EXHIBIT 10.13
EXECUTION
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of October 5, 2000 by and among
Hidden Creek Industries, a New York general partnership ("HCI"), Heavy Duty
Holdings, L.L.C., a Delaware limited liability company ("Heavy Duty"), Xxxxxxx
Holding, Inc., a Delaware corporation ("Xxxxxxx") and its subsidiaries (together
with Xxxxxxx, the "Company").
BACKGROUND
WHEREAS, the Company received valuable services from HCI in
connection with the consummation of the transactions contemplated by the
Transaction Agreement;
WHEREAS, the Company desires to receive financial and management
consulting services from Heavy Duty and thereby obtain the benefit of the
experience of Heavy Duty in business and financial management generally and its
knowledge of the Company and its financial affairs in particular. Heavy Duty is
willing to provide financial and management consulting services to the Company.
Accordingly, the compensation arrangements set forth in this Agreement are
designed to compensate Heavy Duty for such services;
NOW, THEREFORE, in consideration of the foregoing promises and the
respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom, HCI, Heavy Duty and the Company hereby agree as follows:
TERMS
1. Engagement. The Company hereby engages Heavy Duty as a
financial and management consultant, and Heavy Duty hereby agrees to provide
financial and management consulting services to the Company, all on the terms
and subject to the conditions set forth below.
2. Services of Hidden Creek Industries and Heavy Duty Holdings.
HCI has provided valuable services to the Company in connection with the
consummation of the transactions contemplated by the Transaction Agreement (as
defined in Section 3 below). Heavy Duty hereby agrees during the term of this
engagement to consult with the Company's board of directors (the "Board") and
the management of the Company in such manner and on such business and financial
matters as may be reasonably requested from time to time by the Board, including
but not limited to:
(a) corporate strategy;
(b) budgeting of future corporate investments;
(c) acquisition and divestiture strategies; and
(d) debt and equity financings.
Members of the Heavy Duty Group will be available to serve on the Boards and
will devote such time and attention to the Company's affairs as reasonably
necessary to accomplish the purposes of this Agreement. For purposes of this
Agreement, the "Heavy Duty Group" means X.X. Xxxxxxx, Xxxxx X. Xxxx, Xxxx X.
Read, X. Xxxx Xxxxxx, Xxxx X. Xxxxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxxx, Xxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxx and such other persons as may be designated by HCI from
time to time, which persons shall be reasonably acceptable to the Company.
3. Compensation. (a) The Company agrees to pay to HCI as
compensation for services rendered to them with respect to the consummation of
the transactions contemplated by the Recommended Cash Offer made by Xxxxxxxxx,
Lufkin & Xxxxxxxx on behalf of Commercial Vehicle Systems, plc (the "Transaction
Agreement"), a fee for management services equal to $1,000,000 payable upon the
consummation of the transactions contemplated by the Transaction Agreement (the
"Closing"), (b) the Company agrees to pay to Heavy Duty as compensation for
services to be rendered by Heavy Duty hereunder, a fee equal to $500,000 per
year (the "Management Fee"), payable monthly in advance, commencing on the first
day of the first month following the Closing; provided, however, that in the
event the Closing does not occur on the last day of the month, then Heavy Duty
shall be entitled to receive a Management Fee for the period beginning on the
date on which the Closing occurred until the first day of the month following
the Closing in an amount equal to the product of (x) $41,667 multiplied by (y) a
ratio, the numerator of which equals the number of days from and including the
date on which the Closing occurred until the first day of the month following
the Closing, and the denominator of which equals the number of days in the month
in which the Closing occurred; provided, further, that on January 1st of each
calendar year during the term of the Agreement, the Management Fee shall be
increased by the percentage increase in the Consumer Price Index for All Urban
Consumers, U.S. City Average, for all items for the preceding twelve calendar
months, or if the U.S. government ceases to publish such index, then by such
index published by the U.S. government as is in Heavy Duty's judgment most
similar to such index, (c) the Company agrees to pay to HCI or Heavy Duty as
compensation for services to be rendered by HCI and Heavy Duty in connection
with various future transactions a reasonable and customary fee to be determined
mutually and in good faith by the Company and Heavy Duty, payable upon
consummation of any such future transaction. The Board may, at its sole
discretion, elect to increase the amount of the Management Fee. The Company
shall promptly reimburse Heavy Duty for such reasonable travel expenses and
other direct out-of-pocket expenses as may be incurred by Heavy Duty, its
affiliates and their respective officers and employees in connection with the
acquisition and the rendering of services hereunder. The parties hereto agree
that the obligations of Xxxxxxx and its subsidiaries hereunder are on a joint
and several basis with each other.
4. Term. This Agreement shall be in effect for an initial term of
five years commencing on the date hereof, and shall be automatically renewed
thereafter on a year to year basis unless one party gives 30 days' prior written
notice of its desire to terminate this Agreement; provided, however, that this
Agreement shall terminate on the first to occur of (a) the date of the sale of
all or substantially all of the Company's assets (other than a sale to an
affiliate of the Company), (b) the date of the sale of all of the issued and
outstanding capital stock of the Company (other than a sale to an affiliate of
the Company), or (c) Heavy Duty giving the Company 30 days' prior written notice
of termination. No termination of this Agreement, whether pursuant to this
paragraph or
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otherwise, shall affect the Company's obligations with respect to the fees,
costs and expenses incurred by Heavy Duty in rendering services hereunder and
not reimbursed by the Company as of the effective date of such termination.
5. Indemnification. The Company agrees to indemnify and hold
harmless HCI and Heavy Duty, its officers and employees against and from any and
all loss, liability, suits, claims, costs, damages and expenses (including
attorneys' fees) arising from their performance hereunder, except as a result of
their gross negligence or intentional wrongdoing.
6. Independent Contractors. HCI, Heavy Duty and the Company agree
that HCI and Heavy Duty shall perform services hereunder as independent
contractors, retaining control over and responsibility for its own operations
and personnel. None of HCI, Heavy Duty or their employees shall be considered
employees or agents of the Company as a result of this Agreement nor shall any
of them have authority to contract in the name of or bind the Company, except as
expressly agreed to in writing by the Company.
7. Confidential Information. HCI and Heavy Duty acknowledge that
the information, observations and data obtained by them and their agents and
employees during the course of their performance under this Agreement concerning
the business plans, financial data and customer relations of the Company (the
"Confidential Data") are the Company's valuable, special and unique assets.
Therefore, each of HCI and Heavy Duty agrees that it will not, nor will it
permit any of its agents or employees to, use or disclose to any unauthorized
person or use any of the Confidential Data obtained by it during the course of
their performance under this Agreement without the Company's prior written
consent unless and to the extent that (i) the Confidential Data becomes
generally known to and available for use by the public other than as a result of
its acts or omissions to act or (ii) such use or disclosure is required by any
statute, rule, regulation or law or any judicial or administrative body having
jurisdiction.
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):
If to HCI:
Hidden Creek Industries
0000 XXX Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
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If to Heavy Duty:
Heavy Duty Holdings, L.L.C.
0000 XXX Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Read
Telecopy: (000) 000-0000
If to the Company:
c/o Hidden Creek Industries
0000 XXX Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
9. Entire Agreement; Modification. This Agreement (a) contains
the complete and entire understanding and agreement of HCI, Heavy Duty and the
Company with respect to the subject matter hereof; (b) supersedes all prior and
contemporaneous understandings, conditions and agreements, oral or written,
express or implied, respecting the engagement of HCI and Heavy Duty in
connection with the subject matter hereof; and (c) may not be modified except by
an instrument in writing executed by HCI, Heavy Duty and the Company.
10. 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 hereby.
11. Assignment. None of HCI, Heavy Duty or the Company may assign
their rights or obligations under this Agreement without the express written
consent of the other parties to this Agreement; provided, however, that Heavy
Duty may assign its rights and/or obligations under this Agreement to HCI
without the consent of the Company.
12. Governing Law. This Agreement shall be deemed to be a contract
made under, and is to be governed and construed in the accordance with the
internal laws (and not the law of conflicts) of the State of Delaware.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Management
Agreement as of the date written above.
HIDDEN CREEK INDUSTRIES
By: /s/ Xxxx X. Xxxxxx
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Title:
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HEAVY DUTY HOLDINGS, L.L.C.
By: /s/ Xxxx X. Xxxxxx
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Title:
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XXXXXXX HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxx
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Title:
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CVS HOLDINGS LIMITED
By: /s/ Xxxx X. Xxxxxx
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Title:
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COMMERCIAL VEHICLE SYSTEMS, PLC
By: /s/ Xxxx X. Xxxxxx
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Title:
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AGREED AND ACCEPTED:
XXXXXXX, PLC
By: /s/ Xxxx X. Xxxxxx
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Title:
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