MANAGEMENT SERVICES AGREEMENT
Exhibit
10.21
Execution
Copy
THIS
MANAGEMENT SERVICES AGREEMENT (this “Agreement”) is made as of
September 2, 2004 by and between SDC Technologies, Inc., a Delaware corporation (the
(“Company”), with offices at 00000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx, and Xxxxxxx
Consulting III LLC, a Connecticut limited liability company
(“Xxxxxxx”), with offices at 00
Xxxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx.
RECITALS
WHEREAS, the Company is engaged in the development, manufacture,
distribution,
application and sale of abrasion resistant coatings on plastic
corrective and non-corrective vision
eyewear (the “Business”); and
WHEREAS, the Company desires to retain Xxxxxxx to provide executive, financial, and
managerial oversight
services to it relating to the Business on the terms herein set
forth, and Xxxxxxx has capability
enabling it to provide such services and is agreeable to providing
the same as such terms.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is
hereby agreed as follows:
AGREEMENT
1. TERM AND DUTIES.
For the three year period commencing on the date hereof, unless sooner terminated
pursuant to the provisions of Sections 7 or 8 (the
“Term”), Xxxxxxx shall provide executive,
financial and managerial oversight services to the Company (and the Company’s subsidiaries, if
any) from time to time. The nature of such services shall be to analyze the performance of the
Company’s executive personnel and to assist them in developing and planning the
implementation of financing, internal growth and acquisition strategies; however, Xxxxxxx will
not become involved in day-to-day operations of the Company. In general, such services shall
be provided by reviewing internal reports and financial statements and analyses prepared by the
executive officers of the Company and advising them as to matters covered by such reports as
well as assisting them to formulate financial and corporate growth strategies. If so requested,
appropriate personnel of Xxxxxxx will attend all meetings of the Board of Directors. It is
understood that the persons who will provide services to the Company may be employees of
Xxxxxxx and will also have duties with and to Xxxxxxx, and that, therefore, none of said persons
will devote full business time to the business of the Company, but that they will devote thereto
only such time as may be necessary from time to time to properly perform their duties. Unless
either party shall have notified the other of its intention not to renew, at least sixty (60) days
prior to the expiration of the Term, this Agreement shall automatically renew for successive one
year periods.
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Copy
2.
DEGREE OF CARE.
Xxxxxxx shall use its best efforts to perform its services and to
cause its personnel to perform
their services hereunder in a professional manner and with due care,
but shall have no liability to the
Company for any act or omission except for gross negligence or the
willful breach of this Agreement.
3.
FEES.
(a) In
full consideration and compensation for the services to be furnished
by Xxxxxxx to the Company and
its subsidiaries during the Term,
(i) as contemplated by the Stock Purchase Agreement (defined below), but not
changing or increasing any of the parties obligations thereunder, the Company or an affiliate of
the Company shall pay to Xxxxxxx and Xxxxxxx shall accept, an up-front fee in an amount equal to
350,000, with such fee due and payable in immediately available funds at
Closing (as defined in
the Stock Purchase Agreement); and
(ii) the Company shall pay to Xxxxxxx and Xxxxxxx shall accept, an annual fee in an
amount equal to Three Hundred Fifty Thousand Dollars ($350,000). Such fee shall be payable in
arrears in equal quarterly installments of Eighty-Seven Thousand Five Hundred Dollars
(87,500) (each a “Management Fee Payment”) commencing on December 31, 2004 (with
such amount pro rated and equal to 4 months) and continuing on a calendar quarter basis until
the termination of this Agreement. So long as the Company’s fixed charge ratio is less than one
and two-tenths (1.2), the Board of Directors of the Company may elect to defer up to fifty
percent (50%) of the Management Fee Payment then due. Without limiting the preceding
sentence, Xxxxxxx may elect, at any time and from time to time, to defer all or a portion of its fee
for any such installment due by written notice to the Company. Any amount accrued, payable
and/or in arrears shall be paid to the extent assets are legally available therefor and any amounts
for which assets are not legally available shall be paid promptly as assets become legally
available therefor.
(b) Unless
full payment in respect of Management Fee Payments for all past
periods and the
then current period shall have been paid and a sum sufficient for the payment thereof set
apart (i) no dividend whatsoever (other than a dividend payable solely in Common Stock or
Preferred Stock or other securities and rights convertible into or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock and/or Preferred Stock) shall
be declared or paid, and no distribution shall be made on, any Common Stock or Preferred Stock,
and (ii) no shares of Common Stock or Preferred Stock shall be redeemed, purchased or
otherwise acquired (or pay into or set aside for a sinking fund for such purpose); provided,
however, that this restriction shall not apply to the repurchase of shares of capital stock from
employees, officers, directors, consultants or other persons performing services for the Company
or any subsidiary pursuant to agreements under which the Company has the option to repurchase
such shares upon the occurrence of certain events, such as the
termination of employment.
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(c) All payments hereunder shall be in U.S. Dollars and shall be made at the offices
of Xxxxxxx, unless otherwise instructed at least three (3) business days prior to the due date of the
??? payment.
(d)
For purposes of this Agreement, “Stock Purchase
Agreement” shall mean that certain Stock Purchase
Agreement dated of even date herewith by and among Silvue Technologies Group, Inc., Dow Corning
Enterprises, Inc., Xxxxxxxxxx Holdings, Inc. and the Company.
4. EXPENSES.
(a) During the Term, the personnel of Xxxxxxx assigned to perform duties hereunder
shall engage in such travel as may be reasonably required in connection with the performance
of those duties. The Company will pay or reimburse all such reasonable expenses upon
submission of proper documentation, with due regard to cost savings for the Company’s
benefit.
(b) The
Company will pay for, or reimburse Xxxxxxx for, all equipment and
supplies bought
by Xxxxxxx and specifically dedicated to the purposes of this Agreement (e.g. computer
supplies). Xxxxxxx shall not be entitled to reimbursement of incidental expenses (e.g. use
of Xxxxxxx’x offices) for purposes hereof.
(c) Xxxxxxx will pay all salaries, wages, bonuses, health and other insurance
expenses, pension fund payments, payroll taxes and withholding and the like applicable
to its employees furnishing services hereunder, without the right to reimbursement from the
Company.
(d) The Company will indemnify, to the fullest extent permitted by law, Xxxxxxx
and the personnel of Xxxxxxx who perform services hereunder against
any claims which may be made against
them by reason thereof other than claims arising from Xxxxxxx’x xxxxx negligence
or willful misconduct.
5. CONFIDENTIALITY.
The Company acknowledges that Xxxxxxx is engaged in various other businesses some of
which may be competitive with the business and that all persons who perform services for
the Company pursuant to this Agreement will be full time employees of Xxxxxxx and that
their primary loyalty is to Xxxxxxx. The mere existence of Xxxxxxx’x business activities as
described
above and the use of such employees to perform services for Xxxxxxx shall in no way give rise to
any liability of Xxxxxxx or such employees under this Agreement.
6. RELATIONSHIP BETWEEN PARTIES.
Xxxxxxx and the Company are not partners or joint venturers, and neither shall have any
power or right to incur any liability on behalf of the other party; provided, however, that any of
the personnel of Xxxxxxx elected as an officer of the Company shall have the power to obligate
the Company in such capacity as an officer, but only to the extent appropriate for such office.
Each party shall discharge its own debts and obligations without recourse against the other.
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7. DEFAULTS.
The following shall constitute events of default (“Events of Default”) hereunder:
(a)
The failure of the Company to pay Xxxxxxx any sums due to Xxxxxxx
hereunder within ten (10) days of
written demand therefor by Xxxxxxx.
(b) The failure of either party to perform, keep or fulfill in any material respect any of
the other covenants, undertakings, obligations or conditions set forth in this Agreement or
the failure of Xxxxxxx to perform the services required under this
Agreement in a professional manner
and with due care, and the continuance of such default for a period
of thirty (30) days after notice of said default.
(c) A Change in Control. For purposes of this Agreement, a “Change in Control”
means the happening of any of the following: (i) the sale of all or
substantially all of the assets of the
Company or (ii) a stock sale, merger, consolidation, stock exchange, reorganization or
similar transaction to which the Company is a party if the individuals and entities who were
shareholders of the Company immediately prior to the effective date of such transaction
effectively own, immediately following the effective date of such transaction, less than fifty
percent (50%) of the total combined outstanding voting power for the election of directors of the
Company or the surviving entity, in the case of a merger or
consolidation.
Upon the occurrence of any Event of Default, the non-defaulting party may give to the
defaulting party notice of the non-defaulting party’s intention to terminate this Agreement
specifying the cause therefor (“Termination Notice”). If the defaulting party shall fail to cure
the Event of Default before the expiration of a period of sixty (60) days from the date of such
Termination Notice, this Agreement shall terminate. In the case of an Event of Default by the
Company, the parties acknowledge that the damages of Xxxxxxx would be substantial, but
difficult to compute with accuracy; accordingly, Xxxxxxx shall be entitled to receive in cash as an
agreed upon amount of liquidated damages an amount equal to all amounts payable under this
Agreement from the date of the Event of Default to the end of the Term, provided, that, in no
circumstance shall such amount be less than one year of fees under Section 3
hereof.
(d) The
rights granted hereunder shall not be in substitution for, but shall
be in addition to,
any rights and remedies available to the
non-defaulting party hereunder by reason of applicable provisions of law.
non-defaulting party hereunder by reason of applicable provisions of law.
8. TERMINATION.
In addition to termination pursuant to the provisions of Section 7, this
Agreement shall terminate without liability of any party to the other upon the earlier to occur
of the following:
(a) upon the expiration of the Term;
(b) at any time upon the written agreement of the Company and Xxxxxxx; or
(c) immediately upon the dissolution, bankruptcy or insolvency of the Company.
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9. WAIVER.
The
failure of either party to insist upon a strict performance of any of
the terms or provisions
of this Agreement or to exercise any option, right or remedy herein
contained, shall not be
construed as a waiver or as a relinquishment for the future of such term, provision, option,
right or remedy, but the same shall continue and remain in full force and effect. No waiver by
either party of any term or provision hereof shall be deemed to have
been made unless expressed in writing
and signed by such party. In the event of consent by either party to
an assignment of this Agreement, no
further assignment shall be made without the express consent in
writing of such party unless such
assignment may otherwise be made without such consent pursuant to the
terms of this Agreement. In
the event that any portion of this Agreement shall be declared invalid by order, decree or
judgment of a court of competent jurisdiction, this Agreement shall
be construed as if such
portion had not been inserted herein except when such construction
would operate as an undue
hardship to Xxxxxxx or the Company or constitute a substantial
deviation from the general intent and
purpose of said parties as reflected in this Agreement.
10. ASSIGNMENT.
Neither
party shall assign or transfer or permit the assignment or transfer
of this Agreement, or
it rights or obligations hereunder without the prior written consent of the other;
provided, however, that the sale of substantially all the assets of Xxxxxxx to, or the merger of
Xxxxxxx into a single entity or a group of entities under common
control, shall not constitute an assignment
or transfer for purposes of this Section 10.
11. MISCELLANEOUS.
(a) Right
to Make Agreement. The Company and Xxxxxxx each warrant that
neither the execution of this
Agreement nor the consummation of the transactions contemplated
hereby shall violate any provision of law
or judgment, writ, injunction, order or decree of any court or
governmental authority having jurisdiction
over the Company or Xxxxxxx; result in or constitute a breach under any indenture, contract, other
commitment or restriction to which either is a party or by which either is bound; or require any consent,
vote or approval which has not been taken, or at the time of the transaction involved shall not have
been given or taken. Each party covenants that it has and will continue to have throughout the term of
this Agreement and any extensions thereof, the full right to enter into this Agreement and perform its
obligations hereunder.
(b) Applicable
Law; Jurisdiction. This Agreement shall be construed under and
shall be governed by
the laws of the State of Connecticut. Each party unconditionally
submits itself to the exclusive
jurisdiction of any Connecticut State Court or Federal Court of the
United States of America sitting
in Connecticut. Each party unconditionally waives any objection that
it may now or hereafter have to
the laying of venue of any suit, action or proceeding in any such
court and waives the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court. The parties hereby
irrevocably waive trial by jury.
(c) Notices.
Notices, statements and other communications to be given under
the terms of this
Agreement shall be in writing and shall be deemed to have been received (i) on the
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date
of delivery if delivered in person or by facsimile copy and confirmed, (ii) on the date
received if sent by Federal Express or other similar overnight delivery service which requires a
signed receipt or (iii) upon three days after the date of mailing, if mailed first class by
registered or certified mail, return receipt requested, to the party entitled to receive the same at
the following addresses:
| If to the Company: | SDC Technologies, Inc. | |||||
| 0000 Xxxx Xxxxxx Xxxxxx | ||||||
| Xxxxxxx, Xxxxxxxxxx 00000 | ||||||
| Attention: Xxxxxxx X. Xxxxx | ||||||
| with a copy to: | The Compass Group International, LLC | |||||
| 00 Xxxxxx Xxxx, Xxxxxx Xxxxx | ||||||
| Xxxxxxxx, Xxxxxxxxxxx 00000 | ||||||
| Attention: I. Xxxxxx Xxxxxxx | ||||||
| and | Squire, Xxxxxxx & Xxxxxxx L.L.P. | |||||
| 000 Xxxxxx Xxxxxx, Xxxxx 0000 | ||||||
| Xxxxxxxxxx, Xxxx 00000 | ||||||
| Attention: Xxxxxxx X. Xxxxx | ||||||
| If to Xxxxxxx: | Xxxxxxx Consulting III LLC | |||||
| c/o The Compass Group International, LLC | ||||||
| Xxx Xxxx Xxxxx, Xxxxx 0000 | ||||||
| Xxxxxx, Xxxxxxxxxx 00000 | ||||||
| Attention: Xxxxx X. Xxxx | ||||||
| with a copy to: | Squire, Xxxxxxx & Xxxxxxx L.L.P. | |||||
| 000 Xxxxxx Xxxxxx, Xxxxx 0000 | ||||||
| Xxxxxxxxxx, Xxxx 00000 | ||||||
| Attention: Xxxxxxx X. Xxxxx |
Any party to receive notices hereunder may change its address for notices by giving
notice to the other parties stating its new address. Commencing on the fifth day after giving
such notice such newly designated address shall be such party’s address for the purpose of all
notices, statements or other communications required or permitted to be
given pursuant to this Agreement.
(d) Entire
Agreement. This Agreement, together with other writings signed by the
parties expressly stated to be supplementing hereto and together with any instruments to be
executed and delivered pursuant to this Agreement, constitutes the entire agreement between the
parties and supersedes all prior understandings and writings.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken
together shall be deemed one original.
[Remainder
Of Page Intentionally Left Blank]
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Execution Copy
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly
authorized officers on the year and day
first above written.
| SDC TECHNOLOGIES, INC. | ||||||
| By: | /s/ Xxxxx X. Xxxx | |||||
| Its: | PRESIDENT/CEO | |||||
| XXXXXXX CONSULTING III LLC | ||||||
| By: The Compass Group
International LLC Its: Managing Member |
||||||
| By: | /s/ Xxxxx X. Xxxx | |||||
| Name: | Xxxxx X. Xxxx | |||||
| Title: | Principal |
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