EXHIBIT 99.6
MANAGEMENT ADVISORY SERVICES AGREEMENT
MANAGEMENT ADVISORY SERVICES AGREEMENT ("this Agreement") dated as of
December 21, 2000, by and among Health Power, Inc., a Delaware corporation
("HPI"), CompManagement, Inc., an Ohio corporation ("CMI"), CompManagement
Health Systems, Inc., an Ohio corporation ("CHS"), M&N Risk Management, Inc., an
Ohio corporation ("M&NRM"), and M&N Enterprises, Inc., an Ohio corporation
("M&NE") (each of the aforesaid corporations being hereinafter referred to,
individually, as a "Company" and, collectively, as the "Companies"), and
Security Capital Corporation, a Delaware corporation ("Security Capital").
W I T N E S S E T H
WHEREAS, Security Capital desires to provide or cause to be provided
management advisory services to the Companies, and the Companies desire to
obtain such services.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree,
intending to be legally bound, as follows:
1. MANAGEMENT ADVISORY SERVICES. Security Capital shall during the term of
this Agreement provide or cause to be provided such management advisory services
to the Companies in the areas of corporate development, strategic planning,
corporate finance and related matters, and general business policies as any such
Company shall from time to time reasonably request.
2. MANAGEMENT ADVISORY SERVICES FEE.
(a) Subject to Section 6 below, the Companies shall during the term
of this Agreement, for the services described in Section 1 hereto, pay to
Security Capital, in total, an annual management advisory services fee (the
"Fee") equal to 5% of EBITA (as defined below), with respect to each fiscal year
of the Companies. The term "EBITA" shall have the meaning given to such term as
of the date hereof in the Loan Agreement of even date herewith (the "Loan
Agreement"), among each of the Companies, WC Holdings, Inc., a Delaware
corporation ("WC Holdings"), and Bank One, N.A. (the "Senior Lender"), which
definition is incorporated herein by reference, as such definition may be
amended after the date hereof pursuant to an amendment to the Loan Agreement,
PROVIDED, FURTHER, HOWEVER, that no such amendment shall be effective for
purposes of this Agreement without the prior written agreement of Banc One
Mezzanine
Corporation (including its permitted successors and assigns, the "Purchaser")
for so long as there are any outstanding obligations of the Companies under the
Note Purchase Agreement of even date herewith, by and among each of the
Companies, WC Holdings and the Purchaser (the "Note Purchase Agreement", and
referred to collectively with the Loan Agreement as the Loan Agreements").
(b) The Fee shall be paid as follows:
(i) Not later than the fifth day of each month of each year
during the term hereof, the Companies shall pay Security Capital an amount equal
to 0.4167% of EBITA for the last completed fiscal year (each such payment being
an "Estimated Payment");
(ii) Promptly following the availability of financial
statements for each completed fiscal quarter during the term hereof, the
Companies shall pay in cash to SCC the amount, if any, by which the Fee earned
to date (based on EBITA for the immediately preceding completed fiscal quarter)
exceeds the total amount of Estimated Payments made during such fiscal quarter,
provided that, subject to Section 2(b)(iii) below, in the event that the total
of such Estimated Payments exceeds 5% of EBITA for such fiscal quarter, then the
amount of such excess shall be credited against the payment of Estimated
Payments in respect of subsequent fiscal quarters until recouped or until repaid
by Security Capital to the Companies;
(iii) Promptly following the availability of financial
statements for each completed fiscal year during the term hereof, SCC shall pay
in cash to the Companies the amount, if any, by which the aggregate amount of
all Fee payments made to SCC during such fiscal year exceeded the Fee actually
earned with respect to such fiscal year;
(iv) The Fee payable in respect of the period commencing on
the date hereof and ending on December 31, 2000, inclusive, shall be based on
the product of (A) a fraction, the numerator of which is the number of days
included in such period and the denominator of which is 360, multiplied by (B)
$425,000 (which is equivalent to 5% of projected adjusted EBITA of $8,500,000
for the fiscal year ending December 31, 2000 (the "2000 EBITA"); and
(v) The 2000 EBITA shall be used for calculating the Estimated
Fee Payments for the period commencing January 1, 2001 and ending on December
31, 2001, inclusive.
3. COSTS. The Companies shall reimburse Security Capital for all
reasonable out-of-pocket costs or expenses actually incurred by or on behalf of
Security Capital in connection with the services described in Section 1, not to
exceed, however, $100,000 per fiscal year.
4. ACCESS. The Companies will provide to Security Capital and its
representatives reasonable access during normal business hours, upon reasonable
notice and in such manner as will not unreasonably interfere with the conduct of
the business of the Companies, to the books, records, tax returns and other
information with respect to the business of the Companies as Security Capital or
such representatives consider necessary or appropriate for the purpose of
furnishing advisory services as provided in Section 1.
5. TERM. The term of this Agreement shall commence as of the date hereof
and shall terminate on December 31, 2010 or such later date as may be approved
by Security Capital and the Companies.
6. RESTRICTIONS WITH RESPECT TO LOAN AGREEMENTS.
(a) Security Capital agrees that in the event it receives monies under
this Agreement which are not permitted under either of the Loan Agreements, it
shall promptly repay in cash such monies to the Companies.
(b) The rights of Security Capital under this Agreement to receive
payments of the Fee and the other amounts payable by the Companies hereunder
shall be subordinate to the payment of the Companies' obligations under the Loan
Agreements and the agreements, documents and instruments entered into in
connection therewith (the "Loan Documents"), provided that Security Capital
shall have the right to receive and retain payments under this Agreement to the
extent permitted under the Loan Agreements. This Agreement shall be subject to
the terms and conditions of the Loan Documents and that certain Intercreditor
and Subordination Agreement of even date herewith among the Senior Lender, the
Purchaser, the Companies and WC Holdings.
(c) The Lenders are, and shall be, third party beneficiaries of this
Agreement, including, without limitation, the foregoing provisions of this
Section 6 hereof.
7. AMENDMENT AND MODIFICATION. Subject to applicable law and the
provisions of the Loan Documents, this Agreement may be amended, modified or
supplemented only by a written agreement of Security Capital and the Companies.
8. HEADINGS. The Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut applicable to agreements
made and to be performed in Connecticut without regard to such State's conflicts
of laws principles and shall be construed without regard to any presumption or
other rule requiring the construction of an agreement against the party causing
it to be drafted.
[Signature Page to Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SECURITY CAPITAL CORPORATION
By:/S/ XXXXX X. XXXXXXXXXX
Name: Xxxxx X. Xxxxxxxxxx
Title: Chairman
HEALTH POWER, INC.
By:/S/ XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
COMPMANAGEMENT, INC.
By:/S/ XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
COMPMANAGEMENT HEALTH SYSTEMS, INC.
By:/S/ XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
M&N RISK MANAGEMENT, INC.
By:/S/ XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
M&N ENTERPRISES, INC.
By: /S/ XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
