EXECUTION COPY
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Exhibit 10.26
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MANAGEMENT AGREEMENT
Dated as of Xxxxx 0, 0000
Xx and Between
AP HOLDINGS, INC.
and
XXXXXXX INDUSTRIES, INC.
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TABLE OF CONTENTS
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Page
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ARTICLE I
MANAGEMENT...................................................1
Section 1.1 Appointment.................................................1
Section 1.2 Scope of Services...........................................1
Section 1.3 Payment.....................................................2
Section 1.4 Investment Banking..........................................3
ARTICLE II
CAPACITY; EXCLUSIVITY........................................3
Section 2.1 Capacity; No Liability......................................3
Section 2.2 Exclusivity.................................................4
ARTICLE III
TERMINATION..................................................4
Section 3.1 Termination.................................................4
ARTICLE IV
MISCELLANEOUS................................................5
Section 4.1 Notices.....................................................5
Section 4.2 Governing Law...............................................6
Section 4.3 Counterparts................................................6
Section 4.4 Amendments..................................................6
Section 4.5 Entire Agreement............................................6
Section 4.6 Captions....................................................6
(i)
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT ("this Agreement") dated as of March 5, 2001 by and
between AP Holdings, Inc., a Delaware corporation (the "Company") and Xxxxxxx
Industries, Inc., a Delaware corporation (the "Manager").
W I T N E S S E T H:
WHEREAS, the Company desires to have the Manager provide certain management
services; and
WHEREAS, the Manager desires to provide such services.
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
MANAGEMENT
Section 1.1 Appointment. The Company hereby appoints the Manager as its
manager on the terms and conditions hereinafter set forth and the Manager hereby
accepts such appointment.
Section 1.2 Scope of Services. In relation to each of the Company and each
of its Subsidiaries (as defined below), the Manager shall to the extent
reasonable and necessary:
(i) provide such number of non-executive members of the Board of
Directors of the Company, including the Chairman, if so requested,
as is required to ensure efficient management and control of the
Company, such Directors undertaking such functions as are customary
for non-executive Directors;
(ii) take steps and planning measures to ensure at all times employment
of an efficient and professional management team;
(iii) assist in determining the strategic direction of the Company;
(iv) to the extent it considers necessary or desirable in the interest of
the Company and/or its Subsidiaries, retain professional advisors
and consultants, including, without limitation, auditors, legal
advisors and attorneys, financial advisors, etc., to perform such
expert services as are not included by the preceding and as are not
reasonably incidental thereto;
(v) assist in determining the Company's capital structure,
maintaining normal relationships with financing sources,
and arranging necessary financing, including negotiation
of financing documentation;
(vi) search for, evaluate and present new investment
opportunities; and
(vii) establish and maintain contacts with existing and
potential equity investors and other sources of capital.
For purposes of this Agreement, the term "Subsidiary" shall mean, with respect
to any Person, any corporation, association or other business entity of which
more than 50% of the total voting power of shares of capital stock or other
equity interests entitled (without regard to the occurrence of any contingency)
to vote in the election of directors or other managing authority thereof is at
the time owned or controlled, directly or indirectly, by such Person or any of
its Subsidiaries and "Person" shall mean and include an individual, partnership,
joint venture, corporation, trust, unincorporated organization and a
governmental or other department or agency thereof.
Section 1.3 Payment. In consideration of the foregoing services,
commencing on January 1, 2001, the Manager shall be entitled to receive an
annual management fee, payable in cash quarterly in advance not later than 10
days after the end of each quarter, in an amount equal to the greater of (a) one
percent (1%) of Invested Capital (as defined below) and (b) US$2,000,000;
provided, however, that
(i) neither the Manager nor any of its employees shall be
entitled to any further fees or emoluments by reason of
Board participation or otherwise in connection with
rendering such management services, and to the extent the
Company or any of its Subsidiaries shall make any such
payment, the gross aggregate amount thereof shall be
deducted from the aforementioned fee, including, without
limitation, payments made (if any) to any of the Manager's
officers or employees who are employed directly by the
Company;
(ii) the Manager shall be entitled to reimbursement from the
Company for travel expenses reasonably incurred in
performing its services hereunder, equitably shared if
attributable in part to such services and in part to other
activities, provided that the Manager shall seek to
invoice the Subsidiary to which such expenses are
attributable; and
(iii) to the extent the Manager has paid for any services as
referred to in paragraph (iv) of the preceding Section
1.2, the Manager shall be entitled to prompt
reimbursement, but shall seek to apportion such expenses
to the Subsidiary to which they are attributable.
For purposes of this Agreement, "Invested Capital" shall mean (a) the sum of (i)
aggregate stockholders' equity (less retained earnings), (ii) aggregate
indebtedness (including, without
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limitation, obligations under capital leases, but excluding trade payables and
similar items) and (iii) the cumulative change in retained earnings from and
after January 1, 2001 minus (b) cash and cash equivalents, each of which in (a)
and (b) above shall be calculated on a consolidated basis for the Company and
all of its Subsidiaries and shall be measured as of December 31 of each year or
such other date as is agreed between the parties.
Section 1.4 Investment Banking. While the preceding services do not include
investment banking activities, the Company and its Subsidiaries may from time to
time retain the Manager to perform investment banking services in connection
with all debt and equity transactions, acquisitions and disposals, including
mergers and demergers, and similar transactions; provided that:
(i) in the case of the Company and its wholly owned Subsidiaries, if the
Board of Directors of the Company determines that the Manager be
lacking in expertise or capacity so as to provide a professionally
satisfactory service, it shall to such extent be entitled not to
appoint the Manager to perform such services;
(ii) in the case of each Subsidiary that is less than wholly owned, after
having considered retaining the Manager, the board of directors or
other decision-making portion of such Subsidiary shall be entitled
not to appoint the Manager to perform such services, if this is
considered by such decision makers to be in such Subsidiary's
best interest;
(iii) the Manager shall be entitled to decline such appointment, but only
prior to commencement of such services; and
(iv) other than as reimbursement from time to time agreed for out-of-
pocket expenses, the Manager shall only be remunerated for its
services if the transaction to which they relate is consummated, and
then on such basis as is customary and reasonable for the type of
transaction in question in the relevant market, as determined by the
Board of Directors of the Company, or, in the case of a Subsidiary
that is less than wholly owned by the Company or one of its wholly
owned Subsidiaries, the board of directors or other decision-making
party of such Subsidiary.
ARTICLE II
CAPACITY; EXCLUSIVITY
Section 2.1 Capacity; No Liability. In performing its services hereunder,
the Manager shall to reasonable extent ensure that it shall at all times have
adequate expertise and capacity to perform such services in a professionally
satisfactory manner, provided that:
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(i) if the Manager shall at any time have inadequate expertise
and/or capacity, the Manager shall be entitled to
attribute priority and allocate available expertise and
capacity in such manner as it considers fair and
reasonable, as if all functions to be performed for the
Company, its Subsidiaries, the Manager's own activities
and other clients of the Manager were to be performed for
the same principal; and
(ii) absent gross negligence and willful misconduct, the
Manager shall have no liability of whatsoever nature to
the Company and/or its Subsidiaries in connection with
rendering services hereunder or otherwise in connection
herewith, and the Company shall on a continuing basis, as
and when required by the Manager, to the fullest extent
save and render the Manager harmless against all liability
and cost which any third party may seek to impose on the
Manager by reason of its functions hereunder for the
Company and its Subsidiaries, subject to the Manager from
time to time rendering a full account as to such liability
and cost, such that the Company shall ultimately only bear
such net liability and cost, without deduction for any
counterclaim that the Manager may successfully make on its
own behalf.
Section 2.2 Exclusivity. The Manager shall for the duration
hereof refrain from conducting activities on its own behalf or on behalf of
others, which are similar to those of the Company and its Subsidiaries, unless
the Manager shall reasonably consider that no conflicting interest would arise
by reason of such conduct.
ARTICLE III
TERMINATION
Section 3.1 Termination. This Agreement shall terminate on
December 31, 2012; provided, however, that this Agreement shall be
automatically renewed for one additional five-year term terminating on December
31, 2017 unless either party hereto gives the other party written notice no
later than June 30, 2012 of its intention to terminate this Agreement.
Notwithstanding anything in the foregoing to the contrary, this Agreement may be
terminated:
(i) by the Company, if the Manager shall fail to perform its
obligations hereunder in such manner as shall constitute
willful misconduct or gross negligence;
(ii) by the Company, if the Manager shall be rendered incapable
of performing its functions hereunder and the Company
shall reasonably anticipate that such total incapacity
will endure for a period of at least three months;
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(iii) by either party, if the other party shall be adjudicated as
insolvent by a competent court of first instance, or shall admit
its general inability to discharge its obligations as and when
they fall due to be discharged, or shall generally cease so to
discharge its obligations, or shall otherwise become insolvent;
or
(iv) by either party upon giving the other party six (6) months'
written notice;
but not for any other reason.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be validly given, made or served, if in writing and
delivered by personal delivery, overnight courier, telecopier or registered or
certified mail, return-receipt requested and postage prepaid addressed as
follows:
If to the Company, to:
AP Holdings, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
If to the Manager, to:
Xxxxxxx Industries, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX
Attention: Chief Financial Officer
Fax: (000) 000-0000
And all correspondence with a copy to:
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White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
or to such other address as any such party hereto may, from time to time,
designate in writing to the other party hereto, and any such communication shall
be deemed to be given, made or served as of the date so delivered or, in the
case of any communication delivered by mail, as of the date so received.
Section 4.2 Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York applicable to agreements executed and to be performed solely
within such State.
Section 4.3 Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
Section 4.4 Amendments. This Agreement may be changed or terminated
and any provision of this Agreement can be waived, amended, supplemented or
modified only by written agreement of the Company and the Manager.
Section 4.5 Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior arrangements or understandings (whether written or
oral) with respect thereto.
Section 4.6 Captions. The Article and Section captions used herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, each of the parties hereto has caused its name to
be hereunto subscribed by its representative thereunto duly authorized all as of
the day and year first above written.
XXXXXXX INDUSTRIES, INC.
By:
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Name: Xxxxxx Xxxxxxxxx
Title: Secretary
AP HOLDINGS, INC.
By:
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Name: Xxxx X. Xxxxxx
Title: President & Chief Executive Officer
