EXHIBIT 10.6
FORM OF THE MANAGEMENT AGREEMENT DATED AS OF
MARCH 30, 2001, AMONG AMERICAN ACHIEVEMENT CORPORATION, ITS
SUBSIDIARIES LISTED THEREIN AND ▇▇▇▇▇▇ ▇▇▇▇▇▇, INC.
MANAGEMENT AGREEMENT
AGREEMENT made as of March 30, 2001, by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc.,
a Delaware corporation ("CHI"), Commemorative Brands Holding Corp., a Delaware
corporation ("CBI Holding"), Educational Communications, Inc., a Delaware
corporation and a direct subsidiary of CBI Holding ("ECI"), Commemorative
Brands, Inc., a Delaware corporation and a direct subsidiary of CBI Holding
("CBI"), TP Holding Corp., a Delaware corporation and an indirect subsidiary of
CBI Holding, ("TPH") and ▇▇▇▇▇▇ Publishing Company, a Delaware corporation and
subsidiary of TPH ("TPC", and together with CBI Holding, CBI and TPH,
collectively, the "Obligors").
W I T N E S S E T H:
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WHEREAS, the Obligors desire to retain CHI to provide business and
organizational strategy, financial and investment management, advisory and
merchant and investment banking services to the Obligors, upon the terms and
conditions hereinafter set forth, and CHI is willing to undertake such
obligations.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. APPOINTMENT. Each Obligor hereby engages CHI, and CHI hereby agrees,
upon the terms and subject to the conditions set forth herein, to provide
certain services to the Obligors as described in Section 3 hereof.
2. TERM.
(a) The term of this Agreement shall be for an initial term of ten
(10) years. Such term shall be renewed automatically for additional one-year
terms thereafter unless CHI or the Obligors shall give notice in writing within
90 days before the expiration of the initial five-year term or any one-year
renewal thereof of its desire to terminate this Agreement, such termination to
become effective at the end of the then current term. The provisions of
Paragraph 6 and otherwise as the context so requires shall survive the
termination of this Agreement.
(b) If ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners II, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners III,
L.P. and their affiliates and partners shall own less than 5% of the then
aggregate outstanding capital stock of any Obligor, this Agreement shall be
subject to renegotiation by the Board of Directors of such Obligor.
3. DUTIES OF CHI. CHI shall provide the Obligors with consulting
services (collectively, the "Consulting Services"), as and to the extent
reasonably requested from time to time by the Obligors, related to the
following:
(i) business and organizational strategy, including strategy
relating to
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(a) (development of new products and new markets, and analysis
and research related thereto;
(b) new product implementation;
(c) development of broad business growth strategies; and
(ii) human resource management, including
(a) design and development of incentive and bonus programs for
management teams;
(b) assistance with senior executive hiring decisions;
(c) coordination of activities of compensation committees of
the respective Board of Directors of the Obligors;
(d) design and development of employee stock ownership
programs; and
(iii) public relations and related matters, including
(a) assistance in developing an enhanced public relations
program designed to broaden name recognition of the Obligors in the
business community;
(b) advice on general labor matters; and
(iv) financial and investment management, merchant and
investment banking and corporate finance services, including
(a) identification and implementation of merger and
acquisition opportunities for the Obligors for which CHI may receive
additional consideration;
(b) assistance with negotiation of loan documentation
(including amendments thereto) and lender relationships on an ongoing
basis;
(c) advice regarding acquisition strategies and responses to
external proposals; and
(d) advice regarding additional capital requirements.
Without limitation if any of the foregoing, representatives of CHI may
participate, without additional compensation, on the Obligors' and certain of
their affiliates' Boards of Directors and Board Committees.
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3.1 EXCLUSIONS FROM "CONSULTING SERVICES". Notwithstanding anything in
the foregoing to the contrary, the following services are specifically excluded
from the definition of "Consulting Services":
(i) INDEPENDENT ACCOUNTING SERVICES. Accounting services rendered
to any Obligor or CHI with prior notice and consultation with such
Obligor's management, by an independent accounting firm or accountant
(I.E., an accountant who ---- is not an employee of CHI);
(ii) INDEPENDENT ACTUARIAL SERVICES. Actuarial services rendered to
any Obligor or CHI with prior notice and consultation with the management
of such Obligor, by an independent actuarial firm or actuary (I.E., an
actuary who is not an employee of CHI).
(iii) LEGAL SERVICES. Legal services rendered to any Obligor or CHI
with prior notice and consultation with the management of such Obligor, by
an independent law firm or attorney (I.E., an attorney who is not an
employee of CHI); and
(iv) TRANSACTION SERVICES. Services in connection with any
transaction in which Obligors or any of their respective subsidiaries may
be, or may consider becoming, involved, it being understood that CHI shall
have the right of first refusal concerning all opportunities to perform,
for an additional fee, any of such transaction related services. Such right
must be exercised within 30 business days of receipt by CHI of such offer.
4. POWERS OF CHI. So that it may properly perform its duties hereunder,
CHI shall, subject to Section 7 hereof, have the authority to do all things
necessary and proper to carry out the duties set forth in Section 3 hereof.
5. COMPENSATION AND REIMBURSEMENT. As consideration payable to CHI or
any of its affiliates for providing the Consulting Services to the Obligors, the
Obligors hereby agree, jointly and severally, to pay to CHI on a fiscal
quarterly basis in arrears, payable on the last business day of each fiscal
quarter commencing on last business day of the fiscal quarter following the
Closing Date (and defined in the Credit Agreement, as defined below) an annual
management fee of $3,000,000 (the "Annual Fee") commencing fiscal year 2002 (the
annual management fee to be paid during fiscal year 2001 to equal $3,265,000,
$640,000 of which shall be paid on the Closing Date and $625,000 of which has
already been paid) so long as such payments are not in violation of the Second
Amended and Restated Credit Agreement, dated as of March ___, 2001 (as amended
or modified from time to time, the "Credit Agreement"), by CBI, TPH, ECI, TPC,
and ▇▇▇▇▇▇ Production Services Company, L.P., as borrowers, ▇▇▇▇▇▇ Financial,
Inc., as agent, and the various lenders from time to time parties thereto. Such
payments shall accrue to the extent not paid. In addition to the Annual Fee, the
Obligors hereby agree, jointly and severally, to, at the direction of CHI, pay
directly or reimburse CHI for its Out-of-Pocket Expenses (as hereinafter
defined) incurred in connection with the Consulting Services provided for in
Section 3 hereof. For purposes of this Agreement, the term "Out-of-Pocket
Expenses" shall mean the reasonable amounts paid by CHI in connection with the
Consulting Services provided for in Section 3, including (i) fees and
disbursements of any independent
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professionals and organizations, including independent auditors and outside
legal counsel, investment bankers or other financial advisors or consultants,
(ii) costs of any outside services of independent contractors such as financial
printers, couriers, business publications or similar services and (iii)
transportation, per diem, telephone calls, entertainment and all other
reasonable expenses actually incurred by CHI in rendering the Consulting
Services provided for herein. All reimbursements for Out-of-Pocket Expenses
shall be made promptly upon or as soon as practicable after presentation by CHI
to the Obligors of the statement in connection therewith. Notwithstanding the
foregoing, at any time and so long as CBI shall be in default with respect to
any payment under the indenture dated as of December 16, 1996 (the "Indenture"),
and any amendment thereof, between CBI and HSBC Bank USA (formerly known as
Marine Midland Bank) (as Trustee), CBI may defer payment of any fees payable
hereunder until such time as CBI shall no longer be in default or no Notes (as
defined in the Indenture) remain outstanding.
6. INDEMNIFICATION. The Obligors hereby agree, jointly and severally,
to indemnify and hold harmless CHI and its officers, directors, employees,
agents, representatives and affiliates (each being an "Indemnified Party") from
and against any and all losses, claims, damages and liabilities to which such
Indemnified Party may become subject under any applicable federal or state law,
any claim made by any third party or otherwise, relating to or arising out of
the advisory and the Consulting Services contemplated by this Agreement or the
engagement of CHI pursuant to, and the performance or alleged performance by CHI
or such Indemnified Party of the Consulting Services, and the Obligors shall
jointly and severally reimburse any Indemnified Party for all costs and expenses
(including reasonable attorneys' fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened claim, or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party thereto. The Obligors will not be liable
under the foregoing indemnification provision to the extent that any loss,
claim, damage, liability, cost or expense is determined by a court, in a final
judgment from which no further appeal may be taken, to have resulted solely from
the gross negligence or willful misconduct of CHI. The reimbursement and
indemnity obligations of the Obligors under this Section shall be in addition to
any liability which the Obligors may otherwise have, shall extend upon the same
terms and conditions to any affiliate of CHI and the stockholders, officers,
directors, employees, agents, representatives, affiliates and controlling
persons (if any), as the case may be, of CHI and any such affiliate and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Obligors, CHI, any such affiliate and any such
person. The foregoing provisions shall survive the termination of this
Agreement.
7. INDEPENDENT CONTRACTORS. Nothing herein shall be construed to create
a joint venture or partnership between the parties hereto or an
employee/employer relationship. CHI shall be an independent contractor pursuant
to this Agreement. The parties hereto shall have no express or implied right or
authority to assume or create any obligations on behalf of or in the name of the
other parties or to bind the other parties to any contract, agreement or
undertaking with any third party.
8. NOTICES. Any notice or other communications required or permitted to
be given hereunder shall be in writing and delivered by hand or mailed by
registered or certified mail, return receipt requested, or by telecopier to the
party to whom it is to be given at its address set forth herein, or to such
other address as the party shall have specified by notice similarly
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given and the mailing date shall be deemed the date from which all time periods
pertaining to a date of notice shall run.
(i) If to TPH or TPC, to them at:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to CBI, to it at:
▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to CBI Holding or CHI, to it at:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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9. ASSIGNMENT. This Agreement shall inure to the benefit of and be
binding upon the parties and their successors and permitted assigns. However,
neither this Agreement nor any of the rights of the parties hereunder may be
transferred or assigned by the parties hereto, except that (i) if any Obligor
shall merge or consolidate with or into, or sell or otherwise transfer
substantially all of its assets to, another entity that assumes such Obligor's
obligations under this Agreement, such Obligor may assign its rights hereunder
to that entity, and (ii) CHI may assign its rights and obligations hereunder to
any other person or entity controlled, directly or indirectly, by ▇▇▇▇ ▇. ▇▇▇▇▇▇
and/or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Any attempted transfer or assignment in violation of
this Section 9 shall be void.
10. PERMISSIBLE ACTIVITIES. Nothing herein shall in any way preclude
CHI or its affiliates or its respective officers, directors and partners from
engaging in any business activities or from performing services for its or their
own account or for the account of others, including companies which may be in
competition with the business conducted by any Obligor.
11. GENERAL. No amendment or waiver of any provision of this Agreement,
or consent to any departure by either party from any such provision, shall in
any event be effective unless the same shall be in writing and signed by the
parties to this Agreement and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. The waiver of any party of any breach of this Agreement shall not operate
or be construed to be a waiver of any subsequent breach.
12. ENTIRE AGREEMENT.
(a)This Agreement contains the entire agreement between the parties
hereto and supersedes all prior agreements and understandings, oral and written,
among the parties hereto with respect to the subject matter hereof.
(b) CBI and CHI hereby acknowledge that this Agreement supersedes
the Management Agreement dated as of December 16, 1996, between CBI (formerly
known as Scholastic Brands, Inc.) and CHI (the "Prior CBI Management Agreement")
and that the Prior CBI Management Agreement is hereby terminated in accordance
with its terms; provided, however, that any accrued fees and expenses, if any,
payable by CBI to CHI shall be payable by CBI on the Closing Date.
(c) TPH, TPC and CHI hereby acknowledge that this Agreement
supersedes the Management Agreement dated as of February 11, 2000, among TPH
(formerly known as TP Acquisition Corp.), TPC and CHI (the "Prior ▇▇▇▇▇▇
Management Agreement") and that the Prior ▇▇▇▇▇▇ Management Agreement is hereby
terminated in accordance with its terms; provided, however, that any accrued
fees and expenses, if any, payable by TPH and/or TPC to CHI shall be payable by
such parties on the Closing Date.
(d) CBI Holding, CBI, TPH, TPC, and CHI hereby acknowledge that
this Agreement supersedes the Management Agreement dated as of July 21, 2000,
between CBI Holding, CBI, TPH, TPC, and CHI (the "Prior July 2000 Management
Agreement") and that the Prior July 2000 Management Agreement is hereby
terminated in accordance with its terms;
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provided, however, that any accrued fees and expenses, if any, payable by party
thereto to CHI shall be payable by such parties on the Closing Date.
13. SECTION HEADINGS. The section headings contained herein are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
14. APPLICABLE LAW. This agreement and the rights and obligations of
the parties hereunder shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York. Each of the parties
hereto hereby irrevocably submits to the exclusive jurisdiction of any Federal
court sitting in the Southern District of New York over any suit, action or
proceeding arising out of or relating to this agreement. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted or not
prohibited by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought in such a
court and any claim that any such suit, action or proceeding brought in such a
court has been brought in an inconvenient forum. Each of the parties hereto
hereby irrevocably consents to the service of process in any suit, action or
proceeding by sending the same by certified mail, return receipt requested or by
overnight courier service, to the address of such party set forth in Section 8
or in the records of the Company. EACH PARTY HERETO WAIVES ANY RIGHT IT MAY HAVE
TO TRIAL BY JURY IN ANY ACTION BROUGHT HEREUNDER OR ARISING OUT OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
15. SEVERABILITY. If any section, clause, sentence, provision,
subparagraph or paragraph of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal or ineffective for any reason, such section,
clause, sentence, provision, subparagraph or paragraph so held to be invalid,
illegal or ineffective shall be ineffective, but the effect thereof shall not
impair, invalidate or nullify the remainder of this Agreement, and the remainder
of the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and in no way shall be affected, impaired or
invalidated.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Managing Director
COMMEMORATIVE BRANDS HOLDING
CORP.
By:
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Name:
Title:
COMMEMORATIVE BRANDS, INC.
By:
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Name:
Title:
EDUCATIONAL COMMUNICATIONS, INC.
By:
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Name:
Title:
TP HOLDING CORP.
By:
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Name:
Title:
▇▇▇▇▇▇ PUBLISHING COMPANY
By:
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Name:
Title:
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