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MANAGEMENT AGREEMENT
This Agreement is made as of this 24th day of March, 1999 among Sheridan
Healthcare, Inc., a Delaware corporation (the "Company"), Vestar/Calvary
Holdings, Inc. (AHoldings") and Vestar Capital Partners, a New York general
partnership ("Vestar").
WHEREAS, Vestar, by and through its officers, employees, agents,
representatives and affiliates, has expertise in the areas of corporate
management, finance, investment, acquisitions and other matters relating to the
business of the Company; and
WHEREAS, the Company desires to avail itself, for the term of this
Agreement, of the expertise of Vestar in the aforesaid areas, in which it
acknowledges the expertise of Vestar.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions herein set forth, the parties hereto agree as follows:
1. Appointment. Each of Holdings and the Company hereby appoints Vestar to
render the advisory and consulting services described in Paragraph 2 hereof
commencing upon the Effective Time (as defined in Section 3(b) hereof).
2. Services. Vestar hereby agrees that commencing upon the Effective Time
it shall render to each of Holdings and the Company (and their subsidiaries) by
and through such of Vestar's officers, employees, agents, representatives and
affiliates as Vestar, in its sole discretion, shall designate from time to time,
advisory and consulting services in relation to the affairs of Holdings and the
Company (and their subsidiaries) in connection with strategic financial
planning, and other services not referred to in the next sentence, including,
without limitation, advisory and consulting services in relation to the
selection, supervision and retention of independent auditors, the selection,
retention and supervision of outside legal counsel, and the selection, retention
and supervision of investment bankers or other financial advisors or
consultants. It is expressly agreed that the services to be performed hereunder
shall not include (x) investment banking or other financial advisory services
rendered by any of Vestar and its affiliates to Holdings and the Company (and
their subsidiaries) after the Effective Time in connection with acquisitions,
divestitures, refinancings, restructurings and similar transactions by Holdings
and the Company (and their subsidiaries) or (y) full or part-time employment by
any of the Company and its subsidiaries of any employee or partner of any of
Vestar and its affiliates, in each case, for which Vestar and its affiliates
shall be entitled to receive additional compensation.
3. Fees. (a) In consideration of the services contemplated by Paragraph 2,
subject to the provisions of Paragraph 6, Holdings and the Company and their
respective successors hereby jointly and severally agree to pay to Vestar an
aggregate per annum management fee (the "Fee") equal to the greater of (i)
$300,000 and (ii) an amount per annum equal to 1.5% of the consolidated earnings
before depreciation, interest, taxes and amortization of Holdings and its
subsidiaries for such fiscal year, determined in accordance with generally
accepted accounting principles ("EBITDA"), commencing at the Effective Time. The
Fee shall be payable semi-annually in advance (based on clause (i) above in 1999
and thereafter based on the greater of clause (i) above and 1.5% of the prior
year"s EBITDA), with an adjustment of
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the Fee for any fiscal year payable promptly following the determination of
EBITDA for such fiscal year or on termination of this Agreement. The semi-annual
Fee payments shall be non-refundable (except for any downward adjustment as
described above).
(b) Holdings and the Company and their respective successors also hereby
jointly and severally agree to pay Vestar at the effective time (the "Effective
Time") of the merger provided for in the Agreement and Plan of Merger dated
March 24, 1999 among the Company, Holdings and Vestar/Calvary, Inc. (the "Merger
Agreement") a transaction fee equal to $1.6 million plus all of Out-of-Pocket
Expenses (as defined in Section 4) incurred by Vestar prior to the Effective
Time for services rendered by Vestar in connection with the consummation of the
Offer and the Merger referred to in the Merger Agreement.
4. Reimbursements. In addition to the Fee, Holdings and the Company hereby
jointly and severally agree, at the direction of Vestar, to pay directly or
reimburse Vestar for its reasonable Out-of-Pocket Expenses incurred after the
Effective Time in connection with the services provided for in Paragraph 2
hereof. For the purposes of this Agreement, the term "Out-of-Pocket Expenses"
shall mean the amounts paid by or on behalf of Vestar in connection with the
services contemplated hereby, including reasonable (i) fees and disbursements of
any independent professionals and organizations, including independent auditors
and outside legal counsel, investment bankers or other financial advisors or
consultants, (ii) costs of any outside services or independent contractors, such
as financial printers, couriers, business publications or similar services, and
(iii) transportation, per diem, telephone calls, word processing expenses or any
similar expense not associated with its ordinary operations. All reimbursements
for Out-of-Pocket Expenses shall be made promptly upon or as soon as practicable
after presentation by Vestar of the statement in connection therewith.
5. Indemnification. Holdings and the Company hereby jointly and severally
agree to indemnify and hold harmless Vestar and its affiliates and their
respective partners, officers, directors, employees, agents, representatives and
stockholders (each being an "Indemnified Party") from and against any and all
losses, claims, damages and liabilities of whatever kind or nature, joint or
several, absolute, contingent or consequential, to which such Indemnified Party
may become subject under any applicable federal or state law, or any claim made
by any third party, or otherwise, to the extent they relate to or arise out of
the services contemplated by this Agreement or the engagement of Vestar pursuant
to, and the performance by Vestar of the services contemplated by, this
Agreement. Holdings and the Company hereby jointly and severally agree to
reimburse any Indemnified Party for all reasonable 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 for which the Indemnified Party would be entitled to indemnification under
the terms of the previous sentence, or any action or proceeding arising
therefrom, whether or not such Indemnified Party is a party hereto. Holdings and
the Company 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 primarily from the gross negligence or willful
misconduct of Vestar. Neither Holdings nor the Company
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shall be obligated to make any payment to Vestar hereunder unless and until the
Effective Time has occurred.
6. Term. This Agreement shall be in effect on the date hereof and shall
terminate upon the earlier to occur of (i) the termination of the Merger
Agreement or (ii) such time after the Effective Time as Vestar Capital Partners
III, L.P., a Delaware limited partnership ("VCP"), and the partners therein and
the respective affiliates thereof hold, in the aggregate, less than 20% of the
voting power of the Company's outstanding voting stock. The provisions of
Paragraphs 4, 5, 7 and 8 and the joint and several obligation of Holdings and
the Company to pay Fees accrued during the term of this Agreement pursuant to
Section 2 shall survive the termination of this Agreement.
7. Permissible Activities. Subject to all applicable provisions of New
York law that impose fiduciary duties upon Vestar or its partners or affiliates,
nothing herein shall in any way preclude Vestar or its partners, officers,
employees or affiliates from engaging in any business activities or from
performing services for its or their own account or for the account of others,
including for companies that may be in competition with the business conducted
by the Company.
8. General. (a) 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.
(b) Any and all notices hereunder shall, in the absence of receipted hand
delivery, be deemed duly given when mailed, if the same shall be sent by
registered or certified mail, return receipt requested, and the mailing date
shall be deemed the date from which all time periods pertaining to a date of
notice shall run. Notices shall be addressed to the parties at the following
addresses:
If to Vestar: Vestar Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to Holdings Sheridan Healthcare, Inc
or the Company: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D.
and
▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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Vestar/Calvary Holdings, Inc.
c/o Vestar Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
In any case,
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(c) This Agreement shall constitute the entire Agreement between the
parties with respect to the subject matter hereof, and shall supersede all
previous oral and written (and all contemporaneous oral) negotiations,
commitments, agreements and understandings relating hereto.
(d) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE PARTIES TO THIS
AGREEMENT HEREBY AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND STATE COURTS LOCATED IN THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. This Agreement shall
inure to the benefit of, and be binding upon, Vestar, the Indemnified Parties,
the Company and their respective successors and assigns.
(e) This Agreement may be executed in two or more counterparts, and
by different parties on separate counterparts, each set of counterparts showing
execution by all parties shall be deemed an original, but all of which shall
constitute one and the same instrument.
(f) The waiver by any party of any breach of this Agreement shall not
operate as or be construed to be a waiver by such party of any subsequent
breach.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers or agents as set forth
below.
VESTAR CAPITAL PARTNERS
By its General Partner: Vestar
Management Corporation I
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Member
SHERIDAN HEALTHCARE, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
VESTAR/CALVARY HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇