Exhibit 10.3
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MANAGEMENT AGREEMENT
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AGREEMENT made as of October 15, 1996 by and between XXXXXXX-
XXXXXX, INC., a Delaware corporation, XXXXXXX-XXXXXX AG
Greifensee, a Swiss corporation, and on behalf of itself and its
subsidiaries, XXXXXXX-XXXXXX HOLDING DEUTSCHLAND GmbH Albstadt, a
German GmbH (each a "Corporation," and together the
"Corporations"), and AEA INVESTORS INC., a Delaware corporation
("AEA").
WHEREAS, AEA rendered certain investment banking services to
the Corporations since the date of the acquisition of the stock
or other equity interests and certain indebtedness of the
entities comprising the Xxxxxxx-Xxxxxx Group of AG Fur
Prazisionsinstrumente Greifensee, Switzerland and the financing
related thereto;
WHEREAS, AEA also renders advisory services to selected
client companies, and the Corporations desire to retain AEA to
render advisory and consulting services to them and AEA is
willing to provide such services on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
1. The Corporations hereby retain AEA to render advisory
and consulting services to the Corporations and AEA hereby agrees
to render such services, for the period commencing on the date
hereof and continuing so long as AEA owns any securities of MT
Investors Inc., a Delaware corporation. AEA shall render such
advisory and consulting services to the Corporations in
connection with such financial, treasury, manufacturing,
marketing, management and other matters relating to the business
and operations of the Corporations, or affiliated companies, as
the Corporations' Boards of Directors may from time to time
request.
2. As compensation for AEA's advisory and consulting
services rendered pursuant to Section 1 hereof, the Corporations
agree to pay (in the amounts specified on Exhibit A), and AEA
will accept, so long as this Agreement continues in effect, an
aggregate fee at the rate of $1,000,000 per year (payable in US
dollars), which shall include AEA's out-of-pocket costs and
expenses for travel, entertainment and similar items incurred in
the normal course of the performance of its advisory and
consulting services hereunder, such fee to be payable quarterly
in advance, on the first day of each calendar quarter, commencing
as of November 1, 1996. In addition, Xxxxxxx-Xxxxxx, Inc. shall
reimburse AEA for any out-of-pocket expenses (other than normal
course travel, entertainment and similar items). Such
reimbursable expenses shall include, without limitation (i)
expenses incurred in connection with printing, duplicating and
delivering communications to stockholders of MT Investors Inc.
(or any of the Corporations or affiliated companies), to lenders
of any of the Corporations or any subsidiary of any Corporation,
and to holders of other securities of any of the Corporations or
any subsidiary of any Corporation; and (ii) fees and expenses of
outside consultants hired by AEA in connection with the
performance of its services hereunder; PROVIDED, that fees and
expenses of outside consultants in excess of $50,000 for any one
project or $100,000 in the aggregate for all projects in any one
year shall be reimbursed only if the Chief Executive Officer of
Xxxxxxx-Xxxxxx, Inc. has consented to the retention of the
outside consultants the fees and expenses of which exceed $50,000
for any one project or $100,000 in the aggregate for all projects
in any one year. The parties hereto will also enter into an
Indemnification Agreement substantially in the form of Exhibit B
hereto (the "Indemnification Agreement").
(a) It is the understanding of the parties that AEA
may be involved with potential acquisitions, mergers, financing
or other major transactions involving any of the Corporations.
In any such transaction in which AEA contributes capital directly
or indirectly to any of the Corporations or arranges for third
parties to contribute capital directly or indirectly to any of
the Corporations, or which involves the refinancing of any
outstanding indebtedness of any of the Corporations, AEA shall be
entitled to such compensation, in addition to the annual fee
provided above, as such Corporations and AEA shall mutually agree
based upon customary fees and expenses for such transactions.
(b) In the event that any of the Corporations or any
of their subsidiaries employ any employee of AEA as an officer of
such Corporation or such subsidiary or otherwise, and such
employment involves a substantial amount of such employee's time,
such Corporation or such subsidiary shall compensate such
employee at a reasonable rate to be agreed upon among such
employee, such Corporation or such subsidiary, and AEA, and the
compensation payable to such employee by such Corporation or such
subsidiary shall not reduce or affect in any way the fees payable
to AEA hereunder.
3. Any notice required to be given hereunder shall be in
writing and shall be deemed sufficient if delivered in person or
mailed by certified mail as follows: if to the Corporations, to
the office of Xxxxxxx-Xxxxxx, Inc. at Xxxxxxx-Xxxxxx AG, Im
Langacher, XX-0000 Xxxxxxxxxx, Xxxxxxxxxxx or such other address
as the Corporations may hereafter jointly designate for that
purpose; and if to AEA, to it at its office at Park Avenue Tower,
00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other
address as AEA may hereafter designate for that purpose.
4. This Agreement, together with the Indemnification
Agreement, constitutes the entire agreement between the parties
and supersedes all prior agreements and understandings, both
written and oral, with respect to the subject matter hereof.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns,
including any entity into which any of the Corporations shall
consolidate or merge or to which any of the Corporations shall
transfer substantially all of its assets. This Agreement shall
be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be
performed entirely within such state.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date and year first above written.
XXXXXXX-XXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: ------------------------
Title: -----------------------
XXXXXXX-XXXXXX AG
By: /s/ Xxxxxx X. Xxxxxxx
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Name: ------------------------
Title: -----------------------
XXXXXXX-XXXXXX HOLDING
DEUTSCHLAND GmbH
BY: /S/ XXXXXX X. XXXXXXX
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Name: ------------------------
Title: -----------------------
AEA INVESTORS INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Managing Director/VP
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Exhibit A
AEA Management Agreement
Allocation Among Xxxxxxx-Xxxxxx Companies
Xxxxxxx-Xxxxxx, Inc.
Holding Company/Stewardship Function $300,000
Operations* 273,000
Total Xxxxxxx-Xxxxxx, Inc. 573,000
Xxxxxxx-Xxxxxx AG
Operations* 308,000
Xxxxxxx-Xxxxxx Holding Deutschland GmbH
Operations* 119,000
Total Fee $1,000,000
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* Operations fee has been split based upon ratio of respective
1996 sales: 39% for Xxxxxxx-Xxxxxx, Inc., 44% for Xxxxxxx-Xxxxxx
AG and 17% for Xxxxxxx-Xxxxxx Holding Deutschland GmbH. Split
will be recalculated with respect to each fiscal year beginning
with 1998 based on respective sales for the prior fiscal year.
Xxxxxxx-Xxxxxx, Inc. will pay all out-of-pocket expenses that are
payable in addition to the fee under the Management Agreement.
