EXHIBIT 10.3
FOX ▇▇▇▇▇ & COMPANY, LLC
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▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
THE AMC GROUP, L.P.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
September 5, 2003
Vigilant International, Ltd.
c/o Fox ▇▇▇▇▇ Capital Fund II International, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: MANAGEMENT AGREEMENT
Ladies and Gentlemen:
We refer to the Amended and Restated Investment Agreement, dated as of
September 5, 2003 (the "Investment Agreement"), by and among U.N. Holdings
(Cayman), Ltd., an exempted company formed with limited liability under the laws
of the Cayman Islands, Vigilant International, Ltd., an exempted company formed
with limited liability under the laws of the Cayman Islands (the "Company"),
U.N. Holdings II, Inc., a Delaware corporation, U.N. Holdings LLC, a Delaware
limited liability company, U.N. Holdings Inc., a Delaware corporation, Wind
River Investment Corporation, a Delaware corporation ("Wind River"), and those
Trusts listed on Schedule A thereto. As a result of transactions contemplated by
the Investment Agreement, Fox ▇▇▇▇▇ Capital Fund II International, L.P., a
Cayman Islands exempted limited partnership (collectively with its affiliates,
the "Funds"), will acquire indirect beneficial ownership of a majority of Common
Shares (as defined in the Investment Agreement) and Preferred Shares (as defined
in the Investment Agreement) of the Company (collectively, the "Shares").
In connection with the ongoing operations of the Company subsequent to
the consummation of the transactions contemplated by the Investment Agreement,
the Company agrees to pay (1) Fox ▇▇▇▇▇ & Company, LLC, a Delaware limited
liability company ("Fox ▇▇▇▇▇"), an annual fee equal to $1,200,000 (provided,
however, that annual fee for the year beginning on September 5, 2003 shall be
equal to $13,200,000) and (2) The AMC Group, L.P., a Pennsylvania limited
partnership ("AMC" and, together with Fox ▇▇▇▇▇, the "Advisors"), an annual fee
equal to $300,000 (together with the fee payable under (1), the "Annual Services
Fees"), in each case, as compensation for Advisors' ongoing provision of certain
financial and strategic consulting, advisory and other services to the Company
and its affiliates including without limitation AMC's
Vigilant International, Ltd.
September 5, 2003
Page 2
provision of the transition services set forth on Schedule A (the "Services")
and subject to adjustment as provided in the next sentence. The portion of the
Annual Services Fees payable to AMC for any year shall be reduced by an amount
equal to the excess of (a) $300,000 over (b) $300,000 multiplied by a fraction,
the numerator of which is the number of Shares beneficially owned by the Trusts
and their affiliates on the date such Annual Services Fee is payable, and the
denominator of which is 6,000,000 (as appropriately adjusted in the event of
stock splits, consolidations, reorganization, distributions in kind and other
similar events), and the portion of the Annual Services Fees payable to Fox
▇▇▇▇▇ shall be increased by an equal amount such that the aggregate Annual
Services Fees are equal to $1,500,000.
The Annual Services Fee with respect to each twelve month period
beginning on September 5 of each year shall be billed to the Company by the
Advisors and payable on or before November 1 of such year (each, a "Payment
Date"); provided, however, that the Annual Services Fee for the year beginning
on September 5, 2003 shall be due and payable in full at the closing of the
transactions contemplated by the Investment Agreement. Such Annual Services Fees
shall continue to be payable until the earlier of (1) such time as the Funds no
longer hold an indirect equity investment in the Company and (2) such time as
the Advisors and the Company agree in writing to modify or terminate the
arrangements contemplated hereby. Notwithstanding the foregoing, no Annual
Services Fee payable in respect of any year shall be paid on the applicable
Payment Date if on the most recent preceding Interest Payment Date (as defined
in Wind River's 5% Senior Notes due 2015 (the "Senior Notes")) Wind River did
not pay in full and in cash the interest on the Senior Notes with respect to the
year preceding such Payment Date. Any Annual Services Fees not paid as a result
of the preceding sentence, together with interest thereon accruing from the
applicable Payment Date at the Prime Rate from time to time announced by
Citibank, N.A., shall be deferred and shall be payable from time to time in
accordance with the following sentence. Such deferred Annual Services Fee shall
be paid (a) at such times as Additional Principal Amount (as defined in the
Senior Notes) is repaid in cash (it being expressly understood and agreed that,
for the purposes of this sentence, any payments in respect of the principal of
the Senior Notes shall be first applied to any Additional Principal Amount) and
(b) in such amounts that bear the same proportion to the aggregate amount of
such deferred Annual Services Fees (together with accrued interest thereon) as
the amount of Additional Principal Amount that is repaid in cash bears to the
aggregate amount of unpaid Additional Principal Amount.
In addition, the Company will reimburse the Advisors for their and
their affiliates' documented out-of-pocket expenses in connection with the
provision of any Services. The parties hereto acknowledge that the Services
contemplated hereby, and the Annual Service Fee payable therefor, shall not
include investment banking or other similar services that may be provided to the
Company and its affiliates from time to time by the Advisors and their
affiliates, or any transaction fees that may be payable in connection with any
such services. Payments made by the Company pursuant to this letter agreement
shall be made by wire transfer of immediately available funds to such account as
the Advisors shall designate to the Company in writing from time to time.
Vigilant International, Ltd.
September 5, 2003
Page 3
The Advisors may assign their rights and delegate their obligations
hereunder, in whole or in part, to any of their present or future affiliates,
and shall provide written notice to the Company of any such assignment.
Simultaneously herewith, the parties hereto are entering into an
indemnification letter, dated as of the date hereof (the "Indemnification
Letter"). The Indemnification Letter shall survive any termination, expiration
or assignment of this letter agreement.
This letter agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York without regard to choice of
law or conflicts of law principles. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this letter agreement or the transactions contemplated hereby may be
brought in any federal court located in the State of New York or any New York
state court, and each of the parties hereto hereby (1) consents and submits
itself and its property to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding,
(2) consents to and submits itself and its property to the personal jurisdiction
of such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding, and (3) irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. We and you (on your behalf and, to the extent
permitted by applicable law, on behalf of your stockholders and creditors) waive
all right to trial by jury in any action, proceeding or counterclaim (whether
based upon contract, tort or otherwise) related to or arising out of or in
connection with this letter agreement or our engagement.
[SIGNATURE PAGE FOLLOWS]
Vigilant International, Ltd.
September 5, 2003
Page 4
Please confirm that the foregoing is in accordance with your
understanding and agreement with the Advisors by signing a copy of this letter
agreement in the space provided below.
Very truly yours,
FOX ▇▇▇▇▇ & COMPANY, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Person
THE AMC GROUP, L.P.,
By: The AMC Group, LLC, its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
VIGILANT INTERNATIONAL, LTD.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Person
SCHEDULE A
Transition Services
To allow for the continuity of the business of Wind River and its subsidiaries
following the consummation of the transactions contemplated by the Investment
Agreement, to the extent legally permissible and not prohibited or restricted in
any way under the relevant licensing agreements, AMC will continue to provide
Wind River with access to the following software licensed by AMC (the
"Transition Services"):
- Best "FAS Asset Accounting" software through December 31, 2003; and
- Thomson "InSource CS Income Tax" software through the earlier of
October 15, 2004 or the filing by UNIC of its state and federal tax
returns.
There are no warranties by AMC relating to the Transition Services of any kind,
express or implied including without limitation any implied warranties of
merchantability or fitness for a particular purpose. AMC shall have no liability
to Wind River and its subsidiaries or any of their respective affiliates in
connection with the provision of the Transition Services.
FOX ▇▇▇▇▇ & COMPANY, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
THE AMC GROUP, L.P.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
September 5, 2003
Vigilant International, Ltd.
c/o Fox ▇▇▇▇▇ Capital Fund II International, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: INDEMNIFICATION AGREEMENT
Ladies and Gentlemen:
In connection with the engagement of Fox ▇▇▇▇▇ & Company, LLC ("Fox
▇▇▇▇▇") and The AMC Group, L.P. ("AMC", and together with Fox ▇▇▇▇▇, the
"Advisors") to assist Vigilant International, Ltd. (the "Company") with the
matters set forth in the "Management Agreement" letter agreement, dated of even
date herewith, by and among the Company and the Advisors, the Advisors and the
Company are entering into this letter agreement. It is understood and agreed
that in the event that either the Advisors or any of their members, partners,
employees, agents, affiliates or controlling persons, if any (each of the
foregoing, including the Advisors, being an "Indemnified Person"), becomes
involved in any capacity in any action, claim, proceeding or investigation
brought or threatened by or against any person, including you or your
shareholders, financial advisors, underwriters or creditors, related to, arising
out of or in connection with our engagement or any services provided by the
Advisors or any other Indemnified Person to you or any of your affiliates, or
based on any relationship among the foregoing, including without limitation the
service by any employee of the Advisors as a director or officer of the Company
or any of its affiliates (collectively, the "Services"), you will promptly
reimburse, to the fullest extent permitted under applicable law, each such
Indemnified Person for his, her or its legal and other costs and expenses
(including the cost of any investigation and preparation, and any advances of
expenses or other payments made by such Advisor or any of its affiliates to any
other Indemnified Person under any indemnification agreement or similar
arrangement between such Advisor and such other Indemnified Person) as and when
they are incurred or advanced. You will, to the fullest extent permitted under
applicable law, indemnify, defend and hold harmless each Indemnified Person from
and against any losses, claims, damages, liabilities, costs or expenses to which
any Indemnified Person may become subject under any applicable law or otherwise
related to, arising out of or in connection with the Services, whether or not
any pending or threatened action, claim, proceeding or investigation giving rise
to such losses, claims, damages,
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Vigilant International, Ltd.
September 5, 2003
Page 2
liabilities or expense is initiated or brought by you or on your behalf and
whether or not in connection with any action, proceeding or investigation in
which you or such Indemnified Persons are a party, except to the extent that any
such loss, claim, damage, liability or expense is found by a court of competent
jurisdiction in a judgment which has become final in that it is no longer
subject to appeal or review to have resulted primarily from such Indemnified
Person's bad faith or gross negligence. You also agree that, to the fullest
extent permitted under applicable law, no Indemnified Person shall have any
liability (whether direct or indirect, in contract or otherwise) to you or your
security holders or creditors related to, arising out of or in connection with
the Services except to the extent that any loss, claim, damage or liability is
found by a court of competent jurisdiction in a judgment that has become final
in that it is no longer subject to appeal or review to have resulted primarily
from such Indemnified Person's bad faith or gross negligence. If multiple claims
are brought against us in any action, claim, proceeding or investigation related
to, arising out of or in connection with our engagement, with respect to at
least one of which such claims indemnification is permitted under this letter
agreement and under applicable law, you agree that any award or judgment in
connection therewith shall be conclusively deemed to be based on claims as to
which indemnification is permitted and provided for hereunder, except to the
extent such award or judgment expressly states that it, or any portion thereof,
is based solely on a claim as to which indemnification is not available.
If for any reason the foregoing indemnification is held unenforceable,
then you shall contribute to the loss, claim, damage, liability or expense for
which such indemnification is held unenforceable in such proportion as is
appropriate to reflect the relative benefits received, or sought to be received,
by you on the one hand and the party entitled to contribution on the other hand
in the matters contemplated by our engagement as well as the relative fault of
yourselves and such party with respect to such loss, claim, damage, liability or
expense and any other relevant equitable considerations. You agree that for the
purposes hereof the relative benefits received, or sought to be received, by us
shall be deemed to be approximately equal to the fee paid or proposed to be paid
to us, if any, in connection with the related Services for which such payment is
to be made. To the extent permitted by applicable law, in no event shall we or
any other Indemnified Person be required to contribute an aggregate amount in
excess of the aggregate fees actually paid to us for the Services with respect
to which such payment is made. Your reimbursement, indemnity and contribution
obligations under this letter shall be in addition to any liability which you
may otherwise have, shall not be limited by any rights we or any other
Indemnified Person may otherwise have and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of
yourselves, ourselves, and any other Indemnified Persons.
You agree that, without our prior written consent (which will not be
unreasonably withheld), you will not settle, compromise or consent to the entry
of any judgment in any pending or threatened claim, action, or proceeding or
investigation in respect of which indemnification or contribution could be
sought hereunder (whether or not we or any other Indemnified Persons are an
actual or potential party to such claim, action or proceeding or investigation),
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Person from all liability arising out of such claim, action
or proceeding or investigation. No waiver, amendment or other modification of
this letter agreement shall be effective unless in
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Vigilant International, Ltd.
September 5, 2003
Page 3
writing and signed by each party to be bound thereby. This letter agreement and
any claim related directly or indirectly to this letter agreement (including any
claim concerning advice provided pursuant to this agreement) shall be governed
by and construed and enforced in accordance with the laws of the State of New
York without regard to choice of law or conflicts of law principles. Any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this letter agreement or the transactions
contemplated hereby may be brought in any federal court located in the State of
New York or any New York state court, and each of the parties hereto hereby (1)
consents and submits itself and its property to the exclusive jurisdiction of
such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding, (2) consents to and submits itself and its property
to the personal jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding, and (3) irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. We and you (on your behalf
and, to the extent permitted by applicable law, on behalf of your stockholders
and creditors) waive all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) related to or
arising out of or in connection with this letter agreement. This letter
agreement shall remain in effect indefinitely, notwithstanding any termination
or expiration of the Management Agreement.
[SIGNATURE PAGE FOLLOWS]
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Vigilant International, Ltd.
September 5, 2003
Page 4
Please confirm that the foregoing is in accordance with your
understandings and agreements with the Advisors by signing a copy of this letter
agreement in the space provided below.
Very truly yours,
FOX ▇▇▇▇▇ & COMPANY, LLC
By: _____________________________________
Name:
Title:
THE AMC GROUP, L.P.,
By: The AMC Group, LLC, its general partner
By: _________________________________
Name:
Title:
ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN:
VIGILANT INTERNATIONAL, LTD.
By: _________________________________
Name:
Title: