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EXHIBIT 10.3
MANAGEMENT AGREEMENT
This Agreement made as of this 24th day of May, 1993, by and between
Susquehanna Media Co., a corporation organized and existing under the laws of
the State of Delaware ("Company" herein) and Susquehanna Pfaltzgraff Co., a
corporation organized and existing under the laws of the State of Delaware
("Susquehanna" herein).
WITNESSETH:
WHEREAS, Susquehanna has a qualified and experienced staff of trained
personnel capable of providing management oversight, legal, financial/treasury,
human resources, real estate, accounting, and administrative services;
WHEREAS, Company requires competent and qualified management which can
assume and actively discharge management oversight, legal, financial/treasury,
human resources, real estate, accounting and administrative services, and
WHEREAS, Company recognizes that Susquehanna can provide certain goods,
services and employee benefits an advantageous prices or terms, and
WHEREAS, Company desires to retain the services of Susquehanna and
Susquehanna for a fee desires to provide services to Company;
NOW, THEREFORE, the parties intending to be legally bound, mutually
agree as follows:
1. Company will retain the services of Susquehanna and Susquehanna will
perform certain Management Oversight, Finance/Treasury, Legal, Human
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Resources, Real Estate, Accounting and Administrative Services more specifically
set forth on Exhibit "A" attached hereto and made a part hereof. In addition,
Susquehanna agrees to provide certain goods, services and employee benefits
(including but not limited to those listed in Exhibit "B") at its cost.
2. This Agreement shall be for a term of one year commencing on the
date of this Agreement. Thereafter, this Agreement shall continue in effect from
year to year unless terminated by either party by written notice sent to the
other party at least sixty (60) days prior to the end of the initial term or any
revised term.
3. During the term of this Agreement, Susquehanna through its
employees, shall devote its best efforts, and such time and attention as it
deems necessary to provide the services set forth on Exhibit "A".
4. Susquehanna agrees that its management personnel will be accessible
at all times to personnel of Company to review the operation of Company and the
services being provided by Susquehanna and will furnish such recommendations as
appropriate.
5. In consideration for the services rendered by Susquehanna to
Company, Susquehanna shall receive as annual compensation a sum equal to 3 1/2%
of Consolidated Revenues of the Company, payable in monthly installments on the
first day of each month.
6. Susquehanna, in its sole discretion, shall employ such personnel as
are required in conjunction with the proper performance of its duties under this
Agreement and Susquehanna shall have the right to terminate or transfer any
employee as it deems appropriate. Company shall not have the right to
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require that any particular functions be performed by specific employees of
Susquehanna.
7. The parties agree that Susquehanna shall perform its management
services as an independent contractor to Company and nothing contained in this
Agreement shall constitute or be construed to be or to create a partnership or
joint venture between Susquehanna and Company and nothing herein shall be
construed as reserving to Susquehanna the right to control Company's business.
As an independent contractor, Susquehanna shall be responsible for payment of
all applicable federal, state and local taxes related to its operations and for
all wages, benefits, payroll taxes and insurance for its employees.
8. Susquehanna acknowledges that from time to time its employees will
be exposed to Company's confidential and proprietary information. Susquehanna
agrees that any confidential or proprietary information will be kept in
strictest confidence and not revealed to any third party without Company's prior
written authorization. Susquehanna and its employees shall not be required to be
bonded.
9. (a) Company shall have the right to terminate this Agreement if any
of the following events shall occur upon ten days written notice to Susquehanna
given at any time after the period permitted to cure any of the following
defaults has elapsed:
(i) Susquehanna fails to keep, observe or perform any material
covenant, agreement, term or provision of this Agreement to be kept, observed or
performed by Susquehanna, and such default shall continue for a period of 30
days after notice thereof by Company to Susquehanna, or,
(ii) A receiver, liquidator, or trustee of Susquehanna, or of any
of its property is appointed by court order and such order remains in effect
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for more than 30 days, or a petition is filed against Susquehanna under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or hereafter in
effect, and is not dismissed within 30 days after filing, or
(iii) Susquehanna files a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect, or consents to the filing
of any petition against it under such law, or
(iv) Susquehanna makes an assignment for the benefit of its
creditors, or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, trustee, or liquidator
of Susquehanna or of all or any part of its property.
(v) Susquehanna sells all or substantially all of its interest in
Company other than to an Affiliate of Susquehanna. "Affiliate" for purposes of
this Agreement shall mean with respect to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with, such Person. For purposes of this definition, a Person shall be
deemed to be "controlled by" another Person if the other possesses, directly or
indirectly, power either (i) to vote 50% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
(b) Susquehanna shall have the right to terminate this Agreement if
any of the following events shall occur upon ten days written notice given
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to Company at any time after the period permitted to cure any of the following
defaults has elapsed:
(i) The breach of any material covenant, condition, or provision of
this Agreement to be kept, observed, or performed by Company, and such default
shall continue for a period of 30 days after notice thereof by Susquehanna to
Company; or
(ii) A receiver, liquidator, or trustee of Company, or of any of its
property, is appointed by court order and such order remains in effect for more
than 30 days, or Company is adjudicated bankrupt or insolvent; or any of its
property is sequestered by court order and such order remains in effect for more
than 30 days; or a petition is filed against Company under any bankruptcy,
reorganization, arrangement, insolvency, readjustment or debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, and is
not dismissed within 30 days after filing, or
(iii) Company files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the filing of
any petition against it under such law, or
(iv) Company makes an assignment for the benefit of its creditors,
or admits in writing its inability to pay its debts generally as they become due
or consents to the appointment of a receiver, trustee, or liquidator of Company
or of all or any part of its property.
(v) Susquehanna sells all or substantially all of its interest in
Company other than to an Affiliate of Susquehanna.
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10. Should any disagreement or dispute arise under the terms of this
Agreement, which can not be resolved by the parties, either party shall have the
right to refer the disagreement or dispute to the American Arbitration
Association and both parties agree to abide by the Commercial Arbitration Rules
of the Association and be bound by any decision of an arbitrator.
11. This Agreement supersedes any prior verbal or written agreement
between the parties and represents their entire understanding. Modifications and
amendments to this Agreement to be effective must be in writing and executed
with the same formalities as this Agreement.
12. Should any part of this Agreement or the application of such part
be held to be invalid, the remainder of this Agreement shall not be affected
thereby, and shall continue in full force and effect during the term of this
Agreement and any renewal thereof.
13. This Agreement is entered into and shall be governed by the laws of
the Commonwealth of Pennsylvania and shall be binding upon and inure to the
benefit of each party's successors and assigns.
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IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals the day and year first above written.
ATTEST: SUSQUEHANNA PFALTZGRAFF CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
----------------------------- ------------------------------
Secretary Vice President
(Seal)
ATTEST: SUSQUEHANNA MEDIA CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
----------------------------- ------------------------------
Secretary Vice President
(Seal)
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EXHIBIT A
The management fee shall cover the following services:
Management Oversight
1. Approval of operating plans and budgets
2. Approval of capital expenditures in excess of $20,000
3. Negotiation of acquisitions and divestitures
4. Approval of senior management selection and compensation
arrangements
Financial/Treasury
1. Acquisition valuation and due diligence
2. Financial analysis and projections
3. Capital budgeting
4. Arranging and negotiating financing
5. Lender relations
6. Pension fund manager selection and performance evaluation
7. Payroll tax administration
8. Cash management
9. Risk management
10. Computer graphics
Insurance premium and payroll taxes are not included in the management
fee charged by Susquehanna.
Legal
1. Acquisition due diligence
2. Acquisition and financing document drafting and review
3. Real estate transactions (PA)
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4. Lease negotiation and drafting
5. Bad debt collection
6. Representation at zoning hearings, as requested by management
7. Representation at revocation and permit appeals before state
and local officials
8. Labor law advice
9. Personnel action advice and representation (terminations,
disciplinary actions, discrimination cases)
10. Representation at workers, compensation hearings
11. Interface with outside legal counsel
12. Franchise negotiations
Outside legal fees are not included in the management fee charged by
Susquehanna
Human Resources
1. Employee Benefit Administration of all benefit plans
including:
- Health Insurance Plans (AEtna and several HMO's)
administration, including health care cost containment
programs, PPO options, participant communication, etc.
Insurance premiums and claim costs are paid directly by the
Company to the Susquehanna Pfaltzgraff Voluntary Employee
Benefit Account (VEBA).
- Pension Plans administration including annual actuarial
valuations, PBGC premium payments, investment management fees,
consulting expenses and participant communication, etc.
Pension expenses are charged directly to the Company as part
of Retirement Expense.
- 401K Savings Plan administration including administrative and
investment management expenses, annual discrimination testing,
consulting expenses and participant communication. Savings
Plan expenses including Company match of employee
contributions are charged directly to Company.
- Life Insurance Plan administration. Premiums are charged
directly to Company as part of Employee Benefit Expense.
- Sick Leave/LTD Plans administration. LTD premiums are charged
directly to Company as part of Employee Benefit Expense.
Salary continuation and sick leave costs are paid by Company
as Salary Expenses.
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- Educational Assistance Program administration. Employee
reimbursement expenses for Educational Assistance are paid
directly by Company.
- Executive Physical Program administration. Expenses for
executive physicals are paid directly by Company.
2. Salary administration consultation and annual compensation
planning, reviews, and analysis.
3. Human Resources Information Systems (HRIS) software
maintenance and support, including payroll record maintenance,
and ad-hoc report generation.
4. Union negotiation and labor relations support, analysis and
consultation. Expenses for outside legal counsel and
consulting, as required, are billed directly to Company.
5. Employee relations support and consultation. In addition,
Corporate Human Resources provides guidance in compliance with
Federal and State legislation and regulations such as ADA,
Sexual Harassment, wage and hour laws, etc.
6. Training and employee development support and consultation.
Expenses for customized training and materials are billed
directly to Company.
7. Coordination and administration of employee relocations.
Expenses for relocating Company employees or new hires are
billed directly to Company.
8. Coordinate Susquehanna wide programs such as drug testing,
employee social activities, United Way, etc. Expenses for drug
testing of Company employees are billed directly to Company.
9. Job posting program in York area and consultation on
employment and recruiting issues.
10. Employee Assistance Program including both administration and
the actual program cost.
Real Estate
The Corporate Real Estate Department provides consulting and
administrative services related to real property owned or utilized by
the Company. These services include:
1. Administration of contracts and leases, market analysis and
site selection in response to operating needs.
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2. The sale and disposition of excess assets.
3. Building design and construction services.
4. Lease negotiations.
5. Building, environmental and tax monitoring and appeals related
to real estate.
Accounting
1. Quarterly financial statement disclosures and preparation
(Company maintains general ledger and supplies data for
financial reports)
2. Income tax return preparation (federal, state and local)
3. Federal and State information returns (including magnetic
media reporting)
4. Personal property tax returns
5. Federal, state and local audits and tax appeals (business,
property, income and use taxes)
6. Pension plan reporting (5500s)
7. Fixed asset system software maintenance and support
8. General tax advice (advice from outside tax counsel will be
billed directly to Company)
Administrative
1. Office space for Company's executive offices including HVAC
and utilities.
2. Mail room and courier services.
3. Large volume copy and printing support.
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EXHIBIT B
Goods, Services and Employee Benefits purchased through Susquehanna:
Property, casualty and liability insurance
Telephone Services
Office Supplies
Pension Expense
Employee Savings Plan Expense
Payroll Withholding Taxes
Property Taxes
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