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exv10w24

 

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EXHIBIT 10.24

CORPORATE EXECUTIVE EMPLOYMENT AGREEMENT

THIS CORPORATE EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made effective as of November 1,
2004, by and between (Executive) (“Executive”) and ABM Industries Incorporated (“Company”) for
itself and on behalf of its subsidiary corporations as applicable herein.

WHEREAS, Company is engaged in the building maintenance and related service businesses, and

WHEREAS, Executive is experienced in the administration, finance, marketing, and/or operation of
such services, and

WHEREAS, Company has invested significant time and money to develop proprietary trade secrets and
other confidential business information, as well as invaluable goodwill among its customers, sales
prospects and employees, and

WHEREAS, Executive wishes to, or has been and desires to remain employed by Company, and to utilize
such proprietary trade secrets, other confidential business information and goodwill, and

WHEREAS, Company has disclosed or will disclose to Executive such proprietary trade secrets and
other confidential business information which Executive will utilize in the performance of this
Agreement;

NOW THEREFORE, Executive and Company agree as follows:

	A.  	EMPLOYMENT: Company hereby agrees to employ Executive, and Executive hereby accepts such
employment, on the terms and conditions set forth in this Agreement.
	 
	B.  	TITLE: Executive’s title shall be (Title), subject to modification as determined by the
Company’s Board of Directors.
	 
	C.  	DUTIES & RESPONSIBILITIES: Executive shall be expected to assume and perform such executive
or managerial duties and responsibilities as are assigned from time-to-time by the Company’s
(Title) or his or her designee, to whom Executive shall report and be accountable.
	 
	D.  	TERM OF AGREEMENT: Employment hereunder shall be deemed effective as of November 1, 2004,
for a term of two years (“Initial Term”), unless sooner terminated pursuant to Paragraph O
hereof, or later extended pursuant to Paragraph N hereof (“Extended Term”).
	 
	F.  	PRINCIPAL OFFICE: During the Initial Term and any Extended Term, as applicable, of this
Agreement, Executive shall be based at a Company office located in (City) in the state of
(State) a (“State of Employment”), or such other location as shall be mutually agreed upon by
Company and Executive.
	 
	F.  	COMPENSATION: Company agrees to compensate Executive, and Executive agrees to accept as
compensation in full, for Executive’s assumption and performance of duties and
responsibilities pursuant to this Agreement:

	 	1.  	SALARY: A salary paid in equal installments of no less frequently than
semi-monthly at the annual rate set forth in Paragraph X.1 hereof.
	 
	 	2.  	BONUS: A bonus or other incentive or contingent compensation, if any, pursuant
to Paragraph X.2 hereof.

	Corp Exec Officer	 	INITIALS: EXECUTIVE
______COMPANY______

 

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	 	3.  	FRINGE BENEFITS: Executive shall receive the then current fringe benefits
generally provided by Company to all of its Executives. Such benefits may include but
not be limited to the use of a Company-leased car or a car allowance, group health
benefits, long-term disability benefits, group
life insurance, sick leave and vacation. Each of these fringe benefits is subject to
the applicable Company policy at all times. Executive expressly agrees that should he
or she terminate employment with Company for the purpose of being re-employed by a
Company affiliate, he or she shall “carry-over” any previously accrued but unused
vacation balance to the books of the affiliate.
	 
	 	   	Company reserves the right to add, increase, reduce or eliminate any fringe benefit at
any time, but no such benefit or benefits shall be reduced or eliminated as to
Executive unless generally reduced or eliminated as to comparable executives within
the Company.

	G.  	PAYMENT OR REIMBURSEMENT OF BUSINESS EXPENSES: Company shall pay directly or reimburse
Executive for reasonable business expenses of Company incurred by Executive in connection with
Company business, and approved in writing by the person(s) to whom Executive reports pursuant
to Paragraph C hereof, upon presentation to such person(s) by Executive within sixty (60) days
after incurring such expense of an itemized request for payment including the date, nature,
recipient, purpose and amount of each such expense, accompanied by receipts for all such
expenses in accordance with Company policy.

	H.  	BUSINESS CONDUCT: Executive shall comply with all applicable laws pertaining to the
performance of this Agreement, and with all lawful and ethical rules, regulations, policies,
codes of conduct, procedures and instructions of Company, including but not limited to the
following:

	 	1.  	GOOD FAITH: Executive shall not act in any way contrary to the best interest
of Company. Executive agrees that if he or she is approached by any person to discuss a possible
acquisition or other transaction that could result in a change of control of the
Company, Executive will immediately advise the Company’s General Counsel and Chair of
the Nominating, Governance and Succession Committee of the Board of Directors.
	 
	 	2.  	BEST EFFORTS: During all full-time employment hereunder, Executive shall
devote full working time and attention to Company. Notwithstanding any other agreement
to the contrary, Executive shall not at any time be directly or indirectly employed by,
own, operate, assist or otherwise be involved, invested or associated in any business
that is similar or competitive to any business of Company; except that Executive may
own up to five percent (5%) of such publicly-held business(es), provided that
Executive: (a) shall give Company notice(s) of any such ownership exceeding two
percent (2%), in accordance with Paragraph W hereof, and (b) shall not at any time be
directly or indirectly employed by or operate, assist, or otherwise be involved or
associated with any such business(es).
	 
	 	3.  	VERACITY: Executive shall make no claims or promises to any employee,
supplier, contractor, customer or sales prospect of Company that are unauthorized by
Company or are in any way untrue.
	 
	 	4.  	DRIVER’S LICENSE: Executive shall have a driver’s permit issued by Company and
shall carry a valid driver’s license issued by his or her state of domicile or the
State of Employment hereunder whenever Executive is driving any motor vehicle in
connection with Company business. Executive agrees to immediately notify Company in
writing if Executive’s driver’s license is lost, expired, restricted, suspended or
revoked for any reason whatsoever.
	 
	 	5.  	CODE OF CONDUCT: Executive agrees to fully comply with and annually
execute a certification of compliance with the Company’s Code of Business Conduct and
Ethics.

	I.  	NO CONFLICT: Executive represents to Company that Executive is not bound by any contract
with a previous employer or with any other business that might prevent Executive from entering
into this

	Corp Exec Officer	 	INITIALS: EXECUTIVE
_______ COMPANY _______

 

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	   	Agreement. Executive further represents that he or she is not bound by any other
contracts or covenants that in any way restrict or limit Executive’s activities in relation to
his or her employment with Company that have not been fully disclosed to Company prior to the
signing of this Agreement.

	J.  	COMPANY PROPERTY: Company shall, from time to time, entrust to the care, custody and control
of Executive certain of Company’s property, such as motor vehicles, equipment, supplies,
passwords and documents. Such documents may include, but shall not be limited to customer
lists, financial statements, cost data, price lists, invoices, forms, electronic files and
media, mailing lists, contracts, reports, manuals, personnel files or directories,
correspondence, business cards, copies or notes made from Company documents and documents
compiled or prepared by Executive for Executive’s use in connection with Company business.
Executive specifically acknowledges that all such items, including passwords and documents,
are the property of Company, notwithstanding their preparation, care, custody, control or
possession by Executive at any time(s) whatsoever.

	K.  	GOODWILL & PROPRIETARY INFORMATION: In connection with Executive’s employment hereunder:

	 	1.  	Executive agrees to utilize and further Company’s goodwill (“Goodwill”) among
its customers, sales prospects and employees, and acknowledges that Company may
disclose to Executive and Executive may disclose to Company, proprietary trade secrets
and other confidential information not in the public domain (“Proprietary Information”)
including but not limited to specific customer data such as: (a) the identity of
Company’s customers and sales prospects, (b) the nature, extent, frequency,
methodology, cost, price and profit associated with its services and products purchased
from Company, (c) any particular needs or preferences regarding its service or supply
requirements, (d) the names, office hours, telephone numbers and street addresses of
its purchasing agents or other buyers, (e) its billing procedures, (f) its credit
limits and payment practices, and (g) its organization structure.
	 
	 	2.  	Executive agrees that such Proprietary Information and Goodwill have unique
value to Company, are not generally known or readily available to Company’s
competitors, and could only be developed by others after investing significant time and
money. Company would not make such Proprietary Information and Goodwill available to
Executive unless Company is assured that all such Proprietary Information and Goodwill
will be held in trust and confidence by Executive. Executive hereby acknowledges that
to use this Proprietary Information and Goodwill except for the benefit of Company
would be a breach of such trust and confidence and in violation of Executive’s common
law Duty of Loyalty to the Company.

	L.  	RESTRICTIVE COVENANTS: In recognition of Paragraph K, above, Executive hereby agrees that
during the Initial Term and the Extended Term, if any, of this Agreement, and thereafter as
specifically agreed herein:

	 	1.  	Except in the proper performance of this Agreement, Executive shall at no time
directly or indirectly solicit or otherwise encourage or arrange for any employee to
terminate employment with Company while employed by the Company and for a period of one
(1) year following Executive’s termination of employment.
	 
	 	2.  	Except in the proper performance of this Agreement, Executive shall not
directly or indirectly disclose or deliver to any other person or business, any
Proprietary Information obtained directly or indirectly by Executive from, or for,
Company.
	 
	 	3.  	Executive agrees that at all times after the termination of this Agreement,
Executive shall not seek, solicit, divert, take away, obtain or accept the patronage of
any customer or sales prospect of Company through the direct or indirect use of any
Proprietary Information of Company, or by any other unfair or unlawful business
practice.

	Corp Exec Officer	 	INITIALS: EXECUTIVE
______ COMPANY______

 

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	 	4.  	Executive agrees that for a reasonable time after the termination of this
Agreement, which Executive and Company hereby agree to be one (1) year, Executive shall
not directly or indirectly, for Executive or for any other person or business, seek,
solicit, divert, take away, obtain or accept any customer account or sales prospect
with which Executive had direct business involvement on behalf of Company within the
one (1) year period prior to termination of this Agreement.
	 
	 	5.  	Nothing in this Agreement shall be binding upon the parties to the extent it is
void or unenforceable for any reason in the State of Employment, including, without
limitation, as a result of any law regulating competition or proscribing unlawful
business practices.

	M.  	MODIFICATION OF EMPLOYMENT: At any time during the then current Initial or Extended Term, as
applicable, of this Agreement, a majority of the Board of Directors of Company shall have the
absolute right, with or without cause and without terminating this Agreement or Executive’s
employment hereunder, to modify the nature of Executive’s employment for the remainder of the
then current Initial or Extended Term, as applicable, of this Agreement, from that of a
full-time employee to that of a part-time employee (“Modification Period”). The Modification
Period shall commence immediately upon Company giving Executive written notice of such change.

	 	1.  	Upon commencement of the Modification Period: (a) Executive shall immediately
resign as a full-time employee of Company and as an officer and/or director of Company
and of any Company subsidiaries, as applicable, (b) Executive shall promptly return all
Company property in Executive’s possession to Company, including but not limited to any
motor vehicles, equipment, supplies and documents set forth in Paragraph J hereof, and
(c) Company shall pay Executive when due all previously earned and vested but as yet
unpaid, salary, prorated Target Bonus as determined pursuant to Paragraph X.2 or other
contingent compensation, reimbursement of business expenses and fringe benefits.
	 
	 	2.  	During the Modification Period: (a) Company shall continue to pay Executive’s
monthly salary pursuant to Paragraph F.1 hereof, and to the extent available under the
Company’s group insurance policies, continue to provide Executive with the same group
health and life insurance (subject to Executive continuing to pay the employee portion
of any such premium) to which Executive would be entitled as a full-time employee, with
the understanding and agreement that such monthly salary and group insurance, if
available, shall constitute the full extent of Company’s obligation to compensate
Executive, (b) Executive shall not be eligible or entitled to receive or participate in
any bonus or fringe benefits other than the aforementioned group insurance, if
available, (c) in the alternative, Executive may exercise rights under COBRA to obtain
medical insurance coverage as may be available to Executive, (d) Executive shall be
deemed a part-time employee and not a full-time employee of Company, (e) Executive
shall provide Company with such occasional executive or managerial services as
reasonably requested by the person(s) to whom Executive reports pursuant to Paragraph
C hereof, except that failure to render such services by reason of any physical or
mental illness or disability other than Total Disability or death as set forth in
Paragraph O.2 hereof, or unavailability because of absence from the State of Employment
hereunder, shall not affect Executive’s right to receive such salary and (f) Company
shall pay directly or reimburse Executive in accordance with the provisions of
Paragraph G hereof for reasonable business expenses of Company incurred by Executive in
connection with such services requested by the person(s) to whom Executive reports
pursuant to Paragraph C hereof.
	 
	 	3.  	The Modification Period shall continue until the earlier of: (a) Total
Disability or death as set forth in Paragraph O.2 hereof, (b) termination of this
Agreement by Company for “just cause” as hereinafter defined, (c) Executive accepting
employment or receiving any other compensation from operating, assisting or otherwise
being involved, invested or associated with any business that is similar to or
competitive with any business in which Company is engaged on the commencement date of
the Modification Period, or (d) expiration of the then current Term of this Agreement.

	N.  	EXTENSION OF EMPLOYMENT:

	Corp Exec Officer	 	INITIALS: EXECUTIVE
______ COMPANY_______ 

 

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	 	1.  	Absent at least ninety (90) days written Notice of Termination of Employment or
Notice of Non-Renewal from Company to Executive prior to expiration of the then current
Initial or Extended Term, as applicable, of this Agreement, employment hereunder shall
continue for an Extended Term (or another Extended Term, as applicable) of one year, by
which Executive and Company intend that all terms and conditions of this Agreement
shall remain in full force and effect for another twelve (12) months, except that the
base salary specified in Paragraph X.1.a may be increased as set forth in Paragraph
X.1.b during the Extended Term.
	 
	 	2.  	In the event that Notice of Non-Renewal is given ninety (90) days prior to the
expiration of the then Initial or Extended Term, as applicable, of this Agreement,
employment shall continue on an “at will” basis following the expiration of such
Initial or Extended Term. In such event, Company shall have the right to change the
terms and conditions of Executive’s employment, including but not limited to
Executive’s position and/or compensation.

	O.  	TERMINATION OF EMPLOYMENT:

	 	1.	a.  	Termination Upon Expiration Of Term. Subject to at least ninety (90)
days prior written Notice of Termination of Employment, Executive’s employment shall
terminate, with or without cause, at the expiration of the then current Initial or
Extended Term. Company has the option, without terminating this Agreement,of placing
Executive on a leave of absence at the full compensation set forth in Paragraph F
hereof, for any or all of such notice period.
	 
	 	 	b.  	Termination For Cause. Except as provided in Paragraph
O.1.a, the Company shall have the right to terminate Executive’s employment
hereunder at any time during the then current Initial or Extended Term, as
applicable, of this Agreement, without notice subject only to a good faith
determination by a majority of the Board of Directors of Company of “just
cause.” “Just cause” includes but is not limited to any (i) theft or dishonesty
(ii) more than one instance of neglect or failure to perform employment duties,
(iii) more than one instance of inability or unwillingness to perform employment
duties, (iv) insubordination, (v) abuse of alcohol or other drugs or substances
affecting Executive’s performance of his or her employment duties, (vi) material
and willful breach of this Agreement; (vii) other misconduct, unethical or
unlawful activity, or for (vii) a conviction of or plea of “guilty” or “no
contest” to a felony under the laws of the United States or any state thereof.
	 
	 	 	c.  	Voluntary Termination By Executive. At any time
during the then current Initial or Extended Term, as applicable, of this
Agreement and with or without cause, Executive may terminate employment
hereunder by giving Company ninety (90) days prior written notice.

	 	2.  	Employment hereunder shall automatically terminate upon the total disability
(“Total Disability”) or death of Executive. Total Disability shall be deemed to occur
on the ninetieth (90th) consecutive or non-consecutive calendar day within any twelve
(12) month period that Executive is unable to perform the duties set forth in Paragraph
C hereof because of any physical or mental illness or disability. Company shall pay
when due to Executive or, upon death, Executive’s designated beneficiary or estate, as
applicable, all prorated salary, prorated Target Bonus as determined pursuant to
Paragraph X.2 or other contingent compensation, reimbursement of business expenses and
fringe benefits which would have otherwise been payable to Executive under this
Agreement, through the end of the month in which Total Disability or death occurs.
	 
	 	3.  	Upon termination of employment hereunder, Executive shall immediately resign as
an employee of Company and as an officer and/or director of Company and of any Company
subsidiaries, as applicable. Executive shall promptly return and release all Company
property in Executive’s possession to Company, including but not limited to, any motor
vehicles, equipment, supplies,

	Corp Exec Officer	 	INITIALS: EXECUTIVE
_______ COMPANY______

 

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	 	   	passwords and documents set forth in Paragraph J hereof.
Company shall pay Executive, when due, all previously earned and vested but as yet
unpaid, salary, prorated Target Bonus, as determined pursuant to Paragraph X.2 or other
contingent compensation, reimbursement of business expenses and fringe benefits.

	P.  	GOVERNING LAW: This Agreement shall be interpreted and enforced in accordance with the laws
of the State of Employment hereunder.
	 
	Q.  	ARBITRATION CLAUSE:

	 	1.  	Except for the interpretation and enforcement of injunctive relief pursuant to
Paragraph R hereof (which shall be subject to litigation in any court having proper
jurisdiction), any claim or dispute related to or arising from this Agreement (whether
based in contract or tort, in law or equity) including, but not limited to, claims or
disputes between Executive and Company or its directors, officers, employees and agents
regarding Executive’s employment or termination of employment hereunder, or any other
business of Company, shall be resolved by a neutral arbitrator agreed upon by both
parties, through mandatory, final, binding arbitration in accordance with the
procedural and discovery rules of the American Arbitration Association.
	 
	 	2.  	The cost of such arbitration shall be borne by the Company. Any such
arbitration must be requested in writing within one (1) year from the date the party
initiating the arbitration knew or should have known about the claim or dispute, or all
claims arising from that dispute are forever waived. Any such arbitration (or court
proceeding as applicable hereunder) shall be held in the city and/or county of
employment hereunder. Judgment upon the award rendered through such arbitration may be
entered and enforced in any court having proper jurisdiction.

	R.  	REMEDIES & DAMAGES:

	 	1.  	The parties agree that, in the event of a material breach or threatened
material breach of Paragraphs K and/or L hereof, the damage or imminent damage to the
value of Company’s business shall be impractical and/or impossible to estimate or
ascertain, and therefore any remedy at law or in damages shall be inadequate.
Accordingly, the parties hereto agree that Company shall be entitled to the immediate
issuance of a restraining order or an injunction against Executive in the event of such
breach or threatened breach, in addition to any other relief available to Company
pursuant to this Agreement or under law.
	 
	 	2.  	Executive agrees that damages resulting from any such breach which involves any
customer of Company shall be the actual damages according to proof, as determined
by an arbitrator pursuant to Paragraph Q, above.
	 
	 	3.  	To the full extent permitted under the laws of the State of Employment
hereunder, Executive authorizes Company to withhold from any severance payments
otherwise due to Executive and from any other funds (other than wages) held for
Executive’s benefit by Company, any damages or losses sustained by Company as a result
of any material breach or other material violation of this Agreement by Executive,
pending arbitration between the parties as provided for herein.

	S.  	NO WAIVER: Failure by either party to enforce any term or condition of this Agreement at any
time shall not preclude that party from enforcing that provision, or any other provision of
this Agreement, at any later time.

	T.  	SEVERABILITY: The provisions of this Agreement are severable. If any arbitrator (or court
as applicable hereunder) rules that any portion of this Agreement is invalid or unenforceable,
the arbitrator’s or court’s ruling shall not affect the validity and enforceability of other
provisions of this Agreement. It is the intent of the parties that if any provision of this
Agreement is ruled to be overly broad, the arbitrator or court shall

	Corp Exec Officer	 	INITIALS: EXECUTIVE
______ COMPANY______

 

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	   	interpret such provision
with as much permissible breadth as is allowable under law rather than to consider such
provision void.

	U.  	SURVIVAL: All terms and conditions of this Agreement which by reasonable implication are
meant to survive the termination of this Agreement, including but not limited to the
Restrictive Covenants and Arbitration Clause herein, shall remain in full force and effect
after the termination of this Agreement.
	 
	V.  	REPRESENTATIONS: Executive represents and agrees that he or she has carefully read and fully
understands all of the provisions of this Agreement, that he or she is voluntarily entering
into this Agreement and has been given an opportunity to review all aspects of this Agreement
with an attorney, if he or she chooses to do so.
	 
	W.  	NOTICES:

	 	1.  	Any notice required or permitted to be given pursuant to this Agreement shall
be in writing and delivered in person, or sent prepaid by certified mail, bonded
messenger or overnight express, to the party named at the address set forth below or at
such other address as either party may hereafter designate in writing to the other
party:

	 	 	 	 	 	 	 
	

	 	Executive:
	 	(Executive name)	 	 
	

	 	 	 	(Home address)	 	 
	

	 	 	 	(City, State ZIP)	 	 
	 
	 	 	 	 	 	 
	

	 	Company:
	 	ABM Industries Incorporated	 	 
	

	 	 	 	160 Pacific Avenue, Suite 222	 	 
	

	 	 	 	San Francisco, CA 94111	 	 
	

	 	 	 	Attention: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	

	 	Copy:
	 	ABM Industries Incorporated	 	 
	

	 	 	 	160 Pacific Avenue, Suite 222	 	 
	

	 	 	 	San Francisco, CA 94111	 	 
	

	 	 	 	Attention: Chief Employment Counsel	 	 

	 	2.  	Any such Notice shall be assumed to have been received when delivered in
person, or forty-eight (48) hours after being sent in the manner specified above.

	X.  	SPECIAL PROVISIONS:

	 	1.  	BASE SALARY:

	 	a.  	(Salary amount, spelled out) Dollars ($000,000) per year
effective November 1, 2004 through October 31, 2005 at the monthly rate of
$00,000 payable semi-monthly.
	 
	 	b.  	Effective November 1, 2004 and at the beginning of each Fiscal
Year thereafter, Executive shall be eligible, at the sole discretion of the
Company, to receive a merit increase based on Executive’s job performance.
	 
	 	c.  	At the sole discretion of the Company’s Board of Directors (the
“Approving Authority”) the Company may, at any time, grant a compensation
adjustment for reasons deemed appropriate, including but not limited to a change
in Executive’s duties resulting in a material increase in responsibility.

	 	2.  	BONUS: Subject to proration in the event of modification or termination of
employment hereunder, Executive shall be entitled to participate in the Company’s
incentive compensation plan which

	Corp Exec Officer	 	INITIALS: EXECUTIVE
_____ COMPANY______ 

 

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	 	   	provides for a performance-based bonus (“Bonus”)
contingent on the achievement of personal and Corporate objectives for each Fiscal
Year, or partial Fiscal Year, of employment hereunder during the Initial Term, and
during the Extended Term, if any, of this Agreement, as follows:

	 	a.  	A target bonus for this Fiscal Year shall be established equal to
(percentage)% of the Executive’s actual base salary as established at the
beginning of the Fiscal Year for each Fiscal Year (the “Target Bonus”).
Executive’s Target Bonus shall be further subject to an Executive Performance
Bonus Modifier adjustment of 0% to 150% of the Target Bonus to determine
Executive’s Actual Bonus. Such adjustment shall be based on Performance
Criteria contained in the annual Executive Performance Bonus Modifier
Recommendation Calculation Worksheet (see copy attached as Exhibit I) as
recommended by the person(s) to whom Executive reports and reviewed and approved
by the Approving Authority designated in subparagraph X.1.c., above.

	 	i.  	At any time the Approving Authority or its designee
reserves the right to further adjust the Performance Criteria in the
event of a Significant Transaction (as defined
below) during a Fiscal Year and/or for any unanticipated and material
events that are beyond the control of the Company, including but not
limited to acts of god, nature, war or terrorism, or changes in the rules
for financial reporting set forth by the Financial Accounting Standards
Board, the Securities and Exchange Commission, and/or the New York Stock
Exchange or for any other reason which the Approving Authority
determines, in good faith, to be appropriate. For purposes of this
Agreement, the term “Significant Transaction” shall mean the acquisition
or disposition of a business or assets which ABM Industries Incorporated
is required to report under Item 2 of the SEC Form 8-K.
	 
	 	ii.  	The Company shall pay Executive the Actual Bonus
for the Fiscal Year following completion of the audit of the ABM
Industries Incorporated financial statements and approval by the
Approving Authority, but no later than seventy-five (75) days after the
end of each Fiscal Year. The Company in its sole discretion may pay any
prorated Target Bonus earlier. In the event of modification or
termination of employment hereunder, the Company shall pay Executive the
prorated portion of the Target Bonus based on the fraction of the Fiscal
Year that has been completed prior to the date of Modification or
Termination.
	 
	 	iii.  	Absent bad faith or material error, the conclusions
of the Approving Authority or its designee with respect to the
Performance Criteria or Actual Bonus shall be final and binding on
Executive and Company.

	 	b.  	Nothing contained in this Agreement shall entitle Executive to
receive a bonus or other incentive or contingent compensation from Company based
on any sales or profits made by Company after termination of the Initial or
Extended Term of this Agreement or of employment hereunder.
	 
	 	c.  	Notwithstanding any other provision hereof, the Approving
Authority designated in subparagraph X.1.c., above, may, prior to the beginning
of any Fiscal Year, approve and notify the Executive of a modification to the
Target Bonus percentage determined hereunder (either higher or lower), based on
such performance and financial measures and other factors as it shall determine
in its sole discretion. Any decision in this regard shall be deemed final and
binding on Executive regardless of the amount of Target or Actual Bonus
otherwise calculated pursuant to the foregoing provisions. In addition, the
Approving Authority reserves the option at any time to grant a discretionary
incentive bonus, which shall not be subject to the maximum Bonus provisions
described in Paragraph X.2.a., above.

	Corp Exec Officer	 	INITIALS: EXECUTIVE
_____ COMPANY_____ 

 

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	Y.  	SCOPE OF CERTAIN PROVISIONS: All references to Company in Paragraphs H, J, K, L, O.3, R and Z
in this Agreement shall include ABM Industries Incorporated and its subsidiary corporations
and other affiliates.

	Z.  	ENTIRE AGREEMENT: Unless otherwise specified herein, this Agreement sets forth every
contract, understanding and arrangement as to the employment relationship between Executive
and Company, and may only be changed by a written amendment signed by both Executive and
Company.

	 	1.  	The parties intend that this Agreement speak for itself, and that no evidence
with respect to its terms and conditions other than this Agreement itself may be
introduced in any arbitration or judicial proceeding to interpret or enforce this
Agreement.
	 
	 	2.  	It is specifically understood and accepted that this Agreement supersedes all
oral and written employment agreements between Executive and Company prior to the date
hereof, as well as all conflicting provisions of Company’s Guidelines for Corporate
Approval and its Human Resources Manual, including but not limited to the termination,
discipline and discharge provisions contained therein.
	 
	 	3.  	This Agreement may not be amended except in a writing signed by the
Executive and Chief Executive Officer and approved by the Company’s Board of Directors.

FULL KNOWLEDGE & UNDERSTANDING: Executive and Company hereby acknowledge that they have carefully
read and fully understand all terms and conditions of this Agreement, that they have been given an
opportunity to review all aspects of this Agreement with an attorney if they so choose, and that
they are voluntarily entering into this Agreement with full knowledge of the benefits and burdens,
and the risks and rewards, contained herein.

IN WITNESS WHEREOF, Executive and an Officer and Director of the Company have executed this
Agreement as of the date set forth above:

	 	 	 	 	 	 	 	 	 
	

	 	Executive:
	 	Signature:	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Date:	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	Company:
	 	 	 	ABM Industries Incorporated	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Date:	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Signature:	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Signature:	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	 	 	 	 

	Corp Exec Officer	 	INITIALS: EXECUTIVE
_____ COMPANY _____ 

 

Exhibit I

Name of Executive:                                                                                

2005 EXECUTIVE PERFORMANCE BONUS MODIFIER RECOMMENDATION

CALCULATION WORKSHEET

CORPORATE OFFICERS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Circle one rating in each category	 	Unsatisfactory	 	 	Needs Improvement	 	 	Meets Requirements	 	 	Exceeds Requirements	 	 	Superior Performance	 	 	Outstanding	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	I. FINANCIAL PERFORMANCE
	 	 	5	 	 	 	7	 	 	 	9	 	 	 	12	 	 	 	15	 	 	 	18	 	 	 	21	 	 	 	24	 	 	 	27	 	 	 	30	 
	Represents 50% of Target Bonus
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(Category rating requires actual
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	earnings minimum of 80% of budget*)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CATEGORY I RATING SCORE:
	 	 	o	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	II. OTHER CATEGORIES
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GENERAL MANAGEMENT
	 	 	1	 	 	 	2	 	 	 	3	 	 	 	4	 	 	 	5	 	 	 	6	 	 	 	7	 	 	 	8	 	 	 	 9	 	 	 	10	 
	Employee/Labor Relations
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Staff Development
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Recruitment, Retention, Motivation
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financial Management
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Teamwork
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CUSTOMER RELATIONS/
	 	 	1	 	 	 	2	 	 	 	3	 	 	 	4	 	 	 	5	 	 	 	6	 	 	 	7	 	 	 	8	 	 	 	 9	 	 	 	10	 
	MARKET DEVELOPMENT
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	COMPLIANCE & ADMINISTRATION
	 	 	1	 	 	 	2	 	 	 	3	 	 	 	4	 	 	 	5	 	 	 	6	 	 	 	7	 	 	 	8	 	 	 	 9	 	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CATEGORY II RATING SCORE:
	 	 	o	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

* See 2005 Executive Performance Bonus Indicators

	 	 	 
	

	 	 
	

	 	Reviewer’s Signature

Completed forms must be forwarded to the ABM Management Committee for review and

ABM Industries’ President and Chief Executive Officer for approval.

 

2005 EXECUTIVE PERFORMANCE BONUS INDICATORS

ABM CORPORATE EXECUTIVE OFFICERS

	I.  	FINANCIAL PERFORMANCE: Represents 50% of Target Bonus
	   	(Actual earnings [as published in the Company’s Form 10-K as filed with the Securities and
Exchange Commission] must exceed 80% of the 2005 budget, as approved by the ABM Board of
Directors and adjusted for acquisitions, for Executive to receive a Financial Performance
Bonus.)
	 
	   	Develops, obtains approval for, and effectively communicates realistic and GAAP compliant
financial budgets and forecasts consistent with the approved Company and business unit
strategy. Develops and ensures compliance with internal financial controls. Ensures that key
financial goals are aggressively pursued. Contributes directly to the achievement of
financial goals for the Company and one’s area(s) of responsibility. Ensures, to the extent
possible, that performance of the Company and one’s area(s) of responsibility meets or exceeds
budget in all key financial categories, including revenue, expense, and capital management.
Effectively manages costs and, where appropriate, vendors and receivables.
	 
	   	Indicators: Timely development and approval of realistic financial goals and plans;
understanding and acceptance of financial goals throughout the organization and one’s direct
span of control; existence of and compliance with effective internal financial controls.
Company and business unit performance against budget.
	 
	II.  	 OTHER CATEGORIES: Represents 50% of Target Bonus
	 
	   	STRATEGIC LEADERSHIP
	 
	   	Contributes materially to the development, approval, implementation and ongoing evolution of a
sound business strategy for the Company and/or one’s area(s) of responsibility. Researches
concepts and presents new ideas designed to optimize growth, profitability and shareholder
value. Effectively communicates the approved strategy both internally and externally, as
appropriate, and provides guidance to ensure that the approved strategy is carried out.
	 
	   	Indicators: Agreement among management and approval by the Board of Directors of a defined
business strategy; effective translation and communication of the approved strategy to one’s
area of responsibility and other internal and external constituents, as appropriate; proactive
revision of strategy to reflect changing situations; depth of knowledge of one’s market,
competitors, and trends.

 

 

	 	 	 
	2005 Executive Performance Bonus Indicators
	 	 
	ABM Corporate Executive Officers 
	 	Page 2

	 	EMPLOYEE LEADERSHIP
	 
	 	1.  	Employee Relations
	 
	 	   	Maintains sound relationships with superiors, peers, subordinates and, as appropriate, the
Board of Directors. Commands respect and trust while being considered fair and open in
dealings with others.
	 
	 	   	Indicators: Employee complaints; perception among supervisors, peers, subordinates and the
Board of Directors.
	 
	 	2.  	Staff Development
	 
	 	   	Actively contributes to the development of staff under one’s span of control. Provides
guidance to subordinates on key issues and makes time to help others. Establishes and
communicates goals and expectations. Provides open and honest feedback. Identifies and
develops potential successors to key roles.
	 
	 	   	Indicators: Proactive individual goal-setting and ongoing review process; demonstrated
development/improvement of subordinates; effective succession planning.
	 
	 	3.  	Recruitment, Retention and Motivation
	 
	 	   	Generates enthusiasm among superiors, subordinates and peers. Directly contributes to
creating a performance oriented culture. Identifies and distinguishes top performers.
Retains key employees and assists in identifying and recruiting top external talent as
needed.
	 
	 	   	Indicators: Employee retention; positive morale; success in recruiting new talent.
	 
	 	4.  	Teamwork
	 
	 	   	Practices open, effective and inclusive communication within one’s own span of control and
across the Company. Actively seeks ways to build links across the Company with the
objective of capitalizing on and sharing “best practices.”
	 
	 	   	Indicators: Development and implementation of procedures and processes that promote the
application of “best practices” across the Company and within one’s span of control.
Perception as a “team player.”

 

 

	 	 	 
	2005 Executive Performance Bonus Indicators
	 	 
	ABM Corporate Executive Officers 
	 	Page 3

	 	   	COMPLIANCE AND ADMINISTRATION
	 
	 	   	Ensures compliance with all external regulations and internal guidelines and policies
associated with Safety, Employee/Labor Relations and other areas pertaining to the Company’s
various businesses. Ensures management policies and reports effectively address key issues.
Provides for open channels of communication to ensure that appropriate individuals, both
internally and externally, are notified in a timely manner in the event of compliance or other
related issues. Achieves certification of Internal Controls for Sarbanes-Oxley Section 404.
	 
	 	   	Indicators: Volume and severity of labor/employee relations or other compliance issues;
effective handling of such issues as they arise; timely and proper reporting of such issues.exv10w1

 

Exhibit 10.1

LIMITED WAIVER AND THIRD AMENDMENT TO AMENDED AND RESTATED

CREDIT AGREEMENT

     This LIMITED WAIVER AND THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
“Waiver and Amendment”) is entered into as of this 10th day of January, 2005, by NAVARRE
CORPORATION, a Minnesota corporation (“Borrower”), the Credit Parties signatory hereto,
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as agent (the “Agent”) for
itself and the Lenders under and as defined in the Credit Agreement (as hereinafter defined), and
the Lenders. Unless otherwise specified herein, capitalized terms used in this Waiver and
Amendment shall have the meanings ascribed to them by the Credit Agreement.

RECITALS

     WHEREAS, the Borrower, the Credit Parties, the Agent and the Lenders have entered into that
certain Amended and Restated Credit Agreement, dated as of June 18, 2004 (as amended, supplemented,
restated or otherwise modified from time to time, the “Credit Agreement”);

     WHEREAS, the Borrower has advised the Agent and the Lenders that Navarre CP, LLC, a Minnesota
limited liability company, Navarre CLP, LLC, a Minnesota limited liability company and Navarre CS,
LLC, a Minnesota limited liability company, which are wholly-owned Subsidiaries of Borrower (each,
a “New Subsidiary” and collectively, the “New Subsidiaries”) desire to acquire (the
“FUNimation Acquisition”) all of the partnership interests in FUNimation Productions Ltd.,
a Texas limited partnership and FUNimation Store Ltd., a Texas limited partnership (collectively,
together with their Subsidiaries, the “FUNimation Companies”) pursuant to and in accordance
with that certain Partnership Interest Purchase Agreement, dated as of even date herewith, by and
among the Sellers (as defined therein), the Seller Representative (as defined therein), the
FUNimation Companies and the Borrower (as in effect on the date hereof, the “FUNimation
Purchase Agreement”) and other related agreements, documents, opinions, certificates and other
instruments, each of which shall be in form and substance satisfactory to the Agent (together with
the FUNimation Purchase Agreement, collectively, the “FUNimation Acquisition Agreements”),
for an aggregate purchase price (the “FUNimation Purchase Price”) consisting solely of (i)
an amount not to exceed $100,400,000 payable solely in cash and solely from the proceeds of the
Equity Issuance (as defined below) (such portion, the “Cash Portion”), (ii) common Stock of
Borrower (such portion, the “Stock Portion”), the number of shares of which shall (x) be
calculated by dividing $25,000,000 by the Closing Share Price (as defined in the FUNimation
Purchase Agreement) and (y) in no event be less than 1,495,216 or greater than 1,827,486 and (iii)
an aggregate amount not to exceed $17,000,000 payable by the Borrower and/or the New Subsidiaries
as “earnouts” or similar payment obligations (such portion, the “Earnout Portion”);

     WHEREAS, the Borrower has informed the Agent and the Lenders that Borrower desires to issue
and sell certain Stock of Borrower for an aggregate net consideration not to exceed $140,00,000
(the “Equity Issuance”) pursuant to and in accordance with certain definitive securities
purchase agreement and other related agreements, documents, opinions, certificates, and other
instruments, each of which shall be in form and substance satisfactory to the Agent

 

 

(collectively, the “Equity Agreements”), and the proceeds of such Equity Issuance
shall be used to fund (i) the Cash Portion of the FUNimation Purchase Price and (ii) costs and
expenses associated with the FUNimation Acquisition and any remaining amount of the proceeds of
such Equity Issuance may be used by Borrower to prepay the Loans; and

     WHEREAS, the Borrower, the Credit Parties, the Agent and the Lenders have agreed to waive and
amend certain provisions of the Credit Agreement as herein set forth in connection with the
FUNimation Acquisition and the Equity Issuance.

     NOW THEREFORE, in consideration of the foregoing recital, mutual agreements contained herein
and for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Credit Parties, the Agent, and Lenders hereby agree as follows:

SECTION 1. Limited Waivers.

     (a)     The Agent and the Lenders hereby waive the provisions of (1) clause (v) of
Section 6.1 of the Credit Agreement to the extent, and solely to the extent, to permit the
Borrower and the New Subsidiaries to incur the Earnout Portion of the FUNimation Purchase Price and
(2) clause (vi) of Sections 6.1 of the Credit Agreement to the extent, and solely
to the extent, to permit the Borrower and the New Subsidiaries to consummate the FUNimation
Acquisition pursuant to the FUNimation Acquisition Agreements; provided however that it is
understood and agreed by the parties hereto that (i) notwithstanding the foregoing limited waiver,
no Credit Party shall consummate all or any portion of the FUNimation Acquisition unless (x) the
Credit Parties comply with each of the conditions set forth in Section 6.1 relevant to
Permitted Acquisitions (other than the provisions of clauses (v) and (vi) of Section
6.1 of the Credit Agreement to the extent waived above) and (y) an amendment to the Credit
Agreement relating to the FUNimation Acquisition, in form and substance satisfactory to the Agent
in its reasonable discretion, is executed by each of the parties thereto (and payment of an
amendment fee equal to $25,000 in connection therewith); (ii) the FUNimation Companies and any
other entities formed or acquired pursuant to or in connection with the FUNimation Acquisition
(each a “FUNimation Entity”) shall become Credit Parties under the Credit Agreement (and
each such FUNimation Entity shall fully guaranty the Obligations and the Agent shall be granted a
fully perfected first priority Lien (subject to Permitted Encumbrances)on all of the assets of,
and equity interests in, each FUNimation Entity to secure the payment and performance of all of the
Obligations) and shall execute such agreements and documents and take such actions as may be
reasonably requested by the Agent; (iii) no portion of the FUNimation Purchase Price shall be
funded from the proceeds of any Loans; (iv) no Credit Party shall make any investment in one or
more FUNimation Companies or any other entity acquired pursuant to the FUNimation Acquisition and
(v) no FUNimation Entity may merge or consolidate with or into any other Credit Party. The Agent
and the Lenders hereby acknowledge receipt on December 3, 2004 of Borrower’s notice of the proposed
FUNimation Acquisition for purpose of commencing the 30 Business Days’ prior written notice period
required pursuant to clause (i) of Section 6.1 of the Credit Agreement.

     (b)     The Agent and the Lenders hereby waive the provisions of (i) Section 6.5 of the
Credit Agreement to the extent, and solely to the extent, necessary to permit the Equity Issuance

2

 

pursuant to and in accordance with the Equity Agreements and (b) Section 1.3 of the
Credit Agreement to the extent, and solely to the extent, necessary to permit the Borrower to use
the net proceeds of the Equity Issuance solely to fund the Cash Portion of the FUNimation Purchase
Price and costs and expenses associated with the FUNimation Acquisition.

SECTION 2. Amendments.

     (a)     Section 6.3(a) of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:

     “(a)     No Credit Party shall create, incur, assume or permit to exist any Indebtedness,
except (without duplication) (i) Indebtedness secured by purchase money security interests
and Capital Leases permitted in Section 6.7(c), (ii) the Loans and the other
Obligations, (iii) unfunded pension fund and other employee benefit plan obligations and
liabilities to the extent they are permitted to remain unfunded under applicable law, (iv)
existing Indebtedness described in Disclosure Schedule (6.3) and refinancings
thereof or amendments or modifications thereof that do not have the effect of increasing the
principal amount thereof or changing the amortization thereof (other than to extend the
same) and that are otherwise on terms and conditions no less favorable to any Credit Party,
Agent or any Lender, as determined by Agent, than the terms of the Indebtedness being
refinanced, amended or modified, (v) Indebtedness permitted pursuant to Section
6.2(i) hereof, (vi) Indebtedness of Encore Software to the Borrower in an aggregate
amount not to exceed $7,200,000, so long as such Indebtedness is evidenced by an
intercompany note, in form and substance satisfactory to Agent, and such intercompany note
has been delivered and endorsed to Agent, and Indebtedness of Borrower to Encore Software,
Inc., a California corporation pursuant to Section 5 of the Amendment No. 1 to Encore
Purchase Agreement in an aggregate principal amount not to exceed $1,150,000;
provided that, no Credit Party (other than Encore Software) shall guarantee, grant
liens on its assets (including, without limitation, the equity interests in Encore Software)
to secure, or otherwise be directly or indirectly liable for any such Indebtedness or
related obligations, (vii) Indebtedness of BCI Eclipse to the Borrower, so long as (a) the
related loans to BCI Eclipse from the Borrower are permitted pursuant to Section
6.2(i), and (b) such Indebtedness is evidenced by an intercompany note, in form and
substance satisfactory to Agent, and such intercompany note has been delivered and endorsed
to Agent; and (viii) “earnouts” or similar payment obligations incurred by the Borrower
and/or the New Subsidiaries in connection with the FUNimation Acquisition in an aggregate
amount not to exceed $17,000,000.”

     (b)     Section 6.14 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:

       “6.14     Restricted Payments. No Credit Party shall make any Restricted Payment,
except (a) dividends and distributions by Subsidiaries of Borrower paid to Borrower, (b)
employee loans permitted under Section 6.4(b), (c) on any day, the Borrower may
repurchase the Borrower’s own shares of common stock, as long as (i) at the time of such
repurchase and after giving effect thereto, no Default or Event of Default has occurred and
is continuing, (ii) after giving effect to such repurchase, the Borrowing Availability

3

 

shall be at least $20,000,000 and (iii) the aggregate consideration paid for all such
repurchases during any consecutive twelve month period does not exceed $250,000, (d) payment
of Earnout Amounts (under and as defined in the BCI Eclipse Purchase Agreement as in effect
on November 5, 2003) as long as (i) at the time of such payment and after giving effect
thereto, no Default or Event of Default has occurred and is continuing, (ii) after giving
effect to such payment, the Borrowing Availability shall be at least $20,000,000, (iii) the
Borrower has demonstrated to the Agent’s reasonable satisfaction that the average daily
Borrowing Availability for the 30-day period preceding such payment was at least $20,000,000
and (iv) prior to such payment the Borrower has delivered evidence satisfactory to the Agent
demonstrating that, had such payment been made on the last day of the then most recently
completed Fiscal Quarter, Borrower would have been in compliance with the financial
covenants set forth on Annex G to the Credit Agreement as of the end of such Fiscal
Quarter, and (e) payment of Performance Payments (under and as defined in the FUNimation
Purchase Agreement) in an aggregate amount not to exceed $17,000,000.”

     (c)     The following definitions set forth in Annex A to the Credit Agreement are hereby
amended and restated to read in their entirety as follows:

       “Indebtedness” means , with respect to any Person, without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase price of
property payment for which is deferred 6 months or more, but excluding obligations to trade
creditors incurred in the ordinary course of business that are unsecured and not overdue by
more than 6 months unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers’ acceptances and surety bonds,
whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all Capital Lease Obligations and the
present value (discounted at the Index Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person under
commodity purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such Person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or collar
agreement or other similar agreement or arrangement designed to alter the risks of that
Person arising from fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property or other assets (including accounts and contract rights)
owned by such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, (i) ”earnouts” and similar payment obligations excluding
bonus, phantom stock or other similar compensation payments owed to employees, or officers
and incurred in the ordinary course of business, and (j) the Obligations.

4

 

       “Restricted Payment” means, with respect to any Credit Party (a) the
declaration or payment of any dividend or the incurrence of any liability to make any other
payment or distribution of cash or other property or assets in respect of Stock; (b) any
payment on account of the purchase, redemption, defeasance, sinking fund or other retirement
of such Credit Party’s Stock or any other payment or distribution made in respect thereof,
either directly or indirectly; (c) any payment or prepayment of principal of, premium, if
any, or interest, fees or other charges on or with respect to, and any redemption, purchase,
retirement, defeasance, sinking fund or similar payment and any claim for rescission with
respect to, any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or other rights to
acquire Stock of such Credit Party now or hereafter outstanding; (e) any payment of a claim
for the rescission of the purchase or sale of, or for material damages arising from the
purchase or sale of, any shares of such Credit Party’s Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any such claim
for damages or rescission; (f) any payment, loan, contribution, or other transfer of funds
or other property to any Stockholder of such Credit Party other than payment of compensation
in the ordinary course of business to Stockholders who are employees of such Credit Party;
(g) any payment of management fees (or other fees of a similar nature) by such Credit Party
to any Stockholder of such Credit Party or its Affiliates, (h) any payment of any Earnout
Amount (as defined in the BCI Eclipse Purchase Agreement) or similar payment pursuant to the
BCI Eclipse Purchase Agreement, and (i) any payment of any Performance Payments (as defined
in the FUNimation Purchase Agreement) or similar payment pursuant to the FUNimation Purchase
Agreement.

     (d)     Annex A to Credit Agreement is hereby amended by adding the following new
definitions thereto in alphabetical order:

       “FUNimation Acquisition” has the meaning ascribed thereto in that certain
Limited Waiver and Third Amendment to Credit Agreement, dated as of January 10, 2005, by and
among the Agent, the Lenders the Borrower and the Credit Parties.

       “FUNimation Purchase Agreement” has the meaning ascribed thereto in that
certain Limited Waiver and Third Amendment to Credit Agreement, dated as of January 10,
2005, by and among the Agent, the Lenders the Borrower and the Credit Parties.

       “New Subsidiaries” has the meaning ascribed thereto in that certain Limited
Waiver and Third Amendment to Credit Agreement, dated as of January 10, 2005, by and among
the Agent, the Lenders the Borrower and the Credit Parties.

SECTION 3. Effectiveness. The effectiveness of this Waiver and Amendment is subject to the
satisfaction of each the following conditions precedent:

     (a)     the Agent shall have received payment of an amendment fee in an amount equal to $5,000
(which shall be fully earned and payable as of the date hereof);

     (b)     this Waiver and Amendment shall have been duly executed and delivered by the Borrower, the
Credit Parties, the Agent and each Lender; and

5

 

     (c)     the representations and warranties contained herein shall be true and correct in all
respects.

SECTION 4. Representations and Warranties. In order to induce the Agent and each Lender
to enter into this Waiver and Amendment, each Credit Party hereby represents and warrants to the
Agent and each Lender, which representations and warranties shall survive the execution and
delivery of this Waiver and Amendment, that:

     (a)     all of the representations and warranties contained in the Credit Agreement and in each
Loan Document are true and correct as of the date hereof after giving effect to this Waiver and
Amendment (determined as if all references to “Closing Date” were references to January 10, 2005),
except to the extent that any such representations and warranties expressly relate to an earlier
date;

     (b)     the execution, delivery and performance by such Credit Party of this Waiver and Amendment
has been duly authorized by all necessary corporate action required on its part and this Waiver and
Amendment, and the Credit Agreement is the legal, valid and binding obligation of such Credit Party
enforceable against such Credit Party in accordance with its terms, except as its enforceability
may be affected by the effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting the rights or remedies of
creditors generally;

     (c)     neither the execution, delivery and performance of this Waiver and Amendment by such
Credit Party, the performance by such Credit Party of the Credit Agreement nor the consummation of
the transactions contemplated hereby does or shall contravene, result in a breach of, or violate
(i) any provision of any Credit Party’s certificate or articles of incorporation or bylaws or other
similar documents, or agreements, (iii) any law or regulation, or any order or decree of any court
or government instrumentality, or (iii) any indenture, mortgage, deed of trust, lease, agreement or
other instrument to which any Credit Party or any of its Subsidiaries is a party or by which any
Credit Party or any of its Subsidiaries or any of their property is bound, except in any such case
to the extent such conflict or breach has been waived herein or by a written waiver document, a
copy of which has been delivered to Agent on or before the date hereof;

     (d)     no Default or Event of Default has occurred and is continuing; and

     (e)     no Change of Control will occur as a result of the Equity Issuance.

SECTION 5. Reference to and Effect Upon the Credit Agreement.

     (a)     Except as specifically set forth above, the Credit Agreement and the other Loan Documents
shall remain in full force and effect and are hereby ratified and confirmed; and

     (b)     The waivers and amendments set forth herein are effective solely for the purposes set
forth herein and shall be limited precisely as written, and shall not be deemed to (i) be a consent
to any amendment, waiver or modification of any other term or condition of the Credit Agreement or
any other Loan Document, (ii) operate as a waiver or otherwise prejudice any right, power or remedy
that the Agent or the Lenders may now have or may have in the future

6

 

under or in connection with the Credit Agreement or any other Loan Document or (iii)
constitute a waiver of any provision of the Credit Agreement or any Loan Document, except as
specifically set forth herein. Upon the effectiveness of this Waiver and Amendment, each reference
in the Credit Agreement to “this Agreement”, “herein”, “hereof” and words of like import and each
reference in the Credit Agreement and the Loan Documents to the Credit Agreement shall mean the
Credit Agreement as amended hereby. This Waiver and Amendment shall be construed in connection
with and as part of the Credit Agreement.

SECTION 6. Costs And Expenses. As provided in Section 11.3 of the Credit
Agreement, the Borrower agrees to reimburse Agent for all fees, costs, and expenses, including the
reasonable fees, costs, and expenses of counsel or other advisors for advice, assistance, or other
representation in connection with this Waiver and Amendment.

SECTION 7. GOVERNING LAW. THIS WAIVER AND AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.

SECTION 8. Headings. Section headings in this Waiver and Amendment are included herein for
convenience of reference only and shall not constitute part of this Waiver and Amendment for any
other purposes.

SECTION 9. Counterparts. This Waiver and Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original, but all such counterparts
shall constitute one and the same instrument.

(signature page follows)

7

 

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Waiver and Amendment
as of the date first written above.

	 	 	 	 	 
	 	
BORROWER:

NAVARRE CORPORATION

 

 	 
	 	By:  	                                                                                 	 	 
	 	Name:  	                                                                                 	 
	 	Title:  	                                                                                 	 
	 
	 	GENERAL ELECTRIC
CAPITAL
CORPORATION, as Agent and Lender

 

 	 
	 	By:  	                                                                                 	 	 
	 	Name:  	                                                                                 	 
	 	Title:  	                                                                                 	 
	 

S-1

[Signature Page to Limited Waiver And Third Amendment To Credit Agreement]

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

 

 

 

 

 

 

 

 

 

 

 

 

 

     IN WITNESS WHEREOF, this Waiver and Amendment has been duly executed as of the date first
written above by below Persons in their capacity as Credit Parties not as Borrower.

	 	 	 	 	 
	 	ENCORE SOFTWARE, INC., as Credit Party

 

 	 
	 	By:  	                                                                                 	 	 
	 	Name:  	                                                                                 	 
	 	Title:  	                                                                                 	 
	 
	 	BCI ECLIPSE COMPANY, LLC, as Credit Party

 

 	 
	 	By:  	                                                                                 	 	 
	 	Name:  	                                                                                 	 
	 	Title:  	                                                                                 	 
	 

S-2

[Signature Page to Limited Waiver And Third Amendment To Credit Agreement]

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