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Exhibit 10.1
THIS MANAGEMENT FEE AGREEMENT is dated as of December 2,
2006 (this " Agreement ") and is between Freescale
Semiconductor, Inc., a Delaware corporation ("
Freescale " or the " Company ") and
Blackstone Management Partners V L.L.C. (the " Advisor
").
RECITALS
WHEREAS , the Company has entered into an
Agreement and Plan of Merger (the " Merger Agreement
"), dated as of September 15, 2006, by and among Firestone
Holdings LLC, and Firestone Acquisition Corporation, a Delaware
corporation (" Merger Sub "), and Freescale.
WHEREAS , pursuant to an assignment and assumption
agreement dated November 13, 2006, Firestone Holdings LLC
assigned all of its rights and obligations under the Merger
Agreement to Firestone Holdings L.P., a Cayman Islands exempted
limited partnership (" Parent "), which agreed to
assume all such rights and obligations.
WHEREAS , pursuant to the terms and subject to the
conditions of the Merger Agreement, the Merger Sub merged with and
into Freescale (the " Merger "), with Freescale
surviving the Merger.
WHEREAS , funds affiliated with or managed or advised by
each of The Blackstone Group, The Carlyle Group, Permira Advisers
LLC and Texas Pacific Group, along with certain other investors
(each such fund, an " Investor "; and each such group
of affiliated funds or funds advised by the same adviser, an "
Investor Group ") made an investment in Parent (the "
Equity Financing ") in connection with the Merger and
entered into an Investors Agreement dated as of December 1,
2006 (the " Investors Agreement ").
WHEREAS , the Merger was financed in part by the Equity
Financing and in part by debt financings arranged by the Advisor
(such financings, together with the Merger, the Equity Financing
and related transactions are collectively referred to as the "
Transactions ").
WHEREAS , the Advisor has expertise in the areas of
finance, strategy, investment, acquisitions and other matters
relevant to the Company and its business.
WHEREAS , the Advisor used its expertise to provide
substantial financial and structural analysis, due diligence
investigations, corporate strategy, and other advice and assistance
in connection with the Transactions.
WHEREAS , the Company desires to avail itself and its
subsidiaries of the Advisor’s expertise in providing
financial and structural analysis, due diligence investigations,
corporate strategy, and other advice and assistance, which the
Company believes will be beneficial to it and its subsidiaries, and
the Advisor wishes to provide the services to the Company as set
forth in this Agreement in consideration of the payment of the fees
described below.
WHEREAS , concurrently with the
execution of this Agreement, the Company is entering into
substantially identical management fee agreements (" Advisory
Agreements ") with the affiliates or advisors of the
Investors listed on Schedule A hereto (the " Other
Advisors ").
NOW, THEREFORE , in consideration of the premises and
agreements contained herein and of other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the
parties agree as follows:
AGREEMENT
SECTION 1. Appointment.
The Company hereby engages the Advisor, on a non-exclusive
basis, to provide the services described in Section 2 (the "
Services ") on the terms and subject to the
conditions of this Agreement.
SECTION 2. Services.
(a) The Advisor agrees that until the earlier of the Termination
Date or the date mutually agreed upon pursuant to Section 3(b)
below, it will provide to the Company, to the extent appropriate
and requested by the Company, by and through itself and/or its
successors, assigns, affiliates, officers, employees and/or
representatives and third parties (collectively hereinafter
referred to as the " Advisor Designees "), as the
Advisor in its sole discretion may designate from time to time,
management, advisory and consulting services in relation to the
affairs of the Company and its subsidiaries, including, without
limitation, (a) advice regarding the structure, terms,
conditions and other provisions, distribution and timing of debt
and equity offerings and advice regarding relationships with the
Company’s and its subsidiaries’ lenders and bankers,
(b) advice regarding the strategy of the Company,
(c) advice regarding dispositions and/or acquisitions and
(d) such other advice directly related or ancillary to the
above financial advisory services as may be reasonably requested by
the Company; provided that the Services do not include any
advisory or other services in connection with the Transactions; and
provided , further , that if the Investor Group
affiliated with or advised by the Advisor holds less than 10% of
the limited partnership interests of Parent purchased by such
Investor on the Closing Date, the Advisor will not be obligated to
provide any Services.
(b) It is expressly agreed that the Services to be performed
under this Agreement will not include any investment banking or
other financial advisory services which may be provided by the
Advisor or any of its affiliates or Advisor Designees in connection
with any actual or potential acquisition, divestiture, financing,
refinancing, recapitalization or other transaction involving the
Company or any of its subsidiaries. The Advisor or its Advisor
Designees shall be entitled to receive compensation, in addition to
any fees paid under this Agreement, for providing services of the
type specified in the preceding sentence by mutual agreement of the
Company or such subsidiary, on the one hand, and the Advisor or its
relevant affiliates or Advisor Designees, on the other hand.
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SECTION 3. Fees.
(a) Management Fee . In consideration for the Services,
the Company will pay to the Advisor or its Advisor Designee an
annual management fee in respect of each fiscal year from and
including fiscal year 2006 (for which a pro-rated amount shall be
assessed as described below) (the " Management Fee ";
the term "Management Fee" as used in this Agreement means the
Annual Amount as adjusted by the terms of this paragraph (a)). The
Management Fee will accrue and be payable through December 31
of the year in which the Termination Date (as defined below)
occurs. No Management Fee, or any portion thereof shall be
refundable under any circumstances, except as provided below.
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(i) On December 4, 2006, the Company shall pay to the
Advisor or its Advisor Designee an aggregate amount of
$1,129,791.94, representing a pro rata portion of the Annual Amount
(as defined below) in respect of fiscal year 2006 calculated from
December 2, 2006 through December 31, 2006.
(ii) Subject to Section 3(a)(iv) below, the Company shall
pay to the Advisor or its Advisor Designee an annual aggregate
amount equal to the product of (x) 49.45% and (y) 1.5% of
the projected annual EBITDA (as defined below) based on the
Company's annual budget for such year (the " Annual
Amount "). The Annual Amount shall be paid quarterly in
advance in four equal payments on each January,
April 1, July 1 and October 1, commencing on
January 1, 2007.
(iii) On each April 30, commencing on April 30, 2008,
(i) the Advisor will deliver to the Company a statement of the
Services rendered for the most recently completed fiscal year (the
" Recent Fiscal Year ") and (ii) the Company
shall deliver to the Advisor a statement (the " EBITDA
Statement ") setting forth for the Recent Fiscal Year a
calculation of the Annual Amount based on the actual amount of the
Company's EBITDA for such Recent Fiscal Year. If the actual Annual
Amount set forth on the EBITDA Statement exceeds the estimated
Annual Amount previously paid with respect to such Recent Fiscal
Year, then the Company shall promptly pay to the Advisor or its
Advisor Designee, without interest, an amount equal to such
excess.
(iv) If the estimated Annual Amount previously paid with respect
to such Recent Fiscal Year exceeds the actual Annual Amount set
forth on the EBITDA Statement, then the estimated Annual Amount to
be paid in respect of the next fiscal year of the Company shall be
reduced by the amount of such excess.
If the Advisor receives any payment of Management Fees in
advance and its obligation to provide Services terminates within
the calendar quarter to which such payment relates, the Advisor
shall promptly (no later than 15 days after any such termination)
turn over to the Company a portion of the payment or payments so
received equal to the number of days remaining in the calendar
quarter from the date the Advisor was no longer obligated to
provide Services divided by 90 (" Returned Amounts
"). The Company shall pay such Returned Amounts to the Other
Advisors under all other Advisory Agreements, other than to any
such Other Advisor that, under its respective agreement, is no
longer obligated to provide Services. In the event there are
Returned Amounts under any Advisory
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Agreement, in consideration for the incremental
Services to be provided by the Advisor, the Advisor shall be
entitled to receive a portion of such Returned Amounts equal to a
fraction, the numerator of which is the aggregate Management Fee
which the Advisor became entitled to receive in respect of such
calendar quarter, and the denominator of which is the aggregate
Management Fee paid to all advisors under all Advisory Agreements
(including this Agreement) in respect of such calendar quarter,
other than any advisor that, under its respective agreement, is no
longer obligated to provide Services.
In the event an Other Advisor's obligation to provide Services
under its Advisory Agreement terminates and it is no longer
entitled to its management fee, in consideration for the
incremental Services to be provided by the Advisor, the Advisor
shall be entitled to receive a portion of such management fee
previously payable to such Other Advisor equal to a fraction, the
numerator of which is the aggregate Management Fee which the
Advisor is then entitled to, and the denominator of which is the
aggregate Management Fee to which all advisors under all Advisory
Agreements (including this Agreement) are then entitled to, other
than any such advisor that, under its respective agreement, is no
longer obligated to provide Services.
All amounts paid by the Company to the Advisor or its Advisor
Designee pursuant to this Section 3 shall be made by wire
transfer in same-day funds to the bank account designated by the
Advisor or its Advisor Designee, and shall not be refundable under
any circumstances, except as provided above.
For purposes of this Agreement:
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(i) " Termination Date " means the earliest of
(i) the tenth anniversary of the date hereof, (ii) such
time as the Advisor is no longer obligated to provide Services
pursuant to Section 2(a) and (iii) such earlier date as
the Company and the Advisor may mutually agree upon.
(ii) " EBITDA " shall mean "Consolidated EBITDA",
as such term is defined in the Credit Agreement, dated as of
December 1, 2006, among Merger Sub (to be merged with and into
the Company), Citibank, N.A., as Administrative Agent, Swing Line
Lender and L/C Issuer, and the other parties thereto, as the same
may be amended or replaced from time to time.
(b) Early Termination . Notwithstanding anything to the
contrary contained in this Agreement, (i) at any time in
connection with or in anticipation of (but conditional upon) a
Change of Control (as defined below) or a Qualified Public Offering
(as defined below), or sale of all or substantially all of the
Company’s shares, businesses or assets (or at any time
thereafter) or (ii) such earlier time as mutually agreed upon,
and so long as a similar election is made with respect to all
Advisory Agreements, the Advisor and the Company may mutually agree
to terminate this Agreement and the Services provided hereunder in
consideration for a lump sum payment by the Company to the Advisor
or its Advisor Designee, in an amount to be determined at such time
and consistent with customary practices of the Advisor. Such
payment shall be paid on the date on which the Change of Control or
Qualified Public Offering, or sale of shares, businesses or assets
is consummated, or upon such other date as mutually agreed.
Following the payment of the lump sum payment, the obligation of
the Advisor to provide the Services hereunder, and the
corresponding obligations of the
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Company to pay Management Fees, shall be
terminated, but all other provisions of this Agreement shall
continue unaffected. For purposes of this Agreement, " Change
of Control " and a " Qualified Public
Offering " shall have the meanings set forth in the
Investors Agreement.
(c) Non-Payment . Other than following or in connection
with a Change of Control, with the approval of the Majority
Principal Investors (as defined in the Investors Agreement), the
Company may defer the payment of any portion of the Management Fee
(in the same proportion as the aggregate Management Fee to which
all advisors under all Advisory Agreements (including this
Agreement) is deferred) to the extent necessary in order for the
Company to remain in compliance with rating agency requirements and
covenants to lenders. To the extent the Company does not pay any
portion of the Management Fee for any reason, including in reliance
on the preceding sentence, or by reason of any prohibition on such
payment pursuant to the terms of any agreement or indenture
governing indebtedness of the Company or its subsidiaries,
(x) any accrued but unpaid portion of the Management Fee shall
be paid to the Advisor upon the earlier of (i) the first date
on which the payment of such unpaid amount is permitted under such
requirements or covenants, agreement or indenture, to the extent
permitted by such requirements or covenants, agreement or
indenture, and (ii) the total or partial liquidation,
dissolution or winding up of the Company. Any portion of the
Management Fee not paid on the scheduled due date will bear
interest, payable in cash on each scheduled due date, at an annual
rate of interest equal to the Non-Payment Rate (as defined below),
from the date due until paid. For these purposes, the fact that the
Advisor is subsequently no longer entitled to receive payments
pursuant to paragraphs (a) or (b) above shall not affect
its right to receive any deferred payment to which it is entitled
pursuant to this paragraph (c). As used in this Agreement, the term
" Non-Payment Rate " means a rate per annum equal to
the g
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