EXHIBIT 5
MANAGEMENT ADVISORY SERVICES AGREEMENT
AGREEMENT dated as of April 6, 1999 between The Jewel I, Inc. d/b/a
Primrose Country Day School ("Country Day"), Metrocorp Properties, Inc.
("Metrocorp") and Primrose School Franchising Company ("Primrose") (Primrose,
Country Day and Metrocorp are referred to individually as a "Company" and
collectively as the "Companies") and Security Capital Corporation, a Delaware
corporation ("Security Capital").
W I T N E S S E T H:
WHEREAS, Security Capital desires to provide or cause to be provided
management advisory services to the Companies in the areas of corporate
development, strategic planning, investment and financial matters and general
business policies, and the Companies desires to obtain such services.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree,
intending to be legally bound, as follows:
1. MANAGEMENT ADVISORY SERVICES. Security Capital shall during the term of
this Agreement provide or cause to be provided such management advisory services
to the Companies in the areas of corporate development, strategic planning,
investment and financial matters and general business policies as the Companies
shall from time to time reasonably request.
2. MANAGEMENT ADVISORY SERVICES FEE. (a) Subject to Section 6 below, the
Companies shall during the term of this Agreement pay to Security Capital an
annual management advisory services fee (the "Fee") equal to the greater of
$250,000 (the "Minimum Fee") or 5% of the annual EBITDA (as defined in the Stock
Purchase Agreement, dated as of April 6, 1999, by and among Security Capital,
Primrose Holdings, Inc. ("Holdings"), Xxxx X. Xxxxx and The Xxxx X. Xxxxx
Grantor Retained Annuity Trust) of the Companies (the "Maximum Fee") for the
services described in Section 1 hereto.
(b) The Minimum Fee shall be payable in monthly installments on the fifth
day of each month of each year during the term hereof. The Fee due for April
1999 shall be the pro rata portion of the Fee allocable to the period of time
from the date hereof through April 30, 1999. Such pro rata monthly fee shall be
due on the date hereof. The difference between the Maximum Fee and the Minimum
Fee, if positive, for any year during the term hereof shall be payable on the
fifth day of the April immediately following the year for which the Maximum Fee
has last been determined.
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(c) The Fee shall be exclusive of out-of-pocket costs.
3. COSTS. The Companies shall reimburse Security Capital for all
reasonable out-of-pocket costs incurred by or on behalf of Security Capital in
connection with the services described in Section 1. For purposes of this
Agreement, an acquisition, divestiture, public offering of securities or any
other extraordinary transaction of any type will not be deemed to be a matter
for which management advisory services have been bargained for hereunder and,
therefore, all out-of-pocket costs incurred in connection with any such
transaction will not be subject to such limitation. Security Capital shall
furnish such evidence that such costs were incurred as the Companies may from
time to time reasonably request.
4. ACCESS. The Companies will provide to Security Capital and its
representatives reasonable access during normal business hours, upon reasonable
notice and in such manner as will not unreasonably interfere with the conduct of
the business of the Companies, to the books, records, tax returns and other
information with respect to the business of the Companies as Security Capital or
such representatives consider necessary or appropriate for the purpose of
furnishing advisory services as provided in Section 1.
5. TERM. The term of this Agreement shall commence as of the date hereof
and shall terminate on April 6, 2009 or such later date as may be approved by
Security Capital and the Companies.
6. SUBORDINATION. Each of Security Capital and the Companies hereby
agrees, for itself and its successors and assigns, that the Fee and all other
amounts payable to Security Capital hereunder (the "Subordinated Obligations")
are expressly "subordinate and junior in right of payment" to any obligations,
indebtedness and liabilities of the Companies under that certain Credit
Agreement dated as of April 6, 1999 (as amended, supplemented, waived, modified,
refinanced, increased, assigned or replaced from time to time, whether with the
same or different lenders (the "Credit Agreement"), among Primrose Holdings,
Inc., a Delaware corporation ("Holdings"), Primrose, the lenders from time to
time parties thereto (the "Lenders") and Canadian Imperial Bank of Commerce, as
administrative agent (in such capacity, the "Administrative Agent"), and the
other Loan Documents (as defined in the Credit Agreement to which any of the
Companies is a party (the "Senior Obligations"). "Subordinate and junior in
right of payment" means that (1) no part of the Subordinated Obligations shall
have any claim to the assets of any of the Companies on a parity with or prior
to the claim of the Senior Obligations, (2) unless and until the Senior
Obligations have been paid in full, without the express prior written consent of
the Administrative Agent, Security Capital will not take, demand or receive from
the Companies, and the Companies will not make, give or permit, directly or
indirectly, by set-off, redemption, purchase or in any other manner, any payment
of or security for the whole or any part of the Subordinated Obligations, (3)
unless and until the Senior Obligations have been paid in full, without the
express prior written consent of the Administrative Agent, Security Capital will
not accelerate for any reason payment of any portion of the Subordinated
Obligations and (4) in the event of any distribution of any assets of any of
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the Companies or the proceeds thereof in any liquidation, receivership,
bankruptcy proceeding or like occurrence, any payment or distribution which, but
for the provisions of this paragraph, would otherwise be payable or
distributable to Security Capital or otherwise in respect of the Subordinated
Obligations shall be instead paid over or delivered to the Administrative Agent
for application on account of the Senior Obligations, and Security Capital
irrevocably authorizes the Administrative Agent to file proofs of claim, vote,
and otherwise take action in connection with any such liquidation, receivership,
bankruptcy proceeding or other like occurrence. Notwithstanding the foregoing
sentence, at any time EXCEPT when any Event of Default (as defined under the
Credit Agreement) has occurred and is continuing, the Companies may make , and
Security Capital may receive, scheduled payments on account of the Fee in
accordance with the terms of Section 2 hereof. Any amounts which pursuant to
this Section 6 are not paid to Security Capital shall accrue and shall be
payable to Security Capital upon the earlier of the date the Senior Obligations
shall have been paid in full in cash or the event as a result of which such
payment was deferred pursuant to this Section 6 ceases to exist (unless such
payment at such time would result in an Event of Default under the Credit
Agreement). The expressions "prior payment in full", "payment in full", "paid in
full" and other similar phrases when used herein with respect to the Senior
Obligations mean the payment in full in cash, in immediately available funds, of
all of the Senior Obligations.
7. AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by a written agreement of Security
Capital and the Companies.
8. HEADINGS. The Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of Connecticut applicable to agreements
made and to be performed in Connecticut without regard to such State's conflicts
of laws principles and shall be construed without regard to any presumption or
other rule requiring the construction of an agreement against the party causing
it to be drafted.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SECURITY CAPITAL CORPORATION
By:/S/ A. XXXXXX XXXXXXX
Name: A. Xxxxxx Xxxxxxx
Title: President
JEWEL I, INC.
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title:President
PRIMROSE SCHOOL FRANCHISING
COMPANY
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title:President
METROCORP PROPERTIES, INC.
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title:President
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