MANAGEMENT AGREEMENT
EXHIBIT 10.3
EXECUTION COPY
This Management Agreement (this “Agreement”) is entered into as of September 29, 2006
by and between Trader Acquisition Corp, a Delaware corporation (together with its successors and
permitted assigns, the “Company”), and Silver Lake Management Company, L.L.C., a Delaware
limited liability company (the “Manager”). Unless the context otherwise requires, all
capitalized terms used but not defined herein shall have the meanings set forth in the Agreement
and Plan of Merger, dated as of July 30, 2006, by and among the Company, Trader Merger Corp
(“Merger Sub”), a Delaware corporation and a wholly-owned subsidiary of the Company, and
IPC Acquisition Corp. (“IPC”), a Delaware corporation (as amended, supplemented or
otherwise modified from time to time, the “Merger Agreement”).
RECITALS
WHEREAS, the Company has been formed for the purpose of acquiring IPC through the merger of
Merger Sub with and into IPC (the “Merger”), pursuant to the Merger Agreement;
WHEREAS, to enable the Company to engage in the Merger and related transactions, the Manager
provided financial and structural advice and analysis as well as assistance with due diligence
investigations and negotiations (the “Financial Advisory Services”); and
WHEREAS, the Company desires to retain the Manager to provide certain management and advisory
services to it, and the Manager is willing to provide such services on the terms and subject to the
conditions set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Services. The Manager hereby agrees that, during the term of this Agreement (the
“Term”), it will provide the following consulting and management advisory services to the
Company as requested from time to time by the Board of Directors of the Company:
(a) advice in connection with the negotiation and consummation of agreements,
contracts, documents and instruments necessary to provide the Company with financing on
terms and conditions satisfactory to the Company;
(b) financial, managerial and operational advice in connection with the Company’s
day-to-day operations, including, without limitation, advice with respect to the development
and implementation of strategies for improving the operating, marketing and financial
performance of the Company and its subsidiaries; and
(c) such other services (which may include financial and strategic planning and
analysis, consulting services, human resources and executive recruitment services and other
services) as the Manager and the Company may from time to time agree in writing.
The Manager shall devote such time and efforts to the performance of services contemplated
hereby as the Manager deems reasonably necessary or appropriate; provided that no minimum
number of hours is required to be devoted by the Manager on a weekly, monthly, annual or other
basis. The Company acknowledges that the Manager’s services are not exclusive to the Company and
that the Manager will render similar services to other persons and entities. The Manager and the
Company understand that the Company may, at times, engage one or more investment bankers or
financial advisers to provide services in addition to, but not in lieu of, services provided by the
Manager under this Agreement. In providing services to the Company, the Manager will act as an
independent contractor and it is expressly understood and agreed that this Agreement is not
intended to create, and does not create, any partnership, agency, joint venture or similar
relationship between the parties and that no party has the right or ability to contract for or on
behalf of the other party or to effect any transaction for the account of the other party.
2. Payment of Fees.
(a) In the event that the Termination Fee becomes payable to the Company pursuant to
the terms of the Merger Agreement, the Company shall cause the Termination Fee to be paid to
the Manager.
(b) The Company will pay to the Manager, in consideration of the Manager providing the
Financial Advisory Services, a transaction fee (the “Transaction Fee”) in the amount
of $12,000,000, such fee being payable at the Closing of the Merger.
(c) During the period commencing on the Closing Date and continuing throughout the
Term, the Company will pay to the Manager an annual periodic fee of $1,500,000 (the
“Periodic Fee”) in exchange for the ongoing services provided by the Manager under
this Agreement, such fee being payable by the Company quarterly in advance on or before the
start of each calendar quarter; provided, however, that the Periodic Fee for
the period from the Closing Date through the last day of the calendar quarter in which the
Closing occurs shall be paid upon Closing. The Periodic Fee shall be prorated for any
partial period of less than three months.
(d) During the Term, as the Manager and the Company may mutually agree, the Manager may
advise the Company in connection with financing, acquisition, disposition and change of
control transactions involving the Company or any of its respective direct or indirect
subsidiaries (however structured), and in connection with any such transaction, the Company
will pay to the Manager (or such Affiliate of the Manager as the Manager may designate) an
aggregate fee that is mutually agreed between the Manager and the Company.
Each payment made pursuant to this Section 2 shall be paid by wire transfer of immediately
available federal funds to such account(s) as the Manager may specify to the Company in writing
prior to such payment.
3. Term. (a) This Agreement shall continue in full force and effect until the seventh
year anniversary of the Closing (the “End Date”); provided, however, that
(a) the Manager and
2
the Company may unanimously agree to cause this Agreement to be terminated at any time (in
which case this agreement will terminate), (b) the Manager may cause this Agreement to be
terminated at any time following (i) the consummation of an initial public offering of common stock
of the Company pursuant to the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (an “Initial Public Offering”) or (ii) a sale of all or
substantially all of the assets of the Company, in each case by delivering written notice of such
termination to the Company (in which case this Agreement will terminate) and (c) the Company may
cause this Agreement to be terminated at any time following an Initial Public Offering by
delivering written notice of such termination to the Manager (in which case this Agreement will
terminate). In the event of a termination of this Agreement, the Company shall pay Manager (or
such Affiliates of the Manager as the Manager may designate) (i) all unpaid Periodic Fees (pursuant
to Section 2(c) above), Subsequent Fees (pursuant to Section 2(d) above) and Reimbursable Expenses
(pursuant to Section 4(a) below) due with respect to periods prior to the date of termination plus
(ii) the net present value (using a discount rate equal to the then yield on U.S. Treasury
Securities of like maturity) of the Periodic Fees that would have been payable with respect to the
period from the date of termination until the End Date. Sections 4 through 12 (inclusive) of this
Agreement shall survive any termination of this Agreement.
4. Expenses; Indemnification.
(a) Expenses. The Company will pay on demand all Reimbursable Expenses. As
used herein, “Reimbursable Expenses” means (i) all reasonable expenses incurred or
accrued prior to the Closing Date by the Manager or its Affiliates in connection with this
Agreement, the Merger Agreement, the Merger or any related transactions, consisting of their
respective out-of-pocket expenses for travel and other incidentals in connection with such
transactions (including, without limitation, all air travel (in such manner as determined by
the Manager) and other travel-related expenses) and the out-of-pocket expenses and the fees
and charges of (A) Xxxxxxx Xxxxxxx & Xxxxxxxx LLP (as counsel to the Manager and its
affiliated funds), (B) Deloitte & Touche LLP (as financial consultant of the Manager and its
affiliated funds) and (C) any other consultants or advisors retained by the Manager or its
Affiliates in connection with such transactions, (ii) reasonable out-of-pocket expenses
incurred from and after the Closing Date relating to its affiliated funds’ investment in,
the operations of, or the services provided by the Manager or its Affiliates to the Company
or any of its Affiliates from time to time (including, without limitation, all air travel
(in such manner as determined by the Manager) and other travel-related expenses), and (iii)
reasonable out-of-pocket legal expenses incurred by the Manager or its Affiliates from and
after the Closing Date in connection with the enforcement of rights or taking of actions
under this Agreement.
(b) Indemnity and Liability. The Company will indemnify, exonerate and hold
the Manager and its Affiliates (other than the Company’s subsidiaries and other Affiliates
controlled by the Company), and each of their respective partners, shareholders, members,
directors, officers, fiduciaries, managers, controlling persons, employees and agents
(collectively, the “Indemnitees”) free and harmless from and against any and all
actions, causes of action, suits, claims, liabilities, losses, damages and costs and
out-of-pocket expenses in connection therewith (including reasonable attorneys’ fees and
expenses) incurred by any or all of the Indemnitees before or after the
3
date of this Agreement (collectively, the “Indemnified Liabilities”), arising
out of or in any way relating to (i) this Agreement, the Merger, any transaction to which
the Company is a party or any other circumstances with respect to the Company or any
transaction entered into after the Closing Date or (ii) operations of, or services provided
by, the Manager to the Company or any of its Affiliates from time to time (including but not
limited to any indemnification obligations assumed or incurred by any Indemnitee to or on
behalf of the Company, or any of its accountants or other representatives, agents or
affiliates); provided that the foregoing indemnification rights shall not be available to
the extent that any such Indemnified Liabilities arose on account of such Indemnitee’s
willful misconduct, and further provided that, if and to the extent that the foregoing
undertaking may be unavailable or 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. For purposes of this Section 4(b),
none of the circumstances described in the limitations contained in the two provisos in the
immediately preceding sentence shall be deemed to apply absent a final non-appealable
judgment of a court of competent jurisdiction to such effect, in which case to the extent
any such limitation is so determined to apply to any Indemnitee as to any previously
advanced indemnity payments made by the Company, then such payments shall be promptly repaid
by such Indemnitee to the Company. Expenses incurred in defending any civil or criminal
action arising out of or relating to any event or circumstance to which this indemnity shall
apply shall be paid by the Company upon receipt of an undertaking by or on behalf of the
Indemnitee to repay such amount if it be later shown that such Indemnitee was not entitled
to indemnification hereunder. The rights of any Indemnitee to indemnification hereunder
will be in addition to any other rights any such person may have under any other agreement
or instrument referenced above or any other agreement or instrument to which such Indemnitee
is or becomes a party or is or otherwise becomes a beneficiary or under law or regulation.
None of the Indemnitees shall in any event 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 as determined by a final, non-appealable determination of a
court of competent jurisdiction.
5. Disclaimer and Limitation of Liability; Opportunities.
(a) Disclaimer; Standard of Care. The Manager makes no representations or
warranties, express or implied, in respect of the services to be provided by the Manager
hereunder. In no event shall the Manager or any of its Indemnitees be liable to the Company
or any of its Affiliates for any act, alleged act, omission or alleged omission that does
not constitute willful misconduct of the Manager as determined by a final, non-appealable
determination of a court of competent jurisdiction.
(b) Freedom to Pursue Opportunities. In recognition that the Manager and its
Indemnitees currently have, and will in the future have or will consider acquiring,
investments in numerous companies with respect to which the Manager or its Indemnitees may
serve as an adviser, a director or in some other capacity, and in recognition that the
Manager and its Indemnitees have myriad duties to various investors and partners, and in
anticipation that the Company, on the one hand, and the Manager (or
4
one or more Affiliates, associated investment funds or portfolio companies), on the
other hand, may engage in the same or similar activities or lines of business and have an
interest in the same areas of corporate opportunities, and in recognition of the benefits to
be derived by the Company hereunder and in recognition of the difficulties which may
confront any advisor who desires and endeavors fully to satisfy such advisor’s duties in
determining the full scope of such duties in any particular situation, the provisions of
this Section 5(b) are set forth to regulate, define and guide the conduct of certain affairs
of the Company as they may involve the Manager or its Indemnitees. Except as the Manager
may otherwise agree in writing after the date hereof:
(i) The Manager and its Indemnitees shall have the right: (A) to directly or
indirectly engage in any business (including, without limitation, any business
activities or lines of business that are the same as or similar to those pursued by,
or competitive with, the Company and its subsidiaries), (B) to directly or
indirectly do business with any client or customer of the Company and its
subsidiaries, (C) to take any other action that the Manager believes in good faith
is necessary or appropriate to fulfill its obligations as described in the first
sentence of this Section 5(b), and (D) not to present potential transactions,
matters or business opportunities to the Company or any of their subsidiaries, and
to pursue, directly or indirectly, any such opportunity for itself, and to direct
any such opportunity to another Person.
(ii) The Manager and its Indemnitees shall have no duty (contractual or
otherwise) to communicate or present any corporate opportunities to the Company or
any of its Affiliates or to refrain from any actions specified in Section 5(b)(i),
and the Company, on its own behalf and on behalf of its Affiliates, hereby renounces
and waives any right to require the Manager or any of its Indemnitees to act in a
manner inconsistent with the provisions of this Section 5(b).
(iii) The Manager and its Indemnitees shall not be liable to the Company or any
of its Affiliates for breach of any duty (contractual or otherwise) by reason of any
activities or omissions of the types referred to in this Section 5(b) or of any such
Person’s participation therein.
(c) Limitation of Liability. In no event will the Manager or any of its
Indemnitees be liable to the Company or any of its Affiliates for any indirect, special,
incidental or consequential damages, including, without limitation, lost profits or savings,
whether or not such damages are foreseeable, or for any third party claims (whether based in
contract, tort or otherwise), relating to the services to be provided by the Manager
hereunder.
6. Information to be Provided. The Company shall furnish or cause to be furnished to
the Manager such information as reasonably requested by the Manager in order to provide its
services hereunder and that can be reasonably obtained by the Company and its subsidiaries (the
“Information”); provided that the Manager shall keep the Information confidential
and shall not disclose, divulge or use the Information except in connection with the provision of
services
5
hereunder. The Company recognizes and confirms that the Manager will use and rely primarily
on the Information and on information available from generally recognized public sources in
performing the services contemplated by this Agreement without having independently verified the
same, does not assume responsibility for the accuracy or completeness of the Information and such
other information and will be relying upon the Information without independent verification.
7. Assignment, etc. Except as provided below, neither of the parties hereto shall
have the right to assign this Agreement without the prior written consent of the other party.
Notwithstanding the foregoing, (a) the Manager may assign all or part of its rights and obligations
hereunder to any of its respective Affiliates which provides services similar to those called for
by this Agreement, in which event the Manager shall be released of its rights to fees under Section
2 and reimbursement of expenses under Section 4(a) and all of its obligations hereunder, so long as
such obligations are assumed by such Affiliate and (b) the provisions hereof for the benefit of
Indemnitees of the Manager shall inure to the benefit of such Indemnitees and their successors and
assigns and each of such Indemnitees shall be third party beneficiaries of such provisions entitled
to enforce such provisions against the Company.
8. 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 the Manager 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.
9. Governing Law; Jurisdiction.
(a) Governing Law. THIS AGREEMENT AND ANY RELATED DISPUTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT CONSIDERATION OF
THE CONFLICTS OF LAW PRINCIPLES THEREOF.
(b) Consent to Jurisdiction. ANY ACTION OR PROCEEDING AGAINST THE PARTIES
RELATING IN ANY WAY TO THIS AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE
STATE OF DELAWARE OR (TO THE EXTENT SUBJECT MATTER JURISDICTION EXISTS THEREFORE) THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND THE PARTIES IRREVOCABLY SUBMIT TO
THE JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. ANY
ACTIONS OR PROCEEDINGS TO ENFORCE A JUDGMENT ISSUED BY ONE OF THE FOREGOING COURTS MAY BE
ENFORCED IN ANY JURISDICTION.
(c) Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
CANNOT BE WAIVED, EACH PARTY TO THIS AGREEMENT WAIVES, AND COVENANTS THAT SUCH PARTY WILL
NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY
FORUM IN RESPECT OF ANY ISSUE,
6
CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN
ANY WAY CONNECTED WITH THE DEALINGS OF ANY SHAREHOLDER OR HOLDINGS IN CONNECTION WITH ANY OF
THE ABOVE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT,
TORT OR OTHERWISE. Any party to this Agreement may file an original counterpart or a copy
of this Section 9(c) with any court as written evidence of the consent of the parties to the
waiver of their rights to trial by jury.
(d) Reliance. Each of the parties hereto acknowledges that he, she or it has
been informed by each other party that the provisions of Section 8 hereof constitute a
material inducement upon which such party is relying and will rely in entering into this
Agreement and the transactions contemplated hereby.
10. 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.
11. Notice. All notices, demands, and communications required or permitted under this
Agreement shall be in writing and shall be effective if served upon such other party and such other
party’s copied persons as specified below 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) if (i) delivered
personally, (ii) sent and received by facsimile or (iii) sent by certified or registered mail or by
Federal Express, DHL, UPS or any other comparably reputable overnight courier service, postage
prepaid, to the appropriate address as follows:
If to the Company:
Trader Acquisition Corp
c/o Silver Lake Partners
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
c/o Silver Lake Partners
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
If to the Manager:
Silver Lake Management Company, L.L.C.
c/o Silver Lake Partners
0000 Xxxx Xxxx Xxxx, Xxx. 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
c/o Silver Lake Partners
0000 Xxxx Xxxx Xxxx, Xxx. 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
000 Xxxxxxxxx Xxxxxx
0
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx
Unless otherwise specified herein, such notices or other communications shall be deemed
effective, (a) on the date received, if personally delivered or sent by facsimile during normal
business hours, (b) on the business day after being received, if sent by facsimile other than
during normal business hours, (c) one business day after being received, if sent by Federal
Express, DHL or UPS or other comparably reputable delivery service, or (d) five business days after
being received, if sent by registered or certified mail. Each of the parties hereto shall be
entitled to specify a different address by giving notice as aforesaid to each of the other parties
hereto.
12. Severability. If in any proceedings a court 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 a 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.
13. 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.
[Remainder of this page intentionally left blank]
8
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.
| COMPANY: | TRADER ACQUISITION CORP | |||||||
| By: | ||||||||
| Name: Xxxx Xxxx | ||||||||
| Title: Vice President, Secretary and Treasurer | ||||||||
| MANAGER: | SILVER LAKE MANAGEMENT COMPANY, L.L.C. |
|||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
