PROFESSIONAL SERVICES AGREEMENT
EXHIBIT
10.42
This PROFESSIONAL SERVICES AGREEMENT (this “Agreement”) is made as of October 28, 2005
between (the “Service Provider”) and AT Holdings Corporation, a Delaware
corporation (the “Company”).
WHEREAS, the Service Provider, by and through its officers, employees, directors, agents,
representatives and affiliates, has expertise in the areas of corporate management, finance,
investment, acquisitions and other matters relating to the business of the Company and its
subsidiaries;
WHEREAS, the Service Provider has rendered certain services in connection with securing,
structuring and negotiating the equity and debt financing for the transactions contemplated by that
certain Agreement and Plan of Merger, dated as of September 13, 2005 (the “Merger
Agreement”), by and among V.G.A.T. Investors, LLC, a Delaware limited liability company
(“V.G.A.T.”), Xxxxxx Merger Sub, Inc. a Delaware corporation, Greatbanc Trust Company, as
trustee for the Argo-Tech Corporation Employee Stock Ownership Plan, the Company and Argo-Tech
Corporation, a Delaware corporation (“Argo-Tech”); and
WHEREAS, the Company desires to avail itself, for the term of this Agreement, of the expertise
of the Service Provider in the aforesaid areas, in which it acknowledges the expertise of the
Service Provider;
NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions
herein set forth, the parties hereto agree as follows:
1. Appointment. The Company hereby appoints the Service Provider to render the
advisory and consulting services described in Section 2 commencing on the Closing Date (as
defined in Section 3(b)).
2. Services. The Service Provider hereby agrees that, commencing on the Closing Date,
it shall render to the Company and its subsidiaries, by and through such of Service Provider’s
officers, employees, directors, agents, representatives and affiliates as such Service Provider, in
its sole discretion, shall designate from time to time, advisory and consulting services in
relation to the affairs of the Company and its subsidiaries in connection with strategic financial
planning and other services not referred to in the next sentence, including, without limitation,
advisory and consulting services in relation to the selection, supervision and retention of
independent auditors, the selection, retention and supervision of outside legal counsel, and the
selection, retention and supervision of investment bankers or other financial advisors or
consultants. It is expressly agreed that the services to be performed hereunder shall not include
(a) investment banking or other financial advisory services rendered by the Service Provider or its
affiliates to the Company or any of its subsidiaries after the Closing Date in connection with
acquisitions, divestitures, refinancings, restructurings and similar transactions by the Company or
any of its subsidiaries or (b) full-time or part-time employment by the Company or any of its
subsidiaries of any officer, employee, director or partner of the Service Provider or its
affiliates for which, in each case, such Service Provider or affiliate shall be entitled to receive
additional compensation.
3. Fees.
(a) In consideration of the services contemplated by Section 2, subject to the
provisions of Section 6, the Company hereby agrees to pay to the Service Provider a per
annum advisory fee (the “Advisory Fee”) equal to $375,000 commencing at the Closing Date.
For the period from the Closing Date through December 31, 2005, the Advisory Fee shall be pro rated
based on the number of days in such period and shall be payable in full on the Closing Date. For
all periods beginning after December 31, 2005, the Advisory Fee shall be payable semi-annually in
advance on January 1 and July 1 of each calendar year. The Advisory Fee shall be fully earned when
accrued or paid, as the case may be.
(b) At the time of the closing (the “Closing Date”) of the transactions contemplated
by the Merger Agreement, the Company hereby also agrees to (i) pay to the Service Provider a
transaction fee (the “Transaction Fee”) equal to $2,687,500, which Transaction Fee shall be
payable for services rendered in connection with securing, structuring and negotiating the equity
and debt financing for the transactions contemplated by the Merger Agreement and (ii) reimburse the
Service Provider for all Out-of-Pocket Expenses (as defined below) incurred by it on and prior to
the Closing Date in connection with the services described in the foregoing clause.
(c) The Service Provider shall be entitled to be paid (i) a fee by the Company for any
investment banking services provided by it in connection with a Company Sale (as defined in that
certain Securityholders Agreement, dated as of the date hereof, by and among V.G.A.T., the Company
and certain of the securityholders of V.G.A.T and the Company from time to time party thereto, as
the same may be amended, modified or restated from time to time (the “Securityholders
Agreement”)) in an amount equal to 0.50% of the sum of the consideration received by the
Company in connection with such Company Sale plus the principal amount of the Company’s
indebtedness assumed by the purchaser in connection with such Company Sale and (ii) customary and
reasonable fees for any other transaction relating to (A) any acquisition, divestiture or other
transaction by V.G.A.T, the Company, Argo-Tech or any of its subsidiaries, (B) any initial Public
Offering by an Issuer (each as defined in the Securityholders Agreement), or (C) any debt or equity
financing by or involving V.G.A.T, the Company, Argo-Tech or any of their respective subsidiaries.
4. Reimbursements. In addition to the Advisory Fee and the Transaction Fee, the
Company hereby agrees to pay directly or reimburse the Service Provider, at the direction of the
Service Provider, for its and its officers’, employees’, directors’, agents’, representatives’ and
affiliates’ Out-of-Pocket Expenses (as defined below) incurred after the Closing Date in connection
with the services described in Section 2. For the purposes of this Agreement, the term
“Out-of-Pocket Expenses” shall mean the amounts paid by or on behalf of the Service
Provider in connection with the services contemplated hereby, including, but not limited to, (a) fees and disbursements of any
independent professionals and organizations, including, without limitation, independent auditors
and outside legal counsel, investment bankers or other financial advisors or consultants, (b) costs
of any outside services or independent contractors, such as financial printers, couriers, business
publications or similar services, (c) transportation, per diem, telephone calls, word processing
expenses or any similar expense, and (d) bank ticking or other similar fees in connection with any
proposed financing for the Company and/or any of its subsidiaries. All reimbursements for
Out-of-Pocket Expenses contemplated hereby shall be
2
made by wire transfer of immediately available
funds to an account designated by the Service Provider promptly upon, or as soon as practicable
after, presentation by the Service Provider of the statement in connection therewith.
5. Liability. Neither the Service Provider nor any of its affiliates, partners,
members, officers, directors, employees, agents, representatives and securityholders (collectively,
the “Service Provider Group”) shall be liable to the Company or its subsidiaries or
affiliates for any loss, liability, damage or expense (collectively, a “Loss”) arising out
of or in connection with the performance of services contemplated by this Agreement, unless and
then only to the extent that such Loss is determined by a court in a final order from which no
appeal can be taken, to have resulted solely from the gross negligence or willful misconduct on the
part of such member of the Service Provider Group. The Service Provider makes no representations
or warranties, express or implied, in respect of the services to be provided by the Service
Provider Group. Except as the Service Provider otherwise may agree in writing on or after the
Closing Date: (a) each member of the Service Provider Group shall have the right to, and shall have
no duty (contractual or otherwise) not to, directly or indirectly: (i) engage in any Permitted
Business (as defined in V.G.A.T.’s Amended and Restated Limited Liability Company Agreement, as in
effect from time to time, the “LLC Agreement”) or similar business activities or lines of
business as the Company or its subsidiaries or affiliates, (ii) do business with any client,
customer, supplier, lender or investor of, to or in the Company or its subsidiaries or affiliates
with respect to a Permitted Business and (iii) develop a strategic relationship with a Permitted
Businesses; (b) no member of the Service Provider Group shall be liable to the Company or its
subsidiaries or affiliates for breach of any duty (contractual or otherwise) by reason of any such
activities or of such person’s participation therein; and (c) in the event that any member of the
Service Provider Group acquires knowledge of a potential transaction or matter that may be a
corporate opportunity for both (A) the Company or any of its subsidiaries or affiliates, on the one
hand, and (B) such member of the Service Provider Group, on the other hand, or any other person,
other than to the extent such corporate opportunity involves a Permitted Business, no member of the
Service Provider Group shall have any duty (contractual or otherwise) to communicate or present
such corporate opportunity to the Company or its subsidiaries and, notwithstanding any provision of
this Agreement to the contrary, shall not be liable to the Company, its subsidiaries or any of
their affiliates for breach of any duty (contractual or otherwise) by reasons of the fact that any
member of the Service Provider Group directly or indirectly pursues or acquires such opportunity
for itself, directs such opportunity to another person, or does not present such opportunity to the
Company, its subsidiaries or any of their affiliates. In no event will any of the parties hereto
be liable to any other party hereto for any punitive, exemplary, indirect, special, incidental or
consequential damages, including lost profits or savings, whether or not such damages are
foreseeable, or in respect of any liabilities relating to any third party claims (whether based in
contract, tort or otherwise) other than for the Claims relating to the services
which may be provided by the Service Provider hereunder. Nothing in this Section 5
shall limit the confidentiality obligations set forth in Section 9.4 of the LLC Agreement, or any
fiduciary obligations of the members of the management committee or similar body of V.G.A.T. or its
subsidiaries.
6. Term. This Agreement shall be effective as of the Closing Date and shall terminate
(i) at such time after the Closing Date as , together with its affiliates (the
“ Investors”), in the aggregate, hold directly or indirectly, less than
thirty-percent (30%) of the units of V.G.A.T. acquired by the Investors pursuant to
3
the Unit Purchase Agreement dated as of the date hereof, by and among V.G.A.T. and certain of its
equity holders or (ii) upon the consummation by any Issuer (as defined in the Securityholders
Agreement) of an initial Public Offering (as defined in the Securityholders Agreement). This
sentence, the provisions of Sections 4, 5 and 7 through 14
inclusive and the obligation of the Company to pay the Advisory Fees accrued during the term of
this Agreement pursuant to Section 2 shall survive the termination of this Agreement.
7. Indemnification. The Company hereby agrees to defend, indemnify and hold harmless
each member of the Service Provider Group (each an “Indemnified Party”) from and against
any and all losses, claims, damages and liabilities of whatever kind or nature, joint or several,
absolute, contingent or consequential, to which such Indemnified Party may become subject under any
applicable federal or state law, or any claim made by any third party, or otherwise, to the extent
they relate to or arise out of the services contemplated by this Agreement or the engagement of the
Service Provider pursuant to, and the performance by the Service Provider of the services
contemplated by, this Agreement (each a “Claim”). The Company hereby agrees to reimburse
any Indemnified Party for all reasonable costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) as they are incurred in connection with the investigation
of, preparation for or defense of any pending or threatened claim 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 hereto. The Company
will not be liable under the foregoing indemnification provision to the extent that any Claim, 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 the Service Provider
claiming such indemnification.
8. Notices. All notices hereunder shall be in writing and shall be delivered
personally or mailed by United States mail, postage prepaid, addressed to the parties as follows:
| To the Company: | ||||
| AT Holdings Corporation | ||||
| 00000 Xxxxxx Xxxxxx | ||||
| Xxxxxxxxx, XX 00000 | ||||
| Facsimile: (000) 000-0000 | ||||
| Attention: Xxxxxxx Xxxxxxxx and Xxxx X. Xxxx Esq. | ||||
| with copies (which shall not constitute notice to the Company) to: | ||||
| V.G.A.T. Investors, LLC | ||||
| c/o Vestar Capital Partners | ||||
| 000 Xxxx Xxxxxx, 00xx Xxxxx | ||||
| Xxx Xxxx, XX 00000 | ||||
| Facsimile: | (000) 000-0000 | |||
Attention:
|
Xxxx X. Xxxxxxx and | |||
| General Counsel | ||||
| and | ||||
4
| V.G.A.T. Investors, LLC | ||||
| c/o Greenbriar Equity Group LLC | ||||
| 000 Xxxxxxxx Xxxxx Xxxxxx | ||||
| Xxx, Xxx Xxxx 00000 | ||||
| Facsimile: | (000) 000-0000 | |||
Attention:
|
Xxxxxxxx X. Xxxxx | |||
| Xxxx Xxxxxxxxx | ||||
| and | ||||
| Xxxxxxxx & Xxxxx LLP | ||||
| Citigroup Center | ||||
| 000 Xxxx 00xx Xxxxxx | ||||
| Xxx Xxxx, XX 00000 | ||||
| Facsimile: | (000) 000-0000 | |||
Attention:
|
Xxxxxxx Xxxxxxxxx, Esq. | |||
| Xxxxxxxxxxx Xxxxxxx, Esq. | ||||
| To Service Provider: | ||||
Facsimile: |
||||
Attention: |
||||
| with a copy (which shall not constitute notice to the Service Provider) to: | ||||
| Xxxxxxxx & Xxxxx LLP | ||||
| Citigroup Center | ||||
| 000 Xxxx 00xx Xxxxxx | ||||
| Xxx Xxxx, XX 00000 | ||||
| Facsimile: | (000) 000-0000 | |||
Attention:
|
Xxxxxxx Xxxxxxxxx, Esq. | |||
| Xxxxxxxxxxx Xxxxxxx, Esq | ||||
9. Assignment. No party hereto may assign any obligations hereunder to any other
party without the prior written consent of the other parties (which consent shall not be
unreasonably withheld); provided that the Service Provider may, without the consent of the
Company, assign its rights under this Agreement to any of its affiliates.
10. No Waiver. No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy
consequent upon a breach thereof shall constitute a waiver of any such breach or any other
covenant, duty, agreement or condition.
11. Successors and Assigns. All covenants and agreements contained in this Agreement
shall bind and inure to the benefit of the parties hereto and their respective heirs,
5
executors, administrators, successors, legal representatives and permitted assigns, whether so expressed or
not.
12. Counterparts. This Agreement may be executed simultaneously in two or more
separate counterparts, any one of which need not contain the signatures of more than one party, but
each of which shall be an original and all of which together shall constitute one and the same
agreement binding on all the parties hereto.
13. Entire Agreement; Modification; Governing Law. The terms and conditions hereof
constitute the entire agreement between the parties hereto with respect to the subject matter of
this Agreement and supersede all previous communications, either oral or written, representations
or warranties of any kind whatsoever, except as expressly set forth herein. No modifications of
this Agreement nor waiver of the terms or conditions thereof shall be binding upon either party
unless approved in writing by an authorized representative of such party. 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 therein, without giving effect to any choice of law or conflict
of law rules or provisions (whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of New York. Any
dispute relating hereto shall be heard in the state or federal courts of New York, New York, in the
borough of Manhattan, and the parties agree to jurisdiction and venue therein.
14. Arbitration.
(a) Any disputes with regard to this Agreement that is not resolved by mutual agreement, other
than as provided in Section 14(b), shall be resolved by binding arbitration before the
American Arbitration Association (“AAA”) in New York City pursuant to the rules of AAA.
The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§1-16 and shall
be conducted in accordance with the rules and procedures of AAA. Any judgment
upon the reward rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or
findings of liability. The arbitrator shall not have the power to award damages in excess of
actual compensatory damages and shall not multiply actual damages or award punitive damages, and
each party hereby irrevocable waives any claim to such damages. The costs of AAA and the
arbitrator shall be borne by the Company. Each party shall bear its own costs (including, without
limitation, legal fees and fees of any experts) and out-of-pocket expenses.
(b) The parties hereby agree and stipulate that in the event of any breach or violation or
violation of this Agreement by any other party hereto, either threatened or actual, the
non-breaching parties’ rights shall include, in addition to any and all other rights available to
any such non-breaching party at law or in equity, the right to seek and obtain any and all
injunctive relief or restraining orders available to it in courts of proper jurisdiction, so as to
prohibit, bar, and restrain any and all such breaches or violations by any other party hereto.
Each of the parties hereto further agrees that no bond need be filed in connection with any request
by any other party hereto for a temporary restraining order or for temporary or preliminary
injunctive relief.
15. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY RIGHT TO
6
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE FOLLOWS]
7
SIGNATURE PAGE TO PROFESSIONAL SERVICES AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered
by their duly authorized officers or agents as set forth below.
| AT HOLDINGS CORPORATION |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| [VESTAR CAPITAL PARTNERS/GREENBRIAR EQUITY GROUP LLC] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
