ADVISORY AGREEMENT
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AGREEMENT made as of July 24, 1998 1998, between Millenium
Seacarriers, Inc., a Cayman Islands company ("MSI"), and Millenium Advisors,
L.L.C. (the "Advisor"), a New York limited liability company and member of
Millenium Management, Inc. ("MMI"), a Cayman Islands company and sole
shareholder of MSI.
WHEREAS, MMI is making an equity contribution to MSI in
conjunction with the consummation of MSI's $100 million mortgage notes offering
(collectively, the "Transaction");
WHEREAS, MSI and its subsidiaries (collectively, the
"Company"), upon consummation of the Transaction, will be (and certain
predecessor companies and affiliates of the Company currently are) engaged in
the international shipping business, through the ownership, operation and
management of a fleet of handysize and handymax drybulk carriers, and the
Advisor, through its principals and affiliates, is experienced in corporate
finance, financial and investment management and merchant and investment
banking; and
WHEREAS, the Company desires, upon consummation of the
Transaction, to retain the Advisor to provide corporate finance advice,
financial and investment management and merchant and investment banking
services, and executive compensation planning to the Company upon the terms and
conditions hereinafter set forth, and upon consummation of the Transaction, the
Advisor is willing to undertake such obligations
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
1. APPOINTMENT.
The Company hereby agrees, upon consummation of the
Transaction, to engage the Advisor, and the Advisor hereby agrees, upon
consummation of the Transaction and under the terms and conditions set forth
herein, to provide certain services to the Company as described in Section 2
hereof.
2. DUTIES OF ADVISOR.
2.1 CONSULTING SERVICES. The Advisor shall from time to time
provide the Company with consulting services (collectively, the "Consulting
Services) related to the following:
(i) corporate finance, including
(a) advice on general matters involving
corporate finance;
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(b) plan for an appropriate and efficient
capital structure for the Company;
(c) work with management to analyze specific
investment opportunities and capital
structure alternatives;
(d) develop and upgrade the financial budgeting
and forecasting process; and
(ii) financial and investment management and merchant and
investment banking, including
(a) analysis of specific investment
opportunities, expected return scenarios,
and capital structure alternatives;
(b) identification and implementation of merger
and acquisition opportunities for the
Company, for which the Advisor may receive
additional consideration pursuant to Section
2.2(v) hereof;
(c) assistance with negotiation of loan
documentation and other financial contracts
(including amendments thereto) and lender
relationships on an ongoing basis;
(d) advice regarding acquisition strategies and
responses to external proposals;
(e) advice regarding additional capital
requirements; and
(iii) executive compensation planning, including
(a) design and development of incentive and
bonus programs for management team;
(b) assistance with senior executive hiring
decisions; and (c) design and development of
employee equity programs.
Without limiting any of the foregoing, representatives of the
Advisor may participate on the Boards of Directors and Board committees of, MSI
and certain of its affiliates.
2.2 EXCLUSIONS FROM "CONSULTING SERVICES". Notwithstanding
anything in the foregoing to the contrary, the following services are
specifically excluded from the definition of "Consulting Services," regardless
of whether any employee of the Advisor is qualified to perform such services:
INDEPENDENT ACCOUNTING SERVICES. Accounting services rendered to
the Company or the Advisor with prior notice and consultation with the Company's
management, by an independent accounting firm or accountant;
INDEPENDENT ACTUARIAL SERVICE. Actuarial services
rendered to the Company or the Advisor with prior notice and consultation with
the Company's management, by an independent actuarial firm or actuary;
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INDEPENDENT APPRAISAL SERVICES. Appraisal services
rendered to the Company or the Advisor with prior notice and consultation with
the Company's management, by an independent appraisal firm or appraiser;
(iv) LEGAL SERVICES. Legal services rendered to
the Company or the Advisor with prior notice and consultation with the Company's
management, by an independent law firm or attorney; and
(v) TRANSACTION SERVICES. To the extent the
Company determines that it desires the services of any third party financial
advisor, services in connection with any transaction (excluding the acquisition
or sale of vessels) in which the Company or any of its subsidiaries may be, or
may consider becoming, involved (including, without limitation, an initial
public offering of the Company), it is understood that the Advisor shall have
the right of first refusal concerning all opportunities to perform, for
additional compensation, any of such transaction-related services. Such right
must be exercised within 30 business days after receipt by the Advisor of a copy
of such offer from any third party financial advisor by Advisor's written
indication of its interest in such a transaction, in which case the Company
shall pay, or cause to be paid, compensation to the Advisor equal to the fee
payable pursuant to such offer (the "Transaction Fee"). The Transaction Fee
shall be payable in cash at the consummation of any transaction unless the
parties hereto shall mutually agree otherwise. The Advisor may delegate any of
its rights hereunder to any affiliated entity.
In addition to the foregoing, the parties acknowledge that the Advisor will not
be obligated to perform vessel management services for any of the Company's
vessels, which services will be provided by MMI pursuant to the terms of a
separate management agreement.
2.3 POWERS OF THE ADVISOR. So that it may properly perform its
duties hereunder, the Advisor shall, subject to Section 2.4 hereof, have the
power to represent the Company and do all things necessary and proper to carry
out the duties set forth in Section 2 hereof.
2.4 LIMITATIONS ON THE ADVISOR'S POWERS. Notwithstanding
anything herein to the contrary, the Advisor's responsibilities are consultative
only, and the Advisor shall have no power to take any action on behalf of the
Company, or to cause the Company to be responsible for taking any action.
2.5 ACTIVITIES OF THE ADVISOR AND OTHERS. The Advisor and it's
affiliates may engage, simultaneously with their advisory services on behalf of
the Company, in other businesses, and may render services similar to those
described in this Agreement for other individuals, companies, trusts or persons,
and shall not by reason of such engaging in other businesses or rendering of
services for others be deemed to be acting in conflict with the interests of the
Company. Notwithstanding the foregoing, the Advisor shall devote sufficient time
to providing the Consulting Services as the Advisor deems necessary. The
officers, directors, employees or members of the Advisor, in their individual
capacities, may be officers, directors, employees or members of the Company (or
any of its affiliates), but shall not be deemed thereby to have interests that
are in conflict with the interests of the Company. MSI acknowledges that the
Advisor will serve as management company to Millenium
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Investment, Inc., a Cayman Islands company and member of MMI ("MII"), pursuant
to which the Advisor may provide services similar to the Consulting Services to
MII.
3. COMPENSATION OF ADVISOR.
3.1 COMPENSATION STRUCTURE. During the term of this Agreement
and as compensation for services provided hereunder for the Company (but
explicitly excluding any services as may be performed by the Advisor pursuant to
Section 2.2(v) hereof), MSI agrees to pay the Advisor on a quarterly basis in
advance, payable on the first business day of each calendar quarter (other than
the first payment hereunder, which shall be made on the date of the closing of
the Transaction), (i) through the latest to occur between (y) the first full
eight quarters following consummation of the Transaction and (z) an initial
public offering of MMI, $300,000 per year (or $75,000 per quarter),
appropriately pro rated for partial periods, and (ii) thereafter, $150,000 per
year (or $37,500 per quarter), appropriately pro rated for partial periods.
3.2 EXPENSE REIMBURSEMENT. In addition to the foregoing
compensation payable by MSI, MSI shall reimburse the Advisor (or cause the
Advisor to be reimbursed), upon request, for any and all customary and
reasonable out-of-pocket expenses incurred by the Advisor in the performance of
its services pursuant to this Agreement, including any fees or disbursements to
its counsel; PROVIDED, HOWEVER, that such reimbursement obligation shall not
exceed $10,000 in any calendar year without the approval of MSI.
4. GENERAL CONDITIONS.
4.1 Any advice (written or oral) rendered by the Advisor
pursuant to this Agreement is solely for the benefit of the Company in the
context of the matters described in this Agreement and may not be disclosed
without the prior written consent of the Advisor.
4.2 The Advisor agrees to keep confidential all material
non-public information that the Advisor receives or develops concerning the
Company or its affiliates, their business, assets, properties, technologies,
condition and prospects and to disclose that information only with the prior
consent of the Company or as required by law or legal process.
4.3 The Advisor shall have no obligation to make any
independent appraisals of assets or liabilities or any independent verification
of the accuracy or completeness of any information provided it in the course of
this engagement and shall have no liability in regard thereto.
5. TERM AND TERMINATION OF AGREEMENT.
(a) This Agreement shall be for a term of seven
(7) years from the date hereof, and shall automatically renew from year to year
thereafter unless terminated as described in paragraph (b) of this Section 5.
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(b) If MII and its affiliates and members shall
own less than 8% (adjusted for share splits, share dividends share issuance or
similar transactions) of the outstanding common equity of MMI, this Agreement
shall be subject to renegotiation by the Board of Directors of MSI.
(c) Not withstanding the foregoing, it is
understood that the provisions relating to compensation, expenses,
indemnification and exculpation shall survive any such expiration or
termination.
6. LIABILITY; INDEMNITY.
The Advisor is not and never shall be liable to any creditor of the
Company. In addition to the compensation and expenses that MSI has agreed to pay
for the services to be performed pursuant to this Agreement, the Company agrees
(and MSI agrees): (i) to indemnify and hold the Advisor (which term for the
purposes of this Agreement includes its controlling persons, members, directors,
officers, employees, agents and representatives) harmless against and from all
losses, claims, damages or liabilities, joint or several (and all action,
claims, proceeds and investigations in respect thereof), to which the Advisor
may become subject in connection with its performance of the services described
in this Agreement; (ii) that the Advisor will not be culpable for and will have
no liability to the Company for or with respect to any and all losses, claims,
damages or liabilities, joint or several, of the Company incurred in connection
with the Advisor's performance of the services described in this Agreement; and
(iii) in each case to reimburse the Advisor for all reasonable legal and other
out-of-pocket expenses (including the cost of investigation and preparation) as
and when incurred by the Advisor arising out of or in connection with any
action, claim, proceeding or investigation (whether initiated or conducted by
the Company or any other party) in connection therewith, whether or not
resulting in any liability (and whether or not the Advisor is defendant in, or
target of, any such action, claim, proceeding or investigation); PROVIDED,
HOWEVER, that the Company shall not be liable to the Advisor pursuant to clause
(i) and (iii) above and the Company's exculpation of the Advisor pursuant to
clause (ii) above shall not apply in any such case to the extent that any such
loss, claim, damage or liability is found in a final judgement by a court of
competent jurisdiction to have resulted from the Advisor's gross negligence, bad
faith, or willful misconduct or any other indemnified person hereunder or a
material breach of this Agreement, and amounts paid and reimbursement of
expenses under (iii) above shall be refunded. If for any reason the foregoing
indemnification (including reimbursement pursuant to clause (iii) above) or the
exculpation is unavailable to the Advisor or insufficient to hold it harmless
(other than by reason of the proviso to the preceding sentence), then the
Company shall contribute to the amount paid or payable by the Advisor as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the Company on
the one hand and the Advisor on the other hand but also the relative fault of
the Company and the Advisor as well as any relevant equitable considerations,
PROVIDED that, in no event, will the Advisor's aggregate contribution hereunder
exceed the amount of compensation actually received by the Advisor pursuant to
this Agreement. The indemnity, exculpation, reimbursement and contribution
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall survive any termination of
this Agreement, and shall be binding upon and extend to the benefit of any
successors, assigns, heirs and personal representatives of the Company and the
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Advisor.
7. ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit
of the parties' successors and permitted assigns. However, neither this
Agreement nor any of the rights of the parties hereunder may be transferred or
assigned by either party hereto, except that (a) if the Company shall merge or
consolidate with or into, or sell or otherwise transfer substantially all its
assets to, another corporation that assumes the Company's obligations under this
Agreement, the Company may assign its rights hereunder to that corporation, and
(b) the Advisor may assign its rights and obligations hereunder to any
affiliated person or entity. Any attempted transfer or assignment in violation
of this Section 7 shall be void.
8. RELATIONSHIP OF THE PARTIES.
Nothing contained in this Agreement is intended or is to be
construed to constitute the Advisor and the Company as partners or joint
venturers or either party as an employee of the other party. Neither party
hereto shall have any express or implied right or authority to assume or create
any obligations on behalf of or in the name of the other party or to bind the
other party to any contract, agreement or undertaking with any third party. The
services to be performed by the Advisor hereunder are consultation services
only. The Company shall at all times be free to accept or reject the advice
rendered by the Advisor hereunder in its sole discretion.
9. MISCELLANEOUS.
9.1 ARMS-LENGTH AGREEMENT. The Company and the Advisor each
represents, warrants and agrees to the other that this Agreement constitutes an
arms-length agreement between the Company and the Advisor. The Company
understands the method of compensation provided for herein.
9.2 AMENDMENT AND WAIVERS. This Agreement may be amended or
waived only by a writing signed by both parties, and then such consent shall be
effective only in the specific instance and for the specific purpose for which
given.
9.3 NOTICES. All notices and other communications provided for
herein shall be dated and in writing and shall be deemed to have been duly given
when delivered, if delivered personally or sent by telecopy, or when mailed, if
sent by registered or certified mail, return receipt requested, postage prepaid.
(i) if to MSI or the Company, to MSI at:
c/o Maple & Calder
P.O. Box 309
George Town, Grand Cayman
Cayman Islands, British West Indies
Attention: Gareth Griffiths
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(ii) if to the Advisor, to it at:
450 Park Avenue, Suite 2103
New York, New York 10022
Attention: Connor O'Brien
or at such other address as any party shall have specified by notice in writing
to the others.
9.4 EFFECTIVENESS OF AGREEMENT; ENTIRE AGREEMENT. The terms of
this Agreement shall become effective upon the consummation of the Transaction.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements and understandings, oral and written, between
the parties hereto with respect to the subject matter hereof.
9.5 SECTION HEADINGS. The section headings contained herein
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
9.6 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.7 APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be performed entirely within such State, regardless of the
law that might be applied under principles of conflicts of law.
9.8 SEVERABILITY. Any section, clause, sentence, provision,
subparagraph or paragraph of this Agreement held by a court of competent
jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate
or nullify the remainder of this Agreement, but the effect thereof shall be
confined to the section, clause, sentence, provision, subparagraph, or paragraph
so held to be invalid, illegal or ineffective.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MILLENIUM SEACARRIERS, INC.
By: /s/ Vassilios M. Livanos
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Name: Vassilios M. Livanos
Title: President
MILLENIUM ADVISORS, L.L.C.
By: /s/ Connor O'Brien
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Name: Connor O'Brien
Title: Managing Member
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