MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement (this "Agreement") is entered into
as of January 1, 1997 by and between Xxxxxxx International Group Inc., a
Delaware corporation ("Xxxxxxx"), and Hay Island Holding Corporation, a Delaware
corporation ("Hay Island").
RECITALS
WHEREAS, Xxxxxxx is issuing shares of Class A Common Stock,
$0.01 par value per share ("Class A Common Stock"), to the public in an offering
(the "Initial Public Offering") registered under the Securities Act of 1933, as
amended;
WHEREAS, Hay Island beneficially owns all of the issued and
outstanding Xxxxxxx Class B Common Stock, par value $0.01 per share ("Class B
Common Stock") of Xxxxxxx;
WHEREAS, Hay Island has heretofore directly or indirectly
provided certain administrative, financial, management and other services to
Xxxxxxx or its Subsidiaries;
WHEREAS, on the terms and subject to the conditions set forth
herein, Xxxxxxx desires to retain Hay Island as an independent contractor to
continue to provide, directly or indirectly, certain administrative, financial,
management and other services to Xxxxxxx and its Subsidiaries (as defined below)
after the Closing Date (as defined below); and
WHEREAS, on the terms and subject to the conditions set forth
herein, Hay Island desires to provide, directly or indirectly, such services to
Xxxxxxx and its Subsidiaries.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Hay Island and
Xxxxxxx, for themselves, their successors and assigns, hereby agree as follows:
-1-
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the
following terms will have the following meanings, applicable both to the
singular and the plural forms of the terms described:
"Agreement" has the meaning ascribed thereto in the preamble
hereto, as such agreement may be amended and supplemented from time to time in
accordance with its terms.
"Class A Common Stock" has the meaning ascribed thereto in the
recitals to this Agreement.
"Class B Common Stock" has the meaning ascribed thereto in the
recitals to this Agreement.
"Closing Date" means the date of the closing of the initial
sale of Class A Common Stock in the Initial Public Offering.
"Common Stock" means the Class B Common Stock, the Class A
Common Stock and any other class of Xxxxxxx capital stock representing the right
to vote generally for the election of directors.
"Initial Public Offering" has the meaning ascribed thereto in
the recitals to this Agreement.
"Hay Indemnified Person" has the meaning ascribed thereto in
Section 4.3.
"Hay Island" has the meaning ascribed thereto in the preamble
hereto.
"Payment Date" has the meaning ascribed thereto in Section
3.2.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization,
government (and any department or agency thereof) or other entity.
"Schedule A" means the schedule hereto that lists the Services
to be provided by Hay Island to Xxxxxxx.
"Xxxxxxx" has the meaning ascribed thereto in the preamble
hereto.
-2-
"Xxxxxxx Entities" means Xxxxxxx and its Subsidiaries and
"Xxxxxxx Entity" shall mean any of the Xxxxxxx Entities.
"Xxxxxxx Indemnified Person" has the meaning ascribed thereto
in Section 4.4.
"Services Cost" has the meaning ascribed thereto in Section
3.1.
"Services" has the meaning ascribed thereto in Section 2.1.
"Subsidiary" means, as to any Person, any corporation,
association, partnership, joint venture or other business entity of which more
than 50% of the voting capital stock or other voting ownership interests is
owned or controlled directly or indirectly by such Person or by one or more of
the Subsidiaries of such Person or by a combination thereof.
Section 1.2. Internal References. Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement and references
to the parties shall mean the parties to this Agreement.
ARTICLE II
PURCHASE AND SALE OF SERVICES
Section 2.1. Purchase and Sale of Services.
(a) On the terms and subject to the conditions of this
Agreement and in consideration of the Services Cost described below, Hay Island
agrees to provide to Xxxxxxx, or procure the provision to Xxxxxxx of, and
Xxxxxxx agrees to purchase from Hay Island, the services described in Schedule
A, as such schedule is amended from time to time (the "Services").
(b) It is understood that Services to be provided to Xxxxxxx
under this Agreement will, at Xxxxxxx'x request, be provided to Subsidiaries of
Xxxxxxx.
-3-
ARTICLE III
SERVICES COST; OTHER CHARGES
Section 3.1. Services Cost Generally.
(a) Xxxxxxx agrees to pay a fee (the "Services Cost") to Hay
Island for the services that Hay is providing to Xxxxxxx (plus any and all
applicable sales tax) pursuant to this Agreement. The Services Cost for the year
ended December 31, 1997 is $925,000. On each annual anniversary date of this
Agreement, the Services Cost shall be increased or decreased to reflect the
agreed upon allocation of Hay Island's costs for the services performed for the
next calendar year, provided that any increase in the annual amount payable
hereunder will be limited to percentage increase based on the percentage
increase in Consumer Price Index for All Urban Consumers, Northeast for the
preceding calendar year.
Section 3.2. Invoicing and Settlement of Costs.
(a) Hay Island will invoice Xxxxxxx on a monthly basis (not
later than the fifth day of each month) an amount equal to one-twelfth of
Services Cost due under Section 3.1 (a).
(b) Xxxxxxx agrees to pay each invoice on or before 30 days
after the date on which it receives Hay Island's invoices of the Services Cost
(each, a "Payment Date"), by check or wire transfer payable to the order of Hay
Island, or by wire transfer to a bank account located in the United States and
without set off. If Xxxxxxx fails to pay any monthly payment within 90 days of
the relevant Payment Date, Xxxxxxx shall be obligated to pay, in addition to the
amount due on such Payment Date, interest on such amount at the Prime Rate as
published in the Wall Street Journal on the date of the Hay Island invoice for
the unpaid amount.
ARTICLE IV
THE SERVICES
Section 4.1. General Standard of Service. Except as otherwise
agreed with Xxxxxxx or described in this Agreement, and provided that Hay Island
is not restricted by contract with third parties or applicable law, Hay Island
agrees that the nature, quality, and standard of care applicable to the delivery
of the Services hereunder will be substantially the same as that of the Services
which Hay Island provides from time to time throughout its businesses and as
would be obtainable form unrelated third parties.
Section 4.2. Limitation of Liability. Xxxxxxx agrees that none
of Hay Island and its Subsidiaries and their respective directors, officers,
agents, and employees (each, a "Hay Indemnified Person") shall have any
liability, whether direct or indirect, in contract or tort or otherwise, to
Xxxxxxx or any of its Subsidiaries for or in connection with the Services
rendered or to be rendered by any Hay Indemnified Person pursuant to this
Agreement, the transactions contemplated hereby or any Hay Indemnified Person's
actions or inactions in connection with
-4-
any such Services or transactions, except for damages which have resulted from
such Hay Indemnified Person's gross negligence or willful misconduct in
connection with any such Services, actions or inactions.
Section 4.3. Indemnification of Hay Island by Xxxxxxx. Xxxxxxx
agrees to indemnify and hold harmless each Hay Indemnified Person from and
against any damages, and to reimburse each Hay Indemnified Person for all
reasonable expenses as they are incurred in investigating, preparing, pursuing,
or defending any claim, action, proceeding, or investigation (collectively,
"Actions"), whether or not in connection with pending or threatened litigation
and whether or not any Hay indemnified Person is a party, arising out of or in
connection with Services rendered or to be rendered by any Hay Indemnified
Person pursuant to this Agreement, the transactions contemplated hereby or any
Hay Indemnified Person's actions or inactions in connection with any such
Services or transactions; provided that Xxxxxxx will not be responsible for any
damages of any Hay Indemnified Person that have resulted from such Hay
Indemnified Person's gross negligence or willful misconduct in connection with
any of the advice, actions, inactions, or Services referred to above.
Section 4.4. Indemnification of Xxxxxxx by Hay Island. Hay
Island agrees to indemnify and hold harmless Xxxxxxx and its Subsidiaries and
their respective directors, officers agents, and employees (each, a "Xxxxxxx
Indemnified Person") from and against any damages, and to reimburse each Xxxxxxx
Indemnified Person for all reasonable expenses as they are incurred in
investigating, preparing, or defending any Action , whether or not in connection
with pending or threatened litigation and whether or not any Xxxxxxx Indemnified
Person is a party, arising out of the gross negligence or willful misconduct of
any Hay Indemnified Person in connection with the Services rendered or to be
rendered pursuant to this Agreement.
ARTICLE V
TERM AND TERMINATION
Section 5.1. Term. Except as otherwise provided in this
Article V or in Section 6.4 or as otherwise agreed in writing by the parties,
this Agreement shall have an initial term of five years from the Closing Date,
and will be renewed automatically thereafter for successive one-year terms
unless either Xxxxxxx or Hay Island elects not to renew this Agreement upon not
less than six-months' prior written notice.
Section 5.2. Termination.
(a) This Agreement will be subject to early termination by
either Xxxxxxx or Hay Island upon six months' written notice if Hay Island
ceases to own shares of Common Stock representing more than 50% of the combined
voting power of the Common Stock of Xxxxxxx.
-5-
(b) Hay Island may terminate any affected Service at any time
if Xxxxxxx shall have failed to perform any of its material obligations under
this Agreement relating to such Service, Hay Island has notified Xxxxxxx in
writing of such failure, and such failure shall have continued for a period of
60 days after receipt of Xxxxxxx of notice of such failure.
(c) Xxxxxxx may terminate any affected Service at any time if
Hay Island shall have failed to perform any of its material obligations under
this Agreement relating to any such Service, Xxxxxxx has notified Hay Island in
writing of such failure and such failure shall have continued for a period of 60
days after receipt by Hay Island of notice of such failure.
(d) Each of Xxxxxxx and Hay Island agrees that prior to
exercising its rights under this Section it will consult for a reasonable period
with the other party in advance of such termination as to its implementation.
Section 5.3. Effect of Termination.
(a) Other than as required by law, upon termination of any
Service pursuant to Section 5.1 or Section 5.2, and upon termination of this
Agreement in accordance with its terms, Hay Island will have no further
obligation to provide the terminated Service (or any Service, in the case of
termination of this Agreement) and Xxxxxxx will have no obligation to pay any
fees relating to such Services or make any other payments hereunder; provided
that notwithstanding such termination, (i) Xxxxxxx shall remain liable to Hay
Island for fees owed and payable in respect of Services provided prior to the
effective date of the termination; (ii) Hay Island shall continue to charge
Xxxxxxx for administrative and program costs incurred prior to the termination
of any Service and other services required to be provided after the termination
of such Service and Xxxxxxx shall be obligated to pay such expenses in
accordance with the terms of this Agreement, and (iii) the provisions of Article
IV, V and VI shall survive any such termination.
(b) Following termination of this Agreement with respect to
any Service, Hay Island and Xxxxxxx agree to cooperate in providing for an
orderly transition of such Service to Xxxxxxx or to a successor service
provider.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Future Litigation and other Proceedings. In the
event that Xxxxxxx (or any of its officers or directors) or Hay Island (or any
of its officers or directors) at any time after the date hereof initiates or
becomes subject to any litigation or other proceedings before any governmental
authority or arbitration panel with respect to which the parties have no prior
agreements (as to indemnification or otherwise), the party (and its officers and
directors) that has not initiated and is not subject to such litigation or other
proceedings shall comply, at the other party's expense, with any reasonable
requests by the other party for assistance in
-6-
connection with such litigation or other proceedings (including by way of
provision of information and making available of employees as witnesses). In the
event that Xxxxxxx (or any of its officers or directors) and Hay Island (or any
of its officers or directors) at any time after the date hereof initiate or
become subject to any litigation or other proceedings before any governmental
authority or arbitration panel with respect to which the parties have no prior
agreements (as to indemnification or otherwise), each party (and its officers
and directors) shall, at their own expense, coordinate their strategies and
actions with respect to such litigation or other proceedings to the extent such
coordination would not be detrimental to their respective interests and shall
comply, at the expense of the requesting party, with any reasonable requests of
the other party for assistance in connection therewith (including by way of
provision a information and making available of employees as witnesses).
Section 6.2. No Agency. Nothing in this Agreement shall
constitute or be deemed to constitute a partnership or joint venture between the
parties hereto or constitute or be deemed to constitute any party the agent or
employee of the other party for any purpose whatsoever and neither party shall
have authority or power to bind the other or to contract in the name of, or
create a liability against, the other in any way or for any purpose.
Section 6.3. Force Majeure.
(a) For purposes of this Section, "force majeure" means an
event beyond the control of either party, which by its nature could not have
been foreseen by such party, or if it could have been foreseen, was unavoidable,
and includes without limitation acts of God, storms, floods, riots, fires,
sabotage, civil commotion or civil unrest, interference by civil or military
authorities, acts of war (declared or undeclared) and failure of energy sources.
(b) Neither party shall be under any liability for failure to
fulfill any obligation under this Agreement, so long as and to the extent to
which the fulfillment of such obligation is prevented, frustrated, hindered, or
delayed as a consequence of circumstances of force majeure, provided always that
such party shall have exercised all due diligence to minimize to the greatest
extent possible the effect of force majeure on its obligations hereunder.
(c) Promptly on becoming aware of force majeure causing a
delay in performance or preventing performance of any obligations imposed by
this Agreement (and termination of such delay), the party affected shall give
written notice to the other party giving details of the same, including
particulars of the actual, and it applicable, estimated continuing effects of
such force majeure on the obligations of the party whose performance is
prevented or delayed. If such notice shall have been duly given and actual delay
resulting from such force majeure shall be deemed not to be a breach of this
Agreement, and the period for performance of the obligation, to which it relates
shall be extended accordingly, provided that if force majeure results in the
performance of a party being delayed by more than 60 days, the other party shall
have the right to terminate this Agreement with respect to any Service effected
by such delay forthwith by written notice.
-7-
Section 6.4. Entire Agreement. This Agreement (including
Schedule A constituting a part of this Agreement) and any other writing signed
by the parties that specifically references this Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations, both written
and oral between the parties with respect to the subject matter hereof. This
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
Section 6.5. Information. Subject to applicable law and
privileges, each party hereto covenants and agrees to provide the other party
with all information regarding itself and transactions under this Agreement that
the other party reasonably believes are required to comply with all applicable
federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.
Section 6.6. Notices. Any notice, instruction, direction or
demand under the terms of this Agreement required to be in writing will be duly
given upon delivery, if delivered by hand, facsimile transmission, intercompany
mail, or mail, to the following, addresses:
(a) If to Xxxxxxx, to;
Xxxxxxx International Group Inc.
000 Xxxx 00xx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
(b) If to Hay Island, to
Hay Island Holding Corporation
00 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties.
Section 6.7. Governing Law. This Agreement shall be construed
in accordance with and governed by the substantive internal laws of the State of
Delaware.
-8-
Section 6.8. Should any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not render
the entire Agreement invalid. Rather, the Agreement shall be construed as if not
containing the particular invalid or unenforceable provision, and the rights and
obligations of each party shall be construed and enforced accordingly.
Section 6.9. Amendment. This Agreement may only be amended by
a written agreement executed by both parties hereto.
Section 6.10. Counterparts. This Agreement may be executed in
separate counterparts, each of which shall be deemed an original and all of
which, when taken together, shall constitute one agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be signed by their duly authorized representatives.
XXXXXXX INTERNATIONAL GROUP INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Operating Officer
HAY ISLAND HOLDING CORPORATION
By: /s/ Xxxxxxx Xxxxxxx, III
-----------------------------
Name: Xxxxxxx Xxxxxxx, III
Title: Chief Executive Officer
-9-
Services Agreement - Schedule A
Service
------------------------------------------------
Treasury and Cash Management
(including loans and investments)
Corporate Finance
Corporate Development
Risk Management
(including liability, property, casualty
and fiduciary insurance)
Corporate Secretarial Services
Marketing Data Services
Governmental Affairs and Regulation
Human Resources, Executive Compensation,
General Compensation and Benefit Programs
Investor and Public Relations
General Real Estate Services
International Expansion Services
Transportation Services
Corporate, Administrative
and General Services
-10-
