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Exhibit 10.8
May __, 1997
PERSONAL AND CONFIDENTIAL
Vestcom International, Inc.
0000 Xxxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxx Xxxxxx
President and Chief Executive Officer
Dear Xxxx:
This letter agreement (the "Agreement") shall confirm the terms and
conditions of the payment of an advisory fee to Xxxxxxxxxxx & Co., Inc.
("Oppenheimer") by Vestcom International, Inc. ("Vestcom") in consideration of
certain financial advisory and investment banking services which Oppenheimer has
rendered in connection with Vestcom's efforts to obtain a line of credit with a
commercial bank (the "Line of Credit") and to effect an initial consolidation of
companies (the "Founding Companies") in the computer output and document
management services industry to form a leading international provider of such
services (the "Consolidation").
1. Fees. Vestcom agrees to pay Xxxxxxxxxxx for its services as
follows:
(a) A cash transaction fee equal to 1% of the value of the Line of
Credit (the "Line of Credit Fee"), which shall become due and
owing upon the closing of the Line of Credit, and which shall
be payable on January 1 in the year subsequent to the closing
of the Line of Credit. No portion of the Line of Credit Fee
shall be paid to Xxxxxxxxxxx unless the aggregate amount
payable under the Transaction Fee (as hereinafter defined) is
less than $1,800,000.
(b) A cash transaction fee (the "Transaction Fee") based upon the
so-called "Xxxxxx Formula" (which shall be applied to the
acquisition of each Founding Company) calculated as set forth
below. The Transaction Fee shall become due and owing at the
time of the consummation of the Consolidation, and shall be
payable on a deferred basis as is set forth in Section 1(c)
below.
(i) 5% of the first $1,000,000 of consideration paid to
the stockholders of the acquired Founding Company;
(ii) 4% of the second $1,000,000 of consideration paid to
the stockholders of the acquired Founding Company;
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Xx. Xxxx Xxxxxx
May __, 1997
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(iii) 3% of the third $1,000,000 of consideration paid to
the stockholders of the acquired Founding Company;
(iv) 2% of the fourth $1,000,000 of consideration paid to
the stockholders of the acquired Founding Company;
and
(v) 1% of the consideration paid to the stockholders of
the acquired Founding Company that exceeds
$4,000,000.
In no event, however, shall the fee earned by Xxxxxxxxxxx for
the acquisition of any Founding Company be less than $260,000.
It is also explicitly agreed that the formula set forth above
shall not be applied, and thus no fee shall be payable, with
respect to any Founding Company deemed for accounting purposes
to be the accounting acquiror in the Consolidation.
(c) The Transaction Fee shall be payable as follows:
(i) $700,000 of the Transaction Fee shall be payable on
January 1 of the year subsequent to the consummation
of the Consolidation (the "First Payment Date").
(ii) The balance shall be payable in four equal
installments on March 31, June 30, September 30 and
December 31 in the same year as the First Payment
Date.
(d) The aggregate amount payable to Xxxxxxxxxxx under the Line of
Credit Fee and the Transaction Fee shall not exceed
$1,800,000. In the event that the aggregate amount payable to
Xxxxxxxxxxx under the Transaction Fee is less than $1,800,000,
the difference between $1,800,000 and such amount shall be
paid in accordance with Section 1(a) above. All such fees are
payable only upon consummation of the Consolidation.
(e) In the event that the number of Founding Companies is
increased or decreased from seven companies, the parties shall
make an appropriate adjustment to the Transaction Fee.
2. Expenses. Vestcom agrees to reimburse Xxxxxxxxxxx for all of its
reasonable out-of-pocket fees and expenses up to a maximum of $75,000
(including, but not limited to, travel, accommodations, telephone, computer
time, courier and supplies) incurred by
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Xx. Xxxx Xxxxxx
May __, 1997
Page 3
Xxxxxxxxxxx in connection with the performance of its services under this
Agreement. All such expenses are payable only upon consummation of the
Consolidation.
3. Term. The term of this Agreement shall extend until January 31,
1998.
4. Indemnification. In addition to the payment of fees provided for
above, and regardless of whether the Consolidation is consummated, Vestcom
agrees to indemnify Xxxxxxxxxxx, as set forth in the attached Annex A. This
Section 4 shall survive the termination or expiration of this Agreement.
5. Information. Xxxxxxxxxxx recognizes that in performing its services
pursuant to this Agreement, it will be using and relying on data, material and
other information concerning Vestcom and the prospective Founding Companies
("Vestcom Information") furnished by Vestcom and its employees and
representatives and through its engagement may have access to data, materials
and other information concerning possible third parties ("Third Party
Information").
Vestcom represents that all Vestcom Information furnished to
Xxxxxxxxxxx pursuant to this Agreement shall be accurate and complete in all
material respects at the time furnished, and that, if the Vestcom Information
becomes materially inaccurate, incomplete or misleading during the term of this
Agreement, Vestcom shall so advise Xxxxxxxxxxx in writing. Accordingly,
Xxxxxxxxxxx assumes no responsibility for the accuracy and completeness of the
Vestcom Information. Xxxxxxxxxxx also assumes no responsibility for the accuracy
and completeness of the Third Party Information.
In rendering its services hereunder, Xxxxxxxxxxx will be using
and relying upon the Vestcom Information and Third Party Information without
independent verification thereof. All Vestcom Information and Third Party
Information that is not publicly available will be treated in strict confidence,
and will not be revealed by Xxxxxxxxxxx to any third person unless legally
compelled by a court of competent jurisdiction. This Section 5 shall survive the
termination or expiration of this Agreement.
6. Disclosure. Vestcom agrees that, except if disclosed in or filed as
an exhibit to a Registration Statement filed by Vestcom or as otherwise required
by law, the services or advice to be provided by Xxxxxxxxxxx under this
Agreement shall not be disclosed publicly or made available to third parties
without Xxxxxxxxxxx'x prior written approval, which shall not be unreasonably
withheld or delayed.
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Xx. Xxxx Xxxxxx
May __, 1997
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7. Governing Law. This Agreement shall be governed by the laws of the
State of New York and may not be amended or modified except in a writing signed
by both parties.
8. Successors. This Agreement and all rights, liabilities and
obligations hereunder shall be binding upon and inure to the benefit of each
party's successors but may not be assigned without the prior written approval of
the other party.
9. Headings. The descriptive headings of the Sections of this Agreement
are inserted for convenience only, do not constitute a part of this Agreement
and shall not affect in any way the meaning or interpretation of this Agreement.
10. No Brokers. Vestcom represents and warrants to Xxxxxxxxxxx that
there are no brokers, representatives or other persons which have an interest in
the compensation due to Xxxxxxxxxxx pursuant to this Agreement.
Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
letter.
Sincerely,
----------------------
Xxxxxxx X. Xxxxx
Managing Director
Agreed to and accepted as
of the date of first services
rendered hereunder.
Vestcom International, Inc.
By: _____________________________
Name: Xxxx Xxxxxx
Title: President and Chief Executive Officer
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ANNEX A
The Company agrees to indemnify Xxxxxxxxxxx, its employees, directors, officers,
agents, affiliates and each person, if any, who controls it within the meaning
of either Section 20 of the Securities Exchange Act of 1934 or Section 15 of the
Securities Act of 1933 (each such person, including Xxxxxxxxxxx, is referred to
as "Indemnified Party") from and against any losses, claims, damages and
liabilities, joint or several (including all legal or other expenses reasonably
incurred by any Indemnified Party in connection with the preparation for or
defense of any threatened or pending claim, action or proceeding, whether or not
resulting in any liability) ("Damages"), to which such Indemnified Party, in
connection with its services or arising out of its engagement hereunder, may
become subject under any applicable Federal or state law or otherwise, including
but not limited to liability (i) caused by or arising out of an untrue statement
or an alleged untrue statement of a material fact or the omission or the alleged
omission to state a material fact necessary in order to make a statement not
misleading in light of the circumstances under which it was made, (ii) caused by
or arising out of any act or failure to act or (iii) arising out of
Xxxxxxxxxxx'x engagement or the rendering by any Indemnified Party of its
services under this Agreement, provided, however, that the Company will not be
liable to the Indemnified Party hereunder to the extent that any Damages are
found in a final non-appealable judgment by a court of competent jurisdiction to
have resulted from the gross negligence, bad faith or willful misconduct of the
Indemnified Party seeking indemnification hereunder.
These indemnification provisions shall be in addition to any liability which the
Company may otherwise have to any Indemnified Party.
If for any reason, other than a final non-appealable judgment finding an
Indemnified Party liable for Damages for its gross negligence, bad faith or
willful misconduct, the foregoing indemnity is available to an Indemnified Party
or insufficient to hold an Indemnified Party harmless, then the Company shall
contribute to the amount paid or payable by an Indemnified Party as a result of
such Damages in such proportion as is appropriate to reflect not only the
relative benefits received by the Company and its shareholders on the one hand
and Xxxxxxxxxxx on the other, but also the relative fault of the Company and the
Indemnified Party as well as any relevant equitable considerations, subject to
the limitation that in no event shall the total contribution of all Indemnified
Parties to all such Damages exceed the total amount of fees actually received
and retained by Xxxxxxxxxxx hereunder.
Promptly after receipt by the Indemnified Party of notice of any claim or of the
commencement of any action in respect of which indemnity may be sought, the
Indemnified Party will notify the Company in writing of the receipt or
commencement thereof and the Company shall have the right to assume the defense
of such claim or action (including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of fees and expenses of
such counsel), provided that the Indemnified Party shall have the right to
control its defense if, in the opinion of its counsel, the Indemnified Party's
defense is unique or separate to it as the case may
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be, as opposed to a defense pertaining to the Company. In such event, the
Indemnified Party shall have the right to retain counsel reasonably satisfactory
to the Company, at the Company's expense, to represent the Indemnified Party in
any claim or action in respect of which indemnity may be sought and agrees to
cooperate with the Company and the Company's counsel in the defense of such
claim or action, it being understood, however, that the Company shall not, in
connection with any one such claim or action on separate, but substantially
similar or related claims or action in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable fees and
expense of more than one separate firm of attorneys, for all the Indemnified
Parties unless the defense of one Indemnified Party is unique or separate from
that of another Indemnified Party subject to the same claim or action. In the
event that the Company does not promptly assume the defense of a claim or
action, the Indemnified Party shall have the right to employ counsel reasonably
satisfactory to the Company, at the Company's expense, to defend such claim or
action. The omission by an Indemnified Party to promptly notify the Company of
the receipt or commencement of any claim or action in respect of which indemnity
may be sought will relieve the Company from any liability the Company may have
to such Indemnified Party only to the extent that such a delay in notification
materially prejudices the Company's defense of such claim or action. The Company
shall not be liable for any settlement of any such claim or action effected
without its written consent, which shall not be unreasonably withheld or
delayed. Any obligation pursuant to this Annex A shall survive the termination
or expiration of the Agreement.
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