EXHIBIT 10.4
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of the 21st
day of December 1998 by and between TISM, Inc., a Michigan corporation (together
with each of its direct and indirect subsidiaries signatory hereto or hereafter
becoming party hereto by executing a counterpart signature page hereof, the
"Company") and Bain Capital Partners VI, L.P., a Delaware limited partnership
("Bain").
WHEREAS, TM Transitory Merger Corporation ("MergerCo") was formed for
the purpose of effecting the recapitalization of the Company (the
"Recapitalization"), all on the terms and subject to the conditions of that
certain Agreement and Plan of Merger dated as of September 25, 1998 (as
amended, restated, supplemented or otherwise modified, the "Merger
Agreement") among the Company, MergerCo and Thomas S. Monaghan
("Monaghan");
WHEREAS, Bain is providing advisory and other services in connection
with the senior secured financing (the "Senior Financing") being provided
for the Recapitalization pursuant to a Credit Agreement dated on or about
the date hereof by J.P. Morgan Securities Inc., as arranger and syndication
agent, Morgan Guaranty Trust Company of New York, as administrative agent,
and the lending institutions from time to time party thereto (the "Credit
Agreement");
WHEREAS, certain funds (the "Bain Funds") affiliated with Bain are
providing equity financing (the "Equity Investments") in connection with
the Recapitalization; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Company desires to retain Bain to provide certain management and advisory
services to the Company, and Bain desires to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. SERVICES. Bain hereby agrees that, during the term of this Agreement (the
"Term"), it will:
(a) provide the Company with advice in connection with the negotiation and
consummation of agreements, contracts, documents and instruments
necessary to provide the Company with financing from banks or other
financial institutions or other entities on terms and conditions
satisfactory to the Company; and
(b) provide the Company with financial, managerial and operational advice
in connection with its day-to-day operations, including, without
limitation:
(i) advice with respect to the investment of funds; and
(ii) advice with respect to the development and implementation of
strategies for improving the operating, marketing and financial
performance of the Company.
2. PAYMENT OF FEES. The Company hereby agrees to:
(a) pay to Bain (or an affiliate of Bain designated by it) a fee in the
amount of $11.75 million in connection with the structuring of the
Senior Financing for the Recapitalization, together with reimbursement
of Bain's expenses incurred on behalf of the Company through the
Closing Date (as defined in the Merger Agreement) in connection with
the Recapitalization, such fees and expenses being payable by the
Company at the closing of the Recapitalization or, if the
Recapitalization is not consummated, promptly after the time the
Company has abandoned the Recapitalization;
(b) during the Term, pay to Bain (or an affiliate of Bain designated by
it) a management fee in an amount not to exceed $2 million per annum
in exchange for the services provided to the Company by Bain, as more
fully described in Section 1, such fee being payable by the Company
quarterly in advance, the first such payment to be made at the closing
of the Recapitalization; and
(c) during the Term, allow Bain to participate in the negotiation and
consummation of senior financing for any recapitalization or
acquisition or other similar transactions by the Company, and pay to
Bain (or an affiliate of Bain designated by it) a fee in connection
therewith equal to one percent (1%) of the gross purchase price of the
transaction (including all liabilities assumed or otherwise included
in the transaction), such fee to be due and payable for the foregoing
services at the closing of such transaction, whether or not any such
senior financing is actually committed or drawn upon.
Each payment made pursuant to this Section 2 shall be paid by wire transfer
of immediately available federal funds to the account specified on Schedule
1 hereto, or to such other account(s) as Bain may specify to the Company in
writing prior to such payment.
Bain hereby acknowledges that the Credit Agreement contains certain limits
on the fees payable to Bain pursuant to this Section 2.
mutual consent of the parties, for so long as Bain (or any successor or
permitted assign, as the case may be) continues to carry on the business of
providing services of the type described in Section 1; provided, however,
that (a) either party may terminate this Agreement following a material
breach of the terms of this Agreement by the other party hereto and a
failure to cure such breach within 30 days following written notice thereof
and (b) Bain may terminate this Agreement upon not less than 60 days
written notice to the Company; and provided further that each of (x) the
obligations of the Company under Section 4, (y) any and all accrued and
unpaid obligations of the Company owed under Section 2 and (z) the
provisions of Section 7 shall survive any termination of this Agreement to
the maximum extent permitted under applicable law.
4. EXPENSES; INDEMNIFICATION.
(a) Expenses. The Company agrees to pay on demand all expenses incurred
by Bain, the Bain Funds and Bain Capital, Inc. (or any of them) in
connection with this Agreement, the Recapitalization and such other
transactions and all operations hereunder or in respect of the Equity
Investments or otherwise incurred in connection with the
Recapitalization or the Company, including but not limited to (i) the
fees and disbursements of: (A) Ropes & Gray, special counsel to Bain
Capital, Inc. and the Bain Funds, (B) PricewaterhouseCoopers LLP,
accountant to Bain Capital, Inc. and the Bain Funds and (C) any other
consultants or advisors retained by Bain, Bain Capital, Inc., the Bain
Funds or either of the parties identified in clauses (A) and (B)
arising in connection therewith (including but not limited to the
preparation, negotiation and execution of this Agreement and any other
agreement executed in connection herewith or in connection with the
Recapitalization, the Senior Financing or the consummation of the
other transactions contemplated hereby (and any and all amendments,
modifications, restructurings and waivers, and exercises and
preservations of rights and remedies hereunder or thereunder) and the
operations of the Company) and (ii) any out-of-pocket expenses
incurred by Bain, the Bain Funds and Bain Capital, Inc. (or any of
them) in connection with the provision of services hereunder or the
attendance at any meeting of the board of directors (or any committee
thereof) of the Company or any of its affiliates.
(b) Indemnity and Liability. In consideration of the execution and
delivery of this Agreement by Bain and the provision of the Equity
Investments by the Bain Funds, the Company hereby agrees to indemnify,
exonerate and hold each of Bain, Bain Capital, Inc. and each Bain
Fund, and each of their respective partners, shareholders, affiliates,
directors, officers, fiduciaries, employees and agents and each of the
partners, shareholders, affiliates, directors, officers, fiduciaries,
employees and agents of each of the foregoing (collectively, the
"Indemnitees") free and harmless from and against any and all actions,
causes of action, suits, losses, liabilities and damages, and expenses
in connection therewith, including without limitation attorneys' fees
and disbursements (collectively, "Liabilities"), incurred by the
Indemnitees or any of them as a result of, or arising out of, or
relating to the Recapitalization, the execution, delivery,
performance, enforcement or existence of this Agreement or the
transactions contemplated hereby (including but not limited to any
indemnification obligations assumed or incurred by any Indemnitee to
or on behalf of Seller, or any of its accountants or other
representatives, agents or affiliates) (collectively, the "Indemnified
Liabilities") except for any such Indemnified Liabilities arising on
account of such Indemnitee's willful misconduct, and if and to the
extent that the foregoing undertaking may be unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law.
5. ASSIGNMENT, ETC. Except as provided below, neither party shall have the
right to assign this Agreement. Bain acknowledges that its services under
this Agreement are unique. Accordingly, any purported assignment by Bain
(other than as provided below) shall be void. Notwithstanding the
foregoing, (a) Bain may assign all or part of its rights and obligations
hereunder to any affiliate of Bain which provides services similar to those
called for by this Agreement, in which event Bain shall be released of all
of its rights and obligations hereunder and (b) the provisions hereof for
the benefit of the Bain Funds shall inure to the benefit of their
successors and assigns.
6. AMENDMENTS AND WAIVERS. No amendment or waiver of any term, provision or
condition of this Agreement shall be effective, unless in writing and
executed by each of Bain and the Company. No waiver on any one occasion
shall extend to or effect or be construed as a waiver of any right or
remedy on any future occasion. No course of dealing of any person nor any
delay or omission in exercising any right or remedy shall constitute an
amendment of this Agreement or a waiver of any right or remedy of any party
hereto.
7. MISCELLANEOUS.
(a) Choice of Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of The Commonwealth of
Massachusetts without giving effect to any choice or conflict of law
provision or rule that would cause the application of the domestic
substantive laws of any other jurisdiction.
(b) Consent to Jurisdiction. Each of the parties agrees that all actions,
suits or proceedings arising out of or based upon this Agreement or
the subject matter
hereof shall be brought and maintained exclusively in the federal and
state courts of The Commonwealth of Massachusetts. Each of the parties
hereto by execution hereof (i) hereby irrevocably submits to the
jurisdiction of the federal and state courts in The Commonwealth of
Massachusetts for the purpose of any action, suit or proceeding
arising out of or based upon this Agreement or the subject matter
hereof and (ii) hereby waives to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, suit or proceeding, any
claim that it is not subject personally to the jurisdiction of the
above-named courts, that it is immune from extraterritorial injunctive
relief or other injunctive relief, that its property is exempt or
immune from attachment or execution, that any such action, suit or
proceeding may not be brought or maintained in one of the above-named
courts, that any such action, suit or proceeding brought or maintained
in one of the above-named courts should be dismissed on grounds of
forum non conveniens, should be transferred to any court other than
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one of the above-named courts, should be stayed by virtue of the
pendency of any other action, suit or proceeding in any court other
than one of the above-named courts, or that this Agreement or the
subject matter hereof may not be enforced in or by any of the above-
named courts. Each of the parties hereto hereby consents to service
of process in any such suit, action or proceeding in any manner
permitted by the laws of The Commonwealth of Massachusetts, agrees
that service of process by registered or certified mail, return
receipt requested, at the address specified in or pursuant to Section
9 is reasonably calculated to give actual notice and waives and agrees
not to assert by way of motion, as a defense or otherwise, in any such
action, suit or proceeding any claim that service of process made in
accordance with Section 9 does not constitute good and sufficient
service of process. The provisions of this Section 7(b) shall not
restrict the ability of any party to enforce in any court any judgment
obtained in a federal or state court of The Commonwealth of
Massachusetts.
(c) Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY
ISSUE, CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND
WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each of the parties hereto
acknowledges that it has been informed by each other party that the
provisions of this Section 7(c) constitute a material inducement upon
which such party is relying and will rely in entering into this
Agreement and the transactions contemplated hereby. Any of the
parties hereto may file an original counterpart or a copy of this
Agreement with any court as written
evidence of the consent of each of the parties hereto to the waiver of
its right to trial by jury.
8. MERGER/ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof and supersedes any
prior communication or agreement with respect thereto.
9. NOTICE. All notices, demands, and communications of any kind which any
party may require or desire to serve upon any other party under this
Agreement shall be in writing and shall be served upon such other party and
such other party's copied persons as specified below by personal delivery
to the address set forth for it below or to such other address as such
party shall have specified by notice to each other party or by mailing a
copy thereof by certified or registered mail, or by Federal Express or any
other reputable overnight courier service, postage prepaid, with return
receipt requested, addressed to such party and copied persons at such
addresses. In the case of service by personal delivery, it shall be deemed
complete on the first business day after the date of actual delivery to
such address. In case of service by mail or by overnight courier, it shall
be deemed complete, whether or not received, on the third day after the
date of mailing as shown by the registered or certified mail receipt or
courier service receipt. Notwithstanding the foregoing, notice to any
party or copied person of change of address shall be deemed complete only
upon actual receipt by an officer or agent of such party or copied person.
If to the Company, to it at:
TISM, Inc.
30 Frank Lloyd Wright Drive
P.O. Box 997
Ann Arbor, MI 48106-0997
Attention: Chief Executive Officer
with a copy to:
Bain Capital Partners VI, L.P.
Two Copley Place, 7th Floor
Boston, MA 02116
Attention: Mark E. Nunnelly
Robert F. White
Andrew B. Balson
If to Bain, to it at:
Two Copley Place, 7th Floor
Boston, MA 02116
Attention: Mark E. Nunnelly
Robert F. White
Andrew B. Balson
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attention: R. Newcomb Stillwell
10. SEVERABILITY. If in any judicial or arbitral proceedings a court or
arbitrator shall refuse to enforce any provision of this Agreement, then
such unenforceable provision shall be deemed eliminated from this Agreement
for the purpose of such proceedings to the extent necessary to permit the
remaining provisions to be enforced. To the full extent, however, that the
provisions of any applicable law may be waived, they are hereby waived to
the end that this Agreement be deemed to be valid and binding agreement
enforceable in accordance with its terms, and in the event that any
provision hereof shall be found to be invalid or unenforceable, such
provision shall be construed by limiting it so as to be valid and
enforceable to the maximum extent consistent with and possible under
applicable law.
11. DISCLAIMER AND LIMITATION OF LIABILITY.
(a) Disclaimer. Bain makes no representations or warranties, express or
implied, in respect of the services to be provided by it hereunder.
(b) Standard of Care. Neither Bain nor any other Indemnitee shall be
liable to the Company or any of its affiliates for any act, alleged
act, omission or alleged omission suffered or taken by Bain or any
other Indemnitee that does not constitute willful misconduct.
(c) Freedom to Pursue Opportunities, Etc. In anticipation that the
Company and Bain (or one or more affiliates, associated investment
funds or portfolio companies, or clients of Bain) may engage in the
same or similar activities or lines of business and have an interest
in the same areas of corporate opportunities, and in recognition of
the benefits to be derived by the Company from the services to be
provided under this Agreement and in recognition of the difficulties
which may confront any advisor who desires and endeavors fully to
satisfy such advisor's duties in determining the full scope of such
duties in any particular situation, the provisions of this clause (c)
are set forth to regulate, define and guide the conduct of certain
affairs of the Company as they may involve Bain. Except as Bain may
otherwise agree in writing after the date hereof:
(i) Bain shall have the right to, and shall have no duty
(contractual or otherwise) not to, directly or indirectly:
(A) engage in the same or similar business activities or
lines of business as the Company, including those competing
with the Company and (B) do business with any client or
customer of the Company;
(ii) Neither Bain nor any officer, director, employee, partner,
affiliate or associated entity thereof shall be liable to the
Company or its affiliates for breach of any duty (contractual
or otherwise) by reason of any such activities of or of such
person's participation therein; and
(iii) In the event that Bain acquires knowledge of a potential
transaction or matter that may be a corporate opportunity for
both the Company and Bain or any other person, Bain shall
have no duty (contractual or otherwise) to communicate or
present such corporate opportunity to the Company and,
notwithstanding any provision of this Agreement to the
contrary, shall not be liable to the Company or its
affiliates for breach of any duty (contractual or otherwise)
by reason of the fact that Bain directly or indirectly
pursues or acquires such opportunity for itself, directs such
opportunity to another person, or does not present such
opportunity to the Company.
(d) Limitation of Liability. In no event will either party hereto be
liable to the other for any indirect, special, incidental or
consequential damages, including lost profits or savings, whether or
not such damages are foreseeable, or in respect of any Liabilities
relating to any third party claims (whether based in contract, tort or
otherwise) other than the Indemnified Liabilities, relating to the
services to be provided by Bain hereunder.
11. COUNTERPARTS. This Agreement may be executed in any number of counterparts
and by each of the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.
The Company: TISM, INC.
By /s/ Harry J. Silverman
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Name: Harry J. Silverman
Title: Vice President
DOMINO'S, INC.
By /s/ Harry J. Silverman
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Name: Harry J. Silverman
Title: Vice President
DOMINO'S PIZZA, INC.
By /s/ Harry J. Silverman
------------------------------
Name: Harry J. Silverman
Title: Vice President
BLUEFENCE, INC.
By /s/ Harry J. Silverman
------------------------------
Name: Harry J. Silverman
Title: President
Bain: BAIN CAPITAL PARTNERS VI, L.P.
By Bain Capital Investors VI, Inc.,
its general partner
By /s/ Mark E. Nunnelly
--------------------------
Name: Mark E. Nunnelly
Title: Managing Director
Schedule 1 to
Management Agreement
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WIRE TRANSFER INSTRUCTIONS FOR
BAIN CAPITAL PARTNERS VI, L.P.
Citibank, N.A.
ABA # 021 000 089
For Brown Brothers Harriman
Account # 09250276
To Further Credit:
Bain Capital Partners VI, L.P.
Acct. # 610276-8