EXHIBIT 10.7
TJC MANAGEMENT CONSULTING AGREEMENT
THIS TJC MANAGEMENT CONSULTING AGREEMENT (this "Agreement") is
executed as of the 7th day of November, 1996 by and among TJC MANAGEMENT
CORPORATION, a Delaware corporation (the "Consultant") and MOTORS AND GEARS
HOLDINGS, INC., a Delaware corporation, MOTORS AND GEARS, INC., a Delaware
corporation, MOTORS AND GEARS INDUSTRIES, INC., a Delaware corporation,
XXXXXX-XXXXX INDUSTRIES, INC., an Illinois corporation, BCM HOLDINGS, INC.,
an Illinois corporation, THE NEW IMPERIAL ELECTRIC COMPANY, a Delaware
corporation, THE NEW XXXXX MOTORS COMPANY, a Delaware corporation, and NEW
GEAR RESEARCH, INC., a Delaware corporation (each individually and
collectively referred to herein as the "Company").
W I T N E S S E T H:
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WHEREAS, the Consultant has and/or, has access to personnel who are
highly skilled in the field of rendering advice to businesses and financial
advice 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 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 November 7, 2006, unless extended, or
sooner terminated, as provided in paragraph 5 below. The Consultant's
personnel shall be reasonably available to the Company's managers, auditors
and other personnel for consultation and advice, 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. a. Subject to Section 4 hereof, the Company shall pay to the
Consultant, (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 or
(B) 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) and (B), a "Transaction"),
including, but not limited to, any Transaction negotiated for the Company
and/or its direct and indirect subsidiaries involving any affiliate of the
Company or the Consultant, including, but not limited to, any Transaction
involving, The Jordan Company, Jordan Industries, Inc. ("Jordan
Industries"), MCIT 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 direct and indirect 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 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.
b. In recognition of the services rendered by the Consultant in
connection with the evaluation, negotiation, financing and closing of the
Company's (i) offering of $170,000,000 aggregate principal amount of Series
A Senior Notes due 2006, (ii) acquisition, through its indirect subsidiary,
New Imperial Electric Company, of all the net business assets of The
Imperial Electric Company, The Xxxxx Motor Company and Gear Research, Inc.
on even date herewith and (iii) new revolving credit facility with Bankers
Trust Company, as agent, and the other lenders thereunder, the Company will
pay Consultant a fee of $2,250,000 and no further fees in connection with
such Transaction pursuant to Section 2a and 2b.
3. The Company shall reimburse Consultant for out-of-pocket expenses
(including, without limitation, an allocable amount of the Consultant's
overhead expenses, as determined by the Consultant in its sole discretion)
incurred by the Consultant and its personnel in performing services
hereunder to the Company and its direct and indirect subsidiaries which
shall be promptly reimbursed to it by the Company upon the Consultant's
rendering of 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 and/or its direct and
indirect subsidiaries or properties, (b) if the Company has not paid
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 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 cancelled 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 (12.75%) per annum. This
Section 4 shall 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 but will not include fees and third party operating
expenses.
5. This Agreement shall be automatically renewed for successive
one-year terms starting on the tenth anniversary of the date hereof 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 (i) substantially all of the stock or
substantially all of the assets of the Company are sold to an entity
unaffiliated with the Consultant and/or a majority of the Company's
stockholders immediately prior to such sale, (ii) 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 or (iii) a public
offering of the voting securities of the Company has commenced,
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 or any of its direct or indirect
subsidiaries 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 acknowledges and agrees for itself and on behalf of
its direct and indirect subsidiaries that the Consultant, the Jordan
Affiliates and their shareholders, employees, directors and affiliates
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
shareholders, employees, directors or affiliates 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 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 either party hereto without the
consent of the other party; 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. In furtherance and not in
limitation of the foregoing, the Company acknowledges and agrees that the
Consultant may assign at its sole discretion its right to receive any
payment or portion of any payment required hereunder to Jordan Industries;
provided, that the Consultant provides written confirmation to the Company
that the Consultant and the Board of Directors of Jordan Industries agree
to such payment assignment.
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. To the extent not expressly prohibited by the provisions of any
credit, stock, financing or other agreements or instruments binding upon
the Company and its direct and indirect subsidiaries, 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.
f. 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.
g. The Consultant and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the Company.
h. Except as provided by that certain Termination Agreement, of even
date herewith, by and among certain of the parties hereto, this Agreement
sets forth the entire understanding of the Company and the Consultant, and
supersedes all prior agreements, arrangements and communications, whether
oral or written, with respect to the subject matter hereof.
i. 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.
j. This Agreement shall be governed by the internal laws (and not
the law of conflicts) of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
TJC MANAGEMENT CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
MOTORS AND GEARS HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
MOTORS AND GEARS, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
MOTORS AND GEARS INDUSTRIES, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
XXXXXX-XXXXX INDUSTRIES, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
BCM HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
THE NEW IMPERIAL ELECTRIC COMPANY
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
THE NEW XXXXX MOTORS COMPANY
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
NEW GEAR RESEARCH, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
