Bingham Draft
January 9, 2004
AMENDED AND RESTATED
MANAGEMENT AND ADVISORY SERVICES AGREEMENT
(PAHC)
This Amended and Restated Management and Advisory Services Agreement (this
"Agreement"), dated as of October 21, 2003, is entered into between Palladium
Capital Management, L.L.C., a Delaware limited liability company ("Advisor"),
and Phibro Animal Health Corporation (formerly known as Philipp Brothers
Chemicals, Inc.), a New York corporation (the "Company"), in amendment and
restatement of that certain Management and Advisory Services Agreement, dated as
of November 30, 2000 (the "Existing Agreement"), between Palladium Equity
Partners, L.L.C. and the Company.
WHEREAS, Advisor, by and through itself, its affiliates and their
respective officers, employees and representatives, has expertise in the areas
of management, finance, strategy, investment, acquisitions and other matters
relating to the business of the Company; and
WHEREAS, the Company desires to be entitled to continue to avail itself,
for the term of this Agreement, of the expertise of Advisor in the aforesaid
areas, and Advisor wishes to provide a framework to provide the services to the
Company as herein set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment. The Company hereby appoints Advisor to render the advisory
and consulting services described in Section 2 hereof for the term of this
Agreement.
2. Services. Advisor hereby agrees that during the term of this Agreement,
upon the written agreement of the Company and the Advisor, it shall render to
the Company, by and through itself, its affiliates and their respective
officers, employees and representatives as Advisor in its sole discretion shall
designate from time to time, advisory and consulting services in relation to the
affairs of the Company in connection with cash management and treasury advisory
services in accordance with such agreement.
3. Fees. In consideration of the services contemplated by Section 2, the
Company agrees to pay to Advisor such fees as the Advisor and the Company shall
mutually agree upon (the "Fee"), payable in accordance with such mutual
agreement. The Company shall have 30 days from a due date to pay the applicable
Fee (such thirty day period, a "Grace Period"). If the Fee for the corresponding
Grace Period is not paid in full by the end of such Grace Period, then for each
day after the due date and during and after the Grace Period that a Fee due is
not paid in full and until such overdue Fee is paid in full, the Company shall
pay to Advisor an additional fee (the "Additional Fee") equal to a per annum
percentage to be agreed upon by Advisor and the Company, compounded daily
beginning on the start of the Grace Period, on the aggregate amount of the then
Series C Liquidation Preference of the Series C Redeemable Participating
Preferred Shares of the Company (each as defined in the Certificate of
Incorporation of the Company then in effect). The Additional Fee shall be due
and payable as and when accrued.
4. Reimbursements. In addition to the Fees payable pursuant to this
Agreement, the Company shall pay directly or reimburse Advisor for its
Out-of-Pocket Expenses (as defined below); provided that any Out-of-Pocket
Expenses that are incurred other than in the ordinary course of providing
the services of Section 2 shall require the consent of the Company, which
consent shall not be unreasonably withheld or delayed. Promptly following the
Company's request therefor, Advisor will provide written documentation relating
to any Out-of-Pocket Expenses to be paid or reimbursed by the Company pursuant
to this Agreement. For the purposes of this Agreement, the term "Out-of-Pocket
Expenses" shall mean the reasonable out-of-pocket costs and expenses incurred by
Advisor or its affiliates in connection with the services rendered hereunder,
including, without limitation, (i) fees and disbursements of any independent
professionals and organizations, including independent accountants, outside
legal counsel or consultants, (ii) costs of any outside services or independent
contractors such as financial printers, couriers, business publications,
financial services or similar services, and (iii) transportation, word
processing expenses or any similar expense not associated with its ordinary
operations. All reimbursements for Out-of-Pocket Expenses shall be made promptly
upon or as soon as practicable after presentation by Advisor to the Company of a
written statement and appropriate documentation thereof, but in no event later
than fifteen (15) days after the date of such presentation.
5. Indemnification. The Company will indemnify and hold harmless Advisor,
its affiliates and their respective partners (both general and limited), members
(both managing and otherwise), officers, directors, employees, agents and
representatives (each such person being an "Indemnified Party") from and against
any and all losses, claims, damages, liabilities, costs and expenses, whether
joint or several (the "Liabilities"), related to, arising out of or in
connection with the advisory and consulting services contemplated by this
Agreement or the engagement of Advisor pursuant to, and the performance by
Advisor of the services contemplated by, this Agreement, whether or not pending
or threatened, whether or not an Indemnified Party is a party, whether or not
resulting in any liability and whether or not an action, claim, suit,
investigation or proceeding is initiated or brought by the Company. The Company
will reimburse any Indemnified Party for all reasonable costs and expenses
(including reasonable attorneys' fees and expenses) as they are incurred in
connection with investigating, preparing, pursuing, defending or assisting in
the defense of any action, claim, suit, investigation or proceeding for which
the Indemnified Party would be entitled to indemnification under the terms of
the previous sentence, or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party thereto; provided that, subject to the
following sentence, the Company shall be entitled to assume the defense thereof
at its own expense, with counsel satisfactory to such Indemnified Party in its
reasonable judgment. Any Indemnified Party may, at its own expense, retain
separate counsel to participate in such defense; and in any action, claim, suit,
investigation or proceeding in which both the Company or one or more of its
subsidiaries or both, on the one hand, and an Indemnified Party, on the other
hand, is, or is reasonably likely to become, a party, such Indemnified Party
shall have the right to employ separate counsel at the expense of the Company
and to control its own defense of such action, claim, suit, investigation or
proceeding if, in the reasonable opinion of counsel to such Indemnified Party, a
conflict or potential conflict exists between the Company or one or more of its
subsidiaries or both, on the one hand, and such Indemnified Party, on the other
hand, that would make such separate representation advisable. The Company agrees
that it will not, without the prior written consent of the applicable
Indemnified Party, settle, compromise or consent to the entry of any judgment in
any pending or threatened action, claim, suit, investigation or proceeding
relating to the matters contemplated hereby (if any Indemnified Party is a party
thereto or has been threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of the
applicable Indemnified Party and each other Indemnified Party from all liability
arising or that may arise out of such action, claim, suit, investigation or
proceeding. Provided the Company is not in breach of its indemnification
obligations hereunder, no Indemnified Party shall settle or compromise any claim
subject to indemnification hereunder without the consent of the Company. The
Company will not be liable under the foregoing indemnification provision with
respect to any Indemnified Party, to the extent that any loss, claim, damage,
liability, cost or expense is determined by a court, in a final judgment from
which no further
appeal may be taken, to have resulted primarily from the gross negligence or
willful misconduct of Advisor.
6. Accuracy of Information. The Company shall furnish or cause to be
furnished to Advisor such information as Advisor believes appropriate to its
assignment (all such information so furnished being the "Information"). The
Company recognizes and confirms that Advisor (i) will use and rely primarily on
the Information and on information available from generally recognized public
sources in performing the services contemplated by this Agreement without having
independently verified the same; (ii) does not assume responsibility for the
accuracy or completeness of the Information and such other information; and
(iii) is entitled to rely upon the Information without independent verification.
7. Confidentiality. Except as contemplated by the terms hereof or as
required by applicable law or legal process, Advisor shall keep confidential all
material non-public information provided to it by or at the request of the
Company, and shall not disclose such information to any third party or to any of
its employees or advisors except to those persons who have a need to know such
information in connection with Advisor's performance of its responsibilities
hereunder.
8. Term. Subject to Section 11 below, this Agreement shall be effective as
of the date hereof and shall terminate on the date that no Investor Stockholder
(as defined in the Stockholders Agreement dated November 30, 2000, by and among
the Company, Palladium Equity Partners II, L.P., Palladium Equity Partners II-A,
L.P., Palladium Equity Investors II, L.P., and the stockholders signatory
thereto (the "Stockholders Agreement")) nor any of its Affiliates (as defined in
the Stockholders Agreement) own any Equity Securities (as defined in the
Stockholders Agreement) (the "Termination Date"); provided that Section 4 shall
remain in effect with respect to Out-of-Pocket Expenses incurred prior to the
Termination Date; and provided that Section 3 shall remain in effect with
respect to Additional Fees until payment in full of all Fees payable prior to
the Termination Date. The provisions of Sections 5, 7 and 9 and otherwise as the
context so requires shall survive the termination of this Agreement.
9. Permissible Activities. Subject to applicable law, nothing herein shall
in any way preclude Advisor, its affiliates or their respective partners (both
general and limited), members (both managing and otherwise), officers,
directors, employees, agents or representatives from engaging in any business
activities or from performing services for its or their own account or for the
account of others, including for companies that may be in competition with the
business conducted by the Company.
10. Miscellaneous.
(a) Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the laws
of the State of New York. No suit, action or proceeding with respect to
this Agreement may be brought in any court or before any similar authority
other than in a court of competent jurisdiction in the State of New York,
and the parties hereto submit to the exclusive jurisdiction of these
courts for the purpose of such suit, proceeding or judgment. The parties
hereto irrevocably waive any right which they may have to bring such an
action in any other court, domestic or foreign, or before any similar
domestic or foreign authority. Each of the parties hereto irrevocably and
unconditionally waives trial by jury in any legal action or proceeding in
relation to this Agreement and for any counterclaim therein.
(b) Successors and Assigns; Assignment. Neither this Agreement nor
any of the rights, interests or obligations hereunder may be assigned by
any of the parties hereto, in whole or in part (whether by operation of
law or otherwise), without the prior written consent of the other parties,
and any attempt to make any such assignment without such consent shall be
null and
void, except that Advisor may assign its rights and obligations hereunder
to any one or more of its affiliates. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(c) Entire Agreement; Third Parties. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings,
both written and oral, between the parties with respect to the subject
matter hereof. This Agreement shall be binding upon and inure solely to
the benefit of the parties hereto, and nothing in this Agreement, express
or implied, is intended to confer upon any other person any right, benefit
or remedy of any nature under or by reason of this Agreement.
(d) Severability. If any term or provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public
policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the
greatest extent possible.
(e) Amendment and Waiver. This Agreement may be amended only by the
written consent of all the parties hereto. Any waiver, consent or approval
of any kind by any party hereto of any breach, default or noncompliance
under this Agreement or any waiver by such party of any provision or
condition of this Agreement must be in writing and is effective only to
the extent specifically set forth in such writing.
(f) Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement,
shall impair any such right, power or remedy, nor shall it be construed to
be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or
noncompliance thereafter occurring. All remedies, either under this
Agreement, by law, or otherwise afforded to any party, shall be cumulative
and not alternative.
(g) Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified; (b) when sent by confirmed telex or facsimile
if sent during normal business hours of the recipient, if not, then on the
next business day; (c) five calendar days after having been sent by
registered or certified mail, return receipt requested, postage prepaid;
or (d) one business day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification
of receipt. All communications are to be sent to the addresses set forth
below:
If to the Company:
Phibro Animal Health Corporation
One Parker Plaza
Fort Lee, New Jersey 07024
Tel: (201) 944-6020
Fax: (201) 944-5937
Attn: Jack C. Bendheim, President
with copies to:
Golenbock Eiseman Assor Bell & Peskoe LLP
437 Madison Avenue
New York, New York 10022
Tel: (212) 907-7300
Fax: (212) 754-0330
Attn: Lawrence M. Bell
If to Advisor:
Palladium Capital Management, L.L.C.
1270 Avenue of the Americas
Suite 2200
New York, New York 10020
Tel: (212) 218-5150
Fax (212) 218-5155
Attn: Marcos A. Rodriguez
with copies to:
Bingham McCutchen LLP
399 Park Avenue
New York, New York 10022
Tel: (212) 705-7000
Fax: (212) 752-5378
Attn: Neil W. Townsend
(h) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to Section of this Agreement unless
otherwise indicated. The table of contents titles and headings contained
in this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation."
(i) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered.
11. Reinstatement of Existing Agreement. Anything to the contrary
notwithstanding, in the event that the Palladium Transactions (as defined
below), are not consummated on or prior to December 31, 2003, effective as of
the close of business on December 31, 2003, the Existing Agreement as in effect
immediately prior to the amendment and restatement thereof by this Agreement
shall automatically be reinstated without any action by any of the parties
hereto, except that upon such reinstatement the Existing Agreement shall be
deemed amended to provide that Palladium Capital Management, L.L.C., and not
Palladium Equity Partners, L.L.C., shall be the "Advisor" thereunder. For the
avoidance of doubt, in any such case where the Palladium Transactions are not
consummated on or
prior to December 31, 2003, the Fee (as defined in the Existing Agreement) shall
be reinstated and shall be payable quarterly in advance in accordance with the
terms of the Existing Agreement, with the first such quarterly payment in the
amount of $562,500 due and payable on January 1, 2004 for the quarter ending
March 31, 2004. As used herein, the term "Palladium Transactions" has the
meaning set forth in the Consent Agreement, dated as of October 15, 2003, among
the Company, Prince MFG LLC, The Prince Manufacturing Company, Palladium Equity
Partners II, L.P., Palladium Equity Partners II-A, L.P. and Palladium Equity
Investors II, L.P.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties have caused this Management and Advisory
Services Agreement to be executed and delivered by their duly authorized
officers or agents as of the date first above written.
PALLADIUM CAPITAL MANAGEMENT, L.L.C.
By: /s/ Marcos Rodriguez
------------------------------------------
Name: Marcos Rodriguez
Title: Managing Director
PHIBRO ANIMAL HEALTH CORPORATION
By: /s/ Daniel Bendheim
------------------------------------------
Name: Daniel Bendheim
Title: Vice President
PALLADIUM EQUITY PARTNERS, L.L.C.
(for the purpose of consenting to the
amendment of the Existing Agreement
as herein provided and with respect to
Section 11 only)
By: /s/ Marcos Rodriguez
------------------------------------------
Name: Marcos Rodriguez
Title: Managing Director