Exhibit 10.6
MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT ("AGREEMENT") is entered into as of May
21, 2003, between One Equity Partners LLC, a Delaware limited liability company
("OEP"), and MedVest Holdings Corporation, an Ohio corporation ("MEDVEST" or the
"COMPANY").
BACKGROUND
WHEREAS, the Company, together with its direct and indirect subsidiaries
(collectively, the "MEDVEST ENTITIES"), desires to receive general financial and
management advisory services from OEP, and thereby obtain the benefit of the
experience of OEP in business and financial management generally and its
knowledge of the MedVest Entities and their financial affairs in particular. OEP
is willing to provide general financial and management advisory services to the
MedVest Entities. Accordingly, the compensation arrangements set forth in this
Agreement are designed to compensate OEP for such services.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom, OEP and the Company hereby agree as follows:
TERMS
1. ENGAGEMENT. The Company hereby engages OEP as a general financial and
management advisor, and OEP hereby agrees to provide general financial and
management advisory services to the MedVest Entities, all on the terms and
subject to the conditions set forth below:
2. SERVICES OF OEP.
(a) OEP hereby agrees during the term of this engagement to consult
with the Company's board of directors (the "BOARD") and management of the
MedVest Entities in such manner and on such general business and financial
matters as may be reasonably requested from time to time by the Board and agreed
to by OEP, including but not limited to:
(i) corporate strategy;
(ii) budgeting of future corporate investments; and
(iii) acquisition and divestiture strategies.
The parties hereto agree that the services to be provided hereunder shall
include only general financial and management advisory services. In the event
the Company requests extraordinary services (e.g., obtaining debt or equity
financing or coordinating or negotiating the consummation of acquisitions or
divestitures), additional fees may be charged pursuant to arrangements to be
mutually agreed upon by the parties. Notwithstanding the foregoing, the parties
hereto agree that no additional fees shall be charged by, or payable to, OEP
under this Agreement for services performed in connection with a Sale of the
Company (as defined in the
Company's Stockholders Agreement dated as of May 21, 2003), except for such fees
as may separately be agreed to between the parties hereto.
(b) The services provided pursuant to this Agreement are advisory
only, and the MedVest Entities are free to accept or reject the advice rendered
by officers or employees of OEP or its affiliates.
3. COMPENSATION. On the date hereof, the Company shall pay, or cause to
be paid, to OEP a fee in an amount equal to $3.0 million. In addition, within 30
days of the Initial Advisory Fee Payment Date (as defined below) and thereafter,
within 30 days of each anniversary of the Initial Advisory Fee Payment Date, the
Company shall pay, or cause to be paid, to OEP a fee in an amount equal to $2.4
million ("ADVISORY FEES"). The Advisory Fees shall be paid as compensation for
services to be rendered by OEP to the MedVest Entities DURING THE YEAR FOLLOWING
SUCH INITIAL ADVISORY FEE Payment Date or anniversary thereof, as the case may
be. For purposes of this Agreement, "Initial Advisory Fee Payment Date" shall be
the date the Company shall have generated Consolidated EBITDA in excess of $76.0
million measured as of the most recent trailing twelve month period and
calculated in accordance with the definition of "Consolidated EBITDA" in that
certain Credit Agreement by and among Medex, the Company, the Subsidiaries of
Medex party thereto, the financial institutions party thereto, Wachovia Bank,
National Association, as administrative agent, as amended, restated or otherwise
modified); PROVIDED, HOWEVER, in no event will any Advisory Fees be paid prior
to December 15, 2003. The parties hereby agree that the Advisory Fees to be paid
on each anniversary of the Initial Advisory Fee Payment Date shall be payable
regardless of whether or not as of such date the Company has continued to
generate Consolidated EBITDA in excess of $76.0 million.
4. EXPENSE REIMBURSEMENT. The Company shall reimburse OEP for such
reasonable travel expenses and other reasonable out-of-pocket fees and expenses
as may be incurred by OEP, its directors, officers and employees in connection
with the rendering of services hereunder. Such expenses shall be in addition to
any Advisory Fees payable pursuant to paragraph 3 above.
5. TERM. This Agreement shall be in effect for an initial term commencing
on the date hereof and terminating on the seventh anniversary of the date
hereof; PROVIDED, HOWEVER, that this Agreement (i) may be terminated 30 days
after the date of the delivery by OEP to the Company of a notice of termination
for any reason, including any material breach of this Agreement by the Company
or (ii) shall terminate in the event of a Sale of the Company (as defined in
Section 9 of that certain Stockholders Agreement by and among the Company, OEP,
the Investors party thereto and certain other Persons that become a party
thereto from time to time, as amended, restated or modified from time to time).
No termination of this Agreement, whether pursuant to this paragraph or
otherwise, shall affect the Company's obligations with respect to the fees,
costs and expenses incurred by OEP in rendering services hereunder and not
reimbursed by the Company as of the effective date of such termination.
6. INDEMNIFICATION. The Company agrees to indemnify and hold harmless
OEP, its directors, officers and employees and affiliates against and from any
and all loss, liability, suits, claims, costs, damages and expenses (including
attorneys' fees) arising from their performance hereunder, except to the extent
such losses, liabilities, suits, claims, costs, damages and expenses
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are determined by a court of competent jurisdiction to result primarily from
OEP's gross negligence or intentional wrongdoing. The Company will reimburse OEP
for all such fees and expenses, including the fees and expenses of counsel, as
they are incurred by OEP in connection with pending or threatened litigation,
whether or not OEP is a party thereto. The foregoing agreement will be in
addition to any rights that OEP may have at common law or otherwise, including,
but not limited to, any right to contribution. The Company also agrees that OEP
will have no liability to the Company in connection with the services rendered
hereunder (whether in tort, contract or otherwise) for claims, liabilities,
damages, losses or expenses, including fees and expenses of counsel, incurred by
the Company unless, and to the extent, they are determined by judgment of a
court of competent jurisdiction to result primarily from OEP's gross negligence
or intentional wrongdoing.
If indemnification is to be sought hereunder by OEP, then OEP shall notify
the Company of the commencement of any action or proceeding in respect thereof;
provided, however, that the failure to so notify the Company shall not relieve
the Company from any liability that it may otherwise have to OEP, except to the
extent the Company shall have been materially prejudiced by such failure.
Following such notification, the Company may elect in writing to assume the
defense of such action or proceeding, and upon such election, it will not be
liable for any legal costs subsequently incurred by OEP (other than reasonable
costs of investigation) in connection therewith, unless (i) the Company has
failed to provide counsel reasonably satisfactory to OEP in a timely manner or
(ii) counsel that has been provided by the Company reasonably determines that
its representation of OEP would present it with a conflict of interest. In any
litigation or proceeding, the Company will not be responsible for the fees and
expenses of more than one counsel (together with local counsel) for OEP in any
one jurisdiction, unless OEP has a separate and conflicting defense with regard
to such litigation or proceedings, as reasonably determined by the counsel that
has been provided by the Company. The Company will not be liable for any
settlement of any litigation or proceeding effected without its prior written
consent, which consent will not be unreasonably withheld or delayed. Should the
Company assume the defense of any action, the Company will not, without OEP's
prior written consent, settle, compromise, consent to the entry of any judgment
in or otherwise seek to terminate such action if such settlement, compromise,
consent or termination imposes obligations on OEP (through injunctive relief or
otherwise) other than the payment of money for which OEP would be indemnified
for hereunder or which does not unconditionally release OEP from liability.
7. OEP AN INDEPENDENT CONTRACTOR. OEP and the Company agree that OEP
shall perform services hereunder as an independent contractor, retaining control
over and responsibility for its own operations and personnel. Neither OEP nor
its directors, officers or employees shall be considered employees or agents of
the MedVest Entities as a result of this Agreement nor shall any of them have
authority under this Agreement to contract in the name of or bind the MedVest
Entities, except as expressly agreed to in writing by the MedVest Entities.
8. NOTICES. Any notice, report or payment required or permitted to be
given or made under this Agreement by one party to the other shall be deemed to
have been duly given or made if personally delivered or, if mailed, when mailed
by registered or certified mail, postage prepaid, to the other party at the
following addresses (or at such other address as shall be given in writing by
one party to the other):
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IF TO OEP:
One Equity Partners LLC
00 Xxxx Xxxxxx Xxxxxx
Xxxx Xxxxx XX-0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
Xxx Xxxxxxxxxxx
IF TO COMPANY:
MedVest Holdings Corporation.
0000 Xxxxx-Xxxxx Xxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxxxx Arena
Xxxxxxx Xxxxxxx
9. ENTIRE AGREEMENT. This Agreement (a) contains the complete and entire
understanding and agreement of OEP and the Company with respect to the subject
matter hereof and (b) supersedes all prior and contemporaneous understandings,
conditions and agreements, oral or written, express or implied, respecting the
engagement of OEP in connection with the subject matter hereof.
10. AMENDMENT. This Agreement may be amended only with the written consent
of both OEP and the Company.
11. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach of that provision or any other provision
hereof.
12. ASSIGNMENT. Neither OEP nor the Company may assign its rights or
obligations under this Agreement without the express written consent of the
other.
13. CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any jurisdictions other that the State of Illinois.
14. DELIVERY BY FACSIMILE. This Agreement, the agreements referenced to
herein, and each other agreement or instrument entered into in connection
herewith or therewith or contemplated hereby or thereby, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile
machine, shall be treated in all manner and respects as an original agreement or
instrument and shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person. At the request
of any party hereto or to any such agreement or instrument, each other party
hereto or thereto shall reexecute original forms thereof and deliver them to all
other parties. No party hereto or to any such agreement or instrument shall
raise the use of a facsimile machine to deliver a signature or the
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fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine as a defense to the
formation or enforceability of a contract and each such party forever waives any
such defense.
* * * * *
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered as of the date first written above.
MEDVEST HOLDINGS CORPORATION
By: /s/ Xxxxxxxx X. Arena
-------------------------------------
Name: Xxxxxxxx X. Arena
Its: President and CEO
ONE EQUITY PARTNERS LLC
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Its: Partner
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