Exhibit No. 2.5
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is made and
entered into on and as of January 3, 1999 by and between Snap-on Credit LLC, a
Delaware limited liability company ("Company"), and Newcourt Financial USA Inc.,
a Delaware corporation ("Newcourt").
WITNESSETH
WHEREAS, Company desires to engage Newcourt to perform certain
management services ("Management Services") and may, in the future, wish to
engage Newcourt to perform certain other mutually agreeable defined services
("Additional Services" and, together with the Management Services, the
"Services");
WHEREAS, Company and Newcourt desire to agree upon the compensation to
be paid by Company to Newcourt as consideration for the Management Services
provided by Newcourt to Company herein; and
WHEREAS, capitalized definitional terms used herein and not otherwise
defined herein shall have the meaning referred to or specified in the
Definitional Supplement attached as an exhibit to the Agreement Respecting a
Limited Liability Company dated December 1, 1998 between Snap-on Incorporated
and Newcourt.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Management Services. Newcourt shall provide Company with the
following Management Services as set forth in this Section 1:
(a) senior level management support and services as Newcourt deems
reasonably necessary to cause the Company to achieve its targeted goals and
objectives * ;
(b) securitization and reporting services in connection with New
SPC's purchase of Finance Contracts from the Company and Newcourt's purchase of
the Finance Contracts from the New SPC;
(c) accounting support as reasonably necessary to properly train the
Company's personnel in the performance of its accounting, reporting and other
similar functions;
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* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separeately
with the SEC pursuant to Rule 24b-2.
(d) the preparation of financial statements for the Company;
(e) managerial support in connection with assisting the Company in
determining which systems solutions shall be utilized to conduct the Company's
business;
(f) international resources on an as-needed basis in foreign
countries in which Newcourt has financing capabilities and Company desires to
conduct business; and
(g) resources which are reasonably necessary for the implementation
and/or arrangement of any agreed-upon expansion of finance programs until such
time as the Company is able to implement and/or manage with its own resources.
2. Adequate Staff. Newcourt shall, during the term of this Agreement,
maintain suitable staff and support services as may be necessary to adequately
perform its responsibilities under this Agreement. Notwithstanding any other
provision of this Agreement to the contrary, upon reasonable request, Company
and Newcourt shall consult with each other, provide information and otherwise
cooperate with each other so that each will be able to comply with and ascertain
compliance by the other party with this Agreement.
3. Compensation for Management Services. As consideration for the
Management Services described in Section 1 above, Company shall pay to Newcourt
monthly management fees equal to * (the "Base Fee"), plus or minus any increase
or decrease pursuant to the terms and conditions set forth in Exhibit A attached
hereto (the "Newcourt Management Fees"). * Company shall reimburse Newcourt for
all expenses actually incurred by Newcourt in providing the services described
in Subsections (e), (f) and (g) of Section 1 above (the "Newcourt Expenses").
The Newcourt Management Fees and the Newcourt Expenses shall be payable monthly
in immediately available funds, in arrears, by Company to Newcourt by the 15th
day of the following month. The first payment shall be due on April 15, 1999.
Notwithstanding the foregoing, to the extent that the Board of Directors of
Company determines, after due consideration of Company's income and expenses
(including the amount of the Royalty Fee and the Snap-on Management Fees) in any
month, that Company's * is insufficient to pay the full amount of * which are
due and payable that month, then Company shall pay a pro rata portion of each of
* which are due and payable that month and the shortfalls shall be paid on a pro
rata basis from future * , as determined by Company's Board of Directors,
together with the monthly payment that is then due hereunder. The term
"Originations" shall mean the Finance
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* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the SEC pursuant to Rule 24b-2.
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Contracts recorded by Company on its books and records as an asset regardless if
such Finance Contracts are purchased by Company from an Authorized Dealer,
Snap-on Incorporated or any of its Affiliates or are originated directly by
Company or are originated directly by Newcourt pursuant to any vendor program
agreement authorized by Company; provided, however, that any Finance Contracts
included in the Existing Portfolio shall be excluded from the definition.
4. Additional Services. Newcourt may, at the request of Company,
perform such other Additional Services as may be mutually agreeable to Company
and Newcourt. A description of such Additional Services, if any, and the
compensation payable by Company to Newcourt with respect thereto shall be set
forth in an Addendum to this Agreement, in substantially the form of Exhibit B
hereto, signed by Newcourt and Company. It is understood and agreed that such
compensation shall be in addition to and not a part of the Newcourt Management
Fees. Moreover, the limitation contained in the next to last sentence of Section
3 shall not apply to such compensation.
5. Limitations on Authority and Liability of Newcourt. The management
and affairs of Company will, at all times, be subject to the management and
control of the members, Board of Directors, officers and employees of Company.
Except as otherwise expressly set forth herein, it is understood and agreed that
Newcourt has no authority to bind Company to any contract or agreement or to
incur any expenses, or otherwise spend any money on behalf of Company. When
acting pursuant to this Agreement on behalf of Company, Newcourt will make it
apparent to third parties that it is acting solely as an independent contractor
and not in its individual capacity and not as an agent of Company. This is a
service agreement only and the relationship of Newcourt and Company is that of
independent contractor and principal only. The parties hereunder agree and
understand that this Agreement does not vest the entire management powers or
even substantial management powers of Company in Newcourt, but rather is
restricted to limited support functions incorporated in the scope of the
Services as defined from time to time. Newcourt assumes no responsibility under
this Agreement other than to render the Services called for hereunder in good
faith and shall not be responsible for any action of Company in following or
declining to follow any advice or recommendations of Newcourt including without
limitation any advice or recommendation of legal counsel. Newcourt shall not be
responsible for errors made by legal counsel in the performance of Services.
Company shall at all times retain exclusive management and control over its
business operations, policy decisions, officers and employees. The employees of
Newcourt shall not be considered employees of Company for any purpose. Newcourt
(including its Affiliates), its directors, shareholders, officers and employees
will not be liable to Company, Company's members or others, except by reason of
acts constituting bad faith, or willful misconduct. Company shall reimburse,
indemnify and hold harmless Newcourt and its directors, shareholders, officers
and employees of and from any and all expenses (including, without limitation,
reasonable attorneys' fees), losses, damages, liabilities, demands, charges and
claims of any nature whatsoever in respect of or arising from any acts or
omissions performed or omitted by Newcourt in connection with the Services
provided hereunder in good faith and in accordance with the above standard of
care.
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6. * Employees.
(a) * .
(b) * .
(c) * .
(d) * .
(e) * .
7. Miscellaneous.
(a) This Agreement shall be effective beginning on the 3rd day
of January, 1999 and, unless sooner terminated or renewed as provided in this
Section, shall terminate on January 2, 2004. This Agreement shall automatically
renew and remain in effect for any Renewal Term of the Operating Agreement.
Subject to the following sentence, this Agreement shall terminate as follows:
(i) upon the written consent of Newcourt and all of
the Members of the Company;
(ii) upon the Insolvency or dissolution of the
Company; or
(iii) upon the termination or expiration of the
Operating Agreement .
Upon termination or expiration of this Agreement, the rights
and obligations of the parties set forth herein as they relate to completed
Financings and Ancillary Services will continue in full force and effect.
Notwithstanding any other provision of this Agreement to the contrary, upon
termination or expiration of this Agreement all obligations of Newcourt with
respect to the Joint Employees shall terminate as provided in Section 6 of this
Agreement.
(b) This Agreement contains the entire agreement between the
parties hereto with respect to the subject matter hereof, and any agreement
hereafter shall be ineffective to
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* Indicates that material has been omitted and confidential treatment
has been requested therefor. All such omitted material has been filed separately
with the SEC pursuant to Rule 24b-2.
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modify or amend such agreement or constitute a waiver of any of the provisions
hereof unless such agreement is in writing and signed by the party against whom
enforcement, modification, amendment or waiver is sought.
(c) All notices, requests, consents, or other communications
provided for in or to be given under this Agreement shall be in writing, may be
delivered in person, by overnight air courier or by mail, return receipt
requested, and shall be deemed to have been duly given and to have become
effective (i) upon receipt if delivered in person, (ii) one day after having
been delivered to an overnight air courier, or (iii) three days after having
been deposited in the mails as certified or registered matter, all fees prepaid,
directed to the parties or their assignees at the following addresses (or at
such other address as shall be given in writing by a party hereto):
Company: Snap-on Credit LLC
2801 80th Street
Kenosha, Wisconsin 53141-1410
Attention: General Manager and Chief Financial Officer
Newcourt: CFO & Chief Counsel
Newcourt Financial USA Inc.
2 Gatehall Drive
Parsippany, New Jersey 07054
Any person required to give notice pursuant to this Agreement
shall have the burden of proving the validity of the notice.
(d) The invalidity of any clause, part or provision of this
Agreement shall not affect the validity of the remaining portions hereof.
(e) This Agreement shall not be assigned by either party
without the prior written consent of the other party. It is understood and
agreed that Newcourt may delegate any or all of its duties and responsibilities
herein to any Affiliate of Newcourt. Such Affiliate shall, on behalf of
Newcourt, deliver Services to Company subject to the provisions of this
Agreement, including without limitation, Section 5 hereof. Thus, references to
Newcourt in this Agreement means Newcourt itself and, when acting through one or
more of its Affiliates, those Affiliates.
(f) Section headings are for descriptive purposes only and
shall not control or alter the meaning of this Agreement as set forth in the
text. When the context in which words are used in this Agreement indicates that
such is the intent, words in the singular shall include the plural, and vice
versa, and pronouns in the masculine shall include the feminine and neuter, and
vice versa. Additionally, all defined phrases, pronouns, and other variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular,
or plural, as the actual identity of the organization, person, or persons may
require. No provision of this Agreement shall be construed against any party
hereto by reason of the extent to which such party or its counsel participated
in the drafting hereof.
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(g) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Wisconsin.
(h) This Agreement may be executed in any number of
counterparts, and the counterparts together shall constitute one agreement
binding all parties and their permitted successors and assigns.
(i) In the event of any dispute, claim, question or
disagreement arising out of or relating to this Agreement the parties shall use
reasonable efforts to settle such dispute, claim, question or disagreement. To
this effect, they shall consult and negotiate with each other, in good faith,
and, recognizing their mutual interests, attempt to reach a just and equitable
solution satisfactory to both parties. If settlement is not otherwise possible
within a reasonable time (not to exceed 20 days), the Chief Executive Officers,
Chief Financial Officers, or other comparable senior executive officers of
Company and Newcourt, respectively, shall become involved in such efforts.
(j) If the parties do not reach a solution within a period of
thirty (30) days after a matter is referred for conciliation, as provided above,
the dispute shall be submitted to final and binding arbitration as the sole and
exclusive remedy for such dispute. Unless prohibited by applicable law, any
claim shall be made by filing a written demand for arbitration within one (1)
year following the conduct, act or other event or occurrence first giving rise
to the claim; otherwise, the right to any remedy shall be deemed forever waived
and lost. The right and duty of the parties to this Agreement to resolve any
disputes by arbitration shall be governed exclusively by the Federal Arbitration
Act, as amended, and arbitration shall take place according to the commercial
arbitration rules of the American Arbitration Association in effect as of the
date hereof. The arbitration shall be held at the office of the American
Arbitration Association in Chicago, Illinois. Each party will select one
arbitrator and the two so chosen will select a third, and failing selection of
an arbitrator by either party or by the two chosen by the parties, the
arbitrator(s) shall be selected from a panel of neutral arbitrators provided by
the American Arbitration Association and shall be chosen by the striking method.
The parties each shall bear all of their own costs of arbitration; however, the
fees of the arbitrators shall be divided equally between the parties. The
arbitrators shall have no authority to amend or modify the terms of this
Agreement. Each party further agrees that, unless such a limitation is
prohibited by applicable law, the other party shall not be liable for punitive
or exemplary damages and the arbitrators shall have no authority to award the
same. The award or decision by a majority of the arbitrators shall be final and
binding on the parties and may be enforced by judgment or order of any court
having subject matter jurisdiction in the state where the arbitration took place
(an "Arbitration State Court") or by any other court having jurisdiction over
the parties. The parties consent to the exercise of personal jurisdiction over
them by any such Arbitration State Court and to the propriety of venue of any
such Arbitration State Court for the purpose of carrying out this provision; and
they waive any objections that they would otherwise have to the same. No
arbitration under this Agreement shall include, by consolidation, joinder or in
any other manner, any Person other then the parties hereto and any Person in
privity with or claiming through, in the right of or on behalf of such a party,
unless both Company and Newcourt consent in writing. To the extent permitted by
applicable law, no issue of fact or law shall be given preclusive or
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collateral estoppel effect in any arbitration hereunder, except to the extent
such issue may have been determined in another proceeding between Newcourt and
Company or any person in privity with or claiming through, in the right of or on
behalf of Newcourt or Company.
(k) Newcourt and Company agree to perform all further acts and
execute, acknowledge and deliver any documents that may be reasonably necessary,
appropriate or desirable to carry out the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Management
Services Agreement as of the day and year first above written.
SNAP-ON CREDIT LLC
By: /s/ Ned R. Brooks
Name: Ned R. Brooks
Title: General Manager
NEWCOURT FINANCIAL USA INC.
By: /s/ Robert J. Hicks
Name: Robert J. Hicks
Title: Executive Vice President
Snap-on Incorporated hereby agrees to the terms of Section 6(d) which
are applicable to it.
SNAP-ON INCORPORATED
By: /s/ Donald S. Huml
Name: Donald S. Huml
Title: Chief Financial Officer
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NEWCOURT MANAGEMENT SERVICES AGREEMENT
DESCRIPTION OF ATTACHMENTS+
Exhibits:
Exhibit A Credit Incentive Management Fees
Exhibit B Form of Addendum
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+ The exhibits to this document are not being filed herewith. The
registrant agrees to furnish supplementally a copy of any such schedule or
exhibit to the Securities and Exchange Commission upon request.