EXHIBIT 10.6
MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT (this "Management Agreement"), dated
as of June ___, 2003, is made by and among Xxxxxx Holding Co. (DE), Inc., a
Delaware corporation (the "Company") and Xxxxxxx Xxxxx & Partners, L.P. (the
"Manager").
WHEREAS, the Company desires to obtain from the Manager, and the
Manager desires to provide, certain management, consulting and financial
planning services on an ongoing basis and, if mutually agreed prior to such time
as any such services are provided, certain financial advisory and investment
banking services in connection with major financial transactions that may be
undertaken by the Company from time to time in the future; and
WHEREAS, this Management Agreement has been approved by the Company's
board of directors.
NOW, THEREFORE, in consideration of their mutual promises made herein,
and for other good and valuable consideration, receipt of which is hereby
acknowledged by each party, the parties, intending to be legally bound, hereby
agree as follows:
1. Retention of Services.
1.1 General Services. Subject to the terms and conditions hereof,
the Company hereby retains the Manager, and the Manager, hereby agrees to be
retained by the Company, to provide management, consulting and financial
planning services to the Company on an ongoing basis in connection with the
operation and growth of the Company and its subsidiaries in the ordinary course
of its businesses during the term of this Management Agreement (the "General
Services").
1.2 Major Transaction Services. The General Services do not
encompass financial advisory and investment banking services to the Company that
would be required in connection with an acquisition, restructuring or initial
public offering by the Company or a private sale of the stock or assets of the
Company ("Major Transaction Services" and, together with the General Services,
the "Services").
2. Compensation.
2.1 General Services Fee. In consideration of the General
Services, the Company shall pay the Managers an annual fee payable in cash equal
to $1,000,000 (the "Annual Fee"), provided, however, that the Annual Fee for the
period from the date of this Management Agreement through November 24, 2003 (the
"Pro Rata Period"), shall equal the product of $1,000,000 and a fraction, the
numerator of which shall be the number of days in the Pro Rata Period and the
denominator of which shall be 365 (the "Pro Rata Fee"). The Pro Rata Fee shall
be paid in full within 5 business days of the date of this Management Agreement,
without regard to the amount of services actually performed by Manager during
such period. The Annual Fee for each twelve month period beginning November 25,
2003 and thereafter until this Management Agreement is terminated in accordance
with Section 3.1, shall be paid in full on November 25 of each such twelve month
period, without regard to the amount of services
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actually performed by Manager during such period. It is agreed that once any
Annual Fee is paid, it shall be non-refundable.
2.2 Major Transaction Services Fee. Should the Company desire to
engage the Manager to provide Major Transaction Services, such engagement shall
be subject to the negotiation of mutually acceptable fee arrangements.
2.3 Structuring Fee. In connection with the services provided to
the Company in connection with the transactions contemplated by, and pursuant to
the terms of, that certain Recapitalization and Stock Purchase Agreement, dated
as of May 7, 2003, by and among Xxxxxx Holding Co. (PA), Inc., a Pennsylvania
corporation, Green Equity Investors III, L.P., a Delaware limited partnership,
and the shareholders party thereto, the Company agrees to pay to the Manager a
structuring fee of $2,500,000 and reasonable out-of-pocket expenses incurred by
the Manager in connection with the services provided in connection with the
transactions contemplated by the Recapitalization Agreement, which fee and
expenses shall be paid to the Manager on the date of this Management Agreement.
2.4 Expenses. In addition to any fees to be paid to the Manager
under Sections 2.1, 2.2 and 2.3 hereof, the Company shall pay to, or on behalf
of, the Manager, within 15 calendar days of delivery of any invoice, all
reasonable out-of-pocket expenses incurred by the Manager in connection with the
Services rendered hereunder.
3. Term.
3.1 Termination. This Management Agreement shall terminate on the
earlier of (i) November 25, 2008, (ii) such time as Green Equity Investors III,
L.P. and its Affiliates, in the aggregate, cease to have "beneficial ownership"
(as such term is used in Rule 13d-3 and 13d-5 under the Securities and Exchange
Act of 1934, as amended) of 50% of the Company's Series A Preferred Stock and
any shares of common stock of the Company issued upon the conversion thereof, or
(iii) a Qualified IPO (as such term is defined in the Statement of Rights of the
Series A Preferred Stock).
3.2 Survival of Certain Obligations. Notwithstanding any other
provision hereof, the obligations of the Company to pay amounts due with respect
to periods prior to the termination hereof pursuant to Section 2 hereof and the
provisions of Sections 4 and 5 hereof shall survive any termination of this
Management Agreement.
4. Decisions/Authority of Advisor.
4.1 Limitation on the Managers' Liability. The Company reserves
the right to make all decisions with regard to any matter upon which the Manager
has rendered its advice and consultation, and there shall be no liability of the
Manager for any such advice accepted by the Company pursuant to the provisions
of this Management Agreement.
4.2 Independent Contractor. The Manager shall act solely as an
independent contractor and shall have complete charge of its personnel engaged
in the performance of the Services. As an independent contractor, the Manager
shall have authority only to act as an advisor to the Company and shall have no
authority to enter into any agreement or to make any
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representation, commitment or warranty binding upon the Company or to obtain or
incur any right, obligation or liability on behalf of the Company. Nothing
contained in this Management Agreement shall constitute the Manager or any of
its partners or members or any of its affiliates, investment managers,
investment advisors or partners a partner of or joint venturer with the Company.
5. Indemnification.
5.1 Indemnification/Reimbursement of Expenses. The Company shall
(i) indemnify the Manager and its partners and members and any of its
affiliates, investment managers, investment advisors and its affiliates, and the
partners, directors, officers, employees, agents and controlling persons of the
Manager and its partners and its affiliates (collectively, the "Indemnified
Parties"), to the fullest extent permitted by law, from and against any and all
losses, claims, damages and liabilities, joint or several, to which any
Indemnified Party may become subject, caused by, related to or arising out of
the Services or any other advice or services contemplated by this Management
Agreement or the engagement of the Manager pursuant to, and the performance by
the Manager of the Services contemplated by, this Management Agreement, and (ii)
promptly reimburse each Indemnified Party for all costs and expenses (including
reasonable and documented attorneys' fees and expenses), as incurred, in
connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by or on behalf of the Company and whether or
not resulting in any liability.
5.2 Limited Liability. The Company shall not be liable under the
indemnification contained in Section 5.1 hereof to the extent that such loss,
claim, damage, liability, cost or expense is found in a final non-appealable
judgment by a court of competent jurisdiction to have resulted from the
Manager's willful misconduct or gross negligence. The Company further agrees
that no Indemnified Party shall have any liability (whether direct or indirect,
in contract, tort or otherwise) to the Company, holders of its securities or its
creditors related to or arising out of the engagement of the Manager pursuant
to, or the performance by the Manager of the Services contemplated by, this
Management Agreement.
6. Miscellaneous.
6.1 Assignment. None of the parties hereto shall assign this
Management Agreement or the rights and obligations hereunder, in whole or in
part, without the prior written consent of the other parties; provided, however,
that, without obtaining such consent, the Managers may assign this Management
Agreement or its rights and obligations hereunder to (i) any of its partners or
members or their affiliates or any person who controls such Manager; (ii) any
investment manager, investment advisor or partner of Green Equity Investors III,
L.P. or any principal or beneficial owner of any of the foregoing; or (iii) any
investment fund, investment account or investment entity whose investment
manager, investment advisor or partner, or any principal or beneficial owner of
any of the foregoing, is either Green Equity Investors III, L.P. or any person
identified in clauses (i) or (ii) above. Subject to the foregoing, this
Management Agreement will be binding upon and inure solely to the benefit of the
parties hereto and their
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respective successors and assigns, and no other person shall acquire or have any
right hereunder or by virtue hereof.
6.2 Governing Law. This Management Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware as applied to
contracts made and performed within the State of Delaware without regard to
principles of conflict of laws.
6.3 Severability. If any term, provision, covenant or restriction
of this Management Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any such which
may be hereafter declared invalid, illegal, void or unenforceable.
6.4 Entire Agreement. This Management Agreement contains the
entire agreement between the parties with respect to the subject matter of this
Management Agreement and supersedes all written or verbal representations,
warranties, commitments and other understandings with respect to the subject
matter of this Management Agreement prior to the date of this Management
Agreement.
6.5 Further Assurances. Each party hereto agrees to use all
reasonable efforts to obtain all consents and approvals and to do all other
things necessary to consummate the transactions contemplated by this Management
Agreement. The parties agree to take such further action and to deliver or cause
to be delivered any additional agreements or instruments as any of them may
reasonably request for the purpose of carrying out this Management Agreement and
the agreements and transactions contemplated hereby.
6.6 Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Management Agreement, or where any provision
hereof is validly asserted as a defense, the prevailing party, as determined by
a court of competent jurisdiction, shall be entitled to recover reasonable and
documented attorneys' fees in addition to any other available remedy.
6.7 Permissible Activities. Nothing herein shall in any way
preclude the Manager or its partners or members or any of its affiliates,
investment managers, investment advisors or any of their affiliates, or the
partners, directors, officers, employees, agents or controlling persons of the
Manager or its respective partners from engaging in any business activities or
from performing services for its own account or for the account of others.
6.8 Headings. The headings in this Management Agreement are for
convenience and reference only and shall not limit or otherwise affect the
meaning hereof.
6.9 Amendment and Waiver. This Management Agreement may be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may be given, provided that the same are in writing and
signed by each of the parties hereto.
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6.10 Counterparts. This Management Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Management Services
Agreement on the date first appearing above.
XXXXXX HOLDING CO. (DE), INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
XXXXXXX XXXXX & PARTNERS, L.P.
By: LGP Management, Inc.
By: _______________________________
Name: _____________________________
Title: ____________________________
