MONITORING AGREEMENT
MONITORING AGREEMENT (this "Agreement"), dated as of March 13, 1998, among
THE IMPERIAL HOME DECOR GROUP INC., a Delaware corporation ("IHDG"), and
BLACKSTONE MANAGEMENT ASSOCIATES III L.L.C., a Delaware limited liability
company ("BMP").
Recitals
A. BMP, by and through itself, its affiliates and their respective
officers, employees and representatives, has expertise in the areas of finance,
strategy, investment and acquisitions relating to the business of IHDG; and
B. IHDG desires to avail itself, for the term of this Agreement, of the
expertise of BMP in the aforesaid areas and BMP wishes to provide the services
to IHDG as herein set forth;
Agreement
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions contained herein, the parties hereto agree as follows:
1. Appointment. IHDG hereby engages BMP to render the advisory and
consulting services described in Section 2 hereof for the term of this
Agreement.
2. Services. BMP hereby agrees that during the term of this Agreement to
render to IHDG, by and through itself, its affiliates, and their respective
officers, employees and representatives as BMP in its sole discretion shall
designate from time to time, advisory and consulting services in relation to the
affairs of IHDG and its subsidiaries, including, without limitation, (i) advice
in designing financing structures and advice regarding relationships with IHDG
and its subsidiaries' lenders and bankers' (ii) advice regarding the structure
and timing of public offerings of debt and equity securities of IHDG and its
subsidiaries; (iii) advice regarding property dispositions or acquisitions; and
(iv) such other advice directly related or ancillary to the above financial
advisory services as may be reasonably requested by IHDG. It is expressly agreed
that the services to be performed hereunder shall not include investment banking
or other financial advisory services rendered by BMP or its affiliates to IHDG
in connection with any specific acquisition, divestiture, refinancing or
recapitalization by IHDG or any of its subsidiaries. BMP may be entitled to
receive additional compensation for providing services of the type specified in
the preceding sentence by mutual agreement of IHDG or such subsidiary and BMP.
3. Fees. In consideration of the services contemplated by Section 2 and for
similar services rendered prior to the date hereof (a) IHDG agrees to pay to BMP
the sum of $4,000,000, payable on the date hereof, and (b) for the term of this
Agreement, IHDG and its respective successors, jointly and severally, agree to
pay to BMP an annual fee (the "Monitoring Fee") of $1,500,000, payable in
quarterly installments on March 31, June 30, September 30 and
December 31 of each year commencing on the date hereof through the date (the
"Termination Date") on which affiliates of BMP hold, directly, beneficial
ownership of less than 10% of the equity interest in IHDG acquired in the
Transactions, or such earlier date as IHDG and BMP shall agree. The Monitoring
Fee shall not be prorated for the first calendar year of this Agreement. Any
Monitoring Fee for the last calendar year of this Agreement shall be prorated
for the period of such year ending on the Termination Date. To the extent
required by any debt financing of IHDG or its subsidiaries, the Monitoring Fee
shall be deferred until the (i) dissolution of IHDG, and (ii) payment Monitoring
Fee shall bear interest at a rate of ten percent (10%) per annum, compounded
annually, from the date deferred until paid. The "Transactions" are the
transactions contemplated by the Recapitalization Agreement (the
"Recapitalization Agreement"), dated as of October 14, 1997, as amended, among
Xxxxxx, Inc., a New Jersey corporation, Xxxxxx Decorative Products Holdings,
Inc., a Delaware corporation, and BDPI Holdings Corporation ("MergerCo"), a
Delaware corporation and an Amended and Restated Acquisition Agreement (the
"Imperial Acquisition Agreement"), dated as of November 4, 1997 and amended and
restated on March 9, 1998, among Imperial Wallcoverings, Inc., a Delaware
corporation, Xxxxxxx & Xxxxxx Products Co., a Delaware corporation and MergerCo.
4. Reimbursements. In addition to the fees payable pursuant to this
Agreement, IHDG shall, pay directly or reimburse BMP for its Out-of-Pocket
Expenses. For the purposes of this Agreement, the term "Out-of-Pocket Expenses"
shall mean the reasonable out-of-pocket costs and expenses reasonably incurred
by BMP or its affiliates in connection with the services rendered hereunder in
pursuing, or otherwise related to, the business or IHDG and the transactions
contemplated by the Recapitalization Agreement and the Imperial Acquisition
Agreement, including, without limitation, (i) fees and disbursements of any
independent professionals and organizations, including independent accountants,
outside legal counsel or consultants, (ii) costs of any outside services or
independent contractors such as financial printers, couriers, business
publications, on-line financial services or similar services and (iii)
transportation, per diem costs, word processing expenses or any similar expense
not associated with its ordinary operations. All reimbursements for
Out-of-Pocket Expenses shall be made promptly upon or as soon as practicable
after presentation by BMP to IHDG of a written statement thereof.
5. Indemnification. (a) IHDG, will indemnify and hold harmless BMP, its
affiliates and their respective 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 and liabilities, whether joint or several
(the "Indemnifiable Losses"), related to, arising out of or in connection with
the advisory and consulting services contemplated by this Agreement or the
engagement of BMP pursuant to, and the performance by BMP of the services
contemplated by, this Agreement, whether or not pending or threatened, whether
or not an Indemnified Party is a party and whether or not such action, claim,
suit, investigation or proceeding is initiated or brought by IHDG, and 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
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of this sentence, or any action or proceeding arising therefrom, whether or not
such Indemnified Party is a party thereto. IHDG will not be liable under the
foregoing indemnification provision 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 willful misconduct of BMP. If an
Indemnified Party is reimbursed hereunder for any expenses, such reimbursement
of expenses shall be refunded to the extent it is finally judicially determined
that the Indemnifiable Losses in question resulted primarily from the willful
misconduct of BMP.
(b) Notwithstanding any provision herein to the contrary, no officer or
director of IHDG shall be liable for any obligations of IHDG hereunder,
including, without limitation, the payment of' the Monitoring Fee pursuant to
Section 3, the payment or reimbursement of Out-of-Pocket Expenses pursuant to
Section 4 and the indemnification obligations under Section 5(a).
6. Accuracy of Information. IHDG shall furnish or cause to be furnished to
BMP such information as BMP believes appropriate to its monitoring services
hereunder and to the ownership by affiliates of BMP of equity interests of IHDG
(all such information so furnished being the "Information"). IHDG recognizes and
confirms that BMP (i) will use and rely primarily on the Information and on
information available from generally recognized public sources 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.
7. Term. This Agreement shall be effective as of the date hereof and shall
continue until the Termination Date, provided that Section 4 shall remain in
effect with respect to Out-of-Pocket Expenses incurred, and any Monitoring Fee
that has become payable, prior to the Termination Date. The provisions of
Section 5, 6 and 8 and otherwise as the context so requires shall survive the
termination of this Agreement.
8. Permissible Activities. Subject to applicable law, nothing herein shall
in any way preclude BMP, 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 IHDG.
9. Miscellaneous.
(a) No amendment or waiver of any provision of this Agreement, or
consent to any departure by either party hereto from any such provision, shall
be effective unless the same shall be in writing and signed by all of the
parties hereto. Any amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
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given. The waiver by any party of any breach of this Agreement shall not operate
as or be construed to be a waiver by such party of any subsequent breach.
(b) Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by facsimile,
Federal Express, or other overnight courier, addressed as follows or to such
other address of which the parties may have given notice:
If to BMP: c/o The Blackstone Group L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Senior Managing Director
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to IHDG: The Imperial Home Decor Group Inc.
Xxxxx X. Xxxxxx
President and Chief Executive Xxxxxxx
00000 Xxxxxxxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Unless otherwise specified herein, such notices or other communications shall be
deemed received (i) on the date delivered, if delivered personally or sent by
facsimile, and (ii) one business day after being sent by Federal Express or
other overnight courier.
(c) This Agreement shall constitute the entire agreement between the
parties with respect to the subject matter hereof, and shall supersede all
previous oral and written (and all contemporaneous oral) negotiations,
commitments agreements and understandings relating hereto.
(d) This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York. This
Agreement shall inure to the benefit of, and be binding upon, BMP, IHDG and
their respective successors and assigns. The provisions of Section 5 shall
inure to the benefit of each Indemnified Party.
(e) This Agreement may be executed by one or more parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
(f) The waiver by any party of any breach of this Agreement shall not
operate as or be construed to be a waiver by such party of any subsequent
breach.
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(g) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall be not invalidate or render
unenforceable such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers or agents as of the date first
above written.
BLACKSTONE MANAGEMENT ASSOCIATES
III L.L.C.
By: ____________________________
Name:
Title:
THE IMPERIAL HOME DECOR GROUP INC.
By: ______________________________
Name:
Title:
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