EXHIBIT 10.14
ADVISORY AGREEMENT
This Advisory Agreement (this "Agreement") is made and entered into as of
December 21, 2000 by and between AMI Holdings, Inc. ("Holdings"), AMI Spinco,
Inc. (the "Company" and together with Holdings, the "Companies") and Francisco
Partners GP, LLC ("Advisor"). Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Agreement and Plan of
Merger and Recapitalization dated December 5, 2000 (the "Recapitalization
Agreement") by and among Japan Energy Corporation ("JEC"), GA-TEK Inc.,
Holdings, AMI Merger Company, Inc., the Company, TBW LLC ("TBW"), and
FP-McCartney, LLC.
WHEREAS, the Companies desire to retain Advisor and Advisor desires to
perform for the Companies and/or their subsidiaries certain services;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Term. This Agreement shall be in effect for an initial term of ten
(10) years commencing on the date hereof (the "Term"), and shall be
automatically extended thereafter on a year to year basis unless the Companies
provide or Advisor provides written notice of its or their desire to terminate
this Agreement to the other party 90 days prior to the expiration of the Term
or any extension thereof.
2. Services. Advisor shall perform or cause to be performed such services
for the Companies and/or their subsidiaries as directed by such Company's
board of directors, which may include, without limitation, the following:
(a) executive and management services;
(b) identification, support and analysis of acquisitions and
dispositions by such Company or its subsidiaries;
(c) support and analysis of financing alternatives, including,
without limitation, in connection with acquisitions, capital expenditures and
refinancing of existing indebtedness;
(d) finance functions, including assistance in the preparation of
financial projections, and monitoring of compliance with financing agreements;
(e) human resource functions, including searching and hiring of
executives; and
(f) other services for such Company or its subsidiaries upon which
such Company's board of directors and Advisor agree.
Notwithstanding any provision in this Agreement to the contrary,
each of the parties hereto acknowledges and agrees that there are no minimum
levels of services required to be provided to the Companies pursuant to this
Agreement.
3. Advisory Fee. Subject to the terms and conditions herein,
payment for services rendered by Advisor and/or its affiliates incurred in
connection with the performance of services pursuant to this Agreement shall be
billed on an hourly basis for actual services rendered (it being agreed that no
minimum services levels shall be required), plus reasonable out-of-pocket
expenses incurred by Advisor and/or its affiliates commencing with the calendar
quarter ended March 31, 2001; provided that, if the Companies and their
subsidiaries are in compliance with the financial covenants contained in that
certain Credit Agreement dated as of December 21, 2000 (the "Credit Agreement")
between the Companies and AMI Merger Company, Inc., on one hand, and the Lenders
named therein together with Credit Suisse First Boston, as Administrative Agent
and Collateral Agent, on the other hand, in lieu of the aforementioned fees and
expenses, Advisor and/or its affiliates shall have the right to collect an
annual advisory fee (the "Advisory Fee"), the amount of which shall be the
greater of (i) $1,000,000 per annum (the "Flat Fee") or (ii) 0.3% per annum of
the annual consolidated revenue of the Companies and their subsidiaries
(determined on a trailing twelve month basis) (the "Percentage Fee"), plus
reasonable out-of-pocket expenses of Advisor and/or its affiliates.
(a) Adjustment. In the event that the Advisory Fee paid in
any given year pursuant to this Section 3 exceeds the greater of the Flat Fee or
the Percentage Fee, the Advisor shall promptly repay to the Companies the
difference between the greater of the Flat Fee or the Percentage Fee and the
amount of the Advisory Fee actually paid by the Companies during that year. In
the event that the amount of the Advisory Fee paid by the Companies to the
Advisor in any given year is less than the greater of the Flat Fee or the
Percentage Fee, the Companies shall promptly pay the difference between the
amount of Advisory Fee actually paid to the Advisor and the greater of the Flat
Fee or the Percentage Fee.
(b) Advisory Fees Paid to the Other Advisor. Notwithstanding
anything in this Section 3 to the contrary, the Advisory Fee paid to the Advisor
hereunder shall be same amount as the Advisory Fee paid to TBW pursuant to that
certain Advisory Agreement dated as of the date hereof between the Companies and
TBW, as the same may be amended, replaced or modified from time to time (the
"TBW Agreement").
(c) Consent to Payment of Advisory Fee. No Advisory Fee may
be paid in any given year without the prior written consent of TBW, such consent
to be in TBW's reasonable discretion. The Companies acknowledge that they will
not pay any Advisory Fee without having received a copy of the written consent
of TBW. Notwithstanding the foregoing sentence, in any year that the Advisor
does not collect the Advisory Fee for any reason it shall nonetheless remain
entitled to collect hourly fees and expense reimbursements as described above.
(d) Collection of Fee. Subject to the limitation described
in Section 3(c) above, the decision whether to collect any Advisory Fee in a
given year shall be in the Advisor's sole discretion. The Advisor's decision not
to collect an Advisory Fee in any given year shall not be construed to be a
waiver of the Advisor's right to collect an Advisory Fee in any future year.
(e) Fee Calculation. All fees and expenses described in this
paragraph 3 shall be payable to Advisor or its designees on a quarterly basis in
advance (based on the parties' estimate of the amount of fees and expenses which
shall become due and payable for such quarter) commencing as of the date hereof.
For the purposes of this Section 3, compliance with the financial covenants
contained in the Credit Agreement shall be determined on a pro-forma basis and
shall include the deduction of the Advisory Fee, the deduction of any other fees
and expenses that may be payable to the Advisor hereunder and the deduction of
any fees that may be payable pursuant to the TBW Agreement
4. Transaction Fees. The Companies hereby agree to pay to Advisor
or its designee on the Closing Date (as defined in the Recapitalization
Agreement) upon the consummation of the transactions contemplated by the
Recapitalization Agreement a fee for services rendered in connection with the
structuring of the financing for the transactions contemplated by the
Recapitalization Agreement (the "Transactions") and certain other management
services in the amount of Six Million Dollars ($6,000,000), plus reasonable
out-of-pocket expenses. Such fees shall be payable to Advisor or its designees
by wire transfer to an account designated in writing by the Advisor.
5. Personnel. Advisor shall provide and devote to the performance
of this Agreement such partners, employees and agents of Advisor as Advisor
shall deem appropriate to the furnishing of the services required.
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6. Liability. Neither Advisor nor any other Indemnitee (as defined in
Section 7 below) shall be liable to any of the Companies or any of their
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 gross negligence, willful misconduct or bad faith on the
part of an Indemnitee acting within the scope of such person's employment or
authority. Advisor makes no representations or warranties, express or implied,
in respect of the services to be provided by Advisor or any of the other
Indemnitees. Except as Advisor may otherwise agree in writing after the date
hereof: (i) Advisor shall have the right to, and shall have no duty (contractual
or otherwise) not to, directly or indirectly: (A) engage in the same or similar
business activities or lines of business as any of the Companies or any of their
subsidiaries, including those competing with any of the Companies or any of
their subsidiaries and (B) do business with any client or customer of any of the
Companies or any of their subsidiaries; (ii) neither Advisor nor any officer,
director, employee, partner, affiliate or associated entity thereof shall be
liable to any of the Companies or any of their subsidiaries or affiliates for
breach of any duty (contractual or otherwise) by reason of any such activities
of or of such person's participation therein; and (iii) in the event that
Advisor acquires knowledge of a potential transaction or matter that may be a
corporate opportunity for the Companies or any of their subsidiaries, on the one
hand, and Advisor, on the other hand, or any other person, Advisor shall have no
duty (contractual or otherwise) to communicate or present such corporate
opportunity to the Companies or any of their subsidiaries and, notwithstanding
any provision of this Agreement to the contrary, shall not be liable to the
Companies or any of their affiliates for breach of any duty (collateral or
otherwise) by reasons of the fact that Advisor directly or indirectly pursues or
acquires such opportunity for itself, directs such opportunity to another
person, or does not present such opportunity to the Companies. In no event will
any of the parties hereto be liable to any other party hereto for any indirect,
special, incidental or consequential damages, including lost profits or savings,
whether or not such damages are foreseeable, or in respect of any liabilities
relating to any third party claims (whether based in contract, tort or
otherwise) other than the Claims (as defined in Section 7 below) relating to the
service to be provided by Advisor hereunder.
7. Indemnity. Each of the Companies and their subsidiaries shall defend,
indemnify and hold harmless each of Advisor, its affiliates, members, partners,
employees and agents (collectively, the "Indemnitees") from and against any and
all loss, liability, damage or expenses arising from any claim by any person
with respect to, or in any way related to, the performance of services
contemplated by this Agreement (including attorneys' fees) (collectively,
"Claims") resulting from any act or omission of any of the Indemnitees, other
than for Claims which shall be proven to be the direct result of gross
negligence, bad faith or willful misconduct by an Indemnitee. Each of the
Companies and their subsidiaries shall defend at its own cost and expense any
and all suits or actions (just or unjust) which may be brought against such
Company, any of its subsidiaries or any of the Indemnitees or in which any of
the Indemnitees may be impleaded with others upon any Claims, or upon any
matter, directly or indirectly, related to or arising out of this Agreement or
the performance hereof by any of the Indemnitees, except that if such damage
shall be proven to be the direct result of gross negligence, bad faith or
willful misconduct by an Indemnitee, then Advisor shall reimburse the Companies
and their subsidiaries for the costs of defense and other costs incurred by the
Companies and their subsidiaries.
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8. Notices. All notices hereunder shall be in writing and shall be
delivered personally or mailed by United States mail, postage prepaid, addressed
to the parties as follows:
To the Companies as appropriate:
AMI Holdings, Inc.
c/o AMI Spinco, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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Attention: Chief Executive Officer
Facsimile: 858.521.3777
To Advisor:
Francisco Partners GP, LLC
c/o Francisco Partners, L.P.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: 415.986.1320
9. Assignment. The Companies may not assign any obligations
hereunder to any other party without the prior written consent of Advisor (which
consent shall not be unreasonably withheld), and Advisor may not assign any
Advisor obligations hereunder to any other party without the prior written
consent of the Companies (which consent shall not be unreasonably withheld);
provided that Advisor may, without consent of the Companies, assign its rights
and obligations under this Agreement to any Permitted Transferee (as such term
is defined in the Shareholders Agreement dated December 21, 2000 among the
Company, FP-McCartney, LLC, the Advisor, JEC and certain other persons named
therein).
10. Successors. This Agreement and all the obligations and benefits
hereunder shall inure to the successors and assigns of the parties.
11. 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 all of which taken together shall
constitute but one and the same agreement.
12. Entire Agreement; Modification; Governing Law. The terms and
conditions hereof constitute the entire agreement between the parties hereto
with respect to the subject matter of this Agreement and supercede all previous
communications, either oral or written, representations or warranties of any
kind whatsoever, except as expressly set forth herein. No modifications of this
Agreement nor waiver of the terms or conditions thereof shall be binding upon
either party unless approved in writing by an authorized representative of such
party. This Agreement may not be amended in a manner materially adverse to the
Company and the Company may not waive any material provision of this Agreement
that is for its benefit unless a corresponding amendment is made to the TBW
Agreement or TBW's consent is
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obtained. All issues concerning this Agreement shall be governed by and
construed in accordance with the 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 law of any jurisdiction other than the State of New York.
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IN WITNESS WHEREOF, the parties have executed this Advisory Agreement as
of the date first written above.
AMI HOLDINGS, INC.
By:
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Its:
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AMI SPINCO, INC.
By:
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Its:
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FRANCISCO PARTNERS GP, LLC
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇
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Its: Vice President
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