Document:

ex10_1.htm

Exhibit 10.1

 

Execution Version

 

MARIANO COSTAMAGNA

 

RETIREMENT AGREEMENT

 

This Retirement Agreement (this “Agreement”) is entered into between Fuel Systems Solutions, Inc., a Delaware corporation (the “Company”), MTM S.r.L. (“MTM”, a subsidiary of the Company), and Mariano Costamagna, a resident of the Republic of Italy (“Mr. Costamagna”), as of April 24, 2015 (the “Effective Date”).

 

The parties hereto agree as follows:

 

	 	
1.

	
Retirement.  Effective December 31, 2015, the (“Retirement Date”) Mr. Costamagna hereby resigns as the Company’s Chief Executive Officer and, relinquishes all executive authority with regard to MTM, and resigns from all positions as a director, officer, executive, or employee of all subsidiaries of the Company.  Notwithstanding the foregoing, Mr. Costamagna shall continue as a director of  MTM (without any executive authority) and a director of the Company.

 

	 	
2.

	
Executive Position and Succession Planning.  From the Effective Date through the Retirement Date, Mr. Costamagna’s responsibilities and duties as Chief Executive Officer of the Company shall continue.  Mr. Costamagna agrees that the Board of Directors of the Company shall commence a search for his successor as Chief Executive Officer of the Company and commence a process to determine who shall succeed him as Chief Executive Officer of MTM with full executive authority.  Mr. Costamagna agrees to support and mentor the person or persons who will assume his duties as Chief Executive Officer of each of the Company and MTM, and shall cooperate in communicating all necessary information to such person or persons in connection with the transition of duties.  Mr. Costamagna also understands and agrees that in the meanwhile the Board of Directors of the Company intends to appoint a Chief Operating Officer for the Company and who will also fill an equivalent role at MTM.  The Chief Operating Officer will oversee the operations of the Company, MTM,  other members of the Company Group (as defined below), as well as taking a leadership role in implementing the restructuring plan adopted by the Board of Directors of the Company.  Mr. Costamagna agrees to work with and support the Chief Operating Officer.

 

	 	
3.

	
Continued Directorships.  Following the Retirement Date, Mr. Costamagna shall remain a member of the Board of Directors of the Company and MTM and so long as he serves in these positions, Mr. Costamagna will be compensated by the Company as a non-management director of the Company and will receive from MTM compensation, if any, equal to the compensation of other Company directors who also serve on the MTM Board of Directors.

 

	 	
4.

	
Compensation. Until the Retirement Date, Mr. Costamagna will continue to be paid his current annual base salary and remain eligible for consideration for a bonus, as well as any other compensation or benefits to which he may be entitled as Chief Executive Officer (CEO) of the Company.

 

  

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5. 

	
Retirement Benefit.  In addition to his compensation, (i) the Company shall award Mr. Costamagna promptly following the execution of this Agreement 100,000 shares of Company restricted stock or restricted stock units, which will vest, subject to compliance with the provisions of Sections 6, 7 and 8 below, on December 31, 2016 and (ii) MTM will pay Mr. Costamagna a lump sum cash amount of €450,000 on December 31, 2015 (collectively the “Retirement Benefit”), in each case less any applicable US and Italian tax withholdings.  As long as Mr. Costamagna remains a director of the Company or MTM, he shall continue to have the use of the Company car, cell phone and computer under the same arrangements as currently exist. .

 

	 	
6.

	
Confidential Information.  It is understood and agreed that during Mr. Costamagna’s employment by the Company and thereafter, Mr. Costamagna shall keep secret and retain in strictest confidence, and, except to the extent required to be disclosed by applicable law or court order, shall not, without the prior written consent of the Company, furnish, make available or disclose to any third party or use for the benefit of himself or any third party, any confidential information, including trade secrets and intellectual property, of the Company, its lead entities MTM and IMPCO Technologies, Inc. and any of their subsidiaries (collectively, the “Company Group”).

 

	 	
7.

	
Non-Solicitation.  During the Restricted Period (as defined below), Mr. Costamagna agrees that he shall not, directly or indirectly, on behalf of himself, any entity he controls in whole or in part, or any other person or entity, (a) solicit for employment or hire any employee of the Company Group or (b) interfere with the relationship between any member of the Company Group and any of their customers, distributors, vendors, or suppliers.  An employee, shall be covered by this Section while so employed and for a period of six (6) months thereafter.  Notwithstanding the foregoing, the provisions of this Section shall not be violated by general advertising or solicitation not specifically targeted at any member of the Company Group. For purposes of this Agreement, the Restricted Period means the period (i) during which Mr. Costamagna continues as the Company’s CEO and/or continues to serve as a director of the Company or MTM and continuing thereafter (ii) for the longer of (x) 12 months after his ceasing to be CEO of the Company and (y) 6 months after his ceasing to be a director of both the Company and MTM.

 

	 	
8.

	
Non-Competition.

 

Mr. Costamagna acknowledges that during his employment and service as a director with the Company and MTM, (a) Mr. Costamagna has had and will continue to have access to trade secrets and other confidential information of the Company Group and their businesses, suppliers, distributors and customers, which, if disclosed, would unfairly and inappropriately assist in competition against the Company Group; (b) in the event of Mr. Costamagna’s employment by or association with a competitor during the Restricted Period, Mr. Costamagna would inevitably use or disclose such trade secrets and confidential information; (c) the members of the Company Group have substantial relationships with their distributors and customers and Mr. Costamagna has had and will continue to have access to these distributors and customers; and (d) Mr. Costamagna has generated and will continue to generate goodwill for the Company Group in the course of Mr. Costamagna’s employment with the Company.

 

  

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Mr. Costamagna agrees that the following restrictions on Mr. Costamagna’s activities during and after his employment and service as a director are necessary, appropriate and reasonable to protect the goodwill, confidential information and other legitimate interests of the Company Group from unfair and inappropriate competition:

 

(i)           During the Restricted Period, Mr. Costamagna will not, directly or indirectly, engage or participate, as an employee, officer, consultant or stockholder, or render any direct or indirect service or assistance, to any person or entity, whether with or without compensation, engaged in any business that the Company Group conducts or is developing, as of the date Mr. Costamagna ceases to be the Chief Executive Officer of the Company, and if later, a director of the Company and MTM (the “Competing Business”), and which is located in or selling into the geographic area consisting of Europe, North America, South America, Turkey and India, locations in which the Company Group currently conducts business (the “Non-Competition Area”), and Mr. Costamagna will not permit his name to be used by any enterprise engaging in or participating in any Competing Business business in the Non-Competition Area; provided, however, that ownership of less than 5% of the outstanding stock of any publicly traded company shall not by itself be deemed to be a violation of this provision and the ownership of less than 25% of the stock in a private company shall not by itself be deemed a violation of this provision; provided further, that after the later of (i) the Retirement Date or (ii) 6 months after Mr. Costamagna ceases to be a director of the Company and MTM, the Non-Competition Area shall be Italy and any country which shares a border with Italy. Provided further, that the maximum period of five years provided by Italian law for non-competition covenants shall not be exceeded.

 

(ii)           In signing this Agreement, Mr. Costamagna gives the Company assurance that he has carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed on him under Sections 6, 7 and 8. Mr. Costamagna agrees that the restraints contained in this Agreement, including the restraints in this Section, are necessary for the reasonable and proper protection of the Company Group and their trade secrets and confidential information and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent Mr. Costamagna from obtaining other suitable employment during the period in which he is bound by the restraints.  Mr. Costamagna acknowledges (i) that each of these covenants has a unique, very substantial and immeasurable value to the Company Group (ii) that Mr. Costamagna has sufficient assets and skills to provide a livelihood while such covenants remain in force, and (iii) that, as a result of the foregoing, in the event that Mr. Costamagna breaches such covenants, monetary damages would be an insufficient remedy for the Company Group and equitable enforcement of the covenant would be proper.  Mr. Costamagna therefore agrees that the Company, and MTM, in addition to any other remedies available to them, will be entitled to preliminary and permanent injunctive relief against any breach by Mr. Costamagna of any of those covenants, without the necessity of showing actual monetary damages or the posting of a bond or other security.  Mr. Costamagna, the Company and MTM further agree that, in the event that any provision of this Section, or Section 6 or 7 is determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, that provision will be deemed to be modified to permit its enforcement to the maximum extent permitted by law.  Mr. Costamagna further covenants that he will not challenge the reasonableness or enforceability of any of the covenants set forth in this Section or Sections 6 and 7.  It is also agreed that the Company and MTM will have the right to enforce all of the obligations under this Agreement, including without limitation pursuant to this Section, to the extent such enforcement is permitted by law.

 

  

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(iii)           As consideration for the non-competition and non-solicitation covenants contained in this Agreement, Mr. Costamagna is awarded 100,000 shares of restricted stock or restricted stock units, that has been included in the Retirement Benefit specified in Section 5 above and the value of 100,000 shares of stock in the Company as of the date of this Agreement, is €1,020,000 and such amount is the liquidated damages that the parties have agreed to in case of breach by Mr. Costamagna of any such non-competition and/or non-solicitation covenants hereunder, without prejudice to any other remedies available to the Company and MTM.

 

	
  

	
9.

	
Reservation of Authority.  Notwithstanding anything to the contrary in this Agreement, the Board of Directors of the Company, in its discretion, retains the right to appoint and terminate officers of the Company and directors and officers of its subsidiaries, including without limitation, MTM.

 

	
  

	
10.

	
Other Events.  Prior to the Retirement Date, Mr. Costamagna’s position as the Company’s CEO, as well as a director or officer of MTM and any other member of the Company Group shall be terminated upon the occurrence of the following events (each a “Termination Event”):

 

(i)              Immediately upon the death of Mr. Costamagna;

 

(ii)              If Mr. Costamagna shall have been incapacitated from illness, accident or other disability and unable to perform his normal duties hereunder for a consecutive period of three (3) months, upon the Board of Directors of the Company or MTM giving Mr. Costamagna not less than thirty (30) days’ written notice (“Disability”);

 

(iii)              Mr. Costamagna’s resignation as Chief Executive Officer of the Company prior to the Retirement Date; provided that in such case Mr. Costamagna shall remain a director of MTM but he shall by the resignation also relinquish all executive authority with regard to MTM;

 

  

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(iv)              By the Company for “Cause,” which shall mean (a) grossly negligent or wrongful conduct by Mr. Costamagna, which, in the reasonable and good faith judgment of the Board of Directors of the Company (by a vote of  two-thirds or more of all Company directors) adversely affects the material interests of the Company or MTM; or (b) any act or omission of Mr. Costamagna which is a material breach of this Agreement and is not remedied within ten (10) business days after written notice from the Board of Directors of the Company or MTM stating that failure to remedy such conduct will result in termination for Cause.

 

If a Termination Event shall occur, the Company and the Company Group shall not be obligated to continue Mr. Costamagna’s compensation under Section 4.  If the Termination Event shall occur for “Cause,” the Company and MTM shall not be required to pay the Retirement Benefit under Section 5, except as may be necessary to enforce the restrictions under Section 7 or 8.

 

	
  

	
11.

	
Miscellaneous.  This Agreement is the joint and several obligation of the Company and MTM.  The terms of this Agreement shall be governed by, and interpreted and construed in accordance with the provisions of, the laws of New York insofar as the provisions  are obligations and benefit the Company and the laws of Italy insofar as the provisions are obligations of and benefit MTM.  The amendment, modification, or termination of this Agreement may be made only in a writing executed by all of the parties hereto, and no amendment, modification, or termination of this Agreement shall be effective unless and until made in such a writing.  This Agreement shall be binding upon the Company and MTM and the successor to the Company or MTM by merger or consolidation and shall inure to the benefit of any and all successor(s) to the Company, MTM and their subsidiaries (whether the succession occurs by merger or consolidation or the purchase of a material portion of the assets of either the Company or MTM).  This Agreement is personal to Mr. Costamagna and Mr. Costamagna may not assign any of his rights or duties hereunder.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

 

[Signature Page Follows]

 

  

5

  

 

IN WITNESS WHEREOF, this Retirement Agreement has been duly executed by authorized representatives of the Company and MTM and by Mr. Costamagna as of the date first written above.

 

	ACKNOWLEDGED:	 	FUEL SYSTEMS SOLUTIONS, INC.
	 	 	 	 	 
	 	 	 	 	 
	By:	
 /s/ Ronald H. Janis

	 	By:	
/s/ Troy A. Clarke

	Name: Ronald H. Janis	 	Name: Troy A. Clarke
	Title: Acting Secretary	 	
Title: Chairman, Compensation Committee

 

 

	ACKNOWLEDGED:	 	
MTM S.R.L.

	 	 	 	 	 
	 	 	 	 	 
	By:	
/s/ Colin Johnston

	 	By:	/s/ Aldo Zanvercelli 
	Name: Colin Johnston	 	Name: Aldo Zanvercelli
	Title: Director, Fuel Systems Solutions, Inc.	 	Title: Director

 

 

	ACKNOWLEDGED:	 	

MARIANO COSTAMAGNA

	 	 	 	 	 
	 	 	 	 	 
	By:	
/s/ Marco Di Toro 

	 	/s/ Mariano Costamagna
	Name: Marco Di Toro	 	Mariano Costamagna (Signature)
	Title: Director, Fuel Systems Solutions, Inc.	 	 	

 

 

 

6ex10_2.htm

 

 

Exhibit 10.2

April 24, 2015

James Nall

Chairman of the Board

Fuel Systems Solutions, Inc.

780 Third Avenue, 25th Floor

New York, NY 10017

Re:  Agreement for the Provision of Interim Management Services

Dear Mr. Nall:

This letter, together with the attached Schedule(s) and General Terms and Conditions, sets forth the agreement (“Agreement”) between AP Services, LLC, a Michigan limited liability company (“APS”), and Fuel Systems Solutions, Inc. (“Fuel Systems” or the “Company”) for the engagement of APS to provide interim management services to the Company.

All defined terms shall have the meanings ascribed to them in this letter and in the attached Schedule(s) and General Terms and Conditions.

The engagement of APS, including any APS employees who serve in Executive Officer positions, shall be under the supervision of the Board of Directors of the Company.

 

	

Background

 

Since the beginning of Phase 2 (Turnaround Plan Implementation) on February 9, 2015, AlixPartners has been assisting the Company in its implementation of initiatives that were identified during Phase 1 and had been presented to the Board on January 30, 2015. In particular AlixPartners has assisted the Company by:

	
·

	
Supporting the management team and owners in implementing and monitoring the identified initiatives through the Program Management Office (“PMO”) activities by work-stream:

 

	
  

	
-

	
Top Line / Revenue Enhancement:

 

	
  

	
-

	
Direct Material Cost Reduction:

 

	
  

	

-

	
Cost Optimization and Organization

 

	
  

	

-

	
Manufacturing Footprint Optimization (“MFO”)

 

	
  

	

-

	
Inventory Reduction/Capex Optimization:

 

2000 Town Center  |  Suite 2400  |  Southfield, MI  |  48075  |  248.358.4420  |  248.358.1969 fax  |  www.alixpartners.com

  

  

 

James Nall

April 24, 2015

Page 2 of 9

 

	
·

	
Setting up the teams and the owners for each initiative.

 

	
·

	
Developing a monthly financial model according to each initiative operating plan.

 

	
·

	
Capturing potential immediate/short-term savings and cash flow opportunities and accelerating the medium-term potential.

 

	
·

	
Identifying a negotiation strategy and, if required, assisting the Company with its negotiations with its vendors, partners and third parties.

 

	
·

	
Assisting with the internal “buy-in” and commitment of involved staff/offices.

 

	
·

	
Facilitating overall program coordination in cooperation with the Company’s senior management.

 

	
Objective and Tasks

 

Subject to APS’ internal approval from its Risk Management Committee, confirmation that the Company has a Directors and Officers Liability insurance policy in accordance with section 7 of the attached General Terms and Conditions regarding Directors and Officers Liability Insurance coverage, and a copy of the signed Board of Directors’ resolution (or similar document) as official confirmation of the appointment, APS will provide Andrea Alghisi to serve as the Company’s interim Chief Operating Officer (“COO”), reporting to the Company’s Board of Directors.  Working collaboratively with the senior management team, the Board of Directors and other Company professionals, Mr. Alghisi will assist the Company to do the following:

 

	
a)

	
Assist with Company’s governance driving the overall turnaround program, in particular:

 

	
  

	
·

	
Managing the PMO to coordinate the implementation of the identified initiatives for the five workstreams listed above (i.e. Top Line/Revenue Enhancement, Direct Material Cost Reduction, Cost Optimization and Organization, Manufacturing Footprint Optimization and Inventory Reduction/Capex Optimization). This will include:

 

	
  

	
-

	
Bi-weekly core team leaders meeting

 

	
  

	
-

	
Monthly reporting to Strategy Committee or the Board to assess activities progress status, monitor achieved results, remove roadblocks and identify/assess recovery actions

 

	
  

	
-

	
Supporting the management team and owners in implementation and monitoring of the identified initiatives through the PMO activities by the five workstreams listed above.

 

 

  

  

 

James Nall

April 24, 2015

Page 3 of 9

 

	
  

	
·

	
Capturing potential immediate/short-term savings and cash flow opportunities and accelerating the medium-term potential.

 

	
  

	
·

	
Identifying a negotiation strategy and, if required, assisting the Company with its negotiations with its vendors, partners and third parties.

 

	
  

	
·

	
Assisting with the internal “buy-in” and commitment of involved staff/offices.

 

	
  

	
·

	
Facilitating overall program coordination in cooperation with the Company’s senior management and Board members.

 

	
  

	
·

	
Assist with such other matters as may be requested that fall within APS’ expertise and that are mutually agreeable.

 

	
Staffing

 

Stefano Aversa will be the managing director responsible for the overall engagement, and Andrea Alghisi will fill the role of interim COO.  APS anticipates Mr. Alghisi will be on site in Italy essentially full time and attend monthly Board meetings in the US as necessary. Messrs. Aversa and Alghisi will be assisted on this engagement by a staff of consultants at various levels, who have a wide range of skills and abilities related to this type of assignment.  In addition, APS has relationships with, and may periodically use, independent contractors with specialized skills and abilities to assist in this engagement.

APS anticipates initially using one other part-time (50%) consultant for this engagement.  We will periodically review the staffing levels to determine the proper mix for this assignment.  We will only use the necessary staff required to complete the requested or planned tasks.

 

	
Timing and Fees

 

APS will commence this engagement on or about April 27, 2015 after receipt of a copy of the Agreement executed by the Company and confirmation of the Company’s compliance with the requirements set forth in the first paragraph of the Objective and Tasks section above.

The Company shall compensate APS for its services, and reimburse APS for expenses, as set forth on Schedule 1.

*      *      *

 

 

  

  

 

James Nall

April 24, 2015

Page 4 of 9

 

If these terms meet with your approval, please sign and return the enclosed copy of the Agreement.

We look forward to working with you.

Sincerely yours,

AP Services, LLC

 

 

	/s/ Stefano Aversa 	
/s/ Andrea Alghisi

	 	 
	Stefano Aversa	
Andrea Alghisi

 

 

cc. Pietro Bersani

 

Acknowledged and Agreed to:

FUEL SYSTEMS SOLUTIONS, INC.

 

	By:	Troy Clarke
	 	 
	Its:	Director, Chair of Compensation Committee
	 	 
	Dated:	4/24/15

 

  

  

  

 

Schedule 1

Fees and Expenses

	
1.

	
Fees:  APS commits to a flat monthly rate of €125,000, plus VAT, for this engagement, subject to the scope, assumptions and personnel requirements herein remaining unchanged. In the event that changes occur with respect to the scope, assumptions, or personnel requirements, including those due to unforeseen events, the parties shall meet in good faith and agree to a revised fee arrangement.

AlixPartners reviews and revises its billing rates on 1 January of each year.

	
2.

	
Success Fee:  APS does not seek a success fee in connection with this engagement.

	
3.

	
Expenses:  In addition to the fees set forth in this Schedule, the Company shall pay AlixPartners a fixed amount of 15% of the total fees charged in lieu of the Company reimbursing AlixPartners for its expenses incurred in connection with this assignment, such as travel, lodging and meals, and all other indirect administrative costs.

	
4.

	
Break Fee:  APS does not seek a break fee in connection with this engagement.

	
5.

	
Retainer:  APS does not require a retainer in connection with this engagement, but we reserve the right to request a retainer in the future.

	
6.

	
Payment:  APS will submit monthly invoices for services rendered and expenses incurred.  All invoices shall be due and payable immediately upon receipt.  No discount is provided for prompt payment, and none shall be taken, but interest on any invoices paid late shall accrue in accordance with section 2 of the following General Terms and Conditions.

  

Page 5 of 9

  

 

	

AP Services, LLC

General Terms and Conditions

 

These General Terms and Conditions (“Terms”) are incorporated into the Agreement to which these Terms are attached.  In case of conflict between the wording in the letter and/or schedule(s) and these Terms, the wording of the letter and/or schedule(s) shall prevail.

Section 1.  Company Responsibilities.

The Company will undertake responsibilities as set forth below:

	
1.

	
Provide reliable and accurate detailed information, materials, documentation and

	
2.

	
Make decisions and take future actions, as the Company determines in its sole discretion, on any recommendations made by APS in connection with this Agreement.

APS’ delivery of the services and the fees charged are dependent on (i) the Company’s timely and effective completion of its responsibilities; and (ii) timely decisions and approvals made by the Company’s management.  The Company shall be responsible for any delays, additional costs or other deficiencies caused by not completing its responsibilities.

Section 2.  Billing, Retainer and Payments.

Billing.  APS will submit monthly invoices for services rendered and expenses incurred.  Unless explicitly stated in the invoice, all amounts invoiced are not contingent upon or in any way tied to the delivery of any reports or other work product in the future and are not contingent upon the outcome of any case or matter. APS’ fees are exclusive of taxes or similar charges, which shall be the responsibility of the Company (other than taxes imposed on APS’ income generally).

If any Fees and/or Expenses are not paid by the Company on the relevant due date, AlixPartners shall be entitled to charge interest on the unpaid amount until payment is made in full.  Interest shall be calculated using the lesser of (i) one percent (1%) per month (12% per annum) or (ii) to the maximum extent permitted by law.

Retainer.  Upon execution of the Agreement, the Company shall promptly pay APS the agreed-upon advance retainer (“Retainer”).  Invoices shall be offset against the Retainer.  Payments of invoices will be used to replenish the Retainer to the agreed-upon amount.  Any unearned portion of the Retainer will be applied against our final invoice or returned to the Company at the end of the engagement

Payments.  All payments to be made to APS shall be due and payable upon receipt of invoice via wire transfer to APS’ bank account, as follows:

 

	Receiving Bank:	
Deutsche Bank

	Receiving Account: 	
AP Services, LLC

	Currency: 	USD

Section 3.  Relationship of the Parties.

The parties intend that an independent contractor relationship will be created by the Agreement.  As an independent contractor, APS will have complete and exclusive charge of the management and operation of its business, including hiring and paying the wages and other compensation of all its employees and agents, and paying all bills, expenses and other charges incurred or payable with respect to the operation of its business.  Of course, employees of APS will not be entitled to receive from the Company any vacation pay, sick leave, retirement, pension or social security benefits, workers’ compensation, disability, unemployment insurance benefits or any other employee benefits.  APS will be responsible for all employment, withholding, income and other taxes incurred in connection with the operation and conduct of its business.  Nothing in this Agreement is intended to create, nor shall be deemed or construed to create a fiduciary or agency relationship between APS and the Company or its Board of Directors.

Section 4.  Confidentiality.

APS shall use reasonable efforts to keep confidential all non-public confidential or proprietary information obtained from the Company during the performance of its services hereunder (the “Information”), and neither APS nor its personnel will disclose any Information to any other person or entity.  “Information” includes non-public confidential and proprietary data, plans, reports, schedules, drawings, accounts, records, calculations, specifications, flow sheets, computer programs, source or object codes, results, models or any work product relating to the business of the Company, its subsidiaries, distributors, affiliates, vendors, customers, employees, contractors and consultants.

The foregoing is not intended to prohibit, nor shall it be construed as prohibiting, APS from making such disclosures of Information that APS reasonably believes is required by law or any regulatory requirement or authority, or to clear client conflicts.  APS may make reasonable disclosures of Information to third parties in connection with the performance of APS’ obligations and assignments hereunder.  In addition, APS will have the right to disclose to any person that it provided services to the Company or its affiliates and a general description of such services, but shall not provide any other information about its involvement with the Company.  The obligations of APS under this Section 4 shall survive the end of any engagement between the parties for a period of two (2) years.

The Company acknowledges that all information (written or oral), including advice and Work Product (as defined in Section 5), and the terms of this Agreement, generated by APS in connection with this engagement is intended solely for the benefit and use of the Company (limited to its management and its Board of Directors) in connection with the transactions to which it relates.  The Company agrees that no such information shall be used for any other purpose or reproduced, disseminated, quoted or referred to with or without attribution to APS at any time in any manner or for any purpose without APS’ prior approval, except as required by law.

 

	APS	Rev. 01Mar13

Page 6 of 9

  

 

	

AP Services, LLC

General Terms and Conditions

 

Section 5. Intellectual Property.

Upon the Company’s payment of all fees and expenses owed under this Agreement, all analyses, final reports, presentation materials, and other work product (other than any Engagement Tools, as defined below) that APS creates or develops specifically for the Company and delivers to the Company as part of this engagement (collectively known as “Work Product”) shall be owned by the Company and shall constitute Information as defined above.  APS may retain copies of the Work Product and any Information necessary to support the Work Product subject to its confidentiality obligations in this Agreement.

All methodologies, processes, techniques, ideas, concepts, know-how, procedures, software, tools, utilities and other intellectual property that APS has created, acquired or developed or will create, acquire or develop (collectively, “Engagement Tools”), are, and shall be, the sole and exclusive property of APS.  The Company shall not acquire any interest in the Engagement Tools other than a limited non-transferable license to use the Engagement Tools to the extent they are contained in the Work Product.  The Company acknowledges and agrees that any Engagement Tools provided to the Company are provided “as is” and without any warranty or condition of any kind, express, implied or otherwise, including, implied warranties of merchantability or fitness for a particular purpose.

Section 6. Framework of the Engagement.

The Company acknowledges that it is retaining APS solely to assist and advise the Company as described in the Agreement.  This engagement shall not constitute an audit, review or compilation, or any other type of financial statement reporting engagement.

Section 7.  Indemnification and Other Matters.

The Company shall indemnify, hold harmless and defend APS and its affiliates and its and their partners, directors, officers, employees and agents (collectively, the “APS Parties”) from and against all claims, liabilities, losses, expenses and damages arising out of or in connection with the engagement of APS that is the subject of the Agreement.  The Company shall pay damages and expenses, including reasonable legal fees and disbursements of counsel as incurred in advance.  The APS Parties may, but are not required to, engage a single firm of separate counsel of their choice in connection with any of the matters to which these indemnification and advancement obligations relate.

If an APS Party is required by applicable law, legal process or government action to produce information or testimony as a witness with respect to this Agreement, the Company shall reimburse APS for any professional time and expenses (including reasonable external and internal legal costs) incurred to respond to the request, except in cases where an APS Party is a party to the proceeding or the subject of the investigation.

 

In addition to the above indemnification and advancement, APS employees serving as directors or officers of the Company or affiliates will receive the benefit of the most favorable indemnification and advancement provisions provided by the Company to its directors, officers and any equivalently placed employees, whether under the Company’s charter or by-laws, by contract or otherwise.

The Company shall specifically include and cover employees and agents serving as directors or officers of the Company or affiliates from time to time with direct coverage under the Company’s policy for liability insurance covering its directors, officers and any equivalently placed employees (“D&O insurance”).  Prior to APS accepting any officer position, the Company shall, at the request of APS, provide APS a copy of its current D&O policy, a certificate(s) of insurance evidencing the policy is in full force and effect, and a copy of the signed board resolutions and any other documents as APS may reasonably request evidencing the appointment and coverage of the indemnitees.  The Company will maintain such D&O insurance coverage for the period through which claims can be made against such persons.  The Company disclaims a right to distribution from the D&O insurance coverage with respect to such persons.  In the event that the Company is unable to include APS employees and agents under the Company’s policy or does not have first dollar coverage acceptable to APS in effect for at least $10 million (e.g., there are outstanding or threatened claims against officers and directors alleging prior acts that may give rise to a claim), APS may, at its option, attempt to purchase a separate D&O insurance policy that will cover APS employees and agents only. The cost of the policy shall be invoiced to the Company as an out-of-pocket expense.  If APS is unable or unwilling to purchase such D&O insurance, then APS reserves the right to terminate the Agreement.

Notwithstanding anything to the contrary, the Company’s indemnification and advancement obligations in this Section 7 shall be primary to (and without allocation against) any similar indemnification and advancement obligations of APS, its affiliates and insurers to the indemnitees (which shall be secondary), and the Company’s D&O insurance coverage for the indemnitees shall be specifically primary to (and without allocation against) any other valid and collectible insurance coverage that may apply to the indemnitees (whether provided by APS or otherwise).

APS is not responsible for any third-party products or services separately procured by the Company.  The Company’s sole and exclusive rights and remedies with respect to any such third party products or services are against the third-party vendor and not against APS, whether or not APS is instrumental in procuring such third-party product or service.

Section 8.  Governing Law and Arbitration.

The Agreement is governed by and shall be construed in accordance with the laws of the State of New York with respect to contracts made and to be performed entirely therein and without regard to choice of law or principles thereof.

 

	APS	Rev. 01Mar13

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AP Services, LLC

General Terms and Conditions

 

Any controversy or claim arising out of or relating to the Agreement, or the breach thereof, shall be settled by arbitration.  Each party shall appoint one non-neutral arbitrator.  The two party arbitrators shall select a third arbitrator.  If within 30 days after their appointment the two party arbitrators do not select a third arbitrator, the third arbitrator shall be selected by the American Arbitration Association (AAA).  The arbitration shall be conducted in Southfield, Michigan under the AAA’s Commercial Arbitration Rules, and the arbitrators shall issue a reasoned award.  The arbitrators may award costs and attorneys’ fees to the prevailing party.  Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

Notwithstanding the foregoing, APS may in its sole discretion proceed directly to a court of competent jurisdiction to enforce the terms of this Agreement for any claim (and any subsequent counter claim) against the Company relating to either (i) the non-payment of fees or expenses due under this Agreement, or (ii) the non-performance of obligations under Section 7.

In any court proceeding arising out of this Agreement, the parties hereby waive any right to trial by jury.

Section 9.  Termination and Survival.

The Agreement may be terminated at any time by written notice by one party to the other; provided, however, that notwithstanding such termination APS will be entitled to any fees and expenses due under the provisions of the Agreement (for fixed fee engagements, fees will be pro rata based on the amount of time completed), including Success Fee and Break Fee in accordance with Schedule 1.  Such payment obligation shall inure to the benefit of any successor or assignee of APS.

Additionally, unless the Agreement is terminated by the Company for Cause (as defined below) or due to circumstances described in the Success Fee provision in the Agreement, APS shall remain entitled to the Success Fee(s) that otherwise would be payable for the greater of 12 months from the date of termination or the period of time that that has elapsed from the date of the Agreement to the date of termination.  Cause shall mean:

(a)      an APS employee acting on behalf of the Company is convicted of a felony, or

(b)      it is determined in good faith by the Board of Directors of the Company after 30 days’notice and opportunity to cure, that either (i) an APS employee is engaging in misconduct injurious to the Company, or (ii) an APS employee is breaching any of his or her material obligations under this Agreement, or (iii) an APS employee is willfully disobeying a lawful direction of the Board of Directors or senior management of the Company.

Sections 2, 4, 5, 7, 8, 9, 10, 11 and 12 of these Terms, the provisions of Schedule 1 and the obligation to pay accrued fees and expenses shall survive the expiration or termination of the Agreement.

Section 10.  Non-Solicitation of Employees

The Company acknowledges and agrees that APS has made a significant monetary investment recruiting, hiring and training its personnel.  During the term of this Agreement and for a period of two years after the final invoice is rendered by APS with respect to this engagement (the “Restrictive Period”), the Company and its affiliates agree not to directly or indirectly hire, contract with, or solicit the employment of any of APS’ Managing Directors, Directors, or other employees/ contractors.  

If during the Restrictive Period the Company or its affiliates directly or indirectly hires or contracts with any of APS’ Managing Directors, Directors, or other employees/contractors, the Company agrees to pay to APS as liquidated damages and not as a penalty the sum total of: (i) for a Managing Director, one million U.S. dollars ($1,000,000 USD); (ii) for a Director, five hundred thousand U.S. dollars ($500,000 USD); and (iii) for any other employee/contractor, two hundred fifty thousand U.S. dollars ($250,000 USD).  The Company acknowledges and agrees that liquidated damages in such amounts are (x) fair, reasonable and necessary under the circumstances to reimburse APS for the costs of recruiting, hiring and training its employees as well as the lost profits and opportunity costs related to such personnel, and to protect the significant investment that APS has made in its Managing Directors, Directors, and other employees/ consultants; and (y) appropriate due to the difficulty of calculating the exact amount and value of that investment.  

The Company also acknowledges and agrees that money damages alone may not be an adequate remedy for a breach of this provision, and the Company agrees that APS shall have the right to seek a restraining order and/or an injunction for any breach of this non-solicitation provision.  If any provision of this section is found to be invalid or unenforceable, then it shall be deemed modified or restricted to the extent and in the manner necessary to render the same valid and enforceable.

Section 11.  Limit of Liability.

The APS Parties shall not be liable to the Company, or any party asserting claims on behalf of the Company, except for direct damages found in a final determination to be the direct result of the bad faith, self-dealing or intentional misconduct of APS.  The APS Parties shall not be liable for incidental or consequential damages under any circumstances, even if it has been advised of the possibility of such damages.  The APS Parties aggregate liability, whether in tort, contract, or otherwise, is limited to the amount of fees paid to APS for services on this engagement (the “Liability Cap”).  The Liability Cap is the total limit of the APS Parties’ aggregate liability for any and all claims or demands by anyone pursuant to this Agreement, including liability to the Company, to any other parties hereto, and to any others making claims relating to the work performed by APS pursuant to this Agreement.  Any such claimants shall allocate any amounts payable by the APS Parties among themselves as appropriate, but if they cannot agree on the allocation it will not affect the enforceability of the Liability Cap.  Under no circumstances shall the aggregate of all such allocations or other claims against the APS Parties pursuant to this Agreement exceed the Liability Cap.

 

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AP Services, LLC

General Terms and Conditions

 

Section 12.  General.

Severability.  If any portion of the Agreement shall be determined to be invalid or unenforceable, the remainder shall be valid and enforceable to the maximum extent possible.

Entire Agreement.  This Agreement, including the letter, the Terms and the schedule(s), contains the entire understanding of the parties relating to the services to be rendered by APS and supersedes any other communications, agreements, understandings, representations, or estimates among the parties (relating to the subject matter hereof) with respect to such services, The Agreement, including the letter, the Terms and the schedule(s), may not be amended or modified in any respect except in a writing signed by the parties.  APS is not responsible for performing any services not specifically described herein or in a subsequent writing signed by the parties.

Joint and Several.  If more than one party signs this Agreement, the liability of each party shall be joint and several.

Third-Party Beneficiaries.  The indemnitees shall be third-party beneficiaries with respect to Section 7 hereof.

Data Protection.  APS acknowledges and the Company agrees that in performing the services APS may from time to time be required to process certain personal data on behalf of the Company.  In such cases APS may act as the Company’s data processor and APS shall endeavor to (a) act only on reasonable instructions from the Company within the scope of the services of this Agreement; (b) have in place appropriate technical and organizational security measures against unauthorized or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data; and (c) comply (to the extent applicable to it and/or the process) with relevant laws or regulations.

Notices.  All notices required or permitted to be delivered under the Agreement shall be sent, if to APS, to:

AP Services, LLC

2000 Town Center, Suite 2400

Southfield, MI  48075

Attention:  General Counsel

and if to the Company, to the address set forth in the Agreement, to the attention of the Company’s General Counsel, or to such other name or address as may be given in writing to the other party.  All notices under the Agreement shall be sufficient only if delivered by overnight mail. Any notice shall be deemed to be given only upon actual receipt.

 

	APS	Rev. 01Mar13

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