EXHIBIT 10.6
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
This Amended and Restated Management Agreement (the "Agreement") is
made as of the l/st/ day of January, 2004, by and between Empi, Inc., a
Minnesota corporation (the "Company"), TC Group Management, L.L.C., a Delaware
limited liability company ("Carlyle"), and GE Capital Equity Investments, Inc.
("GE Equity").
RECITALS:
WHEREAS, the Company, Carlyle and GE Equity previously entered into a
Management Agreement dated August 31, 1999 (the "Existing Agreement");
WHEREAS, the Company, Carlyle and GE Equity wish to amend and restate
the Existing Agreement to reflect the changes hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions herein set forth, the parties hereto agree to amend and
restate the Existing Agreement in its entirety as follows:
1. Appointment.
The Company hereby appoints Carlyle to render advisory and consulting
services described in Section 2(a) and Section 2(c) hereof for the term of this
Agreement. The Company hereby appoints GE Equity to render advisory and
consulting services described in Section 2(b) hereby for the term of this
Agreement.
2. Services.
(a) Carlyle hereby agrees that during the term of this Agreement
Carlyle shall render to the Company, by and through such of Carlyle's officers,
employees, agents, representatives and affiliates as Carlyle, in its sole
discretion, shall designate from time to time, advisory, consulting and other
services (the "Carlyle Oversight Services") in relation to the day-to-day
operations of the Company and its subsidiaries, strategic planning, domestic and
international marketing and financial oversight and including, without
limitation, advisory and consulting services in relation to the selection,
retention and supervision 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.
(b) GE Equity hereby agrees that during the term of this
Agreement GE Equity shall render to the Company, by and through such of GE
Equity's officers, employees, agents, representatives, and affiliates as GE
Equity, in its sole discretion, shall designate from time to time, advisory,
consulting and other services (the "GE Oversight Services") in relation to the
day-to-day operations of the Company and its subsidiaries, strategic planning,
domestic and international marketing and financial oversight and including,
without limitation, advisory and consulting services in relation to the
selection, retention and supervision
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.
(c) The parties hereto acknowledge that certain events will
require Carlyle to render services beyond the scope of activities which the
parties contemplate as part of the Carlyle Oversight Services and for which
Carlyle shall be entitled-to additional compensation hereunder. It is expressly
agreed that the Carlyle Oversight Services shall not include Investment Banking
Services. "Investment Banking Services" means investment banking, financial
advisory or any other services rendered by Carlyle to the Company in connection
with (i) any acquisitions and divestitures by the Company or MPI Holdings,
L.L.C., a Delaware limited liability company ("MPP'), or any of their
subsidiaries, whether by a purchase or sale of assets or capital stock or by
merger, recapitalization, consolidation or otherwise or (ii) the public or
private sale of debt or equity securities of the Company or its subsidiaries or
any similar financing. The Investment Banking Services and the Oversight
Services shall be referred to herein together as the "Carlyle Services".
3. Fees.
(a) In consideration of the performance of the Carlyle Oversight
Services and the GE Oversight Services contemplated by Section 2(a) and Section
2(b) hereof, the Company and its successors agree to pay to (i) Carlyle an
aggregate per annum fee equal to Two Hundred Seventy-Five Thousand Dollars
($275,000) (the "Carlyle Management Fee") and (ii) GE Equity an aggregate per
annum fee equal to Twenty-Five Thousand Dollars ($25,000) (the "GE Management
Fee" and together with the Carlyle Management Fee the "Management Fees"),
commencing on the date hereof and continuing until such time as this Agreement
is terminated in accordance with Section 6 or by the mutual written consent of
the parties hereto; provided, however, that GE Equity shall cease to have any
right to receive the GE Management Fee and shall cease to be obligated to
perform any services hereunder, if GE Equity and its affiliates cease to hold,
in the aggregate, at least 5% of the then outstanding Common Stock, par value
$.0l per share of the Company. The Management Fees shall be payable quarterly in
advance. Management Fee payments shall be non-refundable.
(b) In consideration of the Investment Banking Services provided
to the Company in connection with the events described in the definition of
Investment Banking Services, Carlyle shall be entitled to receive additional
reasonable compensation as agreed upon by the parties hereto and approved by the
majority of the Board of Directors of the Company. Carlyle shall not be
obligated to perform such services unless requested by the Company to so provide
such services and Carlyle and the Company reach agreement concerning
compensation to be paid to Carlyle for performing such services.
(c) Notwithstanding any provision hereof to the contrary, GE
Equity agrees that, in the event that Carlyle elects of agrees to forego or
defer payment of all or any portion of the Carlyle Management Fee for any
period, GE Equity will agree to forego or defer payment of an equivalent portion
of the GE Management Fee for such period or the same terms that Carlyle agrees
to forgo or defer the Carlyle Management Fee for such period.
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4. Reimbursements.
In addition to the compensation payable to Carlyle pursuant to Section
3 hereof, the Company shall, at the direction of Carlyle, pay directly, or
reimburse Carlyle for, its reasonable Out-of-Pocket Expenses. For the purposes
of this Agreement, the term "Out-of-Pocket Expenses" shall mean the amounts
actually paid by Carlyle or its affiliates or their respective parties, members,
officers, directors or employees in connection with its or their performance of
the Services, including, without limitation, reasonable (i) fees and
disbursements (including, without limitation, underwriting fees) of any
independent professionals and organizations, including, without limitation,
independent auditors, outside legal counsel, consultants, investment bankers or
financial advisors, (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 Carlyle to the Company of a
statement or invoice requesting payment thereof.
5. Indemnification.
The Company will indemnify and hold harmless each of Carlyle and GE
Equity and their officers, employees, agents, representatives, members and
affiliates (each being an "Indemnified Party") from and against any and all
losses, costs, expenses, claims, damages and liabilities (the "Liabilities") 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 performance of the Services contemplated by
this Agreement or the engagement of Carlyle and GE Equity pursuant to, and the
performance by Carlyle and GE Equity of the Services contemplated by, this
Agreement. The Company will 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, provided that, subject to the following sentence, the Company
shall be entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment. Any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense, and in any action, claim or proceeding in which the
Company, on the one hand, and an Indemnified Party, on the other hand, is, or is
reasonably likely to become, a party, such Indemnified Party shall have the
right to employ separate counsel at the Company's expense and to control his or
its own defense of such action, claim or proceeding if, in the reasonable
opinion of counsel to such Indemnified Party, a conflict or potential conflict
exists between the Company, on the one hand, and such Indemnified Party, on the
other hand, that would make such separate representation advisable. The Company
agrees that the Company will not, without the prior written consent of the
applicable Indemnified Party, settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated hereby (if any Indemnified Party is a party thereto or
has been actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of the applicable
Indemnified Party and each other Indemnified Party from
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all liability arising or that may arise out of such claim, action or proceeding.
Provided that the Company is not in breach of its indemnification obligations
hereunder, no Indemnified Party shall settle or compromise any claim subject to
indemnification hereunder without the consent of the Company. The Company 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
solely from the willful misconduct of Carlyle or GE Equity. If an Indemnified
Party is reimbursed hereunder for any expenses, such reimbursement of expenses
shall be refunded to the extent it is finally judicially determined that the
liabilities in question resulted solely from the willful misconduct of such
Indemnified Party.
6. Term.
This Agreement shall be in effect on the date hereof and shall continue
until the earlier of (i) such time as this Agreement is terminated by the mutual
written consent of Carlyle and the Company or (ii) such time as MPI or one or
more of its affiliates collectively control, in the aggregate, less than 10% of
the outstanding shares of voting common stock of the Company. The provisions of
Sections 5, 7 and 8 shall survive the termination of this Agreement.
7. Permissible Activities.
Nothing herein shall in any way preclude Carlyle or GE Equity or their
respective officers, employees, agents, representatives, members 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 the Company.
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 be
effective unless the same shall be in writing and signed by the parties to this
Agreement, and, in any case, such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) This Agreement and the rights of the parties hereunder may
not be assigned without the prior written consent of the parties hereto;
provided, however, Carlyle may assign or transfer its duties or interests
hereunder to a Carlyle affiliate at the sole discretion of Carlyle.
(c) 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:
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If to Carlyle: TC Group Management, L.L.C.
c/o The Carlyle Group
000 Xxxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxx
If to GE Equity: GE Capital Equity Investments, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
If to the Company: Empi, Inc.
000 Xxxxxxxx Xxxx
Xx. Xxxx, XX 00000
Attention: Xxx Xxxxxxxx
(d) This Agreement shall constitute the entire agreement between
the parties 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.
(e) This Agreement shall be governed by, and enforced in
accordance with, the laws of the State of Delaware (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 Delaware 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,
Carlyle and the Company (including any present or future subsidiaries of the
Company that are not signatories hereto), and their respective successors and
permitted assigns.
(f) 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, and shall
constitute one and the same instrument.
(g) 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.
TC GROUP MANAGEMENT, L.L.C.
By: TC Group, L.L.C.
Its: Managing Member
By: TCG Holdings, L.L.C.
Its: Managing Member
By: _______________________________
Name: W. Xxxxxx Xxxx
Title: Managing Director
GE CAPITAL EQUITY INVESTMENTS, INC.
By: _______________________________
Name: Xxxxx Xxxxxx
Title: Duly Authorized Signatory
EMPI, INC.
By: _______________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
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