EXHIBIT 10.11
MANAGEMENT ADVISORY AGREEMENT
THIS MANAGEMENT ADVISORY AGREEMENT ("Advisory Agreement"), is executed
as of November 3, 2004 by and among Xxxxxx & Company Limited (the "Advisor"),
TAL International Group, Inc., a Delaware corporation (the "Company"), and its
direct or indirect subsidiaries, including those party hereto (each are referred
to as a "Subsidiary" and collectively as the "Subsidiaries").
W I T N E S S E T H:
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WHEREAS, the Advisor has and/or has access to personnel who are highly
skilled in the field of rendering advice to businesses such as 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 Advisor;
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 Advisor 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 Advisor, through the Advisor's own
personnel or through personnel available to the Advisor, 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 acquisitions, divestitures and investments, their financial and business
affairs, their relationships with their lenders, stockholders and other
third-party associates or affiliates, and the expansion of their businesses.
Advisor 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 December 31, 2009, unless extended, or sooner terminated, as
provided in Section 4. The Advisor's personnel shall be reasonably available to
the Company's managers, auditors and other personnel for consultation and advice
pursuant to this Agreement, subject to Advisor's reasonable convenience and
scheduling. Services may be rendered at the Advisor's offices or at such other
locations selected by the Advisor as the Company and the Advisor shall from time
to time agree.
2. (a) Subject to Section 4, for services to be rendered, the Company
shall pay quarterly to the Advisor a consulting services fee equal to (i) 40% of
the first $1,250,000 of the
Base Amount (as defined below) plus (ii) the Advisor's Pro Rata Portion (as
defined below) of any Base Amount in excess of $1,250,000. Such fee will be paid
quarterly in arrears on each Payment Date (as defined in the Credit Agreement
dated as of November 3, 2004, among Transamerica Leasing, Inc., Trans Ocean
Ltd., Trans Ocean Container Corporation, the Lenders party thereto and Fortis
Bank (Nederland) N.V. (the "Senior Credit Agreement"), starting with a payment
in respect of the quarter ended March 31, 2005.
(b) For purposes of this Agreement the following terms shall have
the corresponding meanings:
(i) "Base Amount" shall mean an amount equal to 2.5% of EBITDA
(as defined in that certain Senior Subordinated Credit Agreement, dated
as of November 3, 2004, by and among the Company and the lenders named
therein) for the most recently completed and reported fiscal quarter of
the Company and its Subsidiaries on a consolidated basis.
(ii) "Common Stock" shall mean the Common Stock, par value
$.001 per share of the Company.
(iii) "Pro Rata Portion" shall mean the fraction obtained by
dividing (x) the number of shares of Common Stock owned by the Seacon
Investors on the date of payment of the consulting fee under this
Section 2 by (y) the number of shares of Common Stock owned by the
Resolute Investors plus the number of shares of Common Stock owned by
the Seacon Investors on the date of payment of the consulting fee under
this Section 2.
(iv) "Seacon Investors" shall mean Seacon Holdings Limited and
its affiliates.
(v) "Resolute Investors" shall mean The Resolute Fund, L.P.,
The Resolute Fund Singapore PV, L.P., The Resolute Fund Netherlands PV
I, L.P., The Resolute Fund Netherlands PV II, L.P., The Resolute Fund
NQP, L.P., JZ Equity Partners PLC, Fairholme Partners, L.P., Fairholme
Ventures II, LLC, Fairholme Holdings, Ltd., Edgewater Private Equity
Fund III, L.P., Edgewater Private Equity IV, L.P., and their respective
affiliates.
(c) In addition to the foregoing, in recognition of the services
rendered through the date hereof by the Advisor for the evaluation, negotiation,
financing and closing of the Stock Purchase Agreement, dated July 10, 2004,
between TA Leasing Holding Co., Inc. and Xxxxxx & Company Limited, as amended,
and related financing, the Company shall pay all reasonable and documented
out-of-pocket costs and expenses incurred by Advisor for services provided by
the entities listed on Exhibit I in connection with such evaluation,
negotiation, financing and closing, promptly after submission of the appropriate
invoices. In addition, the Company shall reimburse Advisor at Closing for any
private aircraft, travel, meals and lodging expenses incurred by Advisor in
connection with such evaluation, negotiation, financing and closing up to
$850,000 in the aggregate, promptly after submission of the appropriate
invoices.
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3. Notwithstanding the foregoing, the Company shall not be required to
pay the fees under Sections 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, its Subsidiaries or properties including,
without limitation, the Senior Credit Agreement, (b) if the Company or any of
its subsidiaries has not paid cash 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 and such payments have not been made
within applicable cure periods, or has not paid or accrued cash 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 with
respect to its preference shares, if any or (c) if for any other reason payment
of the monitoring fee set forth in Section 3 of the Management Consulting
Agreement dated as of the date hereof, by and among The Jordan Company, L.P. and
the Company and its subsidiaries (the "TJC Management Agreement") is prohibited
under any credit, Stock or other financing agreement of the Company. Any
payments otherwise owed hereunder, which are not made for any of the
above-mentioned reasons, shall not be canceled but rather accrue, and shall be
payable by the Company promptly when, and to the extent, that the Company and
its Subsidiaries are no longer prohibited from making such payments and when the
Company has become current with respect to such principal or interest payments
and has become current with respect to such dividends and has made such
redemptions with respect to such preferred shares, if any. Any payment required
hereunder which is not paid when due shall bear interest at the rate of five
percent (5%) per annum. This Section 3 will not, in any event, restrict or limit
the Company's obligations under Sections 7 and 8, which will be absolute and not
subject to set-off.
4. This Agreement shall be automatically renewed for successive
one-year terms starting December 31, 2009 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 thirty (30) days' prior written
notice from the Company to the Advisor at any time after (a) substantially all
of the shares or substantially all of the assets of the Company or all of its
Subsidiaries are sold to an entity which is not an Affiliate (as defined in the
Shareholders Agreement, dated the date hereof, between the Company and the other
parties thereto) of the Advisor or The Resolute Investors, (b) the Company is
merged or consolidated into another entity unaffiliated with the Advisor and/or
the Resolute Investors and the Company is not the survivor or resulting company
of such transaction, (c) the Company consummates a "Public Offering" (as defined
in the Shareholders Agreement dated as of the date hereof by and among the
Company and the stockholders of the Company party thereto) for gross proceeds of
at least $50 million, (d) the Seacon Investors own less than five percent (5%)
of the outstanding Common Stock (for the avoidance of doubt, all shares of
Common Stock subject to the Escrow Agreement are owned by the Seacon Investors
unless and until such shares are released from escrow and distributed to the
Resolute Investors), or (e) the TJC Management Agreement is terminated for any
reason after the initial five-year term thereof other than any termination by
the Company pursuant to clause (d) of Section 5 of the TJC Management Agreement.
5. The Advisor shall have no liability to the Company for breach of
this Agreement on account of (i) any advice which it renders to the Company or
any of its direct or indirect
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Subsidiaries, provided the Advisor 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 Advisor's inability to or
achieve results desired by the Company (or any of its direct or indirect
Subsidiaries) or Advisor's failure to render services to the Company at any
particular time or from time to time. The Company's and any its direct or
indirect Subsidiaries' sole remedy for any claim for breach under this Agreement
shall be termination of this Agreement.
6. Notwithstanding anything contained in this Agreement to the
contrary, the Company agrees and acknowledges for itself and, to the extent it
is able, on behalf of its direct and indirect Subsidiaries that the Advisor and
its shareholders, members, partners, employees, directors and agents intend to
engage and participate in acquisitions and business transactions outside of the
scope of the relationship created by this Agreement and neither the Advisor nor
any of its shareholders, members, partners, employees, directors or agents 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.
7. The Company will, and will cause each of their direct and indirect
Subsidiaries to, indemnify and hold harmless to the fullest extent permitted by
applicable law, the Advisor, its affiliates and associates, and each of the
respective owners, members, 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 Advisor's services hereunder or other
activities on behalf of the Company and its direct and indirect Subsidiaries.
8. 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 Advisor is made whole for such taxes or charges.
9. (a) This Agreement and the other agreements entered into on the date
hereof in connection with this Agreement supersede all prior agreements between
the parties with respect to the subject matter thereof (including the letter
agreement dated September 16, 2004, by and among The Resolute Fund, L.P., TMC
Holdings, Inc. and Xxxxxx & Company Limited and the letter agreement dated
September 16, 2004, by and between The Resolute Fund, L.P. and Xxxxxx & Company
Limited) and constitute a complete and exclusive statement of the terms of the
agreements among the parties with respect to the subject matter thereof. Without
limiting the generality of the foregoing, the fee payable to Seacon Holdings
Limited under the Transaction Fee Agreement dated as of the date hereof, between
the Company and Seacon Holdings Limited, shall satisfy, in all respects, the $12
million transaction fee specified to be paid to the Advisor pursuant to the
letter agreement dated September 16, 2004, by and between The Resolute Fund,
L.P. and Xxxxxx & Company Limited.
(b) This Agreement may be assigned by Advisor to any of its
subsidiaries or affiliates without the consent of the Company; 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.
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(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) 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, or in the case of Subsequent Subsidiaries
that are not direct or indirect Subsidiaries of the Company, to the extent it is
able, 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.
(f) Each 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.
(g) 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.
(h) The Advisor and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the Company.
(i) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. EACH OF
THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF
THIS AGREEMENT, THE NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD
NOT BE MADE WHOLE BY MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY
TO WHICH THEY MAY BE ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED
TO SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BE APPROPRIATE. THE CHOICE OF
FORUM SET FORTH IN THIS SECTION 9(i) SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT OF ANY JUDGMENT OF A NEW YORK FEDERAL OR STATE COURT OR THE TAKING
OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SUCH A JUDGMENT IN ANY OTHER
APPROPRIATE JURISDICTION.
(j) IN THE EVENT ANY PARTY TO THIS AGREEMENT COMMENCES ANY
LITIGATION, PROCEEDING OR OTHER LEGAL ACTION IN CONNECTION WITH OR RELATING TO
THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED
HEREIN OR THEREIN, THE PARTIES TO THIS AGREEMENT HEREBY (1) AGREE UNDER ALL
CIRCUMSTANCES
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ABSOLUTELY AND IRREVOCABLY TO INSTITUTE ANY LITIGATION, PROCEEDING OR OTHER
LEGAL ACTION IN A COURT OF COMPETENT JURISDICTION LOCATED WITHIN THE SOUTHERN
DISTRICT OF NEW YORK, WHETHER A STATE OR FEDERAL COURT; (2) AGREE THAT IN THE
EVENT OF ANY SUCH LITIGATION, PROCEEDING OR ACTION, SUCH PARTIES WILL CONSENT
AND SUBMIT TO THE PERSONAL JURISDICTION OF ANY SUCH COURT DESCRIBED IN CLAUSE
(1) OF THIS SECTION AND TO SERVICE OF PROCESS UPON THEM IN ACCORDANCE WITH THE
RULES AND STATUTES GOVERNING SERVICE OF PROCESS (IT BEING UNDERSTOOD THAT
NOTHING IN THIS SECTION SHALL BE DEEMED TO PREVENT ANY PARTY FROM SEEKING TO
REMOVE ANY ACTION TO A FEDERAL COURT IN THE SOUTHERN DISTRICT OF NEW YORK; (3)
AGREE TO WAIVE TO THE FULL EXTENT PERMITTED BY LAW ANY OBJECTION THAT THEY MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH LITIGATION, PROCEEDING OR ACTION
IN ANY SUCH COURT OR THAT ANY SUCH LITIGATION, PROCEEDING OR ACTION WAS BROUGHT
IN ANY INCONVENIENT FORUM; (4) AGREE, AFTER CONSULTATION WITH COUNSEL, TO WAIVE
ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS RELATING TO THIS
AGREEMENT; (5) AGREE TO DESIGNATE, APPOINT AND DIRECT AN AUTHORIZED AGENT TO
RECEIVE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS AND DOCUMENTS IN ANY LEGAL
PROCEEDING IN THE SOUTHERN DISTRICT OF NEW YORK; (6) AGREE TO PROVIDE THE OTHER
PARTIES TO THIS AGREEMENT WITH THE NAME, ADDRESS AND FACSIMILE NUMBER OF SUCH
AGENT; (7) AGREE AS AN ALTERNATIVE METHOD OF SERVICE TO SERVICE OF PROCESS IN
ANY LEGAL PROCEEDING BY MAILING OF COPIES THEREOF TO SUCH PARTY AT ITS ADDRESS
SET FORTH HEREIN FOR COMMUNICATIONS TO SUCH PARTY; (8) AGREE THAT ANY SERVICE
MADE AS PROVIDED HEREIN SHALL BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
AND (9) AGREE THAT NOTHING HEREIN SHALL AFFECT THE RIGHTS OF ANY PARTY TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. TO THE EXTENT PERMITTED
BY LAW IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT
OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, AND AGREE TO TAKE
ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXXXXX & COMPANY LIMITED
By: /s/ A. Xxxx Xxxxxx
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Name: A. Xxxx Xxxxxx
Title: Chairman
TAL INTERNATIONAL GROUP, INC.
By: /s/ A. Xxxxxxx Xxxxxx, Xx.
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Name: A. Xxxxxxx Xxxxxx, Xx.
Title: Vice President
