Exhibit (e)(2)
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of the
7th day of October 1997 by and between Labtec Enterprises, Inc., a Delaware
corporation formerly known as LEI Holdings, Inc. (the "Company"), and Sun
Multimedia Advisors, Inc., a Delaware corporation ("Sun MM Advisors").
Whereas, the Company is, on or about the date hereof,
consummating various transactions pursuant to, and as contemplated by,
that certain Recapitalization Agreement and Plan of Merger dated as of
August 26, 1997, as amended (such transactions being referred to
herein as the "Recapitalization Transactions");
Whereas, Sun MM Advisors is providing advisory and other services
to the Company in connection with the senior secured financing (the
"Senior Financing") being provided for the Recapitalization
Transactions pursuant to a Credit Agreement dated on or about the date
hereof (the "Credit Agreement") by Bankers Trust Company, as agent,
and the lending institutions from time to time party thereto; and
Whereas, the Company desires to retain Sun MM Advisors to provide
certain management and advisory services to the Company, and Sun MM
Advisors desires to provide such services, all on the terms and
subject to the conditions of this Agreement;
Now, therefore, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Services. Sun MM Advisors hereby agrees that, during the term of this
Agreement (the "Term"), it will: (a) provide the Company with advise
in connection with the negotiation and consummation of agreements,
contracts, documents and instruments necessary to provide the Company
with financing from banks or other financial institutions or other
entities on terms and conditions satisfactory to the Company; and (b)
provide the Company with financial, managerial and operational advice
in connection with its day-to-day operations, including, without
limitation, advice with respect to the investment of funds with
respect to the development and implementation of strategies for
improving the operating, marketing and financial performance of the
Company.
2. Payment of Fees. The Company hereby agrees to:
a. reimburse all expenses incurred by Sun MM Advisors on behalf of
the Company through the date hereof in connection with the
Recapitalization Transactions;
b. pay to Sun MM Advisors, during the Term, a management fee in the
amount of $500,000 per annum in exchange for the services provided
to
the Company by Sun MM Advisors, as more fully described in Section
1 of this Agreement, such fee being payable by the Company
quarterly in advance; provided, however, that to the extent that
the Company is prohibited under the Credit Agreement from paying
such amount in cash as it becomes due, the Company may delay
payment until it is permitted under the Credit Agreement to make
such payments (in which event the Company shall, at the time of
such payments, also pay interest on the portion of such fees that
is either not paid or has been delayed, such interest to be
calculated at a rate of 12% per annum); and
c. during the Term, allow Sun MM Advisors to participate in the
negotiation and structuring of any acquisition or recapitalization
transactions by the Company or any of its direct or indirect
subsidiaries (and related senior secured financings, if any), and
pay to Sun MM Advisors a fee in connection therewith equal to the
sum of:
i. five percent (5%) of the first $2 million of Transaction
Value;
ii. four percent (4%) of the next $2 million of Transaction
Value (i.e., from $2 million to $4 million in Transaction
Value);
iii. three percent (3%) of the next $2 million of Transaction
Value (i.e., from $4 million to $6 million in Transaction
Value);
iv. two percent (2%) of the next $2 million of Transaction Value
(i.e., from $6 million to $8 million in Transaction Value);
v. one percent (1%) of the Transaction Value to the extent it
exceeds $8 million.
For purposes of calculating any fee under Section 2(c) above, the "Transaction
Value" shall be the gross purchase price of the transaction (including all debt
assumed, refinanced or otherwise included in the transaction); and such fees
will be due and payable for the foregoing services at the closing of such
transaction, whether or not any senior secured financing is actually committed
or drawn upon; provided, however, that to the extent that the Company is
prohibited under the Credit Agreement from paying such amount in cash as it
becomes due, the Company may delay payment until it is permitted under the
Credit Agreement to make such payments (in which event the Company shall, at the
time of such payments, also pay interest on the portion of such fees that is
either not paid or has been delayed, such interest to be calculated at a rate of
12% per annum). Each payment made pursuant to this Section 2 shall be paid by
wire transfer of immediately available federal funds to such account(s) as Sun
MM Advisors may specify to the Company in writing prior to such payment.
3. Term. This Agreement shall continue in full force and effect for a
term of ten years, unless extended or earlier terminated by mutual
consent of the parties; provided, however, that each of (a) the
obligations of the Company under Section 4 below, (b) any and all
accrued and unpaid obligations of the Company owed
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under Section 2 above and (c) the provisions of Section 7 shall
survive any termination of this Agreement to the maximum extent
permitted under applicable law.
4. Expenses; Indemnification.
a. Expenses. The Company agrees to pay on demand all expenses
incurred by Sun MM Advisors and Sun Capital Partners, Inc. (or
either of them or their affiliates) in connection with this
Agreement, the Recapitalization Transactions and any of the other
transactions contemplated by this Agreement or any other agreement
executed in connection herewith, and all operations hereunder or
otherwise incurred in connection with the Recapitalization
Transactions or the Company, including but not limited to: (i) the
fees and disbursements of legal counsel, accountants and any other
consultants or advisors retained by Sun MM Advisors, Sun Capital
Partners, Inc., or their affiliates arising in connection
therewith (including but not limited to the preparation,
negotiation and execution of this Agreement and any other
agreement executed in connection herewith or in connection with
the Recapitalization Transactions, the Senior Financing or the
consummation of the other transactions contemplated hereby (and
any and all amendments, modifications, restructurings and waivers,
and exercises and preservations of rights and remedies hereunder
or thereunder) and the operations of the Company and any of its
subsidiaries), and (ii) any out-of-pocket expenses incurred by Sun
MM Advisors or Sun Capital Partners, Inc. (or by any of their
respective officers, employers or agents) in connection with the
provision of services hereunder or the attendance at any meeting
of the board of directors (or any committee thereof) of the
Company or any of its affiliates.
b. Indemnity and Liability. In consideration of the execution and
delivery of this Agreement by Sun MM Advisors, the Company hereby
agrees to indemnify, exonerate and hold each of Sun MM Advisors,
Sun Capital Partners, Inc. and each of their respective partners,
shareholders, affiliates, directors, officers, fiduciaries,
employees and agents and each of the partners, shareholders,
affiliates, directors, officers, fiduciaries, employees and agents
of each of the foregoing (collectively, the "Indemnitees") free
and harmless from and against any and all actions, causes of
action, suits, losses, liabilities and damages, and expenses in
connection therewith, including without limitation reasonable
attorneys' fees and disbursements (collectively the "Indemnified
Liabilities"), incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to the Recapitalization
Transactions, the execution, delivery, performance, enforcement or
existence of this Agreement or the transactions contemplated
hereby (including but not limited to any indemnification
obligations assumed or incurred by any Indemnitee to or on behalf
of the Company, or any of its accountants or other
representatives, agents or affiliates) except for any such
Indemnified Liabilities arising on account of
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such Indemnitee's gross negligence or willful misconduct, and if
and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Company hereby agrees to make
the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under
applicable law. None of the Indemnitees shall be liable to the
Company or any of its affiliates for any act or omission suffered
or taken by such Indemnitee that does not constitute gross
negligence or willful misconduct.
5. Assignment, etc. Except as provided below, neither party shall have
the right to assign this Agreement. Sun MM Advisors acknowledges that
its services under this Agreement are unique. Accordingly, any
purported assignment by Sun MM Advisors (other than as provided below)
shall be void. Notwithstanding the foregoing, Sun MM Advisors may
assign all or part of its rights and obligations hereunder to Sun
Capital Partners, Inc. or to any other affiliate of Sun MM Advisors
which provides services similar to those called for by this Agreement,
in which event Sun MM Advisors shall be released of all of its rights
and obligations hereunder.
6. Amendments and Waivers. No amendment or waiver of any term, provision
or condition of this Agreement shall be effective, unless in writing
and executed by each of Sun MM Advisors and the Company. No waiver on
any one occasion shall extend to or effect or be construed as a waiver
of any right or remedy on any future occasion. No course of dealing of
any person nor any delay or omission in exercising any right or remedy
shall constitute an amendment of this Agreement or a waiver of any
right or remedy of any party hereto.
7. Miscellaneous.
a. Choice of Law. This Agreement shall be governed by and construed
in accordance with the domestic substantive laws of the State of
New York without giving effect to any choice or conflict of law
provision or rule that would cause the application of the domestic
substantive laws of any other jurisdiction.
b. Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this
Agreement or the subject matter hereof shall be brought and
maintained exclusively in the federal and state courts of the
State of New York. Each of the parties hereto by execution hereof:
(i) hereby irrevocably submits to the jurisdiction of the federal
and state courts in the State of New York for the purpose of any
action, suit or proceeding arising out of or based upon this
Agreement or the subject matter hereof and (ii) hereby waives to
the extent not prohibited by applicable law, and agrees not to
assert, by way of motion, as a defense or otherwise, in any such
action, suit or proceeding, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that it
is immune from extraterritorial injunctive relief or other
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injunctive relief, that its property is exempt or immune from
attachment or execution, that any such action, suit or proceeding
may not be brought or maintained in one of the above-named courts,
that any such action, suit or proceeding brought or maintained in
one of the above-named courts should be dismissed on grounds of
forum non coveniens, should be transferred to any court other than
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one of the above-named courts, should be stayed by virtue of the
pendency of any other action, suit or proceeding in any court
other than one of the above-named courts, or that this Agreement
or the subject matter hereof may not be enforced in or by any of
the above-named courts. Each of the parties hereto hereby consents
to service of process in any such suit, action or proceeding in
any manner permitted by the laws of the State of New York, agrees
that service of process by registered or certified mail, return
receipt requested, at the address specified in or pursuant to
Section 9 is reasonably calculated to give actual notice and
waives and agrees not to assert by way of motion, as a defense or
otherwise, in any such action, suit or proceeding any claim that
service of process made in accordance with Section 9 does not
constitute good and sufficient service of process. The provisions
of this Section 7(b) shall not restrict the ability of any party
to enforce in any court any judgment obtained in a federal or
state court of the State of New York.
c. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY
WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN
ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, CAUSE OF ACTION,
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR BASED UPON THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR
OTHERWISE. Each of the parties hereto acknowledges that it has
been informed by each other party that the provisions of this
Section 7(c) constitute a material inducement upon which such
party is relying and will rely in entering into this Agreement and
the transactions contemplated hereby. Any of the parties hereto
may file an original counterpart or a copy of this Agreement with
any court as written evidence of the consent of each of the
parties hereto to the waiver of its right to trial by jury.
8. Merger/Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof
and supersedes any prior communication or agreement with respect
thereto.
9. Notice. All notices, demands, and communications of any kind which any
party may require or desire to serve upon any other party under this
Agreement shall be
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in writing and shall be served upon such other party and such other
party's copied persons as specified below by personal delivery to the
address set forth for it below or to such other address as such party
shall have specified by notice to each other party or by mailing a
copy thereof by certified or registered mail, or by Federal Express or
any other reputable overnight courier service, postage prepaid, with
return receipt requested, addressed to such party and copied persons
at such addresses. In the case of service by personal delivery, it
shall be deemed complete on the first business day after the date of
actual delivery to such address. In case of service by mail or by
overnight courier, it shall be deemed complete, whether or not
received, on the third day after the date of mailing as shown by the
registered or certified mail receipt or courier service receipt.
Notwithstanding the foregoing, notice to any party or copied person of
change of address shall be deemed complete only upon actual receipt by
an officer or agent of such party or copied person.
If to the Company, to it at:
LABTEC ENTERPRISES, INC.
Suite 350,
0000 X.X. Xxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: President
with copies to:
Xxxx Capital, Inc.
Two Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx and Xxx Xxxxxxx
and to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx
If to Sun MM Advisors, to it at:
Sun Multimedia Advisors, Inc.
c/o Sun Capital Partners, Inc.
000 Xxxxx Xxxxxxx Xxxxx
Xxxx Tower, Eight Floor
West Palm Beach Florida 33401
Attention: Xxxx X. Xxxxx and Xxxxxx X. Xxxxxx
with copies to:
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Xxxx Capital, Inc.
Two Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx and Xxx Xxxxxxx
and to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx
10. Severability. If in any judicial or arbitral proceedings a court or
arbitrator shall refuse to enforce any provision of this Agreement,
then such unenforceable provision shall be deemed eliminated from this
Agreement for the purpose of such proceedings to the extent necessary
to permit the remaining provisions to be enforced. To the full extent,
however, that the provisions of any applicable law may be waived, they
are hereby waived to the end that this Agreement be deemed to be valid
and binding agreement enforceable in accordance with its terms, and in
the event that any provision hereof shall be found to be invalid or
unenforceable, such provision shall be construed by limiting it so as
to be valid and enforceable to the maximum extent consistent with and
possible under applicable law.
11. Counterparts. This Agreement may be executed in any number of
counterparts and by each of the parties hereto in separate
counterparts, each of which when so executed will be considered one in
the same document.
THE COMPANY: LABTEC ENTERPRISES, INC.
By: /s/ Xxxx X. Xxxxx
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Title: Vice President
SUM MM ADVISORS: SUN MULTIMEDIA ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Title: President
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