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EXHIBIT 10.38
MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT
THIS MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement")
is made as of January 31, 1998, between Specialty Equipment Companies, Inc., a
Delaware corporation ("Specialty"), and Specialty Equipment Manufacturing
Corporation, a Delaware corporation ("Operating Subsidiary").
WHEREAS, Specialty has the management and administrative headquarters
and personnel available to assist Operating Subsidiary in the conduct of its
business that Operating Subsidiary would like to utilize in connection with its
business; and
WHEREAS, Operating Subsidiary desires to utilize the services and
experience of Specialty in connection with its business as set forth in this
Agreement; and
NOW, THEREFORE, in consideration of the premises, covenants and
agreements hereinafter contained and other valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Management and Administrative Duties.
During the term of this Agreement, Specialty will perform, or will
cause to be performed, for the benefit of Operating Subsidiary such
administrative, legal, financial, accounting and managerial duties as may be
agreed upon by the parties from time to time (the "Duties"). In performing the
Duties, Specialty shall spend such time as is reasonably required to discharge
such Duties. Notwithstanding the foregoing, this Agreement shall in no way
restrict, in any manner, Operating Subsidiary's ability to obtain services from
any person or entity other than Specialty, or Specialty's ability to engage in
or provide services to any other business, venture or enterprise.
2. Quarterly Payment.
2.1 Amount of Quarterly Payment. Operating Subsidiary will pay
to Specialty, with respect to each calendar quarter during the term of this
Agreement in which Duties are performed, an amount (the "Quarterly Payment")
equal to the aggregate direct and indirect costs and expenses incurred by
Specialty in connection with the performance of the Duties and shall include the
following: (i) all direct costs incurred to perform the Duties, including
out-of-pocket expenses, (ii) all fees of third parties, including fees and
expenses of consultants, attorneys, accountants and other experts and (iii) a
reasonably allocable portion of the overhead expenses relating to the
performance of the Duties (such allocable portion to be based upon the portion
of the revenue of Specialty and its subsidiaries on a consolidated basis
represented by the revenue of Operating Subsidiary).
2.2 Payments. For each quarter in which Duties are performed,
Specialty will submit to Operating Subsidiary a statement with its calculation
of the Quarterly Payment. Operating Subsidiary shall pay the full amount of the
Quarterly Payment within ten (10) days after receipt of the applicable
statement, except as may be otherwise agreed by the parties.
3. Management Fees. As consideration for the performance of the Duties
by Specialty for the benefit of Operating Subsidiary, Operating Subsidiary will
pay to Specialty a management fee with respect to each fiscal quarter in which
Duties are performed (the "Management Fee"). The Management Fee shall be equal
to ten percent (10%) of the portion of the aggregate Quarterly Payments
constituting salary and fringe benefits of employees of Specialty. Operating
Subsidiary shall pay the Management Fee no later than forty-five (45) days after
the end of the fiscal quarter for which such Management Fee is due. The parties
hereby agree that, upon the request of either party, they will revise the
Management Fee as necessary to ensure that charges are equivalent to those which
would be negotiated on an arms-length basis.
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4. Performance. All obligations of Specialty to be performed under this
Agreement shall be performed with reasonable care and pursuant to the good faith
business judgment of Specialty.
5. Limitation of Liability.
5.1 Liability. Specialty and its affiliates, employees and
agents ("Specialty Parties") shall not be liable to Operating Subsidiary, its
affiliates, or to any officer, director, employee, consultant or agent of
Operating Subsidiary or its affiliates ("Op Sub Parties"), for any cost, damage,
expense or loss, including without limitation any special, indirect,
consequential or punitive damages (i) allegedly arising out of Specialty's or
any affiliate's failure to perform or misperformance of any obligation performed
hereunder, or (ii) as a result of Specialty's or any affiliate's, officer's,
director's, employee's, consultant's or agent's reliance on any advice or data
that Specialty or any of its affiliates may provide pursuant to this Agreement.
Operating Subsidiary, on behalf of itself and the other Op Sub Parties, hereby
agrees not to xxx or assert any claim or action against any Specialty Party,
which arises from or relates to the services provided by any of the Specialty
Parties hereunder, excluding any claim arising from the gross negligence of any
Specialty Party and/or the willful and wanton misconduct of any Specialty Party
which was taken with the intent to harm any one or more of the Op Sub Parties.
5.2 Right to Indemnification. In the event that Specialty, any
of its employees, officers, directors, agents or shareholders (each an
"Indemnitee", collectively, the "Indemnitees") was or is made a party or was or
is threatened to be made a party to or were or are involved in or called as a
witness in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, and any appeal therefrom (hereinafter,
collectively a "proceeding") related in any manner whatsoever to the duties
performed by any Indemnitee hereunder, such Indemnitee shall be indemnified and
held harmless by Operating Subsidiary to the fullest extent permitted under the
Delaware General Corporation Law (the "DGCL"), as the same now exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits Operating Subsidiary to provide broader
indemnification rights than the DGCL permitted the corporation to provide prior
to such amendment) against all expenses (including, but not limited to,
attorneys' fees and expenses of litigation) and all liabilities and losses
(including, but not limited to, judgments; fines; liabilities under ERISA for
damages, excise taxes or penalties; damages, fines or penalties arising out of
violation of any law related to the protection of the public health, welfare or
the environment; and amounts paid or to be paid in settlement) incurred or
suffered by such person in connection therewith; provided, that except as
provided in Section 5.4 hereof, Operating Subsidiary shall indemnify any such
person seeking indemnity in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of Operating Subsidiary.
5.3 Expenses. Expenses, including attorneys' fees, incurred by
an Indemnitee in defending or otherwise being involved in a proceeding shall be
paid by Operating Subsidiary in advance of the final disposition of such
proceeding, including any appeal therefrom, upon receipt of an undertaking (the
"Undertaking") by or on behalf of an Indemnitee to repay such amount if it shall
ultimately be determined that such Indemnitee is not entitled to be indemnified
by the Operating Subsidiary; provided that in connection with a proceeding (or
part thereof) initiated by such Indemnitee, except as provided in Section 5.4
hereof, Operating Subsidiary shall pay such expenses in advance of the final
disposition only if such proceeding (or part thereof) was authorized by the
Board of Directors of Operating Subsidiary. The Undertaking shall provide that
if such Indemnitee has commenced proceedings in a court of competent
jurisdiction to secure a determination that he should be indemnified by
Operating Subsidiary, he shall not be obligated to repay Operating Subsidiary
during the pendency of such proceeding.
5.4 Protection of Rights. If a claim under Section 5.2 or any
agreement ("Other Agreement") providing indemnification to an Indemnitee is not
promptly paid in full by Operating Subsidiary after a written claim has been
received by Operating Subsidiary or if expenses pursuant to Section 5.3 or an
Other Agreement have not been promptly advanced after a written request for such
advancement accompanied by the Undertaking has been received by Operating
Subsidiary, the claimant may at any time thereafter bring suit against Operating
Subsidiary to recover the unpaid amount of the claim or the advancement of
expenses. If successful, in whole or in part, in such suit an Indemnitee shall
also be entitled to be paid the reasonable expense thereof. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required Undertaking has been tendered to
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Operating Subsidiary) that such Indemnitee has not met the standards of
conduct which make it permissible under the DGCL for Operating Subsidiary to
indemnify Indemnitee for the amount claimed, but the burden of proving such
defense shall be on Operating Subsidiary. Neither the failure of Operating
Subsidiary (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination that indemnification of an Indemnitee
is proper in the circumstances because such Indemnitee has met the applicable
standard of conduct required under the DGCL, nor an actual determination by
Operating Subsidiary (including its Board of Directors, independent legal
counsel, or its stockholders) that an Indemnitee had not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee had not met the applicable standard of conduct.
5.5 No Presumption. For purposes of this Agreement, the
termination of any proceeding, by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere or its
equivalent, shall not create a presumption that an Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification or contribution is not permitted by applicable
law.
5.6 Non-Exclusivity of Rights. The rights conferred on
Indemnitees by this Agreement shall not be exclusive of any other right which
Indemnitee may have or hereafter acquire under any statute, provision of
Operating Subsidiary's Certificate of Incorporation or By-Laws, other agreement,
vote of stockholders or directors or otherwise.
5.7 Subrogation. In the event of any payment under this
Agreement to an Indemnitee, Operating Subsidiary shall be subrogated to the
extent of such payment to all of the rights of recovery of such Indemnitee, who
shall execute all papers required and shall do everything that may be necessary
to secure such rights, including execution of such documents as are necessary to
enable Operating Subsidiary to bring suit to enforce such rights.
6. Term and Termination.
6.1 Except as otherwise provided herein, this Agreement will
commence on the date hereof and end on the first anniversary thereof.
Thereafter, this Agreement shall continue for consecutive one-year renewal terms
until it is terminated in accordance with this Section 6 and shall remain in
full force until termination. Upon termination of this Agreement, Operating
Subsidiary shall pay to Specialty all Quarterly Payments and Management Fees
incurred or accrued through the effective date of the termination.
6.2 This Agreement may be terminated by either party upon six
(6) months prior written notice to the other party.
6.3 This Agreement is terminable by either party if the other
party shall breach any of the material terms or conditions set forth in the
Agreement and shall fail to correct such breach within thirty (30) days after
notice of the breach is given. Any exercise or failure to exercise such
termination right shall not bar the recovery of any damages resulting from such
breach.
6.4 Specialty shall also have the right to terminate this
Agreement if:
(a) a court having jurisdiction shall enter a decree
or order for relief in respect of Operating Subsidiary in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law nor or hereafter in effect or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Operating Subsidiary or for any substantial part of its
property, or ordering the winding-up or liquidation of its affairs and
such decree or order shall remain unstayed and in effect for a period
of sixty (60) consecutive days; or
(b) Operating Subsidiary shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent to
the appointment of or
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taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequester (or other similar official) of Operating
Subsidiary or for any substantial part of its property, or shall make
any general assignment for the benefit of creditors, or shall fail to
pay its debts as they become due; or
(c) any order, judgment or decree is entered in any
proceeding decreeing the dissolution of Operating Subsidiary and such
order, judgment or decree remains unstayed and in effect for more than
sixty (60) days; or
(d) any other event shall arise whereby Operating
Subsidiary rights under this Agreement might, by operation of law or
otherwise devolve upon or pass to any person, firm, corporation or
other entity other than Operating Subsidiary.
6.5 The provisions of Sections 5, 6.5, 8 and 9 shall survive
termination of this Agreement for any reason. The provisions hereof shall apply
to the acts or omissions taken by any Specialty Party, notwithstanding that
subsequent thereto such party ceased to be a Specialty Party.
7. Assignment. Specialty shall have the right to assign this
Agreement but Operating Subsidiary shall not assign, transfer or otherwise
encumber this Agreement without prior written approval of Specialty.
8. Relationship of the Parties. In all matters relating to this
Agreement, each party hereto shall be solely responsible for the acts of its
employees, and employees of one party shall not be considered employees of the
other party. Except as otherwise provided herein, no party shall have any right,
power or authority to create any obligation, express or implied, on behalf of
any other party, and neither party shall have any liability for the debts or
obligations of the other (except as expressly provided otherwise in writing).
Nothing in this Agreement is intended to create or constitute a joint venture or
partnership between the parties hereto or persons referred to herein.
9. Miscellaneous.
9.1 This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the parties. Nothing contained in this
Agreement is intended to confer upon any person, other than the parties and
their respective permitted successors, assigns and nominees, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
9.2 This Agreement shall be governed by and construed in
accordance with the laws of the state of Illinois.
9.3 All notices and demands hereunder shall be given in
writing (which includes telecopy, telegraph and other wire transmission) with
receipt or confirmation, as appropriate, requested, and sent to the principal
office of the party (or to such other address as such person shall specify by
notice hereunder).
9.4 The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.5 This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
9.6 This Agreement constitutes the entire agreement between
the parties and supersedes all prior agreements, representations, warranties,
statements, promises, information, arrangement and understandings, whether oral
or written, express or implied, with respect to the subject matter of this
Agreement.
9.7 Any amendment or supplement made to this Agreement shall
not be valid unless in writing, signed by each of the parties to this Agreement.
9.8 Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be
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prohibited by or invalid under applicable law, such provision shall be
ineffective only to the minimum extent of such prohibition or invalidity,
without invalidating the remainder of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Management
and Administrative Services Agreement as of the date first above written.
SPECIALTY EQUIPMENT COMPANIES, INC.
By:_______________________________________
Name:_____________________________________
Its:______________________________________
SPECIALTY EQUIPMENT MANUFACTURING CORPORATION
By:_______________________________________
Name:_____________________________________
Its:______________________________________
