MANAGEMENT SERVICES AGREEMENT
MANAGEMENT SERVICES AGREEMENT, dated as of November 26, 1997 among XXXXXXX
HOLDINGS, INC., a Delaware corporation ("Parent"), XXXXXXX FASTENERS INC., a
Delaware corporation (the "Company"), and SARATOGA PARTNERS III, L.P., a private
investment fund ("Saratoga").
Parent and the Company desire for Saratoga to provide certain ongoing
management and advisory services to the Company, and Saratoga is willing to
provide such services subject to the terms and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
Section 1. Services. During the term of this Agreement, Saratoga shall
provide such advisory and management services to Parent and its subsidiaries as
the Board of Directors of Parent or the Company shall reasonably request and
Saratoga shall agree to provide from time to time. Parent and the Company agree
that Saratoga shall have the right, but not the obligation, to act as sole
advisor to Parent and its subsidiaries with respect to significant business
transactions. Such services shall be performed at Saratoga's offices or at such
other locations as Saratoga shall reasonably determine.
Section 2. Compensation. In consideration of the services previously
provided and to be provided in accordance with Section 1, the Company agrees to
pay (or to distribute sufficient funds to Parent in order for Parent to pay),
and Parent agrees to pay, to Saratoga (i) an advisory fee of $1,750,000 by wire
transfer of immediately available funds on the date hereof, (ii) an annual
management fee of $600,000 accruing from the date hereof, payable quarterly in
arrears beginning on March 31, 1998 (it being understood that payment on March
31, 1998 shall include a prorated fee for the period from the date hereof to
December 31, 1997) (provided, however, that at the request of Saratoga, such fee
shall be paid quarterly in advance) and (iii) advisory and/or structuring fees
in connection with significant business transactions (including, without
limitation, acquisitions, investments and financings) in amounts comparable for
similarly situated companies.
Section 3. Reimbursement. Saratoga and its affiliates shall be entitled to
reimbursement of all reasonable out-of-pocket expenses (including travel
expenses) incurred in con-
-2-
nection with the performance of this Agreement (other than salary expenses and
associated overhead charges). The Company agrees to pay (or to distribute
sufficient funds to Parent in order for Parent to pay), and Parent agrees to
pay, such amounts promptly upon request therefor.
Section 4. Indemnity; No Liability. In consideration of the execution and
delivery of this Agreement by Saratoga, the Company hereby agrees to indemnify,
exonerate and hold each of Saratoga and its affiliates, and each of their
respective partners, shareholders, affiliates, directors, officers, fiduciaries,
employees and agents and each of the partners, shareholders, affiliates,
directors, officers, fiduciaries, employees and agents of each of the foregoing
(collectively, the "Indemnitees") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities and damages, and expenses
in connection therewith, including without limitation reasonable attorneys' fees
and disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnitees or any of them as a result of, or arising out of, or relating to the
execution, delivery, performance, enforcement or existence of this Agreement or
the transactions contemplated hereby or thereby except for any such Indemnified
Liabilities arising solely on account of such Indemnitee's gross negligence or
willful misconduct, and if and to the extent that the foregoing undertaking may
be unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. None of the Indemnitees
shall be liable to the Company or any of its affiliates for any act or omission
suffered or taken by such Indemnitee that does not constitute gross negligence
or willful misconduct.
Section 5. Governing Law; Submission to Jurisdiction. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York, without regard to conflicts of law principles.
Section 6. Termination. This Agreement may be terminated by Saratoga at any
time by written notice to Parent and the Company. In addition, this Agreement
will terminate automatically as of the earlier of (i) the tenth anniversary of
this Agreement and (ii) the end of the fiscal year in which the percentage
interest of Saratoga and its affiliates in the outstanding common stock of
Parent falls below 20%. The provisions of Section 4 shall survive any
termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
XXXXXXX FASTENERS INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
XXXXXXX HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
SARATOGA PARTNERS III, L.P.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Attorney-in-Fact
