Exhibit 99.5
------------
Management Agreement
This Management Agreement (this "Agreement") is entered into as of the ____
day of August 1997 by and between System Software Associates, Inc., a Delaware
corporation (the "Company"), and Xxxx Capital Partners V, L.P., a Delaware
limited partnership ("Bain").
Whereas, the Company is undertaking a recapitalization (the
"Recapitalization"), pursuant to which it is selling its [ ]% Convertible
Notes due 2002 in an underwritten public offering and its Junior
Subordinated Notes due 2003 (the "Notes") in a private placement to
institutional investors (the "Private Offering");
Whereas, certain funds (the "Bain Funds") affiliated with Bain are
providing equity financing (the "Equity Investments") to the Company in
connection with the Recapitalization; and
Whereas, subject to the terms and conditions of this Agreement, the
Company desires to retain Bain to provide certain management and advisory
services to the Company, and Bain desires to provide such services;
Now, therefore, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Services. Bain hereby agrees that, during the term of this Agreement (the
"Term"), it will:
a. provide the Company with advice in connection with the negotiation and
consummation of agreements, contracts, documents and instruments
necessary to provide the Company with financing from banks or other
financial institutions or other entities on terms and conditions
satisfactory to the Company; and
b. provide the Company with financial, managerial and operational advice
in connection with its day-to-day operations, including, without
limitation:
i. advice with respect to the investment of funds; and
ii. advice with respect to the development and implementation of
strategies for improving the operating, marketing and financial
performance of the Company.
2. Payment of Fees. The Company hereby agrees to:
a. during the Term, pay to Bain (or an affiliate of Bain designated by
it) a management fee to reimburse Bain for time spent (at a reasonable
hourly rate to be determined by the Company's Board of Directors) and
materials used in providing services to the Company, as more fully
described in Section 1 of this Agreement, in an amount not to exceed
$500,000 per year; provided, however, that this amount may be
increased by the Company's Board of Directors; and
b. during the Term, allow Bain to participate in the negotiation and
consummation of senior financing for any acquisition transactions by
the Company or any of its direct or indirect subsidiaries, and pay to
Bain (or an affiliate of Bain designated by it) a fee in connection
therewith equal to one percent (1%) of the gross purchase price of the
transaction (including all liabilities assumed or otherwise included
in the transaction), such fee to be due and payable for the foregoing
services at the closing of such transaction, whether or not any such
senior financing is actually committed or drawn upon.
Each payment made pursuant to this Section 2 shall be paid by wire transfer
of immediately available federal funds to the account specified on Schedule
1 hereto, or to such other account(s) as Bain may specify to the Company in
writing prior to such payment.
3. Term. This Agreement shall continue in full force and effect, unless and
until terminated by mutual consent of the parties, for so long as any Notes
are outstanding; provided, however, that either party may terminate this
Agreement following a material breach of the terms of this Agreement by the
other party hereto and a failure to cure such breach within 30 days
following written notice thereof; and provided further that each of (a) the
obligations of the Company under Section 4 below, (b) any and all accrued
and unpaid obligations of the Company owed under Section 2 above and (c)
the provisions of Section 7 shall survive any termination of this Agreement
to the maximum extent permitted under applicable law.
4. Expenses; Indemnification.
a. Expenses. Whether or not the Recapitalization, the Equity
Investments or any of the other transactions contemplated by this
Agreement or any other agreement executed in connection herewith or
the Equity Investments shall be consummated, the Company agrees to pay
on demand all expenses incurred by
-2-
Bain, the Bain Funds, Xxxx Capital, Inc., JMI Equity Fund III, L.P. or
CS Investor, L.L.C. (collectively, the "Investors") (or any of them)
in connection with this Agreement, the Recapitalization and such other
transactions and all operations hereunder or in respect of the Equity
Investments or otherwise incurred in connection with the
Recapitalization or the Company, in an aggregate amount not to exceed
$450,000 including but not limited to (i) the fees and disbursements
of: (A) Ropes & Xxxx, special counsel to Xxxx Capital, Inc. and the
Bain Funds, (B) Price Waterhouse LLP, accountant to Xxxx Capital, Inc.
and the Bain Funds, and (C) any other consultants or advisors retained
by the Investors or either of the parties identified in clauses (A)
and (B) arising in connection therewith (including but not limited to
the preparation, negotiation and execution of this Agreement and any
other agreement executed in connection herewith or in connection with
the Recapitalization, the Senior Financing or the consummation of the
other transactions contemplated hereby (and any and all amendments,
modifications, restructurings and waivers, and exercises and
preservations of rights and remedies hereunder or thereunder) and the
operations of the Company and any of its subsidiaries), and (ii) any
out-of-pocket expenses incurred by the Investors in connection with
the provision of services hereunder or the attendance at any meeting
of the board of directors (or any committee thereof) of the Company or
any of its affiliates.
b. Indemnity and Liability. In consideration of the execution and
delivery of this Agreement by Bain and the provision of the Equity
Investments by the Bain Funds, the Company hereby agrees to indemnify,
exonerate and hold each of Bain, Xxxx Capital, Inc. and each Bain
Fund, and each of their respective partners, shareholders, affiliates,
directors, officers, fiduciaries, employees and agents and each of the
partners, shareholders, affiliates, directors, officers, fiduciaries,
employees and agents of each of the foregoing (collectively, the
"Indemnitees") free and harmless from and against any and all actions,
causes of action, suits, losses, liabilities and damages, and expenses
in connection therewith, including without limitation reasonable
attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnitees or any of them as a result
of, or arising out of, or relating to the Recapitalization, the
execution, delivery, performance, enforcement or existence of this
Agreement or the transactions contemplated hereby (including but not
limited to any indemnification obligations assumed or incurred by any
Indemnitee to or on behalf of Seller, or any of its accountants or
other representatives, agents or affiliates) except for any such
Indemnified Liabilities arising on account of such Indemnitee's gross
negligence or willful misconduct, and if and to the extent that the
foregoing undertaking may be 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. None of the Indemnitees shall be
liable to the
-3-
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.
5. Assignment, etc. Except as provided below, neither party shall have the
right to assign this Agreement. Bain acknowledges that its services under
this Agreement are unique. Accordingly, any purported assignment by Bain
(other than as provided below) shall be void. Notwithstanding the
foregoing, (a) Bain may assign all or part of its rights and obligations
hereunder to any affiliate of Bain which provides services similar to those
called for by this Agreement, in which event Bain shall be released of all
of its rights and obligations hereunder, and (b) the provisions hereof for
the benefit of the Bain Funds shall inure to the benefit of their
successors and assigns.
6. 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 each of Xxxx 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.
7. Miscellaneous.
a. Choice of Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of Delaware
without giving effect to any choice or conflict of law provision or
rule that would cause the application of the domestic substantive laws
of any other jurisdiction.
b. Consent to Jurisdiction. Each of the parties agrees that all actions,
suits or proceedings arising out of or based upon this Agreement or
the subject matter hereof shall be brought and maintained exclusively
in the federal and state courts of the State of Delaware. Each of the
parties hereto by execution hereof (i) hereby irrevocably submits to
the jurisdiction of the federal and state courts in the State of
Delaware for the purpose of any action, suit or proceeding arising out
of or based upon this Agreement or the subject matter hereof and (ii)
hereby waives to the extent not prohibited by applicable law, and
agrees not to assert, by way of motion, as a defense or otherwise, in
any such action, suit or proceeding, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that it is
immune from extraterritorial injunctive relief or other injunctive
relief, that its property is exempt or immune from attachment or
execution, that any such action, suit or proceeding may not be brought
or maintained in one of the above-named courts, that any such action,
suit or proceeding brought or maintained in one of the above-named
courts should be dismissed on grounds of forum non conveniens, should
be transferred to any
-4-
court other than one of the above-named courts, should be stayed by
virtue of the pendency of any other action, suit or proceeding in any
court other than one of the above-named courts, or that this Agreement
or the subject matter hereof may not be enforced in or by any of the
above-named courts. Each of the parties hereto hereby consents to
service of process in any such suit, action or proceeding in any
manner permitted by the laws of the State of Delaware, agrees that
service of process by registered or certified mail, return receipt
requested, at the address specified in or pursuant to Section 9 is
reasonably calculated to give actual notice and waives and agrees not
to assert by way of motion, as a defense or otherwise, in any such
action, suit or proceeding any claim that service of process made in
accordance with Section 9 does not constitute good and sufficient
service of process. The provisions of this Section 7(b) shall not
restrict the ability of any party to enforce in any court any judgment
obtained in a federal or state court of the State of Delaware.
c. Waiver of Jury Trial. To the extent not prohibited by applicable law
which cannot be waived, each of the parties hereto hereby waives, and
covenants that it will not assert (whether as plaintiff, defendant, or
otherwise), any right to trial by jury in any forum in respect of any
issue, claim, demand, cause of action, action, suit or proceeding
arising out of or based upon this Agreement or the subject matter
hereof, in each case whether now existing or hereafter arising and
whether in contract or tort or otherwise. Each of the parties hereto
acknowledges that it has been informed by each other party that the
provisions of this Section 7(c) constitute a material inducement upon
which such party is relying and will rely in entering into this
Agreement and the transactions contemplated hereby. Any of the parties
hereto may file an original counterpart or a copy of this Agreement
with any court as written evidence of the consent of each of the
parties hereto to the waiver of its right to trial by jury.
8. Merger/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.
9. Notice. All notices, demands, and communications of any kind which any
party may require or desire to serve upon any other party under this
Agreement shall be in writing and shall be served upon such other party and
such other party's copied persons as specified below by personal delivery
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 or by mailing a
copy thereof by certified or registered mail, or by Federal Express or any
other reputable overnight courier service, postage prepaid, with return
receipt requested, addressed to such party and copied persons at such
addresses. In the case of
-5-
service by personal delivery, it shall be deemed complete on the first
business day after the date of actual delivery to such address. In case of
service by mail or by overnight courier, it shall be deemed complete,
whether or not received, on the third day after the date of mailing as
shown by the registered or certified mail receipt or courier service
receipt. Notwithstanding the foregoing, notice to any party or copied
person of change of address shall be deemed complete only upon actual
receipt by an officer or agent of such party or copied person.
If to the Company, to it at:
System Software Associates, Inc.
000 Xxxx Xxxxxxx, 00xx xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
With a Copy to:
Xxxx Capital, Inc.
Two Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
If to Bain, to it at:
Two Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
With a Copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
10. Severability. If in any judicial or arbitral proceedings a court or
arbitrator 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 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
-6-
limiting it so as to be valid and enforceable to the maximum extent
consistent with and possible under applicable law.
11. 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.
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.
The Company: System Software Associates, Inc.
By_______________________________
Title:
Bain: Xxxx Capital Partners V, L.P.
By Xxxx Capital Investors V, Inc.,
. its general partner
By_______________________________
Title:
-7-
Schedule 1 to
Management Agreement
--------------------
Wire Transfer Instructions for
Xxxx Capital Partners V, L.P.
Bankers Trust Company, NY
ABA # 021 001 033
For: Xxxxx Brothers Xxxxxxxx
Account # 015 01 026
Account Name: Xxxx Capital Partners V, L.P.
Acct. # 810512-4
-8-
