EXHIBIT 10.3
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is made as of the 28th day of
February, 1994, by and between NEI Acquisition Corporation, a Texas corporation
(the "Company"), and Xxxxxx/Xxxxxxx Merchant Banking Group, Ltd. ("MBG").
WHEREAS, MBG organized the Company for the purpose of acquiring the
operating assets of Newspaper Enterprises Inc. of Texas and certain related
equipment; and
WHEREAS, MBG arranged for the financing of the Company's business and
located and identified the operating management of the Company; and
WHEREAS, Xxxxxx/Xxxxxxx Merchant Banking Fund, Ltd. ("MBF"), an affiliate
of MBG, has purchased preferred stock of the Company; and
WHEREAS, MBG has experience in the management of commercial enterprises;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the Company and MBG agree as follows:
1. Engagement of MBG. The Company hereby engages MBG to perform
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supervisory management services during the term of this Agreement. Such
services shall include coordinating relationships with the Company's financing
sources, overseeing the implementation of financial and management information
and reporting systems, general management consulting activities and furnishing
representatives to serve as members of the Company's board of directors. MBG
shall devote such portion of its business time as it, in the exercise of good
business judgment, reasonably determines is necessary to perform the activities
described herein.
2. Consideration.
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2.1 Fee. The Company shall pay MBG a fee of $100,000 per year, payable
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quarterly in arrears on the last day of each June, September, December and
March, commencing June 30, 1994. MBG acknowledges and understands that the
payment of the foregoing management fees shall be subject to certain
restrictions imposed by the lenders to the Company. In the event that the
Company is unable to pay management fees at any time as a result of restrictions
imposed by its lenders, such fees shall be deferred until the restrictions
lapse.
2.2 Stock Options. Pursuant to its Stock Option Plan, the Company hereby
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grants to MBG an option to purchase 25,000 shares of Common Stock at an exercise
price of $1.00 per share. The terms and conditions of such option shall be as
set forth in the Stock Option Agreement in the form attached hereto as
Exhibit A.
2.3 Reimbursements. The Company shall promptly reimburse MBG for all out-
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of-pocket expenses incurred by MBG in the performance of its duties
hereunder; provided, however, that all reimbursements in excess of $500 shall
be subject to the prior approval of Stratford Capital Group, Inc..
3. Duration and Termination of Agreement.
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3.1 Term. This Agreement shall continue in full force and effect from the
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date hereof until the earliest of (i) the seventh anniversary date of this
Agreement, (ii) the date on which MBF and partners of MBF to whom MBF has
distributed securities of the Company shall (collectively) cease to own more
than 15% of the outstanding Common Stock of the Company on a fully diluted
basis, (iii) an event of default hereunder, (iv) the mutual consent of the
parties hereto, (v) the sale of substantially all of the assets of the Company,
merger of the Company with another entity, or an initial public offering of the
Company's Common Stock on a firm commitment basis in which the aggregate net
proceeds received by the Company at the public offering price is at least
$10,000,000.
3.2 Events of Default. If any party hereto (the "breaching party") fails
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to observe or perform any term, covenant or other provision contained herein for
a period of 30 days after written notice from the other party, an event of
default shall be deemed to exist with respect to the breaching party.
Notwithstanding the foregoing and any other provisions of this Agreement, if the
performance by the Company of any term, covenant or other provision of this
Agreement would violate, conflict with or cause (with or without the passage of
time) an event of default under any agreement, contract or understanding with
the Company's lenders then the Company's performance of such term, covenant or
provision is hereby waived by MBG until such time as the Company's performance
thereof would not so violate, conflict or cause an event of default under such
agreement, contract or understanding and in no event would such a failure by the
Company to perform its obligations hereunder be deemed an event of default
herein.
3.3 Remedies. If any event of default as described in paragraph 3.2
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exists with respect to any party hereto, the other party shall be entitled to
all remedies with respect to such defaulting party as permitted by applicable
law.
3.4 Remedies Cumulative. No remedy, right or power conferred herein upon
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any party is intended to be exclusive of any other remedy, right or power given
hereunder or now or hereafter existing at law, in equity or otherwise, and all
such remedies, rights and powers shall be cumulative.
4. Liability of MBG. Neither MBG nor any of its agents, employees or
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representatives shall be liable to the Company for any acts or omissions in
connection
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with the activities contemplated herein, absent a final adjudication of gross
negligence or willful misconduct by MBG or such agent, employee or
representative.
5. Miscellaneous Provisions.
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5.1 Governing Law. This Agreement shall be deemed to have been made in
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and shall be governed by, and interpreted in accordance with, the laws of the
State of Texas.
5.2 Amendment. This Agreement may be amended only by a writing that
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specifically ratifies, confirms and incorporates as a part thereof the
provisions of this Agreement not thereby amended. Each such amendment must be
executed and delivered by both parties.
5.3 Non-Waiver. No waiver of, or failure to assert, any claim, right,
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benefit or remedy pursuant to this Agreement shall operate as a waiver of any
other claim, right or benefit. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner effect such
party's right at a later time to require such performance or fully to enforce
the same.
5.4 Binding Effect. The terms, conditions and covenants of this Agreement
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shall apply to, inure to the benefit of, and be binding upon each of the parties
hereto and their respective successors in interest and permitted assigns.
5.5 Further Assurances. The parties hereto shall execute and deliver to
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the appropriate party such other instruments and perform such other acts as may
reasonably be required in order fully to perform and carry out the terms and
intent of this Agreement.
EXECUTED as of the date first written above.
XXXXXX/XXXXXXX MERCHANT
BANKING GROUP, LTD.
By Xxxxxx Xxxxxxx Inc. (general partner)
By:
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Xxxxx X. Xxxxxx, Chairman
NEI ACQUISITION CORPORATION
By:
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