EXHIBIT 10.6
ADVISORY AGREEMENT
This Advisory Agreement (this " Agreement" ) is made and entered into as of February 1, 2005 (the " Effective Date" ), by and among ECCA Holdings Corporation, a
Delaware corporation (" Parent" ), LFS-Merger Sub, Inc., a Texas Corporation (" Merger Sub" ), and Moulin International Holdings Limited, a Bermuda corporation (" Moulin" ).
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of the date hereof (the " Merger Agreement" ), by and among Parent, Merger Sub, the Company and Thomas H. Lee Equity Fund IV, L.P., in its capacity as the representative of the Company shareholders, Merger Sub will merge (the " Merger" ) with and into Eye Care Centers of America, Inc., a Texas corporation (the " Company" ), and the Company will survive as the successor entity and be a wholly owned subsidiary of the Parent and be subject to all of the obligations of Merger Sub hereunder.
WHEREAS, as of the Effective Date, Parent and Merger Sub have entered into an Advisory Agreement (the " GGC Agreement" ) with GGC Administration, LLC, a Delaware limited liability company (" GGC" ), with the " Management Fees" as defined therein referred to herein as " GGC Management Fees" ).
WHEREAS, Parent and Merger Sub desire to retain Moulin with respect to the services described herein.
NOW, THEREFORE, the parties agree as follows:
1. Term . This Agreement shall be in effect for a term commencing on the Closing Date (as defined in the Merger Agreement) (the " Commencement Date" ) and ending on the tenth anniversary of the Commencement Date (the " Term" ), and shall be automatically extended thereafter on a year to year basis unless Parent or Moulin provides written notice of its desire to terminate this Agreement to the other parties 30 days prior to the expiration of the Term or any extension thereof.
2. Services . During the Term, Moulin shall perform or cause to be performed such services for the Company and/or its Subsidiaries as mutually agreed by Moulin and Parent' s board of directors, which may include, without limitation, the following:
(a) general executive and management services;
(b) identification, support, negotiation and analysis of acquisitions and dispositions by Parent or its Subsidiaries;
(c) support, negotiation 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) marketing functions, including monitoring of marketing plans and strategies;
(f) human resources functions, including searching and hiring of executives; and
(g) other services for Parent and its Subsidiaries upon which Parent' s board of directors and Moulin agree.
3. Management Fees; Expense Reimbursement .
(a) During the Term of this Agreement, Moulin or its designee(s) will be promptly (x) reimbursed for the Covered Expenses, as defined below, of Moulin and its Affiliates, plus (y) paid fees (the " Management Fees" ) as set forth below. The Management Fees will be payable by the Company (as successor to Merger Sub) to Moulin or its designee(s) as follows:
(i) non-refundable Management Fees for the first eighteen months of the Term (in the amount of $1,500,000) shall be paid in advance on the Closing Date,
(ii) beginning on August 15, 2006, and on each three-month anniversary thereafter until and including such time (the " Continuation Time" ) on such date (the " Continuation Date" ) as the cumulative Management Fees paid to Moulin hereunder equal $3,000,000 (it being agreed and understood that the Continuation Time shall have occurred once Moulin has received that portion of the Management Fee (the " Continuation Time Payment" ) being paid on such date which, when added to all prior Management Fees paid to Moulin pursuant to this Agreement, is equal to $3,000,000 and that any other portion of such payment shall be deemed to have been made following the Continuation Time) an amount of $500,000 on such quarterly payment date; provided , however , that the Company shall not pay the portion of any such Management Fees payable on that date to the extent that the sum of such Management Fees payable on that date plus the aggregate amount of Management Fees paid during the 364 days immediately preceding such date exceeds the lesser of (A) two percent (2%) of the the " Consolidated EBITDA" (as defined in that certain trust indenture for the benefit of the Company' s bondholders established concurrently with the Merger) for the last four fiscal-quarters of the Company for which quarterly financial statements are available on the relevant payment date and (B) $2,000,000 (and any such excess amount that is not paid as a result of this proviso shall never be paid and shall not be accrued or deferred for any purpose);
(iii) immediately following the Continuation Time but on the Continuation Date, an amount equal to 50% of the difference between $500,000 and the Continuation Time Payment; provided , however , that the Company shall not pay the portion of any such Management Fees to the extent that the sum of (x) the product of two multiplied by the amount
- 2 -
of such Management Fees plus (y) the Continuation Time Payment plus (z) the aggregate amount of Management Fees and GGC Management Fees paid during the 364 days immediately preceding such date exceeds the lesser of (A) two percent (2%) of the Consolidated EBITDA for the last four fiscal-quarters of the Company for which quarterly financial statements are available on the relevant Payment Date and (B) $2,000,000 (and any such excess amount that is not paid as a result of this proviso shall never be paid and shall not be accrued or deferred for any purpose);
(iv) beginning on the three ...