Exhibit 10.11
ADVISORY AGREEMENT
------------------
This Advisory Agreement ("Agreement") is made as of this 18th day of
May, 1998 among Xxxxxx American Investment Corp. (f/k/a Bidermann Industries
U.S.A., Inc.), a Delaware corporation ("Holdings"), Xxxxxx American Corp. (f/k/a
Bidermann Industries Corp.), a Delaware corporation (the "Company"), and Vestar
Capital Partners, a New York general partnership ("Vestar").
WHEREAS, Vestar, by and through its officers, employees, agents,
representatives and affiliates, has expertise in the areas of corporate
management, finance, product strategy, investment, acquisitions and other
matters relating to the business of Holdings and its subsidiaries; and
WHEREAS, each of Holdings and the Company desires to avail itself, for
the term of this Agreement, of the expertise of Vestar in the aforesaid areas,
in which it acknowledges the expertise of Vestar.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions herein set forth, the parties hereto agree as follows:
1. APPOINTMENT. On the terms and subject to the conditions set forth
in this Agreement, each of Holdings and the Company hereby appoints Vestar to
render the advisory and consulting services described in Paragraph 2 hereof for
the term of this Agreement.
2. SERVICES. Vestar hereby agrees that during the term of this
Agreement it shall render to Holdings and the Company and their respective
subsidiaries by and through such of Vestar's officers, employees, agents,
representatives and affiliates as Vestar, in its sole discretion, shall
designate from time to time, advisory and consulting services in relation to the
affairs of Holdings and the Company and their respective subsidiaries in
connection with strategic financial planning and other services not referred to
in the next sentence including, without limitation, advisory and consulting
services in relation to the selection, supervision and retention of independent
auditors, the selection, retention and supervision of outside legal counsel, and
the selection, retention and supervision of investment bankers or other
financial advisors or consultants. It is expressly agreed that the services to
be performed hereunder shall not include (x) investment banking or other
financial advisory services rendered by any of Vestar and its affiliates to
Holdings and the Company and their respective subsidiaries in connection with
acquisitions, divestitures, refinancings, restructurings and similar
transactions by any of Holdings and the Company and their respective
subsidiaries or (y) full or part-time employment by Holdings or the Company or
any of their respective subsidiaries of any employee or partner of any of Vestar
and its affiliates, in each case for which Vestar and its affiliates shall be
entitled to receive additional compensation.
3. FEES. In consideration of the services contemplated by Paragraph
2, subject to the provisions of Paragraph 6, Holdings and the Company and their
respective successors
2
jointly and severally agree to pay to Vestar an aggregate per annum fee (the
"Fee") equal to $500,000. The Fee shall be payable quarterly in advance and
shall be non-refundable.
4. REIMBURSEMENTS. In addition to the Fee, Holdings and the Company
hereby agree, jointly and severally, at the direction of Vestar, to pay directly
or reimburse Vestar for its reasonable Out-of-Pocket Expenses incurred in
connection with the services provided for in Paragraph 2 hereof. For the
purposes of this Agreement, the term "Out-of-Pocket Expenses" shall mean the
amounts paid by or on behalf of Vestar in connection with the services provided
for in Paragraph 2, including reasonable (i) fees and disbursements of any
independent professionals and organizations, including independent auditors and
outside legal counsel, investment bankers or other financial advisors or
consultants, (ii) costs of any outside services or independent contractors such
as financial printers, couriers, business publications or similar services and
(iii) transportation, per diem, telephone calls, word processing expenses or any
similar expense not associated with its ordinary operations. All reimbursements
for Out-of-Pocket Expenses shall be made within 30 days after presentation by
Vestar of a reasonable statement in connection therewith.
5. INDEMNIFICATION. Holdings and the Company hereby agree jointly and
severally to indemnify and hold harmless Vestar and its affiliates and their
respective partners, officers, directors, employees, agents, representatives and
stockholders (each being an "Indemnified Party") against any and all losses,
claims, damages and liabilities of whatever kind or nature, joint or several,
absolute, contingent or consequential, to which such Indemnified Party may
become subject under any applicable federal or state law, or any claim made by
any third party, or otherwise, to the extent they relate to or arise out of the
advisory and consulting services contemplated by this Agreement or the
engagement of Vestar pursuant to, and the performance by Vestar of the services
contemplated by, this Agreement. Holdings and the Company hereby agree jointly
and severally to reimburse any Indemnified Party for all reasonable costs and
expenses (including reasonable attorneys' fees and expenses) as they are
incurred in connection with the investigation of, preparation for or defense of
any pending or threatened claim for which the Indemnified Party would be
entitled to indemnification under the terms of the previous sentence, or any
action or proceeding arising therefrom, whether or not such Indemnified Party is
a party hereto. Holdings and the Company will not be liable under the foregoing
indemnification provision 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 gross
negligence or willful misconduct of Vestar.
6. TERM. This Agreement shall be in effect on the date hereof and
continue until such time as Vestar Capital Partners III, L.P., a Delaware
limited partnership, and the partners therein and the respective affiliates
thereof beneficially own, in the aggregate, less than one-third of the number of
shares of Holdings outstanding voting stock beneficially owned by them on the
date hereof. The provisions of Paragraphs 4, 5, 7 and 8 and the obligation of
Holdings and the Company to pay Fees accrued during the term of this Agreement
pursuant to Section 3 shall survive the termination of this Agreement.
3
7. PERMISSIBLE ACTIVITIES. Subject to all applicable provisions of
New York law that impose fiduciary duties upon Vestar or its partners or
affiliates, nothing herein shall in any way preclude Vestar or its partners,
officers, employees or affiliates 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 any of Holdings and the Company and their respective subsidiaries.
8. INDEPENDENT CONTRACTOR. Vestar is and will perform this Agreement
as an independent contractor and as such shall have and maintain complete
control over and be responsible for all of its employees and operations.
Neither Vestar nor anyone employed by it, acting in their capacities hereunder,
shall be, represent, act, purport to act, or be deemed to be the agent,
representative, employee or servant of Holdings and the Company and their
respective subsidiaries. This Agreement shall not be deemed to create any form
of business organization between the parties hereto, nor is either party granted
any right or authority to assume or create any obligation or responsibility on
behalf of the other party, nor shall either party be in any way liable for any
debt of the other. Without limiting the generality of the foregoing, all final
decisions with respect to matters as to which Vestar has provided services
hereunder shall be solely those of Holdings and the Company and their respective
subsidiaries.
9. COMPLIANCE WITH LAWS. Vestar covenants that in the performance of
the services to Holdings and the Company and their respective subsidiaries
hereunder it will comply with all applicable statutes, rules, regulations and
orders of the United States and of any state or political subdivisions hereof
and of any applicable foreign jurisdiction.
10. GENERAL. (a) No amendment or waiver of any provision of this
Agreement, or consent to any departure by either party from any such provision,
shall in any event be effective unless the same shall be in writing and signed
by the parties to this Agreement and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(b) Any and all notices hereunder shall, in the absence of receipted
hand delivery, be deemed duly given when mailed, if the same shall be sent by
registered or certified mail, return receipt requested, and the mailing date
shall be deemed the date from which all time periods pertaining to a date of
notice shall run. Notices shall be addressed to the parties at the following
addresses:
If to Vestar:
Vestar Capital Partners
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
If to Holdings or the Company:
4
Xxxxxx American Investment Corp.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
In any case, with a
copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
(c) This Agreement shall constitute the entire Agreement between the
parties and their affiliates 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 ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED THEREIN. THE PARTIES TO THIS AGREEMENT HEREBY AGREE TO
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN
THE SOUTHERN DISTRICT OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT. This Agreement shall inure to the benefit of, and
be binding upon, Vestar, the Indemnified Parties, Holdings and the Company and
their respective successors and assigns.
(e) This Agreement may be executed in two or more counterparts, and by
different parties on separate counterparts, each set of counterparts showing
execution by all parties shall be deemed an original, but all of which shall
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.
5
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers or agents as set forth
below.
XXXXXX AMERICAN INVESTMENT CORP.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
XXXXXX AMERICAN CORP.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
VESTAR CAPITAL PARTNERS
By its General Partner: Vestar
Management Corporation II
By: /s/ Xxxxxx X. X'Xxxxxxx
------------------------------
Name: Xxxxxx X. X'Xxxxxxx
Title: Chief Executive Officer
