Exhibit P
AGREEMENT
THIS AGREEMENT, dated as of April 18, 2005, is entered into by and between
FORMATION CAPITAL, LLC, a Pennsylvania limited liability company
("Formation"), and NORTHBROOK NBV, LLC, a Delaware limited liability
company ("Northbrook"), provides:
RECITALS
WHEREAS, Formation has entered into that certain Term Sheet dated December
14, 2004 by and among Appaloosa Management L.P., Franklin Mutual Advisers,
LLC, Eureka Capital Markets, LLC and Formation (the "Term Sheet"), a copy
of which is attached hereto as Exhibit A, pursuant to which FC has certain
rights and obligations in a newly formed Delaware limited liability company
("Newco") which will acquire Xxxxxxx Enterprises, Inc. ("Xxxxxxx"); and
WHEREAS, Northbrook has agreed to participate with Formation in the
transactions envisaged by the Term Sheet; and
WHEREAS, the parties shall form a new company, FC XXX Acquisition Co., LLC,
a Delaware limited liability company ("FC XXX") for the purpose of
investing in Newco.
NOW THEREFORE, the parties hereto, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, agree as follows:
AGREEMENT
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Term Sheet.
1. Newco Contribution.
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(a) Formation has agreed pursuant to the Term Sheet to make an
equity contribution to Newco in an amount equal to $50,000,000 (the "Newco
Contribution"). Formation and Northbrook hereby agree to provide equal
amounts of $25,000,000 each to FC XXX for the purpose of funding the Newco
Contribution. Such contributions shall be in exchange for identical
interests in FC XXX calculated on a pro rata basis, except as provided
herein.
(b) The parties acknowledge that the amounts used to fund
Northbrook's portion of the Newco Contribution (the "Northbrook
Contribution") do not need to be provided from Northbrook's own resources
and that Northbrook may raise the necessary equity to fund the Northbrook
Contribution in such manner as it deems necessary and appropriate. Any
preferred returns, promotes, fees or other amounts payable to Northbrook by
any party that agrees to contribute a portion of the Northbrook
Contribution in connection with such capital raising activities shall
remain the exclusive property of Northbrook and Formation shall not have
any claim to such preferred returns or fees.
(c) The parties acknowledge that the amounts used to fund
Formation's portion of the Newco Contribution (the "Formation
Contribution") do not need to be provided from Formation's own resources
and that Formation may raise the necessary equity to fund the Formation
Contribution in such manner as it deems necessary and appropriate. Any
preferred returns, promotes, fees or other amounts payable to Formation by
any party that agrees to contribute a portion of the Formation Contribution
in connection with such capital raising activities shall remain the
exclusive property of Formation and Northbrook shall not have any claim to
such preferred returns or fees.
(d) In the event Newco requires an equity contribution greater
than $50,000,000 from FC XXX and Formation agrees to contribute such
amount, Northbrook shall have the right to participate pari passu with
Formation.
(e) Notwithstanding anything herein to the contrary, each party's
obligation to fund the Newco Contribution is conditioned upon mutual
agreement between the parties as to all economic terms of the Xxxxxxx
transaction. The parties acknowledge and agree that they have previously
agreed to the economic terms set forth in the Term Sheet attached hereto as
Exhibit A.
2. Carried Interest. Carried Interest will be distributed to FC XXX in
accordance with the terms and conditions of the Term Sheet. Any such
Carried Interest received by FC XXX will then be distributed in accordance
with Exhibit B.
3. Financial Advisory Fee. A Financial Advisory fee will be
distributed to Formation in accordance with the terms and conditions of the
Term Sheet. A minimum of 50% of the Financial Advisory fees received by
Formation will be contributed by Formation to Newco in return for Class A
Membership Interests. Northbrook shall receive 10% of all such Class A
shares received by Formation. The remainder of the Financial Advisory fees
received by Formation shall be distributed in accordance with Exhibit B.
4. Class A Distributions. All distributions from Newco to the Class A
Members in respect of their capital contributions shall be applied by FC
XXX first to pay FC XXX Expenses (as defined below) and the balance shall
be distributed to Formation and Northbrook in proportion to their equity
contributions. There shall be no deductions or withholdings for any
"carry", "promote", other performance based fees, "structuring fee", "asset
management fee" or similar fee, except as provided in Section 2 above.
5. Asset Management Fees. Formation or its designee Formation Capital
Asset Management, LLC ("FCAM") will be paid an asset management fee by
Newco in accordance with the Term Sheet. Formation agrees to consider a
proposal from Northbrook to provide a portion of the asset management
services provided that such services are provided (i) at current market
rates and (ii) at a cost no greater than that at which Formation or FCAM
can supply such services. In the event Northbrook is able to provide the
services in accordance with the foregoing requirements, the asset
management fee will be allocated between Formation and Northbrook in
proportion to the portion of services actually rendered by Formation and
Northbrook.
6. Break-Up Fee. To the extent the members of Newco enter into an
agreement with Xxxxxxx whereby Newco or its members become entitled to a
Break-Up Fee, any portion of fees distributed to the Class A Members will
be distributed in accordance with Exhibit B.
7. Expenses. All (a) third party fees and expenses incurred by FC XXX,
Formation or Northbrook that are reimbursable by Newco or the parties to
the Term Sheet relating to the acquisition of Xxxxxxx, including, without
limitation, sums paid to or for the benefit of Newco in accordance with the
Term Sheet, reasonable legal fees and expenses related to Xxxxxxx; (b)
Losses (as defined in the Indemnification Agreement) paid in accordance
with the Indemnification Agreement dated February 3, 2005 (the
"Indemnification Agreement") by and among Appaloosa Management L.P.,
Franklin Mutual Advisers, LLC, Formation, Xxxxxxx X. Xxxxxxx, Xxx Xxxxxx,
Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxx and Xxxxxx Xxxxxxx (the
"Indemnification Costs"); and (c) third party fees and expenses paid by
Formation or Northbrook and approved in advance by Formation and Northbrook
that are not reimbursed by Newco (collectively, "FC XXX Expenses") shall be
paid in accordance with Exhibit B. The parties acknowledge that as of the
date of execution of this Agreement, the expenses falling into item (c) and
listed on Schedule 7 to this Agreement have been approved.
8. Management Committee. The Management Committee of Newco will
initially have six members, two of which shall be appointed by Formation.
Formation agrees to appoint one member chosen by Northbrook, in its sole
discretion, to the Management Committee.
9. Management and Voting. FC Xxx shall be managed by its members
provided that for convenience, the parties may appoint an officer or
manager to manage day-to-day matters. With respect to any matter submitted
to a vote of Newco's members, Formation and Northbrook shall be entitled to
vote their proportionate share of the Class A shares and shall use their
best efforts to structure Newco's operating agreement to permit such vote
sharing. Northbrook shall not be a member of or participate in the
management or voting of FCAM or any entity formed by Formation to serve as
manager of Newco.
10. Material Obligations. Formation shall not cause FC XXX to take on
any material obligations or liabilities with respect to Newco in addition
to those set forth in the Term Sheet without the prior written consent of
Northbrook. The parties acknowledge that they have accepted all of the
terms and conditions of the Term Sheet attached hereto. Formation shall not
agree to amend the Term Sheet without the prior written consent of
Northbrook. Other than with respect to the foregoing, if prior to closing
the Xxxxxxx transaction, the Members of Newco are asked to make a material
decision regarding the Xxxxxxx transactions, including, but not limited to,
structure, financing, or strategy as a result of which additional material
obligations would be imposed upon FC XXX, Formation or Northbrook, and
Formation and Northbrook are deadlocked on such issue for more than five
Business Days (the "Discussion Period") then Northbrook may not later than
five Business Days following the Discussion Period notify Formation in
writing that Northbrook has elected to terminate its interest in FC XXX
from the date of such notice and shall only be liable for FC XXX Expenses
incurred prior to the date of delivery of such termination notice. In such
event, any membership interests in FC XXX issued to Northbrook shall be
immediately and without further action on the part of FC XXX or its members
cancelled and Formation shall be entitled to offer membership interests in
FC XXX to any other party. Northbrook's entitlement to any portion of any
of the other fees and distributions payable as provided above shall
terminate upon receipt of such termination notice, except that to the
extent that FC XXX or Formation are reimbursed, whether from Newco, Xxxxxxx
or the parties to the Term Sheet, all or any portion of any fees and
expenses paid by FC XXX during the period that Northbrook was a party to
this Agreement or a member of FC XXX, Northbrook shall be reimbursed its
proportionate share of such expenses paid by Northbrook as if Northbrook
were a member of FC XXX.
11. Business Opportunity Outgrowth. In the event that any business
opportunity for Formation results directly from the termination of Newco's
business activities, Formation agrees that it will extend to Northbrook an
offer to participate in such opportunity on substantially the same terms
and conditions as set forth in this Agreement.
12. Further Assurances. The parties hereto agree to execute,
acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and
things, as may be required by law or as, in the reasonable judgment of the
parties hereto, may be necessary or advisable to carry out the intent and
purpose of this Agreement.
13. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered personally or when
received if sent by registered or certified mail to the parties at the
following addresses (or such other address as a party may specify by
written notice):
If to Formation: Formation Capital, LLC
0000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
With copy to: Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx Xxxxxx
000 Xxxxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx, XX 00000-0000
Fax: 000-000-0000
If to Northbrook: Xxxxx Xxxxx
000 Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
and
Xxxxxx Xxxxxxx
0000 X. Xxxxxxx
Xxxxxxxxxxx, XX 00000
Fax: 000-000-0000
With copy to: Xxxxxxx Xxxxx
000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
14. Headings and Captions. All headings and captions contained in this
Agreement and the table of contents hereto is inserted for convenience only
and shall not be deemed a part of this Agreement.
15. Variance of Pronouns. All pronouns and variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural,
as the identity of the person or entity may require.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one Agreement.
17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF.
18. Validity. Every provision of this Agreement is intended to be
severable. The invalidity and unenforceability of any particular provision
of this Agreement in any jurisdiction shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.
19. Entire Agreement. This Agreement supersedes all prior agreements
among the parties with respect to the subject matter hereof and contains
the entire Agreement among the parties with respect to such subject matter.
21. Amendment/Waivers. This Agreement may only be amended,
supplemented or otherwise modified (including any waiver of any provision
hereof) with the prior written consent of all parties hereto.
22. No Brokers. Each of the parties hereto warrants to each other that
there are no brokerage commissions or finders' fees (or any basis therefor)
resulting from any action taken by such party or any Person acting or
purporting to act on their behalf upon entering into this Agreement.
23. No Third Party Beneficiaries. Except as expressly stated herein,
this Agreement is not intended and shall not be construed as granting any
rights, benefits or privileges to any Person not a party to this Agreement.
24. Construction of Documents. The parties hereto acknowledge that
they were represented by separate and independent counsel in connection
with the review, negotiation and drafting of this Agreement and that this
Agreement shall not be subject to the principle of construing its meaning
against the party that drafted same.
25. Time is of the Essence. Time is of the essence with respect to any
of the matters set forth in this Agreement.
26. Successor and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successor, executors, administrators,
legal representative, heir and legal assigns and shall inure to the benefit
of the parties hereto and, except as otherwise provided herein, their
respective successors, executors, administrators, legal representatives,
heirs and legal assigns. No person or entity other than the parties hereto
and their respective successors, executors, administrators, legal
representatives, heirs and permitted assigns shall have any rights or
claims under this Agreement.
27. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR FUTURE MODIFICATION HEREOF OR (B) IN ANY WAY
CONNECTED OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS AGREEMENT (AS NOW OR HEREAFTER MODIFIED)
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; AND THE COMPANY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE
TO TRIAL BY JURY.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
EXECUTION PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
FORMATION CAPITAL, LLC
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Chief Operating Officer
NORTHBROOK NBV, LLC
By: /s/ Xxx Xxxxx
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Name: Xxx Xxxxx
Title: Manager
