EXHIBIT 10.6
MANAGEMENT AGREEMENT
This Agreement is made as of this 23rd day of July, 1997 among
Xxxxxxx-Xxxxxxx Holdings, Inc., a Delaware corporation ("Holdings"),
Xxxxxxx-Xxxxxxx Corp., a New Jersey corporation and a wholly owned subsidiary of
Holdings ("Xxxxxxx-Xxxxxxx"), Container Management Services, Inc., a South
Carolina corporation and a wholly owned subsidiary of Holdings ("CMS"), and
Vestar Capital Partners, a New York general partnership ("Vestar").
WHEREAS, Vestar, by and through its officers, employees,
agents, representatives and affiliates, has expertise in the areas of corporate
management, finance, product strategy, investment, acquisitions and other
matters relating to the business of Holdings and its subsidiaries; and
WHEREAS, each of Holdings, Xxxxxxx-Xxxxxxx and CMS desires to
avail itself, for the term of this Agreement, of the expertise of Vestar in the
aforesaid areas, in which it acknowledges the expertise of Vestar.
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants and conditions herein set forth, the parties hereto agree as
follows:
1. APPOINTMENT. Each of Holdings, Xxxxxxx-Xxxxxxx and CMS
hereby appoints Vestar to render the advisory and consulting services described
in Paragraph 2 hereof for the term of this Agreement.
2. SERVICES. Vestar hereby agrees that during the term of
this Agreement it shall render to Holdings and its subsidiaries by and through
such of Vestar's officers, employees, agents, representatives and affiliates as
Vestar, in its sole discretion, shall designate from time to time, advisory and
consulting services in relation to the affairs of Holdings and its subsidiaries
in connection with strategic financial planning, and other services not referred
to in the next sentence including, without limitation, advisory and consulting
services in relation to the selection, supervision and retention of independent
auditors, the selection, retention and supervision of outside legal counsel, and
the selection, retention and supervision of investment bankers or other
financial advisors or consultants. It is expressly agreed that the services to
be performed hereunder shall not include (x) investment banking or other
financial advisory services rendered by any of Vestar and its affiliates to any
of Holdings and its subsidiaries in connection with acquisitions, divestitures,
refinancings, restructurings and similar transactions by any of Holdings and its
subsidiaries or (y) except as expressly provided otherwise in Section 3 hereof,
full or part-time employment by Holdings or any of its subsidiaries of any
employee or partner of any of Vestar and its affiliates, for which Vestar and
its affiliates shall be entitled to receive additional compensation.
3. FEES. In consideration of the services contemplated by
Paragraph 2, subject to the provisions of Paragraph 6, each of Holdings,
Xxxxxxx-Xxxxxxx and CMS and their respective successors hereby jointly and
severally agree to pay to Vestar an aggregate per annum fee (the "Fee") equal to
the sum of (A) the greater of (i) $225,000 or (ii) an amount per annum equal to
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.25% of the consolidated net sales of Holdings and its subsidiaries for such
fiscal year, determined in accordance with generally accepted accounting
principles, commencing on the date hereof, plus (B) if and for so long as an
employee or partner of any of Vestar and its affiliates is serving full-time as
the Chief Financial Officer of Holdings or any of its subsidiaries, the sum of
(i) the annual base salary of such Chief Financial Officer, plus (ii) an amount
to be determined by the President of Holdings based on certain performance
criteria established by the President of Holdings. The Fee shall be payable
semi-annually in advance (based on clauses (A) (i) and (B) (i) above), with any
remaining balance of the Fee for any fiscal year payable promptly following the
determination of consolidated net sales for such fiscal year or of the amount
referred to in clause (B) (ii) above, as the case may be, or on termination of
this Agreement. The semi-annual Fee payments shall be non-refundable.
4. REIMBURSEMENTS. In addition to the Fee, each of Holdings,
Xxxxxxx-Xxxxxxx and CMS hereby agree, jointly and severally, at the direction of
Vestar, to pay directly or reimburse Vestar for its reasonable Out-of-Pocket
Expenses incurred in connection with the services provided for in Paragraph 2
hereof. For the purposes of this Agreement, the term "Out-of-Pocket Expenses"
shall mean the amounts paid by or on behalf of Vestar in connection with the
services provided for in Paragraph 2, including reasonable (i) fees and
disbursements of any independent professionals and organizations, including
independent auditors and outside legal counsel, investment bankers or other
financial advisors or consultants, (ii) costs of any outside services or
independent contractors such as financial printers, couriers, business
publications or similar services and (iii) transportation, per diem, telephone
calls, word processing expenses or any similar expense not associated with its
ordinary operations. All reimbursements for Out-of-Pocket Expenses shall be made
promptly upon or as soon as practicable after presentation by Vestar of the
statement in connection therewith.
5. INDEMNIFICATION. Each of Holdings, Xxxxxxx-Xxxxxxx and
CMS hereby agree to jointly and severally indemnify and hold harmless Vestar and
its affiliates and their respective partners, officers, directors, employees,
agents, representatives and stockholders (each being an "Indemnified Party")
against any and all losses, claims, damages and liabilities of whatever kind or
nature, joint or several, absolute, contingent or consequential, to which such
Indemnified Party may become subject under any applicable federal or state law,
or any claim made by any third party, or otherwise, to the extent they relate to
or arise out of the advisory and consulting services contemplated by this
Agreement or the engagement of Vestar pursuant to, and the performance by Vestar
of the services contemplated by, this Agreement. Each of Holdings,
Xxxxxxx-Xxxxxxx and CMS hereby agrees to jointly and severally reimburse any
Indemnified Party for all reasonable costs and expenses (including reasonable
attorneys' fees and expenses) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or threatened claim
for which the Indemnified Party would be entitled to indemnification under the
terms of the previous sentence, or any action or proceeding arising therefrom,
whether or not such Indemnified Party is a party hereto. Holdings,
Xxxxxxx-Xxxxxxx and CMS will not be liable under the foregoing indemnification
provision to the extent that any loss, claim, damage, liability, cost or expense
is determined by a court, in a final judgment from which no further appeal may
be taken, to have resulted primarily from the gross negligence or willful
misconduct of Vestar.
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6. TERM. This Agreement shall be in effect on the date
hereof and continue until such time as Vestar Capital Partners III, L.P., a
Delaware limited partnership ("VEP"), and the partners therein and the
respective affiliates thereof hold, in the aggregate, less than 10% of the
voting power of Holdings' outstanding voting stock. The provisions of Paragraphs
4, 5, 7 and 8 and the obligation of Holdings, Xxxxxxx-Xxxxxxx and CMS to pay
Fees accrued during the term of this Agreement pursuant to Section 3 shall
survive the termination of this Agreement.
7. PERMISSIBLE ACTIVITIES. Subject to all applicable
provisions of New York law that impose fiduciary duties upon Vestar or its
partners or affiliates, nothing herein shall in any way preclude Vestar or its
partners, officers, employees or affiliates from engaging in any business
activities or from performing services for its or their own account or for the
account of others, including for companies that may be in competition with the
business conducted by any of Holdings and its subsidiaries.
8. GENERAL. (a) No amendment or waiver of any provision of
this Agreement, or consent to any departure by either party from any such
provision, shall in any event be effective unless the same shall be in writing
and signed by the parties to this Agreement and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) Any and all notices hereunder shall, in the absence of
receipted hand delivery, be deemed duly given when mailed, if the same shall be
sent by registered or certified mail, return receipt requested, and the mailing
date shall be deemed the date from which all time periods pertaining to a date
of notice shall run. Notices shall be addressed to the parties at the following
addresses:
If to Vestar:
Vestar Capital Partners
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
If to Holdings,
XXXXXXX-XXXXXXX OR CMS:
Xxxxxxx-Xxxxxxx Corp.
000 Xxxx Xxxx Xxxx
Xxx Xxxx, Xxx Xxxxxx 00000
Attn: President
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In any case, with a
copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
(c) This Agreement shall constitute the entire Agreement
between the parties and their affiliates with respect to the subject matter
hereof, and shall supersede all previous oral and written (and all
contemporaneous oral) negotiations, commitments, agreements and understandings
relating hereto. The Management Agreement dated June 12, 1989 between
Xxxxxxx-Xxxxxxx and Vestar Capital Partners, Inc. is hereby terminated, subject
to the second sentence of Section 6 thereof.
(d) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE
CHOICE OF LAW PRINCIPLES THEREOF). THE PARTIES TO THIS AGREEMENT HEREBY AGREE TO
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED
IN THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT. This Agreement shall inure to the benefit of, and be binding
upon, Vestar, the Indemnified Parties, Holdings, Xxxxxxx-Xxxxxxx, CMS and their
respective successors and assigns.
(e) This Agreement may be executed in two or more
counterparts, and by different parties on separate counterparts, each set of
counterparts showing execution by all parties shall be deemed an original, but
all of which shall constitute one and the same instrument.
(f) The waiver by any party of any breach of this Agreement
shall not operate as or be construed to be a waiver by such party of any
subsequent breach.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers or agents as set
forth below.
VESTAR CAPITAL PARTNERS
By its General Partner: Vestar
Management Corporation I
By: /s/ XXXXXX XXXXXX
Name: Xxxxxx Xxxxxx
Title: Managing Director
XXXXXXX-XXXXXXX HOLDINGS, INC.
By: /s/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and CFO
XXXXXXX-XXXXXXX CORP.
By:/s/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and CFO
CONTAINER MANAGEMENT SERVICES, INC.
By:/s/ XXXX X. XXXXXXX
Name: Xxxx X. Xxxxxxx
Title: President and Director
With respect to the second sentence of Section 8(c)
hereof only.
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VESTAR CAPITAL PARTNERS, INC.
By:/s/ XXXXXX XXXXXX
Name: Xxxxxx Xxxxxx
Title: Managing Director
