Exhibit 10.7
PROFESSIONAL SERVICES AGREEMENT
THIS PROFESSIONAL SERVICES AGREEMENT ("AGREEMENT"), dated as of
January 25, 2001, is made by and among BA SBIC Sub, Inc. a Delaware corporation
(the "CONSULTANT") and Xxxxxxx & Xxxxxx Floorcoverings Inc., a Delaware
corporation (the "COMPANY").
WHEREAS, BancAmerica Capital Investors II, L.P., a Delaware
limited partnership (the "INVESTOR") will purchase shares of Class B Preferred
Stock, no par value, and shares of Common Stock, no par value (collectively, the
"Stock") of CAF Holdings, Inc., a Virginia corporation and the parent of the
Company ("HOLDINGS"), pursuant to that certain Recapitalization Agreement, dated
as of December 4, 2000, by and among Holdings, Consultant and the other
signatories thereto (the "RECAPITALIZATION AGREEMENT");
WHEREAS, Holdings, the Investor and the other stockholders of
Holdings are parties to that Investor Rights Agreement, dated as of the date
hereof, concerning securities issued by Holdings (the "INVESTOR RIGHTS
AGREEMENT");
WHEREAS, the Company desires to receive financial and management
consulting services from the Consultant and obtain the benefit of the experience
of the Consultant in business and financial management;
WHEREAS, in connection with the purchase of the Stock by the
Investor, the Consultant desires to provide financial and management consulting
services to the Company pursuant to the terms of this Agreement; and
WHEREAS, the compensation arrangements set forth in this
Agreement are designed to compensate the Consultant for providing such financial
and management consulting services to the Company.
NOW, THEREFORE, in consideration of the foregoing premises and
the respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom, the Consultant and the Company hereby agree as follows:
1. ENGAGEMENT. The Company hereby engages the Consultant as a
financial and management consultant, and the Consultant hereby agrees to provide
financial and management consulting services to the Company, all on the terms
and subject to the conditions set forth below.
2. SERVICES OF THE CONSULTANT. The Consultant hereby agrees
during the term of this engagement to consult with the board of directors (the
"BOARD") of Holdings, the Board of Directors of the Company, and the management
of the Company in such manner and on such business and financial matters as may
be reasonably requested from time to time by the Board, including with respect
to:
(i) business strategy;
(ii) budgeting of future corporate investments;
(iii) acquisition and divestiture strategies; and
(iv) debt and equity financings.
3. PERSONNEL. The Consultant shall provide and devote to the
performance of this Agreement such employees, agents and representatives of the
Consultant and for such time as the Consultant shall deem appropriate for the
furnishing of the services required thereby.
4. MONITORING FEES. The Company shall pay to the Consultant a
quarterly monitoring fee in the amount of $62,500 in immediately available funds
on March 31, June 30, September 30 and December 31 of each year during the term
of this Agreement (as provided in PARAGRAPH 6 below), commencing on March 31,
2001.
5. EXPENSES. The Company shall promptly reimburse the
Consultant for such reasonable travel expenses and other out-of-pocket fees and
expenses as have been or may be incurred by the Consultant and its directors,
officers, employees, agents and representatives in connection with the Closing
(as defined in the Recapitalization Agreement) and in connection with the
rendering of services hereunder (including, but not limited to, fees and
expenses incurred in attending Company related meetings).
6. TERM. The term of this Agreement will continue from the
date hereof until the earliest to occur of the following: (i) the time at which
the Consultant owns less than 25% of the Stock (or securities issued in exchange
therefor) acquired by the Investor under the Recapitalization Agreement, (ii) an
initial Public Offering of securities of Holdings (as defined in the Investors
Rights Agreement) or (iii) a Sale of the Company (as defined in the Investor
Rights Agreement). The expiration of the term of this Agreement, whether
pursuant to this paragraph or otherwise, shall not affect the Company's
obligations to pay the quarterly monitoring fee (or any pro-rata portion thereof
determined based on the actual number of days which have elapsed since the due
date for the most recent quarterly monitoring fee) or any costs or expenses
incurred by the Consultant in rendering services hereunder and not reimbursed by
the Company as of the effective date of such expiration.
7. LIABILITY. Neither the Consultant nor any of its
affiliates, partners, employees or agents shall be liable to the Company or any
of its subsidiaries or affiliates for any loss, liability, damage or expense
arising out of or in connection with the performance of services contemplated by
this Agreement, unless such loss, liability, damage or expense shall be proven
to result directly from the gross negligence or willful misconduct of the
Consultant.
8. INDEMNIFICATION. The Company hereby agrees to indemnify
and hold the Consultant and its members, affiliates, officers, agents and
employees harmless from and against any and all loss, liability, suits, claims,
costs, damages and expenses (including attorneys' fees) arising from its
performance hereunder, except as a result of its gross negligence or willful
misconduct.
9. INDEPENDENT CONTRACTOR. The Consultant and the Company
acknowledge and agree that the Consultant shall perform services hereunder as an
independent contractor, retaining control over and responsibility for its
operations and personnel. Neither the Consultant nor any of its affiliates, nor
any of its members, partners, directors, managers, officers or employees shall
be considered employees or agents of the Company or any of its subsidiaries as a
result of this Agreement nor shall the Consultant or any of its affiliates or
any of its members, partners, directors, managers, officers or employees have
the authority to contract in the name of or bind the Company, except as
expressly agreed to in writing by the Company.
10. NOTICES. Any notice, report or payment required or
permitted to be given or made under this Agreement by one party to the others
shall be deemed to have been duly given or made if personally delivered or, if
mailed, when mailed by registered or certified mail, postage prepaid, to the
other parties at the addresses set forth below:
IF TO THE CONSULTANT: with a copy to:
BA SBIC Sub, Inc. Xxxxxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx 000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Telecopy: 312/828-6298 Telecopy: 312/861-2200
Attn: Xxxxxx X. Xxxxxxx Attn: Xxxx X. Xxxxxxxxxxx
Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
IF TO THE COMPANY:
Xxxxxxx & Xxxxxx Floorcoverings, Inc.
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Telecopy: 706/259-2125
Attn: Xxxxx X. Xxxxxxx
Xxxxxx X. XxXxx
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement (a)
contains the complete and entire understanding and agreement of the Consultant
and the Company with respect to the subject matter hereof and (b) supersedes all
prior and contemporaneous understandings, conditions and agreements, oral or
written, express or implied, respecting the engagement of the Consultant in
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connection with the subject matter hereof. This Agreement may not be amended or
modified except by written instrument executed by the Consultant and the
Company.
12. WAIVER OF BREACH. The waiver by either party of a breach
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach of that
provision or any other provision hereof.
13. ASSIGNMENT. Neither the Consultant nor the Company may
assign any of their rights or obligations under this Agreement without the
express written consent of the other parties hereto.
14. SUCCESSORS. This Agreement and all the obligations and
benefits hereunder shall inure to the successors and permitted assigns of the
parties.
15. COUNTERPARTS. This Agreement may be executed and delivered
by each party hereto in separate counterparts, each of which when so executed
and delivered shall be deemed an original and both of which taken together shall
constitute one and the same agreement.
16. CHOICE OF LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Professional Services Agreement to be duly executed and delivered on the date
and year first above written.
XXXXXXX & XXXXXX FLOORCOVERINGS, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Its:
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BA SBIC SUB, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Its:
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