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EXHIBIT 10.35.2
SECOND AMENDMENT TO
MANAGEMENT AGREEMENT
This SECOND AMENDMENT TO MANAGEMENT AGREEMENT, (this "Amendment"),
dated as of January 31, 2001, is entered into by and among KRG Capital Partners,
L.L.C., a Delaware limited liability company ("KRG") and MDMI Holdings, Inc., a
Colorado corporation (the "Company"). This Amendment shall be effective as of
the closing of the initial public offering of the common stock of the Company or
its successor.
RECITALS
A. KRG and the Company are parties to that certain Management Agreement
dated July 6, 1999, as amended by the First Amendment dated May 31, 2000 (the
"Agreement").
B. In anticipation of the proposed initial public offering of the
common stock of the Company, or its successor, KRG and the Company wish to
rename and amend the Agreement to reflect the new transaction advisory
relationship between KRG and the Company, to replace the current compensation
arrangement with a base transaction fee and a transaction bonus fee and to
reflect the new term of the Agreement.
C. Unless otherwise amended herein, all capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto amend the Agreement as follows:
1. Henceforth, the Agreement shall be entitled the "Transaction
Advisory Agreement."
2. Section 3(a) of the Agreement is deleted in its entirety and
replaced with the following:
"(a) The Company hereby agrees to pay KRG, as compensation for services
to be rendered by KRG to the Company with respect to the consummation
of any acquisition of a medical supply manufacturing business or any
other acquisition in furtherance of the Company's business strategy, a
base transaction fee (the "Base Transaction Fee") equal to one percent
(1%) of the Transaction Value (as defined below) of such acquisition;
provided, however, that the Base Transaction Fee shall be reduced to
one-half of one percent (.5%) of the Transaction Value of the relevant
acquisition if (i) the Transaction Value exceeds $200 million and (ii)
the Company has retained an investment banking
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firm, or a financial advisor providing comparable services, to act on
its behalf in such acquisition. In addition to the Base Transaction
Fee, the Company shall also pay to KRG for each acquisition a
transaction bonus fee (the "Transaction Bonus Fee") equal to the
greater of (i) one percent (1%) of the Transaction Value or (ii)
$250,000; provided, however, that in no event shall the aggregate
Transaction Bonus Fees earned in any one calendar year exceed $500,000.
The Base Transaction Fee and the Transaction Bonus Fee, as set forth
herein, will be payable to KRG upon the closing of each acquisition.
For purposes of this Agreement, "Transaction Value" means the aggregate
of all cash and non-cash consideration paid to the sellers of the
company or the business being acquired and the value of
interest-bearing debt assumed, directly or indirectly, by the Company.
Any non-cash consideration will be valued at the fair market value, and
the value of any equity securities issued will be the fair market value
on the date of issuance, assuming such equity securities are fully
vested on such date."
3. The first paragraph of Section 4 of the Agreement is deleted and
replaced with the following:
"Upon the closing of the initial public offering of the common stock of
the Company, or its successor (the "IPO"), the term of this Agreement,
as amended by that certain Second Amendment to Management Agreement,
shall commence and shall remain in effect for an initial period of five
(5) years. This Agreement shall be renewed automatically after the
initial period on a year-to-year basis unless one party gives the other
party thirty (30) days' prior written notice of its desire not to renew
this Agreement; provided, however, that this Agreement shall
immediately terminate on the date KRG gives the Company written notice
of termination. In the event of a Sale of the Company (as defined
below), this Agreement shall be automatically renewed, without further
action or notice by KRG or the Company, for an additional five (5)-year
term unless the Board, not earlier than thirty (30) days prior to and
not later than sixty (60) days after the closing of a Sale of the
Company, gives KRG written notice of its desire not to renew this
Agreement for such term. In the event that the Board terminates this
Agreement by delivering the required written notice upon the Sale of
the Company, the Company agrees to pay KRG an accelerated cash payment
in an amount equal to $500,000 multiplied by the greater of (i) two and
one-half (2-1/2), or (ii) the number of years remaining in the term of
the Agreement, where any portion of a year less than a whole year is
expressed as a fraction. As used herein, the term "Sale of the Company"
shall mean any transaction or series of related transactions (x) the
result of which is that any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than KRG Capital Fund I, L.P., KRG Capital Fund
I (PA), L.P., KRG Capital Fund I (FF), L.P., KRG Capital Fund I (GER)
or KRG Co-Investment, LLC (collectively the "Fund"), KRG, KRG/CMS L.P,
any institutions, individuals or entities that, upon invitation or by
contractual right, co-invest in the Company with the Fund or KRG (the
"Invited Parties" and, together with KRG and the Fund, the "KRG
Investing Parties"), or persons controlling, controlled by or under
common control with the KRG Investing Parties, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), of more than
fifty percent (50%) of the issued and outstanding Voting
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Stock (as defined below) of the Company; (y) that results in the sale
of all or substantially all of the Company's assets; or (z) that
results in the consolidation or merger of the Company with or into
another corporation or corporations or other entity in which the
Company is not the survivor, unless persons who are shareholders or
affiliates of the Company at the time of such transaction continue to
own more than 50% of the combined voting power of all classes of stock
of the Company or the successor entity. No termination of this
Agreement, whether pursuant to this paragraph or otherwise, will affect
the Company's obligations with respect to earned and accrued fees,
costs and expenses incurred by KRG in rendering the services hereunder
and not paid or reimbursed by the Company as of the effective date of
such termination."
4. The second paragraph of Section 4 to the Agreement is deleted in its
entirety and replaced with the following:
"As used herein, the term "Voting Stock" shall mean and
include (i) any capital stock of any class of the Company ("Common
Shares") which has the right to vote on all matters submitted to
holders of Common Shares, and (ii) any security, right, option, warrant
or agreement convertible into or exercisable to obtain any Common
Shares or capital stock of any class of the Company, or its successor,
which has the right to vote on all matters submitted to holders of
Common Shares."
5. Section 11 of the Agreement is deleted in its entirety and replaced
with the following:
"11. SUCCESSORS AND ASSIGNS.
Neither KRG nor the Company may assign their respective rights
or obligations under this Agreement without the prior written consent
of the other. Except as expressly provided herein or in any instruments
of transfer, this Agreement shall be binding upon and shall inure to
the benefit of the respective successors and assigns of the parties."
6. Other than the amendments and modifications specifically contained
herein, the Agreement remains in full force and effect.
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SIGNATURES
IN WITNESS WHEREOF, KRG and the Company have caused this Amendment to
be signed by their respective officers thereunto duly authorized as of the date
first written above.
KRG CAPITAL PARTNERS, L.L.C.
By:
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Name: Xxxxxxx Xxxxxxxxx
Title: Managing Director
MDMI HOLDINGS, INC.
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
Title: Vice President
