Exhibit 10.5
NEW SUBSIDIARY ADVISORY AGREEMENT
THIS NEW SUBSIDIARY ADVISORY AGREEMENT ("Agreement"), is executed as of the
25th day of July 1997 by and among JORDAN INDUSTRIES, INC., an Illinois
corporation (hereinafter referred to as the "Consultant"), and JORDAN
TELECOMMUNICATION PRODUCTS, INC., a Delaware corporation and each of the other
parties a signatory hereto (hereinafter collectively referred to 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 acquisitions, divestitures and investments, their financial 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 December 31,
2007, unless extended, or sooner terminated, as provided in Section 5 below. The
Consultant'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 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 subsidiaries in connection with the acquisition by the Company and/or
its 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, (B) by the Company and/or its subsidiaries
in connection with any joint venture or other minority investment, or (C) to the
Company in connection with the sale by the Company of all or substantially all
of the Company's and/or its 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 subsidiaries (each of the
transactions described in clauses (A), (B) and (C), a "Transaction"), including,
but not limited to, any Transaction negotiated for the Company involving any
affiliate of the Company or the Consultant, including, but not limited to, any
Transaction involving, TJC Management Corporation, The Jordan Company, 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 subsidiaries with
the assistance of Consultant, including, but not limited to, any financing
obtained for the Company and/or its 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 each of a
majority of the Board of Directors and 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 senior note, senior discount note, preferred stock and bank financing
on or about the date hereof, the Company will pay Consultant a fee of
$4,100,000, such amount to be in lieu of any fees that may otherwise be payable
pursuant to this Section 2 in connection with the Offerings and the transactions
contemplated thereby.
3. The Company shall promptly reimburse Consultant for out-of-pocket
expenses (including, without limitation, an allocable amount of the Consultant's
overhead expenses attributable to the Company and its direct and indirect
subsidiaries, determined on actual usage,
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percentage revenue or such other basis as Consultant may determine) incurred by
the Consultant and its personnel in performing services hereunder to the Company
and its direct and indirect subsidiaries upon the Consultant rendering a
statement therefor, together with such 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, its subsidiaries or properties, (b) if the
Company 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, or (c) if the Company has not paid 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 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 canceled 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 (10%) per
annum. This Section 4 will 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.
5. This Agreement shall be automatically renewed for successive one-year
terms starting December 31, 2007 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 (a) substantially
all of the stock or substantially all of the assets of the Company or all of its
subsidiaries are sold to an entity unaffiliated with the Consultant and/or a
majority of the Company stockholders immediately prior to the sale, or (b) 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. Subject to
the foregoing, the Agreement will not be terminated as a result of any Company
ceasing to be a subsidiary of Jordan Industries, Inc. for financial reporting or
other purposes.
6. The Consultant shall have no liability to the Company on account of
(a) 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 (b) 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 at any particular time or
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from time to time, or (c) the failure of any Transaction to meet the financial,
operating, or other expectations of the Company or any of 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 agrees and acknowledges 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 respective shareholders, 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.
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 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 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 Consultant 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.
(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
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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 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) 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) The Consultant and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the Company.
(j) This Agreement shall be governed by the internal laws (and not
the law of conflicts) of the State of Illinois.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
JORDAN INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxx, Xx.
Senior Vice President
JORDAN TELECOMMUNICATION
PRODUCTS, INC.
JTP INDUSTRIES, INC.
AIM ELECTRONICS CORPORATION
OLD JORDAN TELECOMMUNICATIONS
PRODUCT GROUP, INC.
JORDAN TELECOMMUNICATIONS
PRODUCT GROUP - EUROPE, INC.
VITELEC ELECTRONICS LIMITED
LODAN WEST, INC.
XXXXXXX COMPONENTS, INC.
NEW VIEWSONICS, INC.
SHANGHAI VIEWSONICS ELECTRONICS
CO., LTD.
ADAPT COMMUNICATION
SUPPLY CO. S. FL., INC.
NORTHERN TECHNOLOGIES
HOLDINGS, INC.
NORTHERN TECHNOLOGIES, INC.
NEW DURA-LINE CORPORATION
DIVERSIFIED WIRE & CABLE CO.
BOND HOLDINGS, INC.
NEW CAMBRIDGE PRODUCTS
CORPORATION
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Authorized Officer
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