Exhibit 10.1
MANAGEMENT AGREEMENT
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This MANAGEMENT AGREEMENT (this "Agreement") dated as of May 23, 2003 is
made by and between Cross Media Marketing Corporation, a Delaware corporation
("Cross Media"), Media Outsourcing, Inc., a Delaware corporation ("Media"),
National Syndications, Inc., a Delaware corporation ("NSI" and collectively with
Cross Media and Media, the "Company") and Xxxxxxx Xxxxxxx & Associates LLC (the
"Manager"), a Delaware limited liability company.
Recitals:
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WHEREAS, the parties hereto desire to enter into this Agreement to set
forth the basis on which the Manager will perform management services for the
Company, all as set forth more fully in this Agreement.
NOW, THEREFORE, in consideration of the promises and covenants set forth
herein, and intending to be legally bound hereby, the parties to this Agreement
hereby agree as follows:
1. Engagement. The Company hereby engages the Manager as an independent
con-tractor to the Company, and the Manager hereby accepts such engagement, on
the terms and conditions set forth in this Agreement. The Company is hereby
acquiring from the Manager the services of, Xxxxx X. Xxxxxx ("Xxxxxx"), as well
as such additional professionals that may be necessary. All compensation for the
services and actions of Xxxxxx and the Manager's other professionals that may
perform services on the Company's behalf under this Agreement will be paid by
the Company directly to the Manager.
2. Duties.
(a) The Company represents to the Manager that it has duly approved
the retention of the Manager and approved the terms of this Agreement, including
the appointment of Xxxxxx as the Chairman of the Board, Chief Executive Officer
and Chief Restructuring Officer (hereinafter collectively "CRO") and election as
a member of the Board of Directors of the Company. The Manager will assign
Xxxxxx to act in various managerial capacities to carry out the services
described herein as required of the Manager and as described below.
(b) Xxxxxx, in his role as CRO, shall be authorized but not required
to make final and binding decisions with respect to all aspects of the
management and operation of the Company's business including, without
limitation, organization, human resources, marketing, sales, logistics, finance,
administration, managing outside professionals and such other areas as he may
identify, in such manner as he deems necessary or appropriate in his sole
discretion consistent with the business judgment rule. The CRO shall report
regularly to the Board of Directors and shall seek the approval of the Board of
Directors for any transactions of a type typically subject to such approval. In
view of the Company's precarious present circumstances, the Company acknowledges
that Xxxxxx and the Manager's other professionals may be required to make
decisions with respect to extraordinary measures quickly. Consequently, the
depth of their analysis of the information on which their decisions will be
based may be limited in some
respects due to the availability of information, time constraints and other
factors. Moreover Xxxxxx and the Manager's other professionals shall be
entitled, in performing their duties hereunder on behalf of the Manager, to rely
on information disclosed or supplied to them by the Company's officers,
employees and representatives and specifically the Company President without
verification or warranty of accuracy or validity.
(c) The Manager shall cause Xxxxxx to devote sufficient business
time to the performance of services for the Company hereunder on behalf of the
Manager. However, there is no minimum daily or weekly hourly requirements.
Additionally, The Manager will cause such additional professionals that may be
necessary to devote sufficient time to carry out the scope of services outlined
herein. During the first sixty (60) days from the filing of a case under the
Bankruptcy Code by the Company, the CRO shall obtain approval of the Board of
Directors before taking any action to (i) liquidate the Company or otherwise
take steps towards winding down the Company's business, including (but not
limited to) terminating key employees or significant numbers of non-key
employees, or (ii) terminate the employment of senior executives of the Company.
After such period, the CRO may take steps toward winding down the Company in his
discretion.
(d) In undertaking to provide the services set forth herein, the
Manager does not guarantee or otherwise provide any assurances that it will
succeed in restoring the Company's operational and financial health and
stability. The Company's obligation to pay the Manager's compensation and
reimbursement of expenses (as specified below under Section 4(a) and Section
4(b), respectively) shall not be conditioned upon any particular results being
achieved by the Manager.
(e) Xxxxxx and the Manager's other professionals will have authority
to report to the Agent (as defined below) on their conclusions and
recommendations, as long as in making such reports or otherwise communicating
such conclusions and recommendations, Xxxxxx and the Manager's other
professionals maintain the dynamic of the debtor-creditor relationship between
the Company and the Agent. The Company understands that Xxxxxx and the Manager's
other professionals will communicate with the Company's creditors and their
respective professionals as to the status of operations and the Company's
restructuring plans.
3. Term. The term of the Manager's engagement hereunder shall
commence on the day this Management Agreement is signed and shall continue until
the earlier of (i) termination for cause by Board of Directors of Cross Media
and (ii) indefeasible payment in full of the "Obligations" under the Credit
Agreement dated as of March 19, 2002, as amended, by and between the Company as
the borrower and Fleet National Bank, as agent for itself and the lenders named
therein (the "Agent"). This engagement may be terminated by either the Board of
Directors of Cross Media, in accordance with clause (i) of preceding sentence or
the Manager, at any time, upon providing 15 (fifteen) days written notice
thereof to the other party. However, such termination shall not affect the
Company's obligation to pay the Manager for fees and expenses accruing through
the termination date. This Agreement may be terminated by the Manager at any
time if its invoices rendered pursuant to Section 4 below are not paid when
presented. This Agreement shall be terminated without notice or action by any
party if at any time the Manager and its personnel cease to be covered under the
D&O policy (as defined below), or if such D&O policy is terminated or the
coverage thereunder is reduced or limited.
The Company agrees (i) in the event the Company becomes a debtor in a bankruptcy
proceeding, to cause the filing of such pleadings necessary to continue to
retain the Manager and (ii) that termination of the Manager by the Board of
Directors of Cross Media without cause shall be deemed an "Event of Termination"
under any Forbearance Agreement in effect from time to time between the Company
and the Agent.
4. Compensation. The Manager's compensation hereunder shall consist
of the following:
(a) Fees for the services set forth above will be based on the
hours charged at standard hourly rates that are in effect when the services are
rendered; rates generally are revised annually. Current hourly rates are as
follows:
Rates per Hour
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Principals/Managing $300-$400
Directors
Associates $240-$300
Paraprofessionals $75-$100
(b) Reimbursement of the Manager's reasonable expenses
including, but not limited to, costs of travel, lodging, meals and other
expenses directly relating to this engagement.
The Manager will require weekly payments from the Company throughout the course
of the engagement. The first request will be made on May 14, 2003, which amount
will be an estimate of the fees and expenses incurred during the initial
commencement period. The Manager will also submit to the Company weekly invoices
for all services rendered and expenses incurred; these invoices, net of any
payments received during the invoice period, as well as all required weekly
payments are payable immediately upon receipt via wire transfer to the following
account:
[ACCOUNT INFORMATION INTENTIONALLY OMITTED]
It is the Manager's policy to receive a security retainer before the
commencement of its activities under this Agreement, to be held by the Manager
throughout the term of this engagement. Given the magnitude and scope of the
services requested by the Company, the Manager requires a retainer of
$85,000.00. The Company will wire transfer this amount into the Manager's bank
account noted above, and the retainer will be returned to the Company upon
payment in full of the Manager's outstanding invoices or applied to any
outstanding invoices at the conclusion of the Manager's engagement.
5. Confidentiality.
(a) Except as provided in Section 2(e) above, Xxxxxx and the Manager's
other professionals each agree to treat any information received from the
Company or its representatives with utmost confidentiality, and except as
provided in this Agreement, will not publicly disclose in any manner
confidential information, distribute or disclose in any manner any information
developed by or received from the Company or its representatives without the
Company's prior approval. Such approval shall not be unreasonably withheld. The
Company's approval is not needed if either the information sought is required to
be disclosed by an order binding on the Manager, issued by a court having
competent jurisdiction over the Manager (unless such order specifies that the
information to be disclosed is to be placed under seal), or such information is
otherwise publicly available.
6. Representations and Warranties.
As an inducement to the Manager to enter into this Agreement, the
Company represents and warrants to the Manager the following:
(a) The Company corporations are duly organized and validly existing
under the laws of the jurisdiction in which they were organized and have all
requisite corporate powers to enter into this Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein or therein nor compliance
by the Company with any of the provisions hereof or thereof will: (i) violate
any order, writ, injunction, decree, law, statute, rule or regulation applicable
to it; or (ii) require the consent, approval, permission or other authorization
of, or qualification or filing with or notice to, any court, arbitrator or other
tribunal or any governmental, administrative, regulatory or self-regulatory
agency or any other third party.
(c) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a legal, valid and binding agreement of the
Company, enforceable in accordance with its terms.
(d) To the actual knowledge of the Company, without inquiry or
investigation, the Company is not aware of any document or written statement
regarding the Company furnished to the Manager by any member of senior
management of the Company which contained, when made, any untrue statement of a
material fact or omitted to state a fact necessary to make the statements made
therein, in light of the circumstance under which they were made, not
misleading, excluding: (i) statements which the Manager believes or has reason
to believe, as of the date hereof, are inaccurate; and (ii) financial
projections. To the actual knowledge of the Company, without inquiry or
investigation, the Company is not aware of any fact that materially and
adversely affects the business, operations, affairs, conditions, prospects or
properties of the Company that has not been communicated to or known by the
Manager prior to the date hereof. For purposes of this Agreement, the actual
knowledge of the Company shall mean the actual knowledge of an officer or
director of the Company.
7. Insurance; Exculpation. Concurrently with the execution of this
Agreement, the Company is causing its insurance broker to add Manager and all of
its personnel who perform services for the Company hereunder, including Xxxxxx
(collectively, the "Covered Parties"), to its existing Officers & Directors
insurance Policy (the "D&O" policy) and to send copies of all documentation and
other communications regarding the D&O policy, including without limitation any
expiration, renewal or cancellation thereof, to the attention of Xxxxxx. Upon
any
cancellation or nonrenewal of the D&O policy, the Company shall exercise its
rights (and hereby authorizes Manager to exercise such rights on the Company's
behalf) to extend the claim period for a one-year "discovery period" and shall
exercise such rights and pay such premiums required thereunder. If the Manager
or any other Covered Party is requested or required to appear and/or testify
before any tribunal by the Company or any creditor thereof, whether or not
pursuant to lawful process, all time spent and reasonable out-of-pocket
expenditures incurred by the Manager in connection therewith, including for
legal counsel, shall be considered to have been performed under the terms of
this Agreement, and the Manager shall be entitled to receive payment of fees and
reimbursement of expenses therefor. Neither the Manager nor any other Covered
Party shall have any liability to the Company or any of the officers, directors,
shareholders, employees or agents of the Company or any other party to whom
Manager or any Covered Party might be liable in connection with the services
under this Agreement except for liability determined by a court of competent
jurisdiction to have resulted from gross negligence or willful misconduct of the
Manager.
8. Independent Contractor. The parties intend that the Manager shall
render services hereunder as an independent contractor, and nothing herein shall
be construed to be inconsistent with this relationship or status. The Manager
shall not be entitled to any benefits paid by the Company to its employees. The
Manager shall be solely responsible for any tax consequences applicable to the
Manager by reason of this Agreement and the relationship established hereunder,
and the Company shall not be responsible for the payment of any federal, state
or local taxes or contributions imposed under any employment insurance, social
security, income tax or other tax law or regulation with respect to the
Manager's performance of management services hereunder. The parties agree that,
subject to the terms and provisions of this Agreement, the Manager may perform
any duties hereunder and set the Manager's own work schedule without day-to-day
supervision by the Company.
9. Conflicts. The Manager confirms that none of the principals or
professional staff of the Manager has any financial interest or business
connection with the Company, and the Manager is aware of no conflicts in
connection with this Agreement.
10. Amendments. Any amendment to this Agreement shall be made in writing
and signed by the parties hereto.
11. Enforceability. If any provision of this Agreement shall be invalid or
unenforceable, in whole or in part, then such provision shall be deemed to be
modified or restricted to the extent and in the manner necessary to render the
same valid and enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and enforced to the
maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted or as if such provision had not
been originally incorporated herein, as the case may be.
12. Construction. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of New York.
13. Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person
or duly sent by certified mail, postage prepaid; by an overnight delivery
service, charges prepaid; or by confirmed telecopy; addressed to such party at
the address set forth below or such other address as may hereafter be designated
in writing by the addressee to the addressor:
If to the Company:
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Cross Media Marketing Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
If to the Manager:
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Xxxxxxx Xxxxxxx & Associates LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Managing Director
Any party may from time to time change its address for the purpose of notices to
that party by a similar notice specifying a new address, but no such change
shall be deemed to have been given until it is actually received by the party
sought to be charged with its contents.
14. Waivers. No claim or right arising out of a breach or default under
this Agreement shall be discharged in whole or in part by a waiver of that claim
or right unless the waiver is supported by consideration and is in writing and
executed by the aggrieved party hereto or his or its duly authorized agent. A
waiver by any party hereto of a breach or default by the other party hereto of
any provision of this Agreement shall not be deemed a waiver of future
compliance therewith, and such provisions shall remain in full force and effect.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of
the date first above written.
CROSS MEDIA MARKETING CORPORATION
By: _______________________________
Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer
MEDIA OUTSOURCING, INC.
By: _______________________________
Name:
Title:
NATIONAL SYNDICATIONS, INC.
By: _______________________________
Name:
Title:
XXXXXXX XXXXXXX & ASSOCIATES LLC
By: _______________________________
Xxxxx X. Xxxxxx
Managing Director
