MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement") is made as of this ___th day of
___________, 2000 (the "Effective Date") among Xxxxxxx Corporation, a Delaware
corporation (the "Company"), and Vestar Capital Partners, a Delaware general
partnership ("VCP"). All capitalized terms used herein but not defined herein
shall have the meaning given those terms in the Agreement and Plan of Merger
dated December__, 1999 by and among the Company, Torque Acquisition Co., L.L.C.,
a Delaware limited liability company ("Acquisition Co."), and Torque Merger Sub,
Inc. (the "Merger Agreement").
WHEREAS, VCP, by and through its officers, employees, agents,
representatives and affiliates, has expertise in the areas of corporate
management, finance, investment, acquisitions and other matters relating to the
business of the Company; and
WHEREAS, the Company desires to avail itself, for the term of this
Agreement, of the expertise of VCP in the aforesaid areas, in which it
acknowledges the expertise of VCP;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions herein set forth, the parties hereto agree as follows:
1. Appointment. The Company hereby appoints VCP to render the advisory and
consulting services described in Paragraph 2 hereof commencing on the date on
which the Minimum Condition and all other conditions of the Offer as set forth
in Annex A to the Merger Agreement have been waived or satisfied and all shares
tendered have been accepted for payment and paid for pursuant to the terms of
the Offer ("Tender Closing").
2. Services. VCP hereby agrees that commencing upon the Tender Closing it shall
render to the Company (and its subsidiaries) by and through such of VCP's
officers, employees, agents, representatives and affiliates, as VCP, in its sole
discretion, shall designate from time to time, advisory and consulting services
in relation to the affairs of the Company (and its subsidiaries) in connection
with strategic financial planning, and other services not referred to in the
next sentence, including, without limitation, advisory and consulting services
in relation to the selection, supervision and retention 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. It is expressly agreed that the services to be
performed hereunder shall not include (x) investment banking or other financial
advisory services rendered by any of VCP and its affiliates to the Company (and
its subsidiaries) after the Tender Closing in connection with acquisitions,
divestitures, refinancings, restructurings and similar transactions by the
Company (and its subsidiaries) or (y) full or part-time employment by any of the
Company and its subsidiaries of any employee or partner of any of VCP and its
affiliates, in each case, for which VCP and its affiliates shall be entitled to
receive additional compensation.
3. Fees. In consideration of the services contemplated by Paragraph 2, subject
to the provisions of Paragraph 6, the Company and its respective successors
hereby jointly and severally agree to pay to VCP an annual management fee (the
"Fee") equal to the greater of (i) $250,000 and (ii) an amount equal to 0.5% of
the consolidated earnings before depreciation, interest, taxes and amortization
for such fiscal year, determined in accordance with generally accepted
accounting principles ("EBITDA"), commencing on the Effective Date; provided
that if EBITDA is greater than $70 million, the Fee shall in no event be greater
than $350,000.00. The Fee shall be payable semi-annually in advance (based on
clause (i) above in the fiscal year ended 2000 and thereafter based on the
greater of clause (i) above and 0.5% of the prior year's EBITDA subject to
maximum fee of $350,000), with an adjustment of the Fee for any fiscal year
payable promptly following the determination of EBITDA for such fiscal year or
on termination of this Agreement; provided that the Company shall also pay to
VCP on the Effective Date an amount equal to the product of (i) a fraction, the
numerator of which is the number of days elapsed between the Tender Closing and
the Effective Date and the denominator of which is equal to 365 and (ii) an
amount equal to the Fee. The semi-annual Fee payments shall be non-refundable
(except for any downward adjustment as described above).
4. Reimbursements. In addition to the Fee, the Company hereby agrees, at the
direction of VCP, to pay directly or reimburse VCP for its reasonable
Out-of-Pocket Expenses incurred after the Tender Closing in connection with the
services provided for in Paragraph 2 hereof. For the purposes of this Agreement,
the term "Out-of-Pocket Expenses" shall mean the amounts paid by or on behalf of
VCP in connection with the services contemplated hereby that have not been
previously reimbursed by the Company to VCP pursuant to the terms of the Merger
Agreement, including reasonable (i) fees and disbursements of any independent
professionals and organizations, including independent auditors and outside
legal counsel, investment bankers or other financial advisors or consultants,
(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 VCP of the statement in connection therewith.
5. Indemnification. The Company hereby agrees to indemnify and hold harmless VCP
and its affiliates and their respective partners, officers, directors,
employees, agents, representatives and stockholders (each being an "Indemnified
Party") from and against any and all losses, claims, damages and liabilities of
whatever kind or nature, joint or several, absolute, contingent or
consequential, 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 services
contemplated by this Agreement or the engagement of VCP pursuant to, and the
performance by VCP of the services contemplated by, this Agreement. The Company
hereby agrees to 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. The
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Company will not be liable to an Indemnified Party under the foregoing
indemnification provision to the extent that any loss, claim, damage, liability,
cost or expense is determined by a court of competent jurisdiction, in a final
judgment from which no further appeal may be taken, to have resulted from the
gross negligence or willful misconduct of such Indemnified Party. The Company
shall not be obligated to make any payment to an Indemnified Party hereunder
unless and until the Tender Closing has occurred.
6. Term. This Agreement shall be in effect on the date hereof and shall
terminate at such time after the Effective Time when Acquisition Co. and its
Permitted Transferees (as such term is defined in that certain Stockholders
Agreement dated November 29, 1999 by and among the Company and certain of its
Stockholders) hold, in the aggregate, (i) shares of Company Common Stock
(including shares of Company Common Stock underlying the Warrants) in an amount
that is less than 25% of the number of shares of Company Common Stock (including
the shares of Company Common Stock underlying the Warrants) that Acquisition Co.
held immediately following the Effective Time and (ii) shares of Preferred Stock
in an amount that is less than 10% of the number of shares of Preferred Stock
that Acquisition Co. held immediately following the Effective Time. The
provisions of Paragraphs 4, 5, 7 and 8 and the joint and several obligation of
the Company and its respective successors to pay Fees accrued during the term of
this Agreement pursuant to Paragraph 3 shall survive the termination of this
Agreement.
7. Permissible Activities. Subject to all applicable provisions of New York law
that impose fiduciary duties upon VCP or its partners or affiliates, nothing
herein shall in any way preclude VCP or its partners, officers, employees 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 in any event be effective unless the same shall be in writing
and signed by the parties to this Agreement and then such amendment,
waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
(b) 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,
postage prepaid, 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 VCP: Vestar Capital Partners
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Sander X. Xxxx
with a copy to: Xxxxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Company: Xxxxxxx Corporation
0000 Xxxxxxxxxx Xxxxxx
P.O. Box 22970
Rochester, N.Y. 14692
Attention: Secretary
(c) 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.
(d) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 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
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
(e) This Agreement shall inure to the benefit of, and be binding upon,
VCP, the Indemnified Parties, the Company and their respective
successors and 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, but
all of which 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.
VESTAR CAPITAL PARTNERS
By:_____________________________________
Name:___________________________________
Title:__________________________________
XXXXXXX CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
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