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AMENDED AND RESTATED
MANAGEMENT INCENTIVE AGREEMENT
Amended and Restated Management Incentive Agreement dated as of June
30, 1997 between Fulcrum Direct, Inc., a Delaware corporation with its office at
0000 Xxxxxxx Xxx, XX, Xxx Xxxxxx, Xxx Xxxxxx 00000 (the "Company"), and Fulcrum
Capital Partners L.P., a Delaware limited partnership with its office at 0000
00xx Xxxxxx XX, Xxxxxxxxxxx, Xxx Xxxxxx 00000 ("FCP"), amending the Advisory
Agreement, dated April 1, 1994, between the Company and FCP.
WHEREAS, the Company and FCP desire that the name of the agreement be
amended and restated to more accurately reflect the purpose and intent of the
parties hereto;
WHEREAS, it is expected that a significant portion of the aggregate
value of the Company in the future will be related to the growth of the Company
through acquisitions, by expansion, or otherwise;
WHEREAS, the executive officers of the Company have utilized FCP as an
entity to align their economic interests in the Company in the form of general
and limited partnership interests in FCP;
WHEREAS, the general and limited partners of FCP have considerable
expertise in identifying possible acquisitions and in providing related M&A
services and such parties are also executive officers of the Company;
WHEREAS, in view of the foregoing, the Company has determined that it
is in the best interests of the Company and its shareholders to compensate and
provide incentive for such parties to identify possible acquisitions for the
Company and to provide related M&A services in connection therewith.
NOW, THEREFORE, the Company and FCP hereby agree as follows:
1. Incentive Payments.
The Company agrees to make incentive payments as provided in
Section 1.2 below in order to provide incentives to its executive officers:
(i) to seek business units for acquisition by the Company, whether through
merger, acquisition of assets, tender or exchange offer, acquisition of
securities or otherwise and/or upon the request of the Board of Directors of the
Company, to find a purchaser for or other acquirer of the Company or any of its
subsidiaries or all or any portion of its or their businesses or assets (whether
existing or owned on the date of this Agreement or hereafter acquired and
whether in a single transaction or a series of transactions), whether through
merger, sale of assets, tender or exchange offer, sales of a majority interests
of the Company's outstanding voting securities, liquidation or otherwise (any
such transaction hereinafter referred to as an "Acquisition Transaction"); (ii)
to analyze any offers with respect to an Acquisition Transaction, whether or not
solicited or initiated by the Company; (iii) to assist in the negotiation and
closing of any such Acquisition Transaction; (iv) to provide related M&A
services.
1.2 In the event that an Acquisition Transaction occurs
during the Term (as hereinafter defined) or as a result of discussions
commenced, or agreement reached, during the Term, FCP shall be entitled to
receive upon consummation of each Acquisition Transaction an incentive payment
(the "Payment") equal to the greater of (i) $50,000 or (ii) .02 multiplied by
the Fair Value (as defined below) of the Acquisition Transaction; provided, if
the Fair Value is greater than $20,000,000, then the Payment shall be
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equal to the sum of (i) $400,000 and (ii) the Fair Value less $20,000,000
multiplied by .01. For purpose of this Agreement, "Fair Value" shall mean the
greater of (i) the aggregate consideration payable by the Company or to the
Company or the Company's shareholders, as the case may be, (whether in cash,
property and/or securities) in connection therewith or (ii) the book value of an
Acquisition Transaction for purposes of purchase accounting in accordance with
generally accepted accounting principles. The value of any consideration paid
pursuant to an Acquisition Transaction (other than cash or marketable
securities) shall be the fair market value thereof determined, in good faith, by
the Board of Directors of the Company. If the aggregate consideration in an
Acquisition Transaction may be increased by contingent payments related to
future earnings or operations or otherwise, the portion of the Fee related
thereto payable to FCP shall be calculated pursuant hereto and paid in cash when
and as such contingent payments are made.
1.3 Except as otherwise provided herein, any Payment which
shall become payable under this Agreement, shall be due and payable at the
closing of each Acquisition Transaction; provided, that FCP may, at its option,
take a demand note from the Company with a principal amount equal to the
Payment, accruing interest at 12% per annum, which note shall accrue interest
quarterly but shall not require any payment by the Company until such time as
FCP shall demand payment thereunder, which payment may be demanded by FCP in
either cash or the common stock of the Company, which determination FCP shall
make in its sole discretion.
2. Term
2.1 The Term shall commence on the date hereof and shall
terminate on the earlier of (i) 90 days following the receipt by FCP of
written notice from the Company of a Change of Control or (ii) December 31,
2005 (the "Term").
2.2 If an Acquisition Transaction occurs during the Term, or
occurs after the Term has terminated as result of discussions commenced or an
agreement reached during the Term, FCP shall be entitled to incentive payments
as provided in Section 1 hereof notwithstanding such termination and regardless
of the reason for such termination.
2.3 For purposes of this Agreement, a "Change in Control" of
the Company shall be deemed to have occurred if (x) any "Person" (as defined
below) becomes the "Beneficial Owner" (as defined below), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then outstanding securities,
(y) the Company sells all or substantially all of the assets of the Company;
or (z) as a direct result of a disposition of the Company's securities by
Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx ceases to be the Beneficial Owner,
directly or indirectly, of securities of the Company representing at least
twenty-five percent (25%) of the combined voting power of the Company's then
outstanding securities.
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"Person" shall have the meaning given in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended from time to time (the "Exchange Act"), as
modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall
not include (i) the Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any of its subsidiaries, (iii) the partners, directors, officers, employees or
affiliates of Fulcrum Capital Partners L.P., Fulcrum Capital L.P., The Fulcrum
Group, Inc., or SAB, Inc., or any successor thereof or (iv) an underwriter
temporarily holding securities pursuant to an offering os such securities,
"Beneficial Owner" shall have the meaning defined in Rule 13d-3 under the
Exchange Act.
3. Notices
Any notice of communication given by any party
hereto to the other shall be in writing and personally delivered or mailed by
registered or certified mail, return receipt requested, postage prepaid, if to
the Company, to the address provided above; if to FCP to the address provided
above. All notices shall be deemed given when actually received. Any person
entitled to receive notice may designate in writing, by notice to the other,
such other address to which notices to such person shall thereafter be sent.
4. Miscellaneous
4.1 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of its subject matter and supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
4.2 Amendment; Waiver. This Agreement may not be amended,
supplemented, canceled or discharged, except by written instrument executed by
the party affected thereby. No failure to exercise, and no delay in exercising,
any right, power or privilege hereunder shall operate as a waiver thereof. No
waiver of any breach of any provision of this Agreement shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other provision.
4.3 Binding Effect; Assignment. The rights and obligations of
this Agreement shall bind and inure to the benefit of any successor of the
Company by reorganization, merger or consolidation, or any assignee of all or
substantially all of the Company's business and properties. The rights or
obligations of the Company and of FCP under this Agreement may not be assigned
without the prior written consent of the non-assigning party.
4.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
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4.5 Governing Law; Interpretation. This Agreement shall be
construed in accordance with and governed for all purposes by the laws and
public policy (other than conflict of laws principles) of the State of Delaware
applicable to contracts executed and to be wholly performed within such State
and the parties submit to the jurisdiction of the federal and state courts in
New Mexico for the resolution of all disputes hereunder. Service of process in
any dispute shall be effective (i) upon the Company, if service is made on an
authorized officer of the Company; (ii) upon FCP, if service is made on an
authorized officer of FCP.
4.6 Further Assurances. The parties hereto agree to execute,
acknowledge, deliver and perform, and/or cause to be executed, acknowledged,
delivered and performed, at any time, and/or from time-to-time, as the case may
be, all such further agreements, deeds assignments, transfers, conveyances,
powers of attorney and/or assurances as may be necessary, and/or desirable, to
carry out the provisions and/or intent of this Agreement including, without
limitations, upon the reasonable request of FCP such other agreements as are
necessary or desirable in order for the Company to confirm the engagement of FCP
for the purposes provided herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
FULCRUM DIRECT, INC.
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: President
FULCRUM CAPITAL PARTNERS L.P.
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Principal
