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EXHIBIT 10.3
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MANAGEMENT AGREEMENT
THIS AGREEMENT is entered into as of the 1st of April, 1998, by and among Nesco,
Inc., a Delaware corporation, hereinafter referred to as "Nesco", and Paragon
Corporate Holdings Inc., a Delaware corporation, hereinafter referred to as the
"Company", in order to set forth the express terms of their relationship.
WHEREAS, Nesco has provided general management oversight services to the
Company since the beginning of 1997, and Nesco officers and other personnel (the
"Executives") provide similar services to other affiliates of the Company that
are diversified in many businesses in the United Sates and throughout the world,
WHEREAS, the Company is in need of such services as provided by Nesco
and can benefit therefrom, and
WHEREAS, this Agreement will inure to the benefit of the Company due to
the additional advisory services that can be provided to the Company;
NOW, THEREFORE, in exchange for the mutual promises herein recited and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Nesco and the Company agree as follows:
1. Nesco, through its Executives, will provide general management oversight
services on a regular basis to the Company relating to business
activities involving financial results, legal issues, and long-term
planning involving current operations and acquisitions. Business
development planning include Nesco assistance to identify and acquire
acquisition candidates, including preliminary negotiations and
contractual preparations for such activities. Nesco has assisted and
will continue to assist the Company's efforts relating to banking
relationships of the Company for cash operation needs, acquisitions, and
other cash requirements, and will also monitor excess cash investments
for the Company through professional money management accounts.
2. In payment for these services, the Company will pay to Nesco a
management fee equal to 5% of the Company's EBITDA (as defined in the
offering memorandum for the Company's Senior Notes) calculated on an
annual basis. This fee shall be payable monthly.
3. It is understood and agreed that the Company will directly employ
independent auditors, legal counsel, and other consulting services, such
as advertising, both in the United States and its foreign operations.
Such services will be paid directly by the Company.
4. This Agreement and the fees to be paid hereunder shall be modified and
limited to the extent necessary from time to time to maintain the
Company's compliance with any specific restriction imposed by a lending
institution or indentures relating to outstanding indebtedness to the
Company, including the indenture governing the Company's Senior Notes
due 2008, entered into on April 1, 1998. In such event the Company shall
pay a management fee to Nesco in an amount that will not violate the
specific lending restriction.
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Any amount of management fee not timely paid due to the limitation
stated herein shall be accrued until such time as the restriction may be
removed and the accrued amount paid or as otherwise agreed by Nesco and
the Company.
5. This Agreement shall continue for an indefinite period, unless one party
notifies the other of its intent to terminate this Agreement upon not
less than 60 days written notice prior to the annual anniversary date of
the execution of this Agreement.
6. This Agreement constitutes the entire agreement between the parties
hereto concerning the subject matter hereof; all previous understandings
and negotiations concerning this subject matter are merged into this
Agreement and there are not understandings or agreements between the
parties hereto other than those set forth in this Agreement. In the
event the parties hereafter reach mutual agreement as to additional
terms, the performance of the parties shall be evidence of the terms of
such mutual agreement, however, the parties will maintain a written
record of the specific terms constituting amendments hereto.
7. The Company does hereby indemnify, defend, and hold Nesco, its directors
and officers, harmless from any claim of liability asserted by it or by
any third party, arising from the services rendered by Nesco hereunder,
except only in the case of gross negligence or willful misconduct
solely attributable to Nesco. Nesco's liability for damage shall be
limited to the total amount of management fees paid to Nesco during the
preceding 12 month period. In no event shall Nesco be liable to the
Company or any third party for incidental, consequential, exemplary,
punitive, or special damages of any kind whatsoever. The Company, at its
expense, will maintain Directors and Officers Liability insurance in
substantially its current form, with Nesco named as an "additional named
insured", for all periods during which this Agreement is in effect and
for 5 years after termination of this Agreement.
8. This Agreement has been executed and shall be construed in accordance
with and governed by the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereunto have affixed or caused to be
affixed their respective signatures on the date aforesaid.
NESCO, INC. PARAGON CORPORATE HOLDINGS INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. XxXxxxxxx
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Its: Vice President Its: President & CEO
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