EXHIBIT 10.17
CHS Management IV, L.P.
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
April 10, 2000
American Reprographics Company, L.L.C.
000 Xxxx Xxxxxx
Xxxxx Xxxxxxxx, XX 00000
Gentlemen:
CHS Management IV, L.P., a Delaware limited partnership ("CHS"), desires
to perform certain management services for American Reprographics Company,
L.L.C., a California limited liability company, and its subsidiaries and
affiliates ("ARC"), and ARC desires CHS to perform the management services as
set forth herein.
ARC hereby engages CHS to provide, and CHS agrees to provide, certain
management services for ARC including, without limitation, consultation
regarding the business and operations of ARC, locating investment opportunities
for ARC and other management services reasonably requested by ARC.
CHS's obligation to provide such management services for ARC shall
commence on the date hereof and, unless sooner terminated as provided herein or
as mutually agreed upon by the parties, shall terminate on the fifth (5th)
anniversary of the date hereof but is automatically renewable unless either
party terminates upon thirty days prior written notice. As compensation for
CHS's management services to be rendered hereunder, ARC shall pay CHS an annual
fee (the "CHS Management Fees") in the initial amount of Five Hundred Thousand
Dollars ($500,000) payable on a monthly basis in arrears with respect to the
period through December 31, 2000. Such fee shall continue unless increased in
accordance with the terms hereof. In addition, ARC shall reimburse CHS for all
reasonable direct expenses incurred by CHS in connection with providing the
management services described herein.
Subsequent to December 31, 2000 the so-called "EBITDA" of ARC for the
calendar year 2000 shall be determined in accordance with ARC's historical
practices. If such EBITDA for 2000 exceeds the EBITDA for calendar year 1999,
the $500,000 CHS Management Fees shall be increased with respect to the period
commencing on January 1, 2001 and ending through and
American Reprographics Company, L.L.C.
March __, 2000
Page 2
including December 31, 2001, to the amount determined by multiplying $500,000 by
a fraction the numerator of which is the year 2000 EBITDA and the denominator of
which is the year 1999 EBITDA. Such new amount of CHS Management Fees shall be
the applicable amount unless further increased in accordance with the following.
Subsequent to the end of calendar year 2001, and each calendar year thereafter,
the EBITDA of ARC shall be computed for the preceding calendar year. If the
EBITDA as so calculated exceeds the highest annual EBITDA of ARC for each
preceding calendar year from and including calendar year 1999, then the CHS
Management Fees shall be increased for the calendar year in which the
calculation is being made. The increased amount shall be determined by
multiplying the CHS Management Fees then being paid for the preceding calendar
year by a fraction the numerator of which is the EBITDA for the calendar year
preceding the year in which the calculation is being made and the denominator of
which is the highest EBITDA for a prior calendar year from and including
calendar year 1999. Notwithstanding anything to the contrary herein contained,
(A) once increased in accordance with the foregoing, the CHS Management Fees
shall be subject only to increase and shall not be subject to reduction, and (B)
the CHS Management Fees shall not exceed $1,000,000 annually.
This agreement may be terminated by the Board of Managers of ARC in the
event the Board of Managers determine in good faith that CHS has materially
failed to diligently provide the management services provided herein to ARC. In
the event of such termination by the Board of Managers, ARC's obligations
hereunder shall cease and CHS shall forfeit all right to receive any future
compensation hereunder, except that CHS shall be entitled to its pro rata share
of compensation for services already performed as of the date of termination and
to reimbursement for all reasonable direct expenses incurred by CHS as of such
date in connection with providing the management services described herein.
* * * * * *
American Reprographics Company, L.L.C.
March __, 2000
Page 3
Very truly yours,
CHS Management IV, L.P.
By: Code, Xxxxxxxx & Xxxxxxx, L.L.C., its
general partner
By: /s/ XXXXX X. XXXXXX
---------------------------------
Its:_________________________________
Accepted and Agreed to this 10th day of
April, 2000.
American Reprographics Company, L.L.C.
By: /s/ X. XXXXXXXXXXXX
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Title:____________________________
