MANAGEMENT SERVICES AGREEMENT
Exhibit
10.1
THIS MANAGEMENT SERVICES AGREEMENT
(this “Agreement”) is made
and entered into as of the 1st day of January, 2007 by and between HARDY CREDIT
CO., a Pennsylvania limited partnership (the “Company”), and 84
LUMBER COMPANY, a Pennsylvania limited partnership (“Manager”).
Recitals:
A. The
Company was formed for the purpose of making construction loans (the “Loans”) to
small to medium sized builders (the “Loan Program”), acquiring land and funding
the costs of developing building lots for resale (the “Projects”).
B. 84
LADC LLC, a Pennsylvania limited liability company, is the general partner (the
“General Partner”) in the Company.
C. Manager
is a privately-held supplier of building materials and has builders/developers
as customers, some of which are small to medium sized. Manager and
the General Partner expect that a number of such small to medium sized
builders/developers will participate in the Loan Program and
Projects.
D.
The Company is a subsidiary of Manager.
E. Manager
has certain rights with respect to various trademarks, trade names, logos and
other intellectual property which would be useful in the operation of the
Company, the Loan Program and the Projects.
F. The
Company desires to engage Manager to provide certain services for the Company,
and Manager desires to accept such engagement.
NOW, THEREFORE, in consideration of the
foregoing and the mutual promises hereinafter set forth, the Company and
Manager, intending to be legally bound, hereby agree as follows:
1. License.
(a) Manager
has certain rights with respect to the trademarks, trade names, logos and other
intellectual property identified on Exhibit A hereto
(collectively, the “Intellectual
Property”). Subject to the terms and conditions hereinafter
provided, Manager hereby grants to the Company, and the Company hereby accepts,
a non-exclusive license (the “License”) to use the
Intellectual Property only in connection with the operation of the Company, and
for no other purpose. The License shall not be transferable without
the prior written consent of Manager, in Manager’s sole and absolute
discretion.
(b) The
Company shall maintain quality standards for the products/services on which it
uses any of the Intellectual Property consistent with the standards set by
Manager from time to time.
(c) The
Company acknowledges that the Company has no title to or ownership of the
Intellectual Property. Manager does not grant to the Company any
right, title or interest in or to the Intellectual Property, other than the
rights granted hereby, or any right to engage in an activity, which, absent a
license, would constitute, induce or contribute to infringement of the right,
title or interest of Manager in or to the Intellectual Property. The
Company shall not challenge anywhere in the United States the validity or
enforceability of the Intellectual Property. The Company shall
immediately notify Manager in writing if it obtains knowledge of any use or
intended use by any third party of any name, xxxx, logo or design identical to
or confusingly similar to any of the Intellectual Property. The
Company shall not, at any time during or after the term of this Agreement, claim
any right, title or interest in or to the Intellectual Property except such
rights as are provided herein.
(d) The
License shall become effective as of the date hereof, and shall continue until
this Agreement terminates pursuant to Section 3.
(e) The
Company hereby acknowledges receipt of the necessary artwork and the specimens
of the trademarks and trade name included in the Intellectual Property
(collectively, the “Marks”) required by
the Company for use of the Marks under this Agreement. The Company
shall use commercially reasonable efforts to accompany each usage of the Marks
in any tangible medium by the words “Trademark” or “Service Xxxx” or the
designations ®, ™, or SM, as
appropriate, in each case situated so as to make clear to the public that the
Marks are being used as trademarks/service marks. The Company shall
affix on promotional materials, where practical, a suitable legend identifying
that the Company’s use of the Marks has been licensed by Manager.
(f) The
Company agrees that it would be impossible or inadequate to measure and
calculate Manager’s damages from the breach by the Company of any of the
provisions of this Section 1 and that no adequate remedy at law exists to
protect Manager in the event of such breach. Accordingly, the Company
agrees that, in the event of such breach, Manager will have available, in
addition to any other rights or remedies available at law or in equity, the
right to obtain an injunction or specific performance with regard to such
breach. In connection with the foregoing, the Company hereby waives
and agrees not to assert in any such action or proceeding the claim or defense
that Manager has an adequate remedy at law.
2. Engagement of
Manager. The Company hereby engages Manager, and grants to
Manager the sole and exclusive right, to provide the Services for the Company,
and Manager hereby accepts such engagement, all on the terms and conditions
hereinafter provided.
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3. Term and
Termination.
(a) The
initial term of this Agreement and the undertakings of the parties hereunder
shall commence on the date of this Agreement and shall expire on the fifth
(5th)
anniversary of the date of this Agreement (the “Initial Term”), and
shall be automatically renewed for successive three-year periods (each a “Renewal Term”)
unless, not later than 90 days prior to the expiration of the Initial Term or
the applicable Renewal Term, as the case may be, the Company or Manager gives
written notice to the other of its intent to terminate this Agreement, effective
upon the expiration of the Initial Term or the applicable Renewal Term, as the
case may be; provided, however, that upon the occurrence of any one or more of
the following events (a “Termination Event”),
this Agreement may be terminated in the manner hereinafter set
forth:
(i) the
institution of a proceeding against a party in a court having jurisdiction
seeking a decree or order for relief in an involuntary case under the bankruptcy
laws, or any other similar applicable law, now or hereafter in effect, or for
the appointment of a receiver, liquidator, trustee, sequestrator or similar
official for such party or for a substantial part of its property, or for the
winding up or liquidation of its affairs, and such proceeding shall remain
undismissed or unstayed and in effect for a period of 60 days or
more;
(ii) the
institution of a proceeding by such a party to be adjudicated a bankrupt, or the
consent by such party to the institution of a bankruptcy proceeding against it,
or the filing by such party of a petition, answer or consent seeking
reorganization under the bankruptcy laws, or any other similar law, now or
hereafter in effect, or the consent by such party to the filing of any such
petition or to the appointment of a receiver, liquidator, trustee, sequestrator
or similar official for such party or for a substantial part of its property, or
assignment by such party for the benefit of its creditors, or the admission in
writing by such party of its inability to pay its debts generally as they become
due, or the taking by such party of any action in furtherance of the
foregoing;
(iii) the
sale by the Company of all or substantially all of its property and the
Company’s dissolution and commencement of winding up and liquidation;
or
(iv) a
material breach by a party of any of its agreements or undertakings hereunder
and the failure to cure the same to the reasonable satisfaction of the other
party within 30 days after written notice thereof from such other
party.
(b) Upon
the occurrence of a Termination Event, the party that is not the subject of said
Termination Event may elect to terminate this Agreement and its undertakings
hereunder by giving at least 10 days’ prior written notice of such
election. Upon termination of this Agreement in accordance with
Section 3(a), the terminating party shall have all rights and remedies available
to it under applicable law.
(c) Upon
the termination of this Agreement, whether by the expiration of the Initial Term
or any Renewal Term without renewal in accordance with Section 3(a) or the
occurrence of a Termination Event, (i) Manager shall deliver to the Company all
records, accounts, documents and files and agreements relating to the Company,
the Loans and the Projects; (ii) the Company shall accept delivery of the same
and pay to Manager all compensation and reimbursements due to Manager hereunder;
and (iii) those rights to use the Intellectual Property vested in the Company
hereunder shall immediately cease, and the Company shall immediately (x) refrain
from any further use of the Intellectual Property for any purposes, (y)
discontinue all advertising and promotions using the Marks and remove from all
written materials relating to the Company and the Projects all reference to the
Marks and (z) return all original artwork depicting the Marks in the possession
of the Company at the time of termination to Manager and destroy all other
artwork, brochures and other written materials which depict the
Marks.
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4. Responsibilities of
Manager. Subject to the authority, direction and guidelines of
the General Partner, Manager shall provide the following services for the
Company:
(a) The
accounting and finance functions including but not limited to accounts payable,
general ledger processing, financial statement preparation, audit and assistance
in acquiring financing;
(b) MIS,
phone and internet network support;
(c) payroll
services (including serving as common pay master);
(d) human
resources and benefits; and
(e) marketing.
5. Compensation and
Reimbursement to Manager. As compensation and reimbursement
for the License and Services provided by Manager under this Agreement, Manager
shall receive the following:
(a) The
Company shall pay to Manager a fee (the “Base Management Fee”)
in an amount equal to $500 per month. The Base Management Fee earned
shall be payable as soon as practicable after the end of the month.
(b) In
addition to the Base Management Fee to be paid to Manager pursuant to
Section 5(a), Manager shall receive reimbursement (the “Additional Management
Fee”) from the Company for all salary and benefit costs for all full-time
employees of the Company. Reimbursement will be equal to 100% of
salary and bonuses plus 25% for benefits. The Additional Management
Fee earned shall be payable as soon as practicable after the end of the month
and be accompanied by a detailed calculation
(c) Manager
shall be responsible for and pay all its reasonable, ordinary and necessary
business expenses, including out-of-pocket expenses, incurred by it or its
employees and agents in the course of performing the Services
hereunder.
6. Professional
Expenses. Except as otherwise provided herein and except as
Manager, in its sole discretion, shall determine, the expenses, costs, fees,
compensation and other remuneration of any person other than Manager engaged to
perform duties of a specialized nature for the Company and each Loan, such as
subcontractors and independent attorneys, accountants, auditors and consultants,
shall be an expense of the Company, and not of Manager.
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7. Insurance. The
Company will be covered under the general liability umbrella policy of Manager,
the costs of which shall be paid by Manager.
8. Books and
Records. Manager shall maintain at its principal office true
and complete books and records relating to the Loans and the Services provided
hereunder. The Company, at its own expense, shall have the right and
privilege of examining and copying such books and records at reasonable times
and upon reasonable notice.
9. Compliance with Legal
Requirements. The Company and Manager shall take such action
as may be necessary to comply with all laws applicable to the subject matter of
this Agreement, and all rules, regulations and orders imposed by any
governmental authority having jurisdiction over the matters contemplated by this
Agreement.
10. Representations and
Warranties of the Company. The Company hereby represents and
warrants to Manager as follows:
(a) Organization. The
Company is a limited partnership duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania, with full power to
conduct its business in the manner and in the places where such business is
conducted by it.
(b) Authority. The
Company has full right, authority and power to enter into this Agreement and
each agreement, document and instrument to be executed and delivered by the
Company pursuant to this Agreement, and to carry out the transactions
contemplated hereby.
11. Representations and
Warranties of Manager. Manager hereby represents and warrants
to the Company as follows:
(a) Organization. Manager
is a limited partnership duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania, with full power to conduct
its business in the manner and in the places where such business is conducted by
it.
(b) Authority. Manager
has full right, authority and power to enter into this Agreement and each
agreement, document and instrument to be executed and delivered by Manager
pursuant to this Agreement, and to carry out the transactions contemplated
hereby.
(c) Performance. Manager
has the requisite skill and experience to perform the Services hereunder, and
shall use its best efforts to fulfill its obligations under this
Agreement.
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(d) Intellectual
Property. Manager has certain rights with respect to the
Intellectual Property and has the right to license the Intellectual Property to
the Company in accordance with the terms of this Agreement, free of all liens,
claims, encumbrances and other restrictions. The Company shall
quietly and peacefully possess the Intellectual Property in accordance with the
terms of this Agreement. The Company’s permitted use and possession
of the Intellectual Property in accordance with the terms of this Agreement will
not be interrupted or otherwise disturbed by any third party asserting a claim
under or through Manager. To Manager’s knowledge, the Intellectual
Property does not infringe, misappropriate or otherwise violate the rights of
any third party. There is no pending litigation, arbitration or other
similar proceeding before any tribunal involving a claim of infringement or
violation of any third party’s rights relating to the Intellectual Property, and
Manager is not aware of and has received no notice of any claim of such
infringement.
12. Indemnification.
(a) The
Company agrees to indemnify and hold harmless Manager from and against any and
all claims, charges, suits, proceedings, costs (including reasonable attorneys’
fees) and expenses suffered or incurred as a result of Manager’s acting within
the scope of this Agreement. Manager shall not be liable to the
Company for any matter arising out of or in the course of Manager’s exercise of
its best efforts to carry out its duties in accordance with the terms of this
Agreement. Notwithstanding the foregoing, the provisions of this
Section 12(a) shall not apply in the event of the gross negligence or willful
misconduct on the part of Manager or its employees.
(b) Manager
agrees to indemnify and hold harmless the Company from and against any and all
claims, charges, suits, proceedings, costs (including reasonable attorneys’
fees) and expenses suffered or incurred as a result of Manager’s acting outside
the scope of this Agreement or in the event of the gross negligence or willful
misconduct on the part of Manager or its employees.
13. Other Activities of
Manager. Manager shall only be required to devote such time as
is reasonably necessary for it to carry out its duties under this Agreement, and
nothing herein shall be construed as prohibiting or otherwise affecting the
right of Manager to own, invest in, manage or operate other businesses or
properties, whether or not of the kind and nature of the Projects, so long as
such other activities do not interfere with the performance by Manager of its
duties under this Agreement.
14. Notices. All
notices required or permitted to be given under this Agreement shall be
considered to be sufficiently given if in writing and either hand delivered,
delivered by overnight courier, sent by facsimile transmission, or mailed by
registered or certified mail, postage prepaid, at the address appearing below,
or at such other address as the party entitled to such notice shall give to the
other in the manner specified in this Section 14.
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If to the Company:
Hardy Credit Co.
c/o Hardy Credit
0000 Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxxxx
00000-0000
Attn: Xxxxxxxx
X. Xxxxxxx, President
Fax: (000)
000-0000
If to Manager:
84 Lumber Company
0000
Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxxxx
00000-0000
Attn: Xxxxxx
X. Xxxxxxx, Chief Financial Officer
Fax: (000)
000-0000
15. Assignment. This
Agreement shall not be assignable by either party without the prior written
consent of the other, which consent shall not be unreasonably withheld or
delayed.
16. Entire Agreement;
Amendments. This Agreement constitutes the entire Agreement
and understanding between the Company and Manager with respect to the subject
matter hereof and supersedes all prior agreements and understandings, whether
written or oral. Any amendment, modification or alteration to this
Agreement, or waiver of any provision hereof, must be in writing, signed by the
party to be bound thereby.
17. Severability. If
any provision of this Agreement shall be determined by a court of competent
jurisdiction to be illegal, invalid or unenforceable, such provision shall be
ineffective to the extent of such illegality, invalidity or unenforceability,
but the remaining provisions hereof shall not be affected thereby.
18. Governing
Law. This Agreement shall, in all respects, be governed by,
and construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania.
19. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed a duplicate original, binding on the parties hereto notwithstanding that
each party is not a signatory to the original or the same
counterpart. Signatures on this Agreement transmitted by facsimile
shall be deemed original signatures for all purposes of this
Agreement.
20. Headings. All
headings contained in this Agreement are intended for convenience or reference
only, and shall not be used to interpret any of the terms and provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties have
caused this Agreement to be executed as of the day and year first above
written.
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THE COMPANY:
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HARDY
CREDIT CO.
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By:
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84
LADC, LLC, Its General Partner
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By:
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/s/ Xxxxxxxx X. Xxxxxxx
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Name:
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Xxxxxxxx
X. Xxxxxxx
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Title:
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President
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MANAGER:
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84
LUMBER COMPANY
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By:
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/s/ Xxxxxx X. Xxxxxxx
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Name:
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Xxxxxx
X. Xxxxxxx
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Title:
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Chief
Financial
Officer
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8
Exhibit
A
Intellectual
Property
84
Lumber
