries in good faith and in accordance with professional
standards and applicable law. The term of this Agreement shall commence the date
hereof and continue until December 31, 2011, unless extended, or sooner
terminated, as provided in Section 5 below. The Consultant's personnel shall be
reasonably available to the Company's managers, auditors and other personnel for
consultation and advice pursuant to this Agreement, subject to Consultant's
reasonable convenience and scheduling. Services may be rendered at the
Consultant's offices or at such other locations selected by the Consultant as
the Company and the Consultant shall from time to time agree.
2. Subject to Section 4 hereof, the Company shall pay to the Consultant, in
the aggregate, (i) an investment banking and sponsorship fee of up to two
percent (2%) of the aggregate consideration paid (including non-competition,
earnout, contingent purchase price, incentive arrangements and similar payments)
(A) by the Company and/or its direct and indirect subsidiaries in connection
with the acquisition by the Company and/or its direct and indirect subsidiaries
of all or substantially all of the outstanding capital stock, warrants, options
or other rights to acquire or sell capital stock, or all or substantially all of
the business or assets of another individual, corporation, partnership or other
business entity, (B) by the Company and/or its direct and indirect subsidiaries
in connection with any joint venture or other minority investment, or (C) to the
Company in connection with the sale by the Company of all or substantially all
of the Company's and/or its direct and indirect subsidiaries outstanding capital
stock, warrants, options, or other rights to acquire or sell stock, or all or
substantially all of the business or assets of the Company and/or its direct and
indirect subsidiaries (each of the transactions described in clauses (A), (B)
and (C), a "Transaction"), including, but not limited to, any Transaction
negotiated for the Company involving any affiliate of the Company or the
Consultant, including, but not limited to, any Transaction involving the
Consultant, JII, Inc., Jordan Industries, Inc., JII Partners Limited
Partnership, The Jordan Company, TJC Management Corp., JZ Equity Partners, PLC,
Jordan/Zalaznick Capital Company, Leucadia National Corporation or any
affiliates of any of the foregoing (collectively, the "Jordan Affiliates"); and
(ii) a financial consulting fee of up to one percent (1%) of the amount obtained
or made available pursuant to any debt, equity or other financing (including
without limitation, any refinancing) by the Company and/or its direct and
indirect subsidiaries with the assistance of Consultant, including, but not
limited to, any financing obtained for the Company and/or its subsidiaries from
one or more of the Jordan Affiliates. However, the amount of such fees payable
in each such Transaction will be no less favorable to the Company than those
that could be obtained from comparable, unaffiliated third parties, and will be
subject to separate discussion and approval, in connection with each such
Transaction, by each of a majority of the Board of Directors and a majority of
the directors who are disinterested directors in relation to Consultant and its
affiliates. Notwithstanding and in addition to the foregoing, if the Consultant
renders services to the Company outside the ordinary course of business, the
Company shall pay an additional amount equal to the value of such extraordinary
services rendered by the Consultant as may be separately agreed to between the
Consultant and the Company.
3. The Company shall promptly reimburse Consultant for out-of-pocket
expenses (including, without limitation, an allocable amount of the Consultant's
overhead expenses, attributable to the Company and its direct and indirect
subsidiaries, determined on actual usage, percentage or revenue or such other
basis as Consultant may determine), incurred by the Consultant and its personnel
in performing services hereunder to the Company and its direct and indirect
subsidiaries upon the Consultant rendering a statement therefor, together with
supporting data as the Company shall reasonably require.
4. Notwithstanding the foregoing, the Company shall not be required to pay
the fees under Section 2, (a) if and to the extent expressly prohibited by the
provisions of any credit, stock, financing or other agreements or instruments
binding upon the Company, its subsidiaries or properties, (b) if the Company has
not paid cash interest on any interest payment date or has postponed or not made
any principal payments with respect to any of their indebtedness on any
scheduled payment dates, or (c) if the Company has not paid cash dividends on
any dividend payment date as set forth in its certificate of incorporation or as
declared by its Board of Directors, or has postponed or not made any redemptions
on any redemption date as set forth in its certificate of incorporation or any
certificate of designation with respect to its preferred stock, if any. Any
payments otherwise owed hereunder, which are not made for any of the
above-mentioned reasons, shall not be canceled but rather 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 and when the Company has become
current with respect to such principal or interest payments, has become current
with respect to such dividends and has made such redemptions with respect to
such preferred stock, if any. Any payment required hereunder which is not paid
when due shall bear interest at the rate of ten percent (10%) per annum. This
Section 4 will not, in any event, restrict or limit the Company's obligations
under Sections 3, 8 and 9, which will be absolute and not subject to set-off.
5. This Agreement shall be automatically renewed for successive one-year
terms starting December 31, 2011 unless either party hereto, within sixty (60)
days prior to the scheduled renewal date, notifies the other party as to its
election to terminate this Agreement. Notwithstanding the foregoing, this
Agreement may be terminated by not less than ninety (90) days' prior written
notice from the Company to the Consultant at any time after (a) substantially
all of the stock or substantially all of the assets of the Company or all of its
subsidiaries are sold to an entity unaffiliated with the Consultant and/or a
majority of the Company stockholders immediately prior to the sale or (b) the
Company is merged or consolidated into another entity unaffiliated with the
Consultant and/or a majority of the Company's stockholders immediately prior to
such merger and the Company is not the survivor of such transaction. Subject to
the foregoing, this Agreement will not be terminated as a result of any
subsidiary of the Company ceasing to be a subsidiary of the Company for
financial reporting or other purposes.
6. The Consultant shall have no liability to the Company on account of (i)
any advice which it renders to the Company or any of its direct or indirect
subsidiaries, provided the Consultant believed in good faith that such advice
was useful or beneficial to the Company or any of its direct or indirect
subsidiaries at the time it was rendered, or (ii) the Consultant's inability to
obtain financing or achieve other results desired by the Company (or any of its
direct or indirect subsidiaries) or Consultant's failure to render services to
the Company at any particular time or from time to time, or (iii) the failure of
any Transaction to meet the financial, operating, or other expectations of the
Company or any of its direct or indirect subsidiaries. The Company's and any of
its direct or indirect subsidiaries' sole remedy for any claim under this
Agreement shall be termination of this Agreement.
7. Notwithstanding anything contained in this Agreement to the contrary,
the Company agrees and acknowledges for itself and on behalf of its direct and
indirect subsidiaries that the Consultant, the Jordan Affiliates and their
respective shareholders, partners, employees, directors and agents intend to
engage and participate in acquisitions and business transactions outside of the
scope of the relationship created by this Agreement and neither the Consultant,
any of the Jordan Affiliates nor any of their respective shareholders, partners,
employees, directors or agents shall be under any obligation whatsoever to make
such acquisitions or business transactions through the Company or any of its
direct or indirect subsidiaries or offer such acquisitions or business
transactions to the Company or any of its direct or indirect subsidiaries.
8. The Company will, and will cause each of its direct and indirect
subsidiaries to, indemnify and hold harmless to the fullest extent permitted by
applicable law, the Consultant, its affiliates and associates, each of the
Jordan Affiliates, and each of the respective owners, partners, officers,
directors, employees and agents of each of the foregoing, from and against any
loss, liability, damage, claim or expenses (including the fees and expenses of
counsel) arising as a result or in connection with this Agreement, the
Consultant's services hereunder or other activities on behalf of the Company and
its direct and indirect subsidiaries.
9. Any payments paid by the Company under this Agreement shall not be
subject to set-off and shall be increased by the amount, if any, of any taxes
(other than income taxes) or other governmental charges levied in respect of
such payments, so that the Consultant is made whole for such taxes or charges.
10 (a) This Agreement sets forth the entire understanding of the parties
with respect to the Consultant's rendering of transaction or financial services
to the Company. This Agreement may not be modified, waived, terminated or
amended except expressly by an instrument in writing signed by the Consultant
and the Company.
(b) This Agreement may be assigned by Consultant to any of its
subsidiaries or affiliates without the consent of the Company, provided,
however, such assignment shall not relieve such party from its obligations
hereunder. Any assignment of this Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns.
(c) In the event that any provision of this Agreement shall be held
to be void or unenforceable in whole or in part, the remaining provisions of
this Agreement and the remaining portion of any provision held void or
unenforceable in part shall continue in full force and effect.
(d) Except as otherwise specifically provided herein, notice given
hereunder shall be deemed sufficient if delivered personally or sent by
registered or certified mail to the address of the party for whom intended at
the principal executive offices of such party, or at such other address as such
party may hereinafter specify by written notice to the other party.
(e) If at any time after the date upon which this Agreement is
executed, the Company acquires or creates one or more subsidiary corporations
(a "Subsequent Subsidiary"), the Company shall cause such Subsequent Subsidiary
to be subject to this Agreement and all references herein to the Company's
"direct and indirect subsidiaries" shall be interpreted to include all
Subsequent Subsidiaries.
(f) Each direct and indirect subsidiary of the Company shall be
jointly and severally liable and obligated hereunder with respect to each
obligation, responsibility and liability of the Company, as if a direct
obligation of such subsidiary. The Company will cause each direct and indirect
subsidiary of the Company to honor each obligation, responsibility and
liability of each subsidiary hereunder.
(g) No waiver by either party of any breach of any provision of this
Agreement shall be deemed a continuing waiver or a waiver of any preceding or
succeeding breach of such provision or of any other provision herein contained.
(h) The Consultant and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the Company,
(i) This Agreement shall be governed by the internal laws (and not
the law of conflicts) of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
JORDAN INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President
MOTORS AND GEARS HOLDINGS, INC.
KINETEK, INC.
KINETEK INDUSTRIES, INC.
FIR Group Holdings, Inc.
FIR Group Holdings Italia, S.r.l. (Italian LLC)
Construgioni Italiane Motori Elettrici, S.p.A.
(Italian Corporation)
SelinSistemi, S.p.A. (Italian Corporation)
FIR Electromeccanica, S.p.A. (Italian Corporation)
T.E.A. Technologie Electromeccaniche ed
Automazione, S.r.l. (Italian
LLC)
Motion Holdings, Inc.
Motion Control Engineering, Inc.
Xxxxxx-Xxxxx Industries, Inc.
Xxxxxx-Xxxxx de Mexico S.A. de C.V
The Imperial Electric Company
Gear Research, Inc.
Advanced D.C. Holdings, Inc.
Advanced D.C. Motors, Inc.
Sermed S.A.R.L.
Advanced D.C. Motors GmbH
Electric Vehicle Components Ltd.
Electrical Design and Control Company
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxx, Xx.
Title: Vice President