EXHIBIT 10.26
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of the 22nd
day of November, 2002, by and between National Waterworks, Inc., a Delaware
corporation (the "Company"), THL Managers V, LLC, a Delaware limited liability
company ("THL") and X.X. Xxxxxx Partners, LLC, a Delaware limited liability
company ("JPMP" and, together with THL, the "Sponsors").
WHEREAS, the Company has entered into a certain Asset Purchase
Agreement (the "Purchase Agreement") dated as of September 12, 2002, pursuant to
which it shall acquire substantially all of the assets and liabilities of U.S.
Filter Distribution Group, Inc., a Georgia corporation, from United States
Filter Corporation (the "Transaction").
WHEREAS, certain Affiliates (as defined herein) of THL and JPMP have
provided equity financing to the Company's parent, National Waterworks Holdings,
Inc. ("Holdings") pursuant to that certain Sponsor Purchase Agreement, dated as
of November 22, 2002, in connection with the consummation of the Transaction
(the "Closing").
WHEREAS, the Sponsors have staff specifically skilled in corporate
finance, strategic corporate planning, and other management skills and advisory
services.
WHEREAS, the Company will require the Sponsors' special skills and
management advisory services in connection with its business operations and
execution of its strategic plan.
WHEREAS, the Sponsors are willing to provide such skills and services
to the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. SERVICES. Each Sponsor, severally and not jointly, hereby agrees that if
during the term of this Agreement (the "Term") the Company reasonably and
specifically requests that the Sponsors provide the services set forth below and
the Sponsors agree to provide such services, the Sponsors or one of their
Controlled Affiliates will:
a. provide the Company with advice in connection with the negotiation
and consummation of agreements, contracts, documents and instruments necessary
to provide the Company with financing from banks or other financial institutions
or other entities on terms and conditions satisfactory to the Company;
b. provide the Company with advice with respect to the development and
implementation of strategies for improving the operating, marketing and
financial performance of the Company, and other senior management matters
related to the business, administration and policies of the Company; and
c. provide the Company with advice concerning such management matters
that relate to proposed mergers, acquisitions, dispositions, recapitalizations,
issuances of securities, financings or other similar transactions.
No Sponsor shall have any obligation to the Company as to the method
and time of rendering its services hereunder, and the Company shall not have any
right to dictate or direct the details of the performance of services rendered
hereunder. This Agreement shall in no way prohibit a Sponsor or any of its
Affiliates or employees from engaging in other activities, whether or not
competitive with any business of the Company of any of its Affiliates.
2. PAYMENT OF FEES. In exchange for each Sponsor's agreement to provide the
services set forth herein, the Company hereby agrees to pay to each Sponsor (or
its designee) a management fee equal to $125,000.00 per calendar quarter,
payable in advance on the first day of such quarter. Such payments shall begin
on July 1, 2004 and continue until the termination of this agreement in
accordance with Section 3 below. Each payment made pursuant to this Section 2
shall be paid by wire transfer of immediately available funds to the accounts
specified on Exhibit A, attached hereto, or to such other account(s) as each
Sponsor may specify in writing to the Company.
3. TERM. This Agreement shall continue in full force and effect, unless and
until (i) terminated by a Sponsor (with respect to itself and not any other
Sponsor) upon 30 days notice to the Company and the other Sponsor, (ii)
terminated upon the mutual consent of the Sponsors upon 30 days notice to the
Company, (iii) terminated automatically, with respect to a particular Sponsor,
on the date which such Sponsor no longer owns at least 5% of the equity
securities of Holdings it purchased at the Closing, or (iv) terminated by a
Sponsor (with respect to itself and not any other Sponsor) upon the consummation
of Holding's Initial Public Offering (as defined in the Stockholders' Agreement
between Holdings, the Sponsors, and the other parties thereto), or a change in
law, event, or other occurrence (together with the Initial Public Offering, an
"Adverse Event") which, in the determination of such Sponsor and a majority of
Holding's Board of Directors, causes the existence of this Agreement to (A)
render any director designated by such Sponsor as an "interested" or otherwise
not an "independent" director, (B) adversely affect such Sponsor's right to
designate a Person or Persons to serve on the Company's board of directors, or
(C) affect the ability of a Person who has been designated by such Sponsor to
serve on the Company's board of directors to perform his duties as a director.
Upon any termination of this Agreement, each of (a) the obligations of the
Company under Section 4 below, (b) any and all owed and unpaid obligations of
the Company under Section 2 above and (c) the provisions of Section 7 shall
survive any termination of this Agreement to the maximum extent permitted under
applicable law. In the event that a Sponsor terminates this Agreement in
accordance with Section 3, clause (iv) above, the Company agrees to pay such
Sponsor a cash lump-sum termination fee equal to the net present value of the
fees that would have been payable to such Sponsor (but for the termination
hereof) pursuant to Section 2 hereof for a period of ten (10) years from the
date of such termination calculated using a discount rate equal to the ten-year
treasury rate on the date of such termination. Such termination fee shall be
payable by wire transfer of immediately available funds within 10 days after the
date of termination to the account specified on Exhibit A, attached hereto, or
to such other account(s) as such Sponsor may specify in writing to the Company.
4. EXPENSES; INDEMNIFICATION.
a. Expenses. The Company agrees to pay on demand all expenses incurred
by the Sponsors and their Controlled Affiliates (as defined herein) or any of
them in connection with this Agreement, including but not limited to the fees
and disbursements of Weil, Gotshal & Xxxxxx LLP, counsel to THL, and O'Melveny &
Xxxxx LLP, counsel to JPMP, and any other consultants or advisors retained by
the Sponsors or their respective counsel arising in connection therewith,
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including but not limited to the preparation, negotiation and execution of this
Agreement, the performance of services hereunder, or the transactions
contemplated hereby.
b. Indemnity and Liability. In consideration of the execution and
delivery of this Agreement by the Sponsors, the Company hereby agrees to
indemnify, exonerate and hold each of THL and its Controlled Affiliates, and
JPMP and its Controlled Affiliates, and each of their respective partners,
shareholders, Controlled Affiliates, directors, officers, fiduciaries, employees
and agents and each of the partners, shareholders, Controlled 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 (including but not limited to any
indemnification obligation assumed or incurred by any Indemnitee to or on behalf
of any Sponsor, or its accountants or other representatives, agents or
Controlled Affiliates) except for any such Indemnified Liabilities arising 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 Controlled Affiliates for any act or omission suffered or
taken by such Indemnitee that does not constitute gross negligence or willful
gross negligence or misconduct.
5. ASSIGNMENT, ETC. Except as provided below, neither the Company nor the
Sponsors shall have the right to assign this Agreement. Each Sponsor
acknowledges that its services under this Agreement are unique. Accordingly, any
purported assignment by any Sponsor shall be void. Notwithstanding the
foregoing, any Sponsor may assign all or part of its rights and obligations
hereunder to (i) any Affiliate which provides services similar to those called
for by this Agreement, or (ii) to the other Sponsor. In the event of an
assignment in accordance with Section 5(ii) such assigning Sponsor shall be
released from all of its rights and obligations hereunder.
6. AMENDMENTS AND WAIVERS. No amendment or waiver of any term, provision or
condition of this Agreement shall be effective, unless in writing and executed
by each Sponsor and the Company. No waiver on any one occasion shall extend to
or effect or be construed as a waiver of any right or remedy on any future
occasion. No course of dealing of any person nor any delay or omission in
exercising any right or remedy shall constitute an amendment of this Agreement
or a waiver of any right or remedy of any party hereto.
7. MISCELLANEOUS.
a. Choice of Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the domestic substantive laws of any other
jurisdiction.
b. Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this Agreement or the
subject matter hereof shall be
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brought and maintained exclusively in the federal and state courts of the State
of Delaware. Each of the parties hereto by execution hereof (i) hereby
irrevocably submits to the jurisdiction of the federal and state courts in the
State of Delaware for the purpose of any action, suit or proceeding arising out
of or based upon this Agreement or the subject matter hereof and (ii) hereby
waives to the extent not prohibited by applicable law, and agrees not to assert,
by way of motion, as a defense or otherwise, in any such action, suit or
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that it is immune from extraterritorial injunctive
relief or other injunctive relief, that its property is exempt or immune from
attachment or execution, that any such action, suit or proceeding may not be
brought or maintained in one of the above-named courts, that any such action,
suit or proceeding brought or maintained in one of the above-named courts should
be dismissed on grounds of forum non conveniens, should be transferred to any
court other than one of the above-named courts, should be stayed by virtue of
the pendency of any other action, suit or proceeding in any court other than one
of the above-named courts, or that this Agreement or the subject matter hereof
may not be enforced in or by any of the above-named courts. Each of the parties
hereto hereby consents to service of process in any such suit, action or
proceeding in any manner permitted by the laws of the State of Delaware, agrees
that service of process by registered or certified mail, return receipt
requested, at the address specified in or pursuant to Section 10 is reasonably
calculated to give actual notice and waives and agrees not to assert by way of
motion, as a defense or otherwise, in any such action, suit or proceeding any
claim that service of process made in accordance with Section 10 does not
constitute good and sufficient service of process. The provisions of this
Section 7(b) shall not restrict the ability of any party to enforce in any court
any judgment obtained in a federal or state court of the State of Delaware.
c. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR BASED UPON THIS
AGREEMENT OR THE SUBJECT HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each of the parties hereto
acknowledges that it has been informed by each other party that the provisions
of this Section 7(c) constitute a material inducement upon which such party is
relying and will rely in entering into this Agreement and the transactions
contemplated hereby. Any of the parties hereto may file an original counterpart
or a copy of this Agreement with any court as written evidence of the consent of
each of the parties hereto to the waiver of its right to trial by jury.
8. INDEPENDENT CONTRACTOR. The parties agree and understand that each
Sponsor is and shall act as an independent contractor of the Company in the
performance of its duties hereunder. Each Sponsor is not, and in the performance
of its duties hereunder will not hold itself out as, an employee, agent or
partner of the Company.
9. MERGER/ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes any prior communication or agreement with respect thereto.
10. NOTICE. All notices, demands, and communications of any kind which any
party may require or desire to serve upon any other party under this Agreement
shall be in writing and shall be
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served upon such other party and such other party's copied persons as specified
below by personal delivery to the address set forth for it below or to such
other address as such party shall have specified by notice to each other party
or by mailing a copy thereof by certified or registered mail, or by Federal
Express or any other reputable overnight courier service, postage prepaid, with
return receipt requested, addressed to such party and copied persons at such
addresses. In the case of service by personal delivery, it shall be deemed
complete on the first business day after the date of actual delivery to such
address. In case of service by mail or by overnight courier, it shall be deemed
complete, whether or not received, on the third day after the date of mailing as
shown by the registered or certified mail receipt or courier service receipt.
Notwithstanding the foregoing, notice to any party or copied person of change of
address shall be deemed complete only upon actual receipt by an officer or agent
of such party or copied person.
If to the Company, to it at:
National Waterworks, Inc.
American Plaza
000 Xxxx Xxxxxxx 0
Xxxxx 000
Xxxx, Xxxxx 00000
Attention: President
If to THL, to it at:
THL Managers V, LLC
c/o Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. XxXxxx
Telecopier: (000)000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
If to JPMP, to it at:
X.X. Xxxxxx Partners, LLC
c/o X.X. Xxxxxx Partners, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
with a copy to:
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O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
11. SEVERABILITY. If in any judicial or arbitral proceedings a court or
arbitrator shall refuse to enforce any provision of this Agreement, then such
unenforceable provision shall be deemed eliminated from this Agreement for the
purpose of such proceedings to the extent necessary to permit the remaining
provisions to be enforced. To the full extent, however, that the provisions of
any applicable law may be waived, they are hereby waived to the end that this
Agreement be, deemed to be valid and binding agreement enforceable in accordance
with its terms, and in the event that any provision hereof shall be found to be
invalid or unenforceable, such provision shall be construed by limiting it so as
to be valid and enforceable to the maximum extent consistent with and possible
under applicable law.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by each of the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
13. HEADINGS. All descriptive headings in this Agreement are inserted for
convenience only and shall be disregarded in construing or applying any
provision of this Agreement.
14. PREVAILING PARTY. If any legal action or other proceedings is brought for a
breach of this Agreement or any of the warranties herein, the prevailing party
shall be entitled to recover its reasonable attorneys' fees and other costs
incurred in bringing such action or proceeding, in addition to any other relief
to which such party may be entitled.
15. SPONSORS. Any reference herein to action to be taken by "the Sponsors"
or consent to be granted by "the Sponsors" shall require the action or consent,
as the case may be, of each of THL and JPMP.
16. DEFINITIONS.
a. Affiliate. As used herein, the term "Affiliate" means, with respect
to any Person, any (a) director, officer, limited or general partner, member or
stockholder holding 5% or more of the outstanding capital stock or other equity
interests of such Person, and (b) other Person that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person.
b. Control. As used herein, the term "control" means, (including, with
correlative meaning, the terms "controlling," "controlled by" and "under common
control with") with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management,
policies or investment decisions of such Person, whether through the ownership
of voting securities, by contract or otherwise.
c. Controlled Affiliate. As used herein, the term "Controlled
Affiliate" means, with respect to any Person, any (a) director, officer, limited
or general partner, member or stockholder holding 5% or more of the outstanding
capital stock or other equity interests of such Person, and (b)
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any other Person that, directly or indirectly, through one or more
intermediaries, is controlled by such Person.
d. Person. As used herein, the term "Person" shall be construed in the
broadest sense and means and includes a natural person, a partnership, a
corporation, an association, a joint stock company, a limited liability company,
a trust, a joint venture, an unincorporated organization and any other entity
and any federal, state, municipal, foreign or other government, governmental
department, commission, board, bureau, agency or instrumentality, or any private
or public court or tribunal.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.
NATIONAL WATERWORKS, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: C.E.O. and President
THL MANAGERS V, LLC
By: Xxxxxx X. Xxx Partners, L.P., its
Managing Member
By: Xxxxxxx X. Xxxxxx
-----------------
Name: Xxxxxxx X. XxXxxx
Title: Managing Director
X.X. XXXXXX PARTNERS, LLC
By: /s/ Xxxxxxx Xxxxxx
------------------
Name: Xxxxxxx Xxxxxx
Title: Partner
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EXHIBIT A
Wire Instructions
THL Managers V, LLC
FleetBoston
000 Xxxxxxx Xxxxxx
Xxxxxx, XX
ABA #000000000
Account Name: THL Managers V, LLC
Account #270-07242
X.X. Xxxxxx Partners, LLC
X.X. Xxxxxx Xxxxx Bank
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA#000000000
Account Name: X.X. Xxxxxx Partners, LLC
Account #000-000-000
Contact: Xxxxxxxxx Xxxxx
