EXHIBIT 10.21
MANAGEMENT CONSULTING AGREEMENT
THIS MANAGEMENT CONSULTING AGREEMENT ("Agreement"), is executed as of the
16th day of October, 2001, by and among TJC MANAGEMENT CORPORATION, a Delaware
corporation (the "Consultant") and SAFETY HOLDINGS, INC., a Delaware corporation
("Holdings"), and its direct and indirect subsidiaries (collectively, the
"Company").
W I T N E S S E T H:
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WHEREAS, the Consultant has and/or has access to personnel who are highly
skilled in the field of rendering consulting services and financial advice to
businesses; and
WHEREAS, the Company desires to retain Consultant to provide consulting
services and financial advice to the Company;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto do hereby agree as follows:
1. The Company hereby retains the Consultant, through the Consultant's
own personnel or through personnel available to the Consultant, to render
consulting services from time to time to the Company and its subsidiaries
(whether now existing or hereafter acquired), in connection with their financial
and business affairs, their relationships with their lenders, stockholders and
other third-party associates or affiliates, and the expansion of their
businesses. The term of this Agreement shall commence the date hereof and
continue until December 31, 2011, unless extended, or sooner terminated, as
provided in SECTION 5 below. The Consultant's personnel shall be reasonably
available to the Company's managers, auditors and other personnel for
consultation and advice, subject to Consultant's reasonable convenience and
scheduling. Services may be rendered at the Consultant's offices or at such
other locations selected by the Consultant as the Company and the Consultant
shall from time to time agree.
2. a. The Company shall pay the Consultant a management fee equal to, on
a per annum basis, $1,000,000. The Company shall pay the Consultant such
management fee in quarterly installments equal to $250,000 on each of March 31,
June 30, September 30 and December 31 of each year, commencing September 30,
2001.
b. In addition to the above quarterly payments, the Company shall pay to
the Consultant, (i) an investment banking and sponsorship fee of up to two
percent (2%) of the aggregate consideration paid (including assumed or
refinanced indebtedness, non-competition, earnout, contingent purchase price,
incentive arrangements and similar payments) (A) by the Company in connection
with the acquisition by the Company of all or substantially all of the
outstanding capital
stock, warrants, options or other rights to acquire or sell capital stock, or
all or substantially all of the business or assets of another individual,
corporation, partnership or other business entity or (B) to the Company in
connection with the sale by the Company of all or substantially all of the
Company's outstanding capital stock, warrants, options, or other rights to
acquire or sell stock, or all or substantially all of the business or assets of
the Company or one of its subsidiaries (each of the transactions described in
clauses (A) and (B), a "Transaction"), including, but not limited to, any
Transaction negotiated for the Company involving any affiliate of the Company or
the Consultant, including, but not limited to, any Transaction involving, The
Jordan Company, LLC, Jordan/Zalaznick Capital Company or any affiliates of any
of the foregoing (collectively, the "Jordan Affiliates"); and (ii) a financial
consulting fee of up to one percent (1%) of the amount obtained or made
available pursuant to any debt, equity or other financing (including without
limitation, any refinancing) by the Company with the assistance of Consultant,
including, but not limited to, any financing obtained for the Company from one
or more of the Jordan Affiliates, PROVIDED, that in no event shall a fee be
payable under SECTION 2(b)(ii) hereunder (x) with respect to borrowings under
the Credit Agreement or (y) with respect to financings referred to in SECTION
2(B)(II) made in connection with the consummation of a Transaction. In addition,
prior to paying any fee pursuant to this paragraph (b) the Board of Directors of
the Company (including the disinterested directors) must approve the applicable
Transaction or financing as in the best interests of the Corporation.
c. In addition, the Company shall pay to the Consultant a closing fee of
$2.50 million upon the consummation of the merger of Safety Merger Co. Inc. and
Xxxxxx Xxxxx Corporation in lieu of any fee otherwise payable under SECTION
2(b).
3. The Company shall reimburse Consultant for reasonable out-of-pocket
expenses and any reasonable, direct, allocable costs incurred by the Consultant
and its personnel in performing services hereunder to the Company and its
subsidiaries upon the Consultant's rendering of a statement therefor, together
with supporting data as the Company shall reasonably require.
4. Notwithstanding the foregoing, the Company shall not pay the fees
under SECTION 2 and such fees shall accrue pursuant to the second sentence of
this SECTION 4, (a) if any payment or financial covenant default under either
(i) the Revolving Credit and Term Loan Agreement, of even date herewith, by and
among Xxxxxx Xxxxx Corporation, Fleet National Bank the other lenders party
thereof, and Fleet National Bank, as administrative agent for itself and such
other lenders or (ii) the Purchase Agreement, of even date herewith, by and
between the Company and JZ Equity Partners PLC, has occurred and is continuing
(regardless of whether such agreements are then in effect), (b) if and to the
extent expressly prohibited by the provisions of any credit, stock, financing or
other agreements or instruments binding upon the Company, its subsidiaries or
properties, (c) if the Company has not paid interest on any interest payment
date or has postponed or not made any
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principal payments with respect to any of their indebtedness on any scheduled
payment dates, or (d) if the Company has not paid dividends on any dividend
payment date as set forth in its certificate of incorporation or as declared by
its Board of Directors, or has postponed or not made any redemptions on any
redemption date as set forth in its certificate of incorporation or any
certificate of designation with respect to its preferred stock, if any. Any
payments otherwise owed hereunder, which are not made for any of the
above-mentioned reasons, shall not be cancelled but rather shall accrue, without
interest, and shall be payable by the Company promptly when, and to the extent,
that the Company is no longer prohibited from making such payments and when the
Company has become current with respect to such principal or interest payments,
has become current with respect to such dividends and has made such redemptions
with respect to such preferred stock, if any. This SECTION 4 will not, in any
event, restrict or limit the Company's obligations under SECTION 3, 8 and 9,
which will be absolute and not subject to set-off.
5. This Agreement shall be automatically renewed for successive one-year
terms starting December 31, 2011 unless either party hereto, within sixty (60)
days prior to the scheduled renewal date, notifies the other party as to its
election to terminate this Agreement. Notwithstanding the foregoing, this
Agreement may be terminated by not less than ninety (90) days' prior written
notice from the Company to the Consultant at any time after (a) substantially
all of the stock or substantially all of the assets of the Company are sold to
any entity unaffiliated with the Consultant and/or a majority of the Company's
stockholders immediately prior to such sale or (b) the Company is merged or
consolidated into another entity unaffiliated with the Consultant and/or a
majority of the Company's stockholders immediately prior to such merger and the
Company is not the survivor of such transaction.
6. The Consultant shall have no liability to the Company on account of
(a) any advice which it renders to the Company, provided the Consultant believed
in good faith that such advice was useful or beneficial to the Company at the
time it was rendered, or (b) the Consultant's inability to obtain financing or
achieve other results desired by the Company or Consultant's failure to render
services to the Company at any particular time or from time to time, or (c) the
failure of any transaction to meet the financial, operating or other
expectations of the Company. The Company's sole remedy for any claim under this
Agreement shall be termination of this Agreement.
7. Notwithstanding anything contained in this Agreement to the contrary,
the Company agrees and acknowledges that the Consultant, the Jordan Affiliates
and their shareholders, members, employees, directors and affiliates intend to
engage and participate in acquisitions and business transactions outside of the
scope of the relationship created by this Agreement and neither the Consultant,
any of the Jordan Affiliates nor any of their shareholders, members, employees,
directors or affiliates shall be under any obligation whatsoever (except to the
extent that fiduciary duty
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principles under Delaware corporate law may be applicable to individual
directors and officers of the Company) to make such acquisitions, business
transactions or other opportunities through the Company or offer such
acquisitions, business transactions or other opportunities to the Company.
8. The Company will, to the fullest extent permitted by applicable law,
indemnify and hold harmless the Consultant, its affiliates and associates, each
of the Jordan Affiliates, and each of the respective owners, partners, members,
officers, directors, employees and agents of each of the foregoing, from and
against any loss, liability, damage, claim or expenses (including the fees and
expenses of counsel) arising as a result or in connection with this Agreement or
the Consultant's services hereunder.
9. Any payments paid by the Company under this Agreement shall not be
subject to set-off and shall be increased by the amount, if any, of any taxes
(other than income taxes) or other governmental charges levied in respect of
such payments, so that the Consultant is made whole for such taxes or charges.
10. a. This Agreement sets forth the entire understanding of the parties
with respect to the Consultant's rendering of services to the Company. This
Agreement may not be modified, waived, terminated or amended except expressly by
an instrument in writing signed by the Consultant and the Company.
b. This Agreement may be assigned by either party hereto without the
consent of the other party, provided, however, such assignment shall not relieve
such party from its obligations hereunder. Any assignment of this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
c. In the event that any provision of this Agreement shall be held to
be void or unenforceable in whole or in part, the remaining provisions of this
Agreement and the remaining portion of any provision held void or unenforceable
in part shall continue in full force and effect.
d. Except as otherwise specifically provided herein, all notices,
requests, claims, demands and other communications hereunder shall be in writing
and shall be deemed to have been duly given when delivered in person, by
confirmed facsimile transmission, confirmed courier service, or by registered or
certified mail (postage prepaid, return receipt requested) to the address of the
party for whom intended at the principal executive offices of such party, or at
such other address as such party may hereinafter specify by written notice to
the other party.
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e. The Company's subsidiaries will be jointly and severally liable and
obligated hereunder with respect to each obligation, responsibility and
liability of the Company, as if a direct obligation of the subsidiaries.
f. No waiver by either party of any breach of any provision of this
Agreement shall be deemed a continuing waiver or a waiver of any preceding or
succeeding breach of such provision or of any other provision herein contained.
g. The Consultant and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the Company.
h. This Agreement shall be governed by the internal laws (and not the
law of conflicts) of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TJC MANAGEMENT CORPORATION
By: /s/Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
Title:
SAFETY HOLDINGS, INC.
By:/s/ A. Xxxxxxx Xxxxxx, Xx.
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Name: A. Xxxxxxx Xxxxxx, Xx.
Title:
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