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EXHIBIT 10.1
CONSULTING AGREEMENT
This CONSULTING AGREEMENT, dated as of March 17, 2000 (the "Agreement"),
by and among Complete Business Solutions, Inc., a Michigan corporation (the
"Company"), and Clayton, Dubilier & Rice, Inc., a Delaware corporation ("CD&R").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Company is entering into (i) a Stock Purchase Agreement, dated as of the
date hereof (the "Stock Purchase Agreement"), by and among the Company and
CDR-COOKIE Acquisition, L.L.C., a Delaware limited liability company
("CDR-Cookie VI"), CDR-COOKIE Acquisition VI-A, L.L.C., a Delaware limited
liability company ("CDR-Cookie VI-A" and together with CDR-COOKIE VI, the
"Purchasers"), pursuant to which each of the Purchasers shall subscribe for and
purchase shares of preferred stock, without par value, of the Company and a
warrant to purchase shares of common stock, without par value, of the Company,
and (ii) an Indemnification Agreement, dated as of the date hereof (the
"Indemnification Agreement"), by and among the Company, CD&R and Clayton
Dubilier & Rice Fund VI Limited Partnership, a Cayman Islands exempted limited
partnership (the "CD&R Fund") (capitalized terms used herein without definition
having the meanings ascribed in the Indemnification Agreement); and
WHEREAS, the Company desires to receive financial and managerial
advisory services from CD&R, and CD&R desires to provide such services to the
Company;
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth and the mutual benefits to be derived herefrom,
the parties hereto hereby agree as follows:
1. Engagement. The Company hereby engages CD&R as a consultant, and CD&R
hereby agrees to provide financial and managerial advisory services to the
Company, all on the terms and subject to the conditions set forth below.
2. Services, etc. (a) CD&R hereby agrees, during the term of this
Agreement, to assist, advise and consult with the respective Boards of Directors
and management of the Company and its Subsidiaries in such manner and on such
business, management and financial matters, and provide such other financial and
managerial advisory services (collectively, the "Services"), as may be
reasonably requested from time
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to time by the Board of Directors of the Company, including but not limited to
assistance in:
(i) developing and implementing corporate and business strategy and
planning for the Company and its Subsidiaries, including plans
and programs for improving operating, marketing and financial
performance, budgeting of future corporate investments,
acquisition and divestiture strategies, reorganizational
programs, customer segmentation and strategic plans for the
Indian operations of the Company;
(ii) assisting in the recruitment of key management employees;
(iii) following the consummation of the Initial Closing, assisting
in arranging future debt and equity financings and refinancings
for corporate purposes; and
(iv) following the consummation of the Initial Closing, providing
professional employees to serve as directors or officers of the
Company and its Subsidiaries.
(b) CD&R will assign a team of professional employees of CD&R to
provide the Services to be rendered by CD&R pursuant to Section 2(a). Mr. Ned
Lautenbach, or a replacement professional employee of CD&R (who shall be
selected by CD&R and shall be reasonably satisfactory to the Company), will be
the senior operating leader of such team of professional employees.
(c) The Company will use its reasonable efforts to furnish CD&R
with such information as CD&R believes appropriate to its engagement hereunder
(all such information so furnished being referred to herein as the
"Information"). The Company recognizes and confirms that (i) CD&R will use and
rely primarily on the Information and on information available from generally
recognized public sources in performing the Services, and (ii) CD&R does not
assume responsibility for the accuracy or completeness of the Information and
such other information. The parties agree that (x) the Information furnished
hereunder will constitute part of the Confidential Information (as defined under
the confidentiality agreement, dated February 1, 2000 (the "Confidentiality
Agreement"), by and between CD&R and the Company) to the extent such Information
meets the definition of Confidential Information under the Confidentiality
Agreement, and that the Confidentiality Agreement shall govern the disclosure
and use by CD&R of such Information until the later of (A) February 1, 2002 and
(B) two years following the termination of this Agreement and (y) the provisions
of the Confidentiality Agreement are hereby amended to the extent necessary to
(A) permit CD&R to disclose or reveal the
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Information to the members of the team of professional employees of CD&R
assigned pursuant to Section 2(b), and (B) permit CD&R to use the Information
to render the Services pursuant to Section 2(a).
3. Compensation; Payment of Expenses. (a) The Company agrees to pay to
CD&R, immediately upon the consummation of the Initial Closing, pursuant to the
Stock Purchase Agreement, a fee of $6 million plus reasonable fees and expenses.
(b) The Company agrees to pay to CD&R, as compensation for the Services
to be rendered by CD&R hereunder, a fee of $500,000 per year (the "Services
Fee"), payable on the first day of the month in monthly installments of
$83,333.33 in arrears commencing on April 1, 2000. The Services Fee may, in the
sole discretion of a majority of the members of the Company's Board of Directors
who are not Affiliates of CD&R, be increased but may not be decreased without
the prior written consent of CD&R. The Company shall pay to CD&R all fees,
perquisites and grants of stock options to which each employee of CD&R elected
to serve on the Board of Directors of the Company (a "Designated Director")
would be entitled as an outside director under the compensation policies of the
Board as in effect from time to time; provided, that CD&R shall cause such
Designated Director to waive any and all consulting fees to which such
Designated Director would otherwise be entitled for any period for which the
Services Fee or any installment thereof is paid and for which such Designated
Director continues to be employed by CD&R.
(c) The Company agrees to reimburse CD&R for such reasonable travel and
other out-of-pocket expenses ("Expenses") as may be incurred by CD&R and its
employees, agents and advisors in the course or on account of rendering of the
Services, including but not limited to any reasonable fees and expenses of any
legal, accounting or other professional advisors to CD&R engaged in connection
with the Services and any reasonable expenses incurred by any Designated
Director in connection with the performance of his duties. CD&R may submit
monthly expense statements, which shall be payable within thirty days.
4. Term, etc. (a) This Agreement shall be in effect until terminated in
accordance herewith. CD&R may terminate this Agreement upon written notice to
the Company in the event of (i) the acquisition by any person other than the
Purchasers or any Affiliate thereof of a controlling equity interest in the
Company, (ii) the fifth anniversary of the Initial Closing under the Stock
Purchase Agreement, (iii) the Director Termination Date under the Stock Purchase
Agreement, (iv) a termination of the Stock Purchase Agreement pursuant to the
terms thereof prior to the consummation of the Subsequent Closing thereunder,
and (v) August 30, 2000, if the transactions to be consummated in the Subsequent
Closing shall not as of such date have been approved as required under the
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applicable rules and regulations of the NASD by the requisite vote of the
Company's shareholders. This Agreement may be earlier terminated by either party
hereto upon 180 days' prior written notice to the other party hereto. The
provisions of this Agreement shall survive any termination of this Agreement,
except for the provisions of Section 1, Section 2(a), Section 2(b), the first
sentence of Section 2(c) and (solely as to any portion of the Services Fee or
any Expense not paid or reimbursed prior to such termination and not required to
be paid or reimbursed thereafter pursuant to Section 4(c) hereof) Section 3
hereof.
(b) Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Company, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, the Company under this Agreement with the same effect as if
such successor corporation had been a party thereto. Subject to Section 4(a), no
such consolidation, merger or conveyance, transfer or lease of all or
substantially all of the assets of the Company shall have the effect of
terminating this Agreement or of releasing the Company or any such successor
corporation from its obligations hereunder.
(c) Upon any termination of this Agreement, the Company shall
immediately pay or reimburse, as the case may be, (i) any accrued and unpaid
installment of the Services Fee or portion thereof (pro rated, with respect to
the month in which such termination occurs, for the portion of such month that
precedes such termination), and (ii) any unpaid and unreimbursed Expenses that
have been incurred prior to such termination (whether or not such Expenses shall
then have become payable). In the event of the liquidation of the Company, all
amounts due CD&R hereunder shall be paid to CD&R before any liquidating
distributions or similar payments are made to stockholders of the Company.
5. Indemnification. (a) The Company confirms and reaffirms its
obligations pursuant to the Indemnification Agreement. Without limiting the
generality of the foregoing, the Company confirms and agrees that (x) it shall
indemnify, defend and hold harmless CD&R, the CD&R Fund, CD&R Associates and
Associates Inc., their respective successors and assigns, each of the respective
directors, officers, partners, employees, agents, advisors, representatives and
controlling persons (within the meaning of the Securities Act of 1933, as
amended), each person controlled (within the meaning of the Securities Act of
1933, as amended) by any of the foregoing, and each other person who becomes a
director or officer of the Company or any Subsidiary following the Initial
Closing and who is an Affiliate of CD&R, and their respective successors and
assigns (collectively, "Indemnitees") from and against any and all claims,
obligations, liabilities, causes of action, actions, suits, proceedings,
investigations, judgments, decrees, losses,
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damages, fees, costs and expenses (including without limitation interest,
penalties and fees and disbursements of attorneys, accountants, investment
bankers and other professional advisors) (collectively, "Obligations"), whether
incurred with respect to third parties or otherwise, in any way resulting from,
arising out of or in connection with, based upon or relating to, the performance
of the Services, except to the extent that any such Obligation is found in a
final judgment by a court having jurisdiction to have resulted from the gross
negligence or intentional misconduct of an Indemnitee, (y) no Indemnitee shall
have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company or their respective security holders or creditors with
respect to any Obligation in any way resulting from, arising out of or in
connection with, based upon or relating to, the performance of the Services,
except to the extent that any such Obligation is found in a final judgment by a
court having jurisdiction to have resulted from the gross negligence or
intentional misconduct of an Indemnitee, and (z) the rights of each Indemnitee
to be indemnified under any agreement, document, certificate or instrument or
applicable law are independent of and in addition to any rights of such
Indemnitee under any other agreement, document, certificate or instrument or
applicable law.
(b) The Company hereby agrees to advance reasonable costs and expenses,
including reasonable attorneys' fees, incurred by CD&R (acting on its own behalf
or, if requested by any such Indemnitee other than itself, on behalf of such
Indemnitee) or any Indemnitee in defending any claim relating to any Obligation
in advance of the final disposition of such claim within 30 days of receipt from
CD&R of (i) a notice setting forth the amount of such costs and expenses (a
"Payment Notice") and (ii) an undertaking by or on behalf of CD&R or such
Indemnitee to repay amounts so advanced if it shall ultimately be determined
that CD&R or such Indemnitee is not entitled to be indemnified by the Company as
authorized by this Agreement. CD&R may submit Payment Notices to the Company
monthly.
6. Independent Contractor Status. The parties agree that CD&R shall
perform services hereunder as an independent contractor, retaining control over
and responsibility for its own operations and personnel. The parties further
agree that, subject to the second sentence of Section 2(b), (i) CD&R may, in its
sole discretion, remove or substitute any of the members of, or add members to,
the team of professional employees of CD&R which will be providing the Services
pursuant to Section 2(b) from time to time on the basis of necessity,
desirability or otherwise, and (ii) any such removal, substitution or addition
shall not in any way modify or affect any of the obligations of the Company
hereunder, including, without limitation, its obligation to pay the Services
Fee. Neither CD&R nor any of its employees or agents shall, solely by virtue of
this Agreement or the arrangements hereunder, be considered employees or agents
of the Company nor shall any of them have authority to contract in the name of
or bind the Company, except (a) to the extent that any professional employee of
CD&R may be serving as a director or an officer
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of the Company pursuant to Section 2(a)(iv) hereof or (b) as expressly agreed to
in writing by the Company. Any duties of CD&R arising out of its engagement to
perform services hereunder shall be owed solely to the Company.
7. Notices. Any notice or other communication required or permitted to
be given or made under this Agreement by one party to the other parties shall be
in writing and shall be deemed to have been duly given and effective (i) on the
date of delivery if delivered personally or (ii) when sent if sent by prepaid
telegram, or mailed first-class, postage prepaid, registered or certified mail,
or facsimile transmission as follows (or to such other address as shall be given
in writing by one party to the other parties in accordance herewith):
If to the Company to:
Facsimile:
Telephone:
Attention:
If to CD&R, to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
18th Floor
New York, New York 10152
Telephone: (212) 407-5200
Telecopy: (212) 407-5252
Attention: Kevin J. Conway
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Telecopy: (212) 909-6836
Attention: Franci J. Blassberg, Esq.
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8. Entire Agreement. This Agreement, together with the Indemnification
Agreement and the Confidentiality Agreement, (a) contains the complete and
entire understanding and agreement of CD&R and the Company with respect to the
subject matter hereof and (b) supersedes all prior and contemporaneous
understandings, conditions and agreements, oral or written, express or implied,
in respect of the subject matter hereof, including but not limited to in respect
of the engagement of CD&R in connection with the subject matter hereof. There
are no representations or warranties of CD&R in connection with this Agreement
or the Services to be provided hereunder, except as expressly made and contained
in this Agreement.
9. Headings. The headings contained in this Agreement are for purposes
of convenience only and shall not affect the meaning or interpretation of this
Agreement.
10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
11. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and assigns and to each Indemnitee, provided that neither this
Agreement nor any right, interest or obligation hereunder shall be assigned by
either party, whether by operation of law or otherwise, without the express
written consent of the other party hereto. This Agreement is not intended to
confer any right or remedy hereunder upon any person other than the parties to
this Agreement and their respective successors and permitted assigns and each
Indemnitee.
12. Governing Law. This Agreement shall be governed in all respects
including as to validity, interpretations and effects by the laws of the State
of New York, without giving effect to its principles or rules of conflict of
laws to the extent such principles or rules would require or permit the
application of the laws of another jurisdiction. The Company and CD&R hereby
irrevocably submit to the jurisdiction of the courts of the Federal courts of
the United States of America, in each case located in the State, City and County
of New York, solely in respect of the interpretation and enforcement of the
provisions of this Agreement, and hereby waive, and agree not to assert, as a
defense in any action, suit or proceeding for the interpretation or enforcement
hereof, that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in such courts or that the venue
thereof may not be appropriate or that this Agreement may not be enforced in or
by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Federal court. The Company and CD&R hereby
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consent to and grant any such court jurisdiction over the person of such parties
and over the subject matter of any such dispute and agree that mailing of
process or other papers in connection with any such action or proceeding in the
manner provided in Section 7, or in such other manner as may be permitted by
law, shall be valid and sufficient service thereof.
13. Waiver of Jury Trial. Each party hereto acknowledges and agrees that
any controversy that may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore it hereby irrevocably and
unconditionally waives any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of or relating to this
Agreement, or the breach, termination or validity of this Agreement, or the
transactions contemplated by this Agreement. Each party certifies and
acknowledges that (a) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (b) it understands
and has considered the implications of this waiver, (c) it makes this waiver
voluntarily, and (d) it has been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications contained in this Section
13.
14. Miscellaneous. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement is not intended to confer any
right or remedy hereunder upon any person other than each of the parties hereto
and their respective successors and permitted assigns and each other Indemnitee.
No amendment, modification, supplement or discharge of this Agreement, and no
waiver hereunder, shall be valid or binding unless set forth in writing and duly
executed by the party or Indemnitee against whom enforcement of the amendment,
modification, supplement, discharge or waiver is sought (and in the case of the
Company, approved by resolution of a majority of the members of the Board of
Directors of the Company who are not Affiliates of CD&R). Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party or Indemnitee
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto or any Indemnitee of a breach of or a
default under any of the provisions of this Agreement, nor the failure by any
party hereto or any Indemnitee on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right, powers or privilege
hereunder, shall be construed as a waiver of any other breach or default of a
similar nature, or as a waiver of any of such provisions, rights, power or
privileges hereunder. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies that any party or Indemnitee may
otherwise have at law or in equity or otherwise.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
CLAYTON, DUBILIER & RICE, INC.
By: _______________________________
Name:
Title:
COMPLETE BUSINESS SOLUTIONS, INC.
By: _______________________________
Name:
Title: Executive Vice President
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