[APSERVICES LLC LOGO] Detroit New York Chicago Dallas
Exhibit 10.2
July 20, 2005
Xxxx Xxxxxxx
Chairman, President & CEO
Tecumseh Products Company
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Re: Interim Management Services
Dear Xxxx:
This letter, together with the attached Schedule(s), Exhibit and General Terms
and Conditions, sets forth the agreement ("Agreement") between AP Services, LLC,
a Michigan limited liability company ("APS"), and Tecumseh Products Company (the
"Company"), for the engagement of APS to provide certain temporary employees to
the Company to assist it in its restructuring as described below.
All defined terms shall have the meanings ascribed to them in this letter and in
the attached Schedule(s), Exhibit and General Terms and Conditions.
The engagement of APS, including any APS employees who serve in management
positions, shall be under the direction and control of the Board of Directors of
the Company and the direct supervision of its Chief Executive Officer.
OBJECTIVE AND TASKS
Xxx Xxxxxxx will be designated "President of the Engine & Power Train Group,"
reporting to the Company's Chief Executive Officer. In addition, Xxx Xxxxx will
be designated as "VP, Finance - Engine & Power Train Group," reporting to Xx.
Xxxxxxx. APS may provide additional resources including a President of the
Brazil Engine & Power Train Group and a Plant Manager of New Holstein, if
mutually agreeable with the Company. No such APS personnel, regardless of
designation or title, will be or become or be deemed to be employees or officers
of the Company.
Working collaboratively with the senior management team, the Board of Directors
and other Company professionals, Xx. Xxxxxxx will assist the Company in
evaluating and implementing strategic and tactical options for performance
improvement. In addition, the Temporary Staff (as defined below) roles will
include working with the Company and its team to do the following:
2000 Town Center | Xxxxx 0000 x Xxxxxxxxxx, XX x 00000 | 248.358.4420 |
000.000.0000 fax | xxx.xxxxxxxxxxxx.xxx
[APSERVICES LLC LOGO]
Xxxx Xxxxxxx
July 20, 2005
Page 2
- Assist in overseeing and driving financial performance in such a manner as
to maximize value for the Company's stakeholders.
- Assist management with the development of the Company's business plans,
and such other related forecasts as may be required.
- Assist in communication and/or negotiation with outside constituents
including the customers, suppliers, governmental units and others as
appropriate.
- Assist with such other matters as may be requested that fall within APS'
expertise and that are mutually agreeable.
STAFFING
APS will provide the Company with the individuals set forth on Exhibit A
("Temporary Staff"), subject to the terms and conditions of this Agreement, with
the titles, pay rates and other descriptions set forth therein.
With prior notice to, and approval of, the Company, the Temporary Staff may be
assisted by or replaced by other professionals at various levels, as required,
who shall also become Temporary Staff. APS will keep the Company informed as to
APS' staffing and will not add additional Temporary Staff to the assignment
without first consulting with the Company to obtain Company concurrence that
such additional resources are required and do not duplicate the activities of
other employees or professionals.
TIMING, FEES AND RETAINER
APS will commence this engagement immediately upon receipt of a copy of the
Agreement executed by the Company accompanied by the Retainer, as set forth in
Schedule 1.
APS shall be compensated for its services, and reimbursed for expenses, under
this Agreement as set forth on Schedule 1.
* * *
The terms and conditions set out in the attached Schedule(s), Exhibit and the
General Terms and Conditions form part of this Agreement and are incorporated by
reference herein.
[APSERVICES LLC LOGO]
Xxxx Xxxxxxx
July 20, 2005
Page 3
If these terms meet with your approval, please sign and return the enclosed copy
of this Agreement and wire transfer the amount to establish the Retainer.
We look forward to working with you.
Sincerely yours,
AP SERVICES, LLC
/s/ XXX XXXXXXX
Xxx Xxxxxxx
Managing Director
Acknowledged and Agreed to:
TECUMSEH PRODUCTS COMPANY
By: /s/ XXXX X. XXXXXXX
Its: President and Chief Executive Officer
Dated: July 20, 2005
[APSERVICES LLC LOGO]
AP SERVICES, LLC
INTERIM MANAGEMENT SERVICES - TECUMSEH PRODUCTS COMPANY
EXHIBIT A
TEMPORARY EMPLOYEES
INDIVIDUALS WITH MANAGEMENT POSITIONS
COMMITMENT
NAME DESCRIPTION DAILY RATE FULL(1) OR PART TIME
------------ ------------------------ ---------- --------------------
Xxx Xxxxxxx President - Engine & $7,150 Full Time
Power Train Group
Xxxxxx Xxxxx V.P., Finance - Engine & $5,830 Full-Time
Power Train Group
ADDITIONAL TEMPORARY EMPLOYEES
COMMITMENT
NAME DESCRIPTION DAILY RATE FULL(1) OR PART(2) TIME
---- ----------- ---------- -----------------------
XXX XXX XXX XXX
The parties agree that Exhibit A can be amended by APS from time to time, with
the prior consent of the Company, to add or delete staff.
(1) Full time is defined as substantially full time.
(2) Part time is defined as approximately 2-3 days per week, with some weeks
more or less depending on the needs and issues facing the Company at that
time.
[APSERVICES LLC LOGO] Detroit New York Chicago Dallas
SCHEDULE 1
FEES AND EXPENSES
1. FEES: APS' fees will be based on APS' daily rates, which are:
Managing Directors $6,270 - $7,590
Directors $4,730 - $5,830
Vice Presidents $3,520 - $4,510
Associates $2,750 - $3,080
Analysts $1,980 - $2,420
Paraprofessionals $1,650
APS will review and revise its daily rates effective each January 1, but
increases will be limited to a maximum of 4%.
2. CONTINGENT SUCCESS FEE: APS does not seek a Contingent Success Fee in this
engagement.
3. EXPENSES: In addition to the fees set forth herein, the Company shall pay
directly, or reimburse APS upon receipt of periodic xxxxxxxx, for all
reasonable out-of-pocket expenses incurred in connection with this
assignment, such as travel, lodging, postage, telephone and facsimile
charges. Expenses will be capped at 15% of Fees.
4. BREAK FEE: APS does not seek a Break Fee in this engagement.
5. RETAINER: The Company shall pay APS a retainer of $250,000 to be applied
against Fees and Expenses as set forth in this Schedule and in accordance
with Section 2 of the attached General Terms and Conditions.
[APSERVICES LLC LOGO]
SCHEDULE 2
DISCLOSURES
We know of no fact or situation that would represent a conflict of interest for
us with regard to the Company. However, we wish to disclose the following:
- Questor Partners Fund, L.P. ("QPF") and an affiliated side-by-side fund
and Questor Partners Fund II, L.P. ("QPF II") and affiliated side-by-side
funds, $300 million and $865 million funds, respectively, are private
equity funds that invest in special situations and under-performing
companies. Neither QPF nor QPF II will make an investment in the Debtors
for at least three years after the date that AlixPartners' engagement
terminates.
- Xx. Xxx Xxxx, a managing director in AlixPartners, is also the President
and CEO of Questor Management Company, LLC ("Questor"), the entity that
manages QPF and QPF II.
- Questor and AlixPartners are separate companies. AlixPartners, pursuant to
contract, performs certain accounting and other administrative services
for Questor. From time to time, Questor hires AlixPartners as a contractor
to advise it regarding a potential acquisition, and occasionally investee
companies of QPF and QPF II hire AlixPartners. From time to time,
employees of AlixPartners are elected to the boards of directors of
investee companies of QPF and QPF II, but no such board members are
involved in this engagement.
- Xx. Xxxx and Mr. Xxxxxx Xxxxxxx own interests in Questor General Partner,
LP ("QGP") and Questor General Partner II, LP ("QGP II"), the general
partners of QPF and QPF II. Substantially all of the AlixPartners managing
directors are limited partners in QGP II and, as such, are passive
participants in the general partner with no voice in authorizing QPF II's
investments. Xx. Xxxx, Xx. Xxxxxx X. Xxxx, and Xx. Xxxxxxx Xxxxxxxxx are
also managing directors of Questor and, along with Xx. Xxxxxxx, members of
its Investment Committee. The Investment Committee makes investment
decisions for Questor.
- Substantially all of the managing directors of AlixPartners own limited
partnership interests in one or more of the following entities: Questor
Side-by-Side Partners, L.P. ("SBS"), Questor Side-by-Side Partners II,
L.P. ("SBS II") and Questor Side-by-Side Partners II 3(c)(1), L.P. ("SBS
II 3c1"). Limited partners, except for Xx. Xxxx, Xx. Xxxx and Mr.
Xxxxxxxxx are passive investors and have no voice in approving the
entities' investments.
- Some of the limited partners of QPF and/or QPF II are affiliates of
financial institutions that are also lenders to companies that may have
retained AlixPartners.
[APSERVICES LLC LOGO]
The affiliates of such financial institutions are passive investors in QPF
and QPF II and have no voice in approving Questor's investments. Where
such situations occur, the lending relationship and investment in QPF
and/or QPF II is detailed in AlixPartners' disclosures.
- QPF, QPF II, SBS, SBS II, SBS II 3c1 and Questor are all related entities.
The Side-by-Side funds contain, in the aggregate, 6.3% of the total
Questor funds, which are in excess of $1.17 billion.
- Xxxxxx X. Xxxx, a director of Tecumseh Products Company, is, occasionally,
an employee of AP Services, LLC, and
Xx. Xxxx has advised the other directors that:
(a) he is, occasionally, an employee of AP Services, LLC;
(b) he does not perform policy making functions for AP
Services, LLC similar to those performed for a corporation by its
president, a vice president in charge of a principal business unit,
division, or function (such as sales, administration, or finance),
or other officer who performs policy making functions;
(c) he is not a director of AP Services, LLC or a person who
performs functions for AP Services, LLC similar to those performed
by a director of a corporation;
(d) he does not own any portion of the equity interest in AP
Services, LLC;
(e) he receives no compensation from AP Services, LLC; and
(f) he anticipates that the fees to be paid to AP Services,
LLC for the consulting services under the AP Agreement will
constitute less than 5% of the total consolidated revenues of AP
Services, LLC and its subsidiaries, if any, for its current fiscal
year.
This Schedule 2 may be updated by APS from time to time to disclose additional
connections or relationships between APS and the interested parties.
AP SERVICES, LLC
GENERAL TERMS AND CONDITIONS
These General Terms and Conditions ("Terms") are incorporated into the letter
agreement ("Agreement") between the Company and APS to which these Terms are
attached.
SECTION 1. COMPANY RESPONSIBILITIES
The Company will undertake responsibilities as set forth below:
1. Provide reliable and accurate detailed information, materials,
documentation and
2. Make decisions and take future actions, as the Company determines in its
sole discretion, on any recommendations made by APS in connection with the
tasks or work product under this Agreement.
APS' delivery of the services and the fees charged are dependent on (i) the
Company's timely and effective completion of its responsibilities; and (ii)
timely decisions and approvals made by the Company's management. The Company
shall be responsible for any delays, additional costs or other deficiencies
caused by not completing its responsibilities.
SECTION 2. RETAINER AND PAYMENTS.
RETAINER. APS will submit monthly invoices for services rendered and expenses
incurred and will offset such invoices against the Retainer. Any unearned
portion of the Retainer will be returned to the Company at the termination of
the engagement.
PAYMENTS. All payments to be made by the Company to APS shall be payable upon
receipt of invoice via wire transfer to APS' bank account, as follows:
Receiving Bank: Comerica Bank
ABA #000000000
Receiving Account: AP Services, LLC
A/C #1851-765410
SECTION 3. RELATIONSHIP OF THE PARTIES.
The parties intend that an independent contractor relationship will be created
by the Agreement. As an independent contractor, APS will have complete and
exclusive charge of the management and operation of its business, including
hiring and paying the wages and other compensation of all its employees and
agents, and paying all bills, expenses and other charges incurred or payable
with respect to the operation of its business. Of course, neither the Temporary
Staff nor APS will be entitled to receive from the Company any vacation pay,
sick leave, retirement, pension or social security benefits, workers'
compensation, disability, unemployment insurance benefits or any other employee
benefits. APS will be responsible for all employment, withholding, income and
other taxes incurred in connection with the operation and conduct of its
business.
The Company shall not solicit, recruit or hire any employees or agents of APS
for a period of two years subsequent to the completion and/or termination of the
Agreement.
SECTION 4. CONFIDENTIALITY.
APS shall keep confidential all non-public, confidential or proprietary
information obtained from the Company during the performance of its services
hereunder (the "Information"), and neither APS nor the Temporary Staff will
disclose any Information to any other person or entity. "Information" includes
non-public, confidential and proprietary data, plans, reports, schedules,
drawings, accounts, records, calculations, specifications, flow sheets, computer
programs, source or object codes, results, models or any work product relating
to the business of the Company, its subsidiaries, distributors, affiliates,
vendors, customers, employees, contractors and consultants.
The foregoing is not intended to prohibit, nor shall it be construed as
prohibiting, APS or the Temporary Staff from disclosure pursuant to a valid
subpoena or court order, but neither APS nor the Temporary Staff shall
encourage, suggest, invite or request, or assist in securing, any such subpoena
or court order; and the Temporary Staff shall promptly give notice of any such
subpoena or court order by fax transmission to the Company. APS and the
Temporary Staff may make reasonable disclosures of Information to third parties
in connection with the performance of APS' obligations and assignments
hereunder. In addition, APS will have the right to disclose to others in the
normal course of business its involvement with the Company.
The Company acknowledges that all information (written or oral), including Work
Product (as defined in Section 5), generated by APS and the Temporary Staff in
connection with this engagement is intended solely for the benefit and use of
the Company (limited to its management and its Board of Directors) in connection
with the transactions to which it relates. The Company agrees that no such
information shall be used for any other purpose or reproduced, disseminated,
quoted or referred to with attribution to APS at any time in any manner or for
any purpose without APS' prior approval except as required by law.
SECTION 5. INTELLECTUAL PROPERTY.
All methodologies, processes, techniques, ideas, concepts, know-how, procedures,
software, tools, writings and other intellectual property that APS has created,
acquired or developed prior to the date of this Agreement are, and shall remain,
the sole and exclusive property of APS, and the Company shall not acquire any
interest therein. APS shall be free to use all methodologies, processes,
techniques, ideas, concepts, know-how, procedures, software, tools, writings and
other intellectual property that APS may create or develop in connection with
this engagement, subject to its duty of confidentiality to the extent that the
same contain information or materials furnished to APS by the Company that
constitute Information referred to in Section 4 above. Except as provided above,
all information, reports, materials, software and other work product that APS
creates or develops specifically for the Company as part of this engagement
(collectively known as "Work Product") shall be owned by the Company and shall
constitute Information referred to in Section 4 above. APS may retain copies of
the Work Product subject to its obligations under Section 4 above.
SECTION 6. FRAMEWORK OF THE ENGAGEMENT.
The Company acknowledges that it is retaining APS to provide the Temporary Staff
solely to assist the Company and its Board of Directors in the management and
restructuring of the Company. This engagement shall not constitute an audit,
review or compilation, or any other type of financial statement reporting or
consulting engagement that is subject to the rules of the AICPA, the SSCS or
other such state and national professional bodies.
SECTION 7. INDEMNIFICATION AND OTHER MATTERS.
The Company shall indemnify, hold harmless and defend APS and APS' directors,
officers, employees, Temporary Staff and agents from and against all claims,
liabilities, losses, expenses and damages arising from services performed by APS
personnel in accordance with this Agreement. With respect to any matter for
which indemnification is provided herein, the Company shall pay costs as
incurred, including reasonable legal fees and disbursements of counsel in any
legal proceeding in which APS or other indemnitees may be required or agree to
participate but in which they are not a party. APS and its directors, officers,
employees, Temporary Staff and agents will engage a single firm of separate
counsel acceptable to the Company,
AP SERVICES, LLC
GENERAL TERMS AND CONDITIONS
the approval for which shall not be unreasonably withheld, in connection with
any of the matters to which this indemnification agreement relates.
APS is not responsible for any third-party products or services. The Company's
sole and exclusive rights and remedies with respect to any third party products
or services are against the third-party vendor and not against APS, whether or
not APS is instrumental in procuring the third-party product or service.
APS shall not be liable to the Company except for actual damages resulting from
bad faith, self-dealing or gross negligence.
SECTION 8. GOVERNING LAW
The Agreement is governed by and shall be construed in accordance with the laws
of the State of Michigan with respect to contracts made and to be performed
entirely therein and without regard to choice of law or principles thereof.
Any controversy or claim arising out of or relating to the Agreement, or the
breach thereof, shall be settled by arbitration. Each party shall appoint one
non-neutral arbitrator. The two party arbitrators shall select a third
arbitrator. If within 30 days after their appointment the two party arbitrators
do not select a third arbitrator, the third arbitrator shall be selected by the
American Arbitration Association (AAA). The arbitration shall be conducted in
Southfield, Michigan under the AAA's Commercial Arbitration Rules, and the
arbitrators shall issue a reasoned award. The arbitrators may award costs and
attorneys' fees to the prevailing party. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. However, in
the event the Company is under the protection of the Bankruptcy Code, the
arbitration provisions shall apply only to the extent that the Bankruptcy Court,
or the U.S. District Court if the reference is withdrawn, does not retain
jurisdiction over a controversy or claim.
SECTION 9. TERMINATION AND SURVIVAL.
The Agreement may be terminated at any time by written notice by one party to
the other; provided, however, that notwithstanding such termination APS will be
entitled to any fees and expenses due under the provisions of the Agreement,
including Contingent Success Fee and Break Fee in accordance with Schedule 1.
The Break Fee is due and payable at the time of termination of the Agreement.
Such payment obligation shall inure to the benefit of any successor or assignee
of APS.
Additionally, unless the Agreement is terminated by the Company for Cause (as
defined below) or due to circumstances described in the Contingent Success Fee
provision in the Agreement, APS shall remain entitled to the Contingent Success
Fee(s) that otherwise would be payable for the greater of 12 months from the
date of termination or the period of time that that has elapsed from the date of
this Agreement to the date of termination. Cause shall mean:
(a) a Temporary Staff member acting on behalf of the Company is convicted of a
felony, or
(b) it is determined in good faith by the Board of Directors of the Company
that, after 30 days notice and opportunity to cure, either (i) a Temporary Staff
member is engaging in misconduct injurious to the Company, or (ii) a Temporary
Staff member breaches any of his or her material obligations under this
Agreement; or (iii) a Temporary Staff member willfully disobeys a lawful
direction of the Board of Directors or senior management of the Company.
Sections 2, 4, 5, 7, 8, 9 and 10 of these Terms shall survive the expiration or
termination of the Agreement.
SECTION 10. GENERAL.
SEVERABILITY. If any portion of the Agreement shall be determined to be invalid
or unenforceable, the remainder shall be valid and enforceable to the maximum
extent possible.
ENTIRE AGREEMENT. These Terms, the letter agreement into which they are
incorporated and the Schedule(s) and Exhibit to such letter agreement contain
the entire understanding of the parties relating to the services to be rendered
by APS and the Temporary Staff and may not be amended or modified in any respect
except in a writing signed by the parties. APS is not responsible for performing
any services not specifically described herein or in a subsequent writing signed
by the parties. If there is a conflict between these Terms and the balance of
the Agreement, these Terms shall govern.
NOTICES. All notices required or permitted to be delivered under the Agreement
shall be sent, if to APS, to:
AP Services, LLC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxxxxxxxx
and if to the Company, to the address set forth in the Agreement, to the
attention of the Company's General Counsel, or to such other name or address as
may be given in writing to the other party. All notices under the Agreement
shall be sufficient if delivered by facsimile or overnight mail. Any notice
shall be deemed to be given only upon actual receipt.
SECTION 11. DISCLOSURES.
APS is not aware of any fact or situation, other than those disclosed in
Schedule 2, which would represent a conflict of interest for APS with regard to
the Company. However, APS has not completed a thorough check of the parties in
interest with regard to the Company. Upon receiving additional information from
the Company with respect to the parties in interest, APS will promptly complete
a search of its relationships and will notify the Company of any connections APS
may have with such parties in interest. While APS is not aware of any
relationships, other than those disclosed in Schedule 2, that connect APS to any
party in interest, because APS is a consulting firm that serves clients on a
international basis in numerous cases, it is possible that APS may have rendered
services to or have business associations with other entities which had or have
relationships with the Company. APS has not and will not represent the interests
of any of the entities disclosed on Schedule 2 in this case.
