GLENCOE MANAGEMENT SERVICES AGREEMENT
Exhibit 10.24
GLENCOE MANAGEMENT SERVICES AGREEMENT
This Glencoe Management Services Agreement (this “Glencoe Services Agreement”), is made and
entered into as of June 7, 2004, between First Mercury Financial Corporation, a Delaware
corporation (the “Company”), and Glencoe Capital, LLC, an Illinois limited liability
company (“Glencoe”). Capitalized terms used but not otherwise defined herein shall have
the meanings given to them in the Series A Convertible Preferred Stock Purchase Agreement, dated
March 1, 2004 (the “Purchase Agreement”), by and between the Company and FMFC Holdings,
LLC, a Delaware limited liability company (the “Investor”).
RECITALS
A. The Company desires to obtain from Glencoe, and Glencoe is willing and able to provide,
management services and other assistance to the Company in accordance with and subject to the terms
and conditions set forth in this Glencoe Services Agreement.
B. The Company will benefit from the consummation of the transactions contemplated by the Purchase
Agreement.
C. As a condition to the consummation of the transactions contemplated by the Purchase Agreement,
the Investor has required that the Company execute and deliver this Glencoe Services Agreement and
the Company desires to do so.
AGREEMENT
In consideration of the foregoing recitals and the benefits and covenants set forth below, the
parties mutually agree as follows:
1. Appointment as Manager.
The Company hereby retains Glencoe to provide management services and other assistance as requested
by the Company, including, but not limited to, services and assistance with respect to strategic
planning, budgeting, cash management, record keeping, quality control, advisory and administrative
services, finance, tax, consumer affairs, public relations, accounting, risk management,
procurement and supervision of third party service providers, contract negotiation, and providing
economic and investment and acquisition analysis with respect to investments and acquisitions or
potential investments and acquisitions; provided, that the management and the conduct of
the activities of the Company shall remain the sole responsibility of the Board of Directors and
officers of the Company. Glencoe shall devote such time as it determines is reasonably necessary
to provide such services and assistance; provided, that Glencoe shall not be required to
devote in excess of that number of hours in any given year as may be reasonably agreed upon by
Glencoe and the Company from time to time.
2. Compensation.
For services to be provided by Glencoe hereunder, the Company shall pay Glencoe, and Glencoe shall
be entitled to receive from the Company for the term of this Glencoe Services Agreement,
an annual management fee in the amount of $750,000 (the “Glencoe Management Fee”), payable
quarterly in arrears. Except as provided or permitted in this Glencoe Services Agreement, Glencoe
shall not be entitled to receive from the Company any compensation or remuneration in consideration
for its services under this Glencoe Services Agreement to the Company. Each quarterly payment
shall be in the amount of twenty-five percent (25%) of the aggregate Glencoe Management Fee as
calculated on the last day of each such quarterly period. The first quarterly payout of $187,500
shall be made upon execution hereof.
3. Expenses.
Glencoe shall be reimbursed the cost of its reasonable out-of-pocket travel and travel-related
expenses incurred in connection with the services performed hereunder (e.g., airfare, hotel, meals,
etc.).
4. Certain Transactions.
To the fullest extent permitted by law, (i) the Company waives any claim that it may have that any
Specified Opportunity (as defined below) constituted a corporate opportunity that should have been
presented to the Company or any of its Affiliates by Glencoe or any Glencoe Indemnitee; (ii)
Glencoe and the Glencoe Indemnitees shall have no fiduciary duty to offer any Specified Opportunity
to the Company or otherwise; and (iii) Glencoe and the Glencoe Indemnitees may in an individual
capacity, or on behalf of another person or entity, pursue, refer, or take advantage of, any
Specified Opportunity. “Specified Opportunity” means any of the following specified classes of
business opportunities:
| (a) | any potential acquisition of a business, whether pursuant to an offering of stock, assets or otherwise, offered to Glencoe or a Glencoe Indemnitee in any capacity other than its capacity as a provider of services pursuant to this Glencoe Services Agreement; | ||
| (b) | any potential acquisition of a business, whether pursuant to an offering of stock, assets or otherwise, that is offered to the Company by any investment bank, broker, auction process or other similar means unless such opportunity is offered only to the Company and not any other person, or only to the Company and other offerees which do not include Glencoe or the Glencoe Indemnitees; and | ||
| (c) | any corporate opportunity offered to Glencoe or a Glencoe Indemnitee in its capacity as a fiduciary for another entity. |
In the event Glencoe or any Glencoe Indemnitee in its individual capacity, any entity which Glencoe
or such Glencoe Indemnitee controls, or to Glencoe’s or such Glencoe Indemnitee’s knowledge any
entity for which Glencoe or such Glencoe Indemnitee acts in a fiduciary capacity, is pursuing or is
considering pursuing any Specified Opportunity which is also then to Glencoe’s or such Glencoe
Indemnitee’s knowledge being pursued or considered by the Company, Glencoe or such Glencoe
Indemnitee shall disclose its interest in such Specified Opportunity to the Company.
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5. Delegation.
In performing the above services, Glencoe may delegate all or any of its duties and
responsibilities to Affiliates of Glencoe and compensate them out of the Glencoe Management Fee in
accordance with the provisions of this Agreement either fully or on a pro rata basis;
provided, however, that Glencoe shall remain responsible for the actions of any
such Affiliate and such Affiliate shall not be entitled to any additional compensation for such
services.
6. Notices.
All notices, requests, demands and other communications hereunder shall be in writing and shall be
delivered and deemed to have been given as set forth in the Purchase Agreement.
7. Effective Period of Agreement and Amendments.
This Glencoe Services Agreement shall become effective on the date first written above and shall
terminate upon a Change of Control. For purposes hereof, “Change of Control” shall mean
(i) a merger or consolidation of the Company with or into another corporation or other entity; (ii)
the sale, lease, license, conveyance or transfer of all or substantially all of the assets of the
Company; (iii) except for the transactions contemplated by the Purchase Agreement, any purchase of
shares of capital stock of the Company (either through a negotiated stock purchase or a tender for
such shares) by any party or group, through one, or a series of related transactions, that did not
beneficially own a majority of the voting power of the outstanding shares of capital stock of the
Company immediately prior to such purchase, the effect of which is that such party or group
beneficially owns at least a majority of such voting power immediately after such purchase; or (iv)
any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary. Any
amendment to this Glencoe Services Agreement shall be in writing and signed by both parties hereto.
8. Limitation of Liability.
Glencoe shall not be liable, responsible or accountable in damages or otherwise to the Company for
mistakes of judgment or for action or inaction which Glencoe believed to be in the best interests
of the Company or for losses due to the negligence of employees, brokers or other agents of the
Company. Glencoe may consult with legal counsel, accountants or other professional advisors
selected by Glencoe or the Company and Glencoe shall not be liable for damages of any kind
resulting from any action or omission suffered or taken by Glencoe in good faith in reliance and in
accordance with the opinion or advice of such counsel, accountants, or other professional advisors.
Subject to applicable law, neither Glencoe nor any of its managers, members, officers, directors,
employees, partners, or shareholders, (collectively, the “Glencoe Indemnitees”), shall be
liable, responsible or accountable to the Company for any Losses which the Company may sustain or
suffer.
9. Indemnification.
The Company shall indemnify and hold harmless Glencoe and the Glencoe Indemnitees from and against
any and all Losses, arising out of or incidental to the services performed by Glencoe
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hereunder; provided, however, that neither Glencoe nor any Glencoe Indemnitee shall
be entitled to indemnification hereunder where the claim at issue is based upon:
| (a) | the gross negligence or willful misconduct of Glencoe or a Glencoe Indemnitee as finally adjudicated by a court of competent jurisdiction; or | ||
| (b) | the material breach by Glencoe of any provision of this Glencoe Services Agreement as finally adjudicated by a court of competent jurisdiction. |
The indemnification rights herein contained shall be cumulative of, and in addition to, any and all
other rights, remedies and recourse to which Glencoe or a Glencoe Indemnitee shall be entitled,
whether pursuant to some other provision of this Glencoe Services Agreement, at law or in equity.
The Company will maintain general liability insurance coverage, including a director and officer
extension, at customary coverage levels, provided that such insurance coverage can be obtained at
commercially reasonable rates and on commercially reasonable terms.
10. Non-Assignability.
This Glencoe Services Agreement is not to be assigned by either party hereto without the prior
written consent of the other; provided, however, that Glencoe may assign this
Glencoe Services Agreement to Exec Net Company, LLC, an entity involved with Glencoe’s executive
network.
11. Governing Law.
This Glencoe Services Agreement shall be governed by and construed in accordance with the internal
substantive laws of the State of Delaware without giving effect to any choice or conflict of law
provision or rule.
12. Miscellaneous.
Except as stated herein, this Glencoe Services Agreement is the entire agreement and understanding
of the parties with respect to its subject matter and supersedes all prior discussions
understandings, agreements and representations, written or oral, which may have existed between the
parties as to that subject matter.
Each provision of this Glencoe Services Agreement shall be considered separable and if, for any
reason, any provision or provisions, or any part thereof, is determined to be invalid or contrary
to any existing or future applicable law, such invalidity shall not impair the operation of or
affect those portions of this Glencoe Services Agreement that are valid. This Glencoe Services
Agreement shall be construed and enforced in all respects as if such invalid or unenforceable
provision or provisions had been omitted.
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IN WITNESS WHEREOF, the parties hereto have executed this Glencoe Services Agreement as of the
date first above written.
| FIRST MERCURY FINANCIAL CORPORATION | ||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Title: | President | |||
| GLENCOE CAPITAL, LLC | ||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: | ||||
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AMENDMENT NO. 1 TO GLENCOE MANAGEMENT SERVICES AGREEMENT
This
Amendment (this “Amendment”) is made and entered
into as of August 17, 2005 by
and between First Mercury Financial Corporation, a Delaware corporation (the “Company”) and
Glencoe Capital, LLC, an Illinois Limited Liability Company (“Glencoe”).
WHEREAS, the Company and Glencoe are parties to that certain Glencoe Management Services
Agreement dated as of June 7, 2004 (the “Original Agreement”) which, by its terms,
terminates upon the occurrence of a change of control of the Company; and
WHEREAS, the Company and Glencoe desire to amend the Original Agreement to provide that it
will terminate only upon the mutual written consent of the Company and Glencoe.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledge, the parties agree as
follows:
1. Amendment. Section 7 of the Original Agreement is herby amended and restated in
its entirety to read as follows:
“7. Effective Period of Agreement and Amendments.
This Glencoe Services Agreement shall become effective on the date first
written above and shall terminate upon the mutual written consent of the
Company and Glencoe. Any amendment to this Glencoe Services Agreement shall
be in writing and signed by both parties hereto.”
2. Ratification of Original Agreement as Amended. Except as amended hereby, the terms
and conditions of the Original Agreement shall remain in full force and effect.
3. Counterparts. This Amendment may be executed in multiple counterparts, each of
which shall constitute an original but all of which shall constitute one and the same instrument.
4. Governing Law. This Amendment shall be deemed a contract made under the laws of
the State of Delaware and together with the rights and obligations of the parties hereunder, shall
be construed under and governed by the laws of such state, without giving effect to its conflicts
of laws principles.
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IN WITNESS WHEREOF, each of the undersigned has executed this Amendment as of the date first above
written.
| FIRST MERCURY FINANCIAL CORPORATION | ||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Printed Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Title: | President | |||
| GLENCOE CAPITAL, LLC | ||||
| By: | /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇ | |||
| Printed Name: | ▇.▇. ▇▇▇▇▇▇▇▇▇ | |||
| Title: | Principal | |||
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