Exhibit 10.3
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement") is made and entered into as
of March 30, 2004, by and between Corrpro Companies, Inc., an Ohio corporation
(the "Company"), and ▇▇▇▇▇▇▇ Partners III, L.P., a Delaware limited partnership
("Services Provider"). Capitalized terms used herein but not defined herein
shall have the meanings assigned to such terms in that certain Securities
Purchase Agreement (the "Purchase Agreement"), dated as of December 15, 2003, by
and between the Company and CorrPro Investments, LLC, a Delaware limited
liability company affiliated with Services Provider ("Purchaser").
WHEREAS, the Company and Purchaser are parties to the Purchase
Agreement, which provides for, among other things, the purchase and sale of the
Securities; and
WHEREAS, in order to induce Purchaser to enter into the Purchase
Agreement, the Company has agreed to, among other things, pay a closing fee at
the Closing in accordance with the terms hereof; and
WHEREAS, the Company desires to (i) receive financial advisory,
management advisory, strategic planning, monitoring and other related services
from Services Provider following the consummation of the transactions
contemplated by the Purchase Agreement and the other Transaction Documents, such
services to be provided on the terms set forth in this Agreement, and (ii)
obtain the benefit of experience of Services Provider in business and financial
management generally and its knowledge of the Company and the Company's
financial affairs in particular; and
WHEREAS, Services Provider is willing to provide financial advisory,
management advisory, strategic planning, monitoring and other related services
to the Company, and the compensation arrangement set forth herein is designed to
compensate Services Provider for rendering such services; and
WHEREAS, the agreement by the parties hereto to execute and deliver
this Agreement is a condition to the Purchaser entering into, and to the closing
of the transactions contemplated by, the Purchase Agreement and the other
Transaction Documents;
NOW, THEREFORE, in consideration of the premises, covenants and
agreements of each of the parties hereto and the Purchaser contained in this
Agreement, the Purchase Agreement and the other Transaction Documents, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Closing Fee. At the Closing, the Company shall pay a closing
fee in the aggregate amount of $500,000 payable by wire transfer of immediately
available funds as set forth on Schedule A hereto.
NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT CONTAINS INDEMNIFICATION
PROVISIONS IN SECTION 10 THAT APPLY TO ANY LOSSES (AS DEFINED BELOW) THAT HAVE
RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE
SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF SERVICES PROVIDER OR ANY OTHER
INDEMNIFIED PARTY (AS DEFINED BELOW).
2. Engagement. The Company hereby engages Services Provider to
provide the Services (as defined below) to the Company, and Services Provider
hereby agrees to provide the Services to the Company, all on the terms and
conditions set forth herein. The Company understands and agrees that if Services
Provider is asked to furnish the Company a financial opinion letter or act for
the Company in any other formal capacity, such further action shall not be
covered by this Agreement and shall be subject to a separate agreement
containing terms and conditions to be mutually agreed upon by the Company and
Services Provider.
3. Services. Services Provider hereby agrees during the term of
this engagement to consult with the Board of Directors of the Company (the
"Board of Directors") in such manner and on such business and financial services
as may be reasonably requested from time to time by the Board of Directors,
including, but not limited to, financial advisory, management advisory,
strategic planning, monitoring and other related services (collectively, the
"Services").
4. Personnel. Services Provider shall provide and devote to the
performance of this Agreement such directors, employees and agents of Services
Provider and/or its Affiliates as Services Provider shall deem appropriate for
the furnishing of the Services hereunder.
5. Compensation. As compensation for the Services to be rendered
by Services Provider to the Company pursuant to the terms hereof, the Company
shall pay to ▇▇▇▇▇▇▇ Management Limited III, LLC, an affiliate of Services
Provider and Purchaser ("▇▇▇▇▇▇▇ Management") (or such other entity designated
by Services Provider), an annual, non-refundable fee of $400,000, payable
quarterly in advance in equal installments on the first Business Day of each
calendar quarter (the "Services Fee"). The first quarterly installment of the
Services Fee shall be due and payable on the date hereof and shall be computed
on the basis of a ninety (90) day quarterly period and the number of days
elapsed from and including the date hereof to and including March 31, 2004.
Notwithstanding the foregoing, in lieu of paying any quarterly installment of
the Services Fee, the Company may, at its option, delay payment of such
quarterly installment and accrue any unpaid portion thereof if (i) the Company
is restricted from paying such quarterly installment of the Services Fee under
the terms of the Senior Credit Facility or the Subordinated Notes or (ii) the
Board of Directors determines that the payment of such quarterly installment
would directly result in a default under the Senior Credit Facility or the
Subordinated Notes. All accrued and unpaid installments of the Services Fee
payable by the Company to ▇▇▇▇▇▇▇ Management (or such other entity designated by
Services Provider) under this Section 5 shall become immediately due and payable
upon the termination or expiration of this Agreement pursuant to Section 11
hereof.
6. Non-Refundable Fees. The Company and Services Provider hereby
agree that, once paid, the Services Fees or any part thereof payable hereunder
shall be deemed earned when paid and shall not be refundable under any
circumstances.
7. Reimbursement of Expenses. In addition to the compensation to
be paid to ▇▇▇▇▇▇▇ Management (or such other entity designated by Services
Provider) by the Company for the rendition of the Services pursuant to Section 5
hereof, the Company shall reimburse ▇▇▇▇▇▇▇ Management (or such other entity
designated by Services Provider), promptly following presentation of invoices or
reasonably detailed descriptions thereof, for all disbursements and expenses
incurred by Services Provider or its Affiliates or representatives (either
exclusively relating to the Company or jointly with respect to multiple
entities, in which case Services Provider or its Affiliate, as applicable, shall
invoice the Company for its allocable portion of such expenses) for the account
of the Company or in connection with the performance of the Services hereunder.
Such expenses shall include, but not be limited to, travel expenses, telephone
expenses, messenger and delivery fees, fees and expenses of counsel,
accountants, consultants and other advisors.
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8. Acknowledgements. The parties hereto hereby acknowledge that
certain employees of Services Provider and/or its Affiliates may serve as
members of the Board of Directors. For the purposes of this Agreement, any
person that is both a member of the Board of Directors and an employee of
Services Provider and/or its Affiliates shall be referred to as an "SP Director"
during such time as such person holds both positions. With respect to each SP
Director, the parties hereby acknowledge and agree as follows:
(a) Each SP Director will not be compensated by the
Company in connection with their services as members of the Board of Directors.
Each SP Director shall be compensated by Services Provider and/or its Affiliates
and shall not be entitled to any additional compensation for such services from
the Company;
(b) In connection with any expenses incurred by each SP
Director in his capacity as a member of the Board of Directors, such SP Director
shall be entitled to reimbursement for such expenses from either (i) the
Services Provider and/or its Affiliates in his capacity as an employee of
Services Provider and/or its Affiliates and the Services Provider and/or its
Affiliates shall be entitled to reimbursement for such expenses from the Company
pursuant to Section 7 hereof or (ii) the Company in his capacity as a member of
the Board of Directors, but in no event shall the Company be responsible for
double reimbursement of such expenses; and
(c) The services provided by each SP Director in his
capacity as a member of the Board of Directors may constitute Services under
this Agreement and shall, in most cases, be included within the Services to be
provided by Services Provider under the terms hereof; provided, however, that
nothing contained in this Agreement shall serve to modify, alter or expand any
of the fiduciary duties or any other applicable duties under law that each SP
Director is otherwise subject to in his capacity as a member of the Board of
Directors.
9. Liability. None of Services Provider, its Affiliates or any
officer, director, partner (general or limited), member, employee, agent,
attorney, successor or assign of Services Provider and/or its Affiliates shall
be liable to the Company or any of its Affiliates for any Losses arising out of,
relating to, or in connection with this Agreement or the performance of the
Services hereunder.
10. Indemnification. The Company shall indemnify, defend and hold
Services Provider, its Affiliates and each officer, director, partner (general
and limited), member, employee, agent, attorney, successor and assign of
Services Provider and/or its Affiliates (each, an "Indemnified Party") harmless
from and against all Losses arising out of, relating to, or in connection with
(i) this Agreement, (ii) the engagement or performance of the Services hereunder
or (iii) any actions taken or omitted to be taken (including, without
limitation, any untrue statements made or any statements omitted to be made) by
the Company. Promptly upon becoming aware of any fact, condition or event that
may give rise to a claim for indemnification under this Section 10, an
Indemnified Party shall give written notice (a "Claim Notice") to the Company
specifying the nature of the claim and, if possible, the amount or the estimated
amount thereof. No failure or delay in giving a Claim Notice and no failure to
include any specific information relating to a claim therein (such as the amount
or estimated amount thereof) shall relieve, limit or otherwise affect the
obligation of the Company to indemnify an Indemnified Party under this Section
10, unless such failure materially and adversely prejudices the Company. If any
such Losses relate to the commencement of any action or proceeding by a third
party, an Indemnified Party shall give a Claim Notice to the Company and the
Company shall thereafter be entitled to assume the defense thereof with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that the
Company shall not agree to any settlement of any such action or proceeding
without the prior written consent of such Indemnified Party. The rights
conferred above shall not be exclusive of any other right
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that an Indemnified Party may have or hereafter acquire under any statute, the
Amended Articles, the Amended Regulations or otherwise. As used herein, the term
"Losses" shall mean each and all of the following items: claims, losses
(including, without limitation, losses of earnings), liabilities, obligations,
payments, damages (actual, punitive or consequential), charges, judgments,
fines, penalties, amounts paid in settlement, costs and expenses (including,
without limitation, interest that may be imposed in connection therewith, costs
and expenses of investigation, actions, suits, proceedings, demands, assessments
and reasonable fees, expenses and disbursements of counsel, consultants and
other experts). THE COMPANY HEREBY ACKNOWLEDGES AND AGREES THAT THE FOREGOING
INDEMNITY SHALL BE APPLICABLE TO ANY LOSSES THAT HAVE RESULTED FROM OR ARE
ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR
CONCURRENT ORDINARY NEGLIGENCE OF SERVICES PROVIDER OR ANY OTHER INDEMNIFIED
PARTY.
11. Term. The term of this Agreement shall be eight (8) years from
the date hereof and shall automatically renew for one (1) year terms thereafter
unless either party delivers written notice to the other party to such effect at
least ninety (90) days before the end of the then current term.
12. Services Provider an Independent Contractor. Services Provider
and the Company hereby agree that Services Provider shall perform the Services
hereunder as an independent contractor, retaining control over and
responsibility for its own operations and personnel. Other than a SP Director
acting in his capacity as a member of the Board of Directors, none of Services
Provider nor any of its Affiliates shall be considered to be an employee or
agent 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.
13. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware, excluding the application of
any conflicts of laws principles that would require the application of the laws
of another state.
14. Assignment. This Agreement and all provisions contained herein
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, neither this Agreement nor
any of the rights, interests, or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of the other party;
provided, further, that without the prior written consent of the Company,
Services Provider shall be entitled to assign its rights and obligations under
this Agreement to any of its Affiliates; provided, that any such Affiliate is,
in the reasonable judgment of the Company, qualified to render the Services.
15. Notices. All notices and other communications required or
permitted hereunder shall be in writing. Notices shall be delivered personally,
via recognized overnight courier (such as Federal Express, DHL or Airborne
Express) or via certified or registered mail, and shall be effective upon
receipt. Notices may be delivered via facsimile or e-mail, provided that by no
later than two days thereafter such notice is confirmed in writing and sent via
one of the methods described in the previous sentence. Notices shall be
addressed as follows:
(i) if to Services Provider, to
▇▇▇▇▇▇▇ Partners III, L.P.
▇▇▇ ▇. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Company, to
Corrpro Companies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, ▇▇▇▇▇▇ & Parks, LLP
▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: F. ▇▇▇▇▇▇ ▇'▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
16. Amendment. This Agreement may be amended or modified only upon
the written consent of the Company (acting by and through a majority of the
members of the Board of Directors who are not officers, directors, members or
employees of Purchaser or its Affiliates (other than the Company and its
Subsidiaries)) and Services Provider.
17. Execution. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement, and all of which, when taken together, shall be deemed to constitute
one and the same Agreement. The exchange of copies of this Agreement and of
signature pages by facsimile transmission shall constitute effective execution
and delivery of this Agreement as to the parties and may be used in lieu of the
original Agreement for all purposes. Signatures of the parties transmitted by
facsimile shall be deemed to be their original signatures for any purpose
whatsoever.
18. Entire Agreement. This Agreement and the Purchase Agreement
embody the complete agreement and understanding between the parties and
supersede and preempt any prior agreements, understandings or representations by
or between the parties, written or oral, relating to the subject matter hereof.
19. Waiver or 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.
20. Survival. The provisions of Sections 6, 7, 8, 9, 10, 20 and
21, and the rights and obligations of the parties with respect thereto, shall
survive the termination or expiration of this Agreement. The provisions of
Section 5 of this Agreement, and the rights and obligations of the parties with
respect thereto, shall survive the termination or expiration of this Agreement
only with respect to any
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accrued and unpaid compensation due to Services Provider pursuant thereto at the
time of such termination or expiration.
21. Third-Party Beneficiaries. The parties hereto expressly
acknowledge and agree that each of Services Provider's Affiliates, including,
but not limited to, ▇▇▇▇▇▇▇ Management and ▇▇▇▇▇▇▇ Affiliates III, L.P., an
affiliate of Services Provider and Purchaser ("▇▇▇▇▇▇▇ Affiliates III"), shall
be an intended third-party beneficiary to this Agreement, shall be entitled to
the benefits of this Agreement as though a party hereto and shall be entitled to
directly enforce any rights in connection therewith.
* * * * * * *
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IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the date first written above.
CORRPRO COMPANIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Asst. Sec.
▇▇▇▇▇▇▇ PARTNERS III, L.P.
By: ▇▇▇▇▇▇▇ Management Company III,
L.P., its general partner
By: ▇▇▇▇▇▇▇ Management Limited III,
LLC, its general partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Principal
SCHEDULE A
CLOSING FEE
The Closing Fee shall be payable in immediately available funds as
follows: (a) $17,128 to ▇▇▇▇▇▇▇ Affiliates III; (b) $407,872 to ▇▇▇▇▇▇▇
Management; (c) $60,000 to American Capital Strategies, Ltd. and (d) $15,000 to
CapitalSource Finance LLC.
