EXHIBIT 10.15
AMENDED AND RESTATED MANAGEMENT ADVISORY SERVICES AGREEMENT
THIS AMENDED AND RESTATED MANAGEMENT ADVISORY SERVICES AGREEMENT
("Agreement"), effective as of the 29th day of May, 1998 (the "Effective Date"),
by and between MENTMORE HOLDINGS CORPORATION, a Delaware corporation
("Mentmore") and STELLEX INDUSTRIES, INC., a Delaware corporation, TSMD
ACQUISITION CORP., a Delaware corporation, STELLEX MICROWAVE SYSTEMS, INC.
(formerly X-X TSMD Inc.), a California corporation, STELLEX AEROSPACE HOLDINGS,
INC., a Delaware corporation, MONITOR AEROSPACE CORPORATION, a New York
corporation, MONITOR MARINE PRODUCTS, INC., a New York corporation, MONITOR
AEROSPACE INTERNATIONAL CORP., a New York corporation, KII HOLDING CORP., a
Delaware corporation, KII ACQUISITION CORP., a Delaware corporation, STELLEX
AEROSPACE (formerly XXXXXXXX INDUSTRIES, INC.), a California corporation,
PARAGON PRECISION PRODUCTS, a California corporation, XXXXX MACHINING
INTERNATIONAL, a California corporation, SCANNING ELECTRON ANALYSIS
LABORATORIES, INC., a California corporation, and GENERAL INSPECTION
LABORATORIES, INC., a California corporation (hereinafter, collectively, the
"Companies") amends and restates that certain Management Advisory Services
Agreement between Mentmore and certain of the Companies dated July 1, 1997, as
amended and restated November 1, 1997.
WHEREAS, the Companies are engaged in the aerospace, defense, and space
industries; and
WHEREAS, the Companies desire to engage Mentmore for the purpose of
providing certain staff and services, including management advisory, consulting
and other services and facilities to the Companies and Mentmore desires to
provide such staff, services and facilities upon the terms and conditions stated
herein.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby agree as follows:
1. MANAGEMENT ADVISORY SERVICES.
A. The Companies hereby engage Mentmore to provide to the Companies
executive management advisory, consulting and other services including, but not
limited to:
1) strategic planning, financial planning, accounting and financial
reporting services oversight and review, including expertise and assistance
in financial presentation and planning and such services as are reasonably
necessary for the Companies to comply with its financial reporting
obligations to third parties, including report preparation, compliance with
generally accepted accounting principles ("GAAP"), footnote disclosure,
compilation and review;
2) consulting, expertise and assistance with respect to traditional
treasury functions (including cash management and managing the Companies'
relationships with its lenders, monitoring the Companies' compliance with
current lender requirements, monitoring of debt covenants, negotiation of
waivers and exceptions, monitoring of cash flow and negotiations of lines
of credit and other credit facilities);
3) general business development services; and
4) oversight and review required for all federal, state and local tax
preparation, planning and audits.
B. Mentmore agrees to provide such services to the Companies through the
use of Mentmore employees or agents who Mentmore reasonably deems to be
qualified to provide such services. Mentmore shall have the right to determine
the manner in which it shall perform its responsibilities and provide the
services required hereunder.
2. COMPENSATION.
A. In consideration of the performance of such services as are contemplated
hereunder, the Companies agree to pay to Mentmore during the term of this
Agreement annual base compensation (hereinafter the "Base Compensation") in the
aggregate amount of (i) ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) per
annum, plus (ii) from and after January 1, 1999, an amount equal to one per cent
(1%) of the Companies' total consolidated sales in any fiscal year less the
amounts paid pursuant to (a), above.
B. The Base Compensation shall be payable by the Companies to Mentmore in
equal monthly installments payable on the 1st day of each calendar month during
the term hereof, the first monthly installment to be due and payable on June 1,
1998. That portion of the Base Compensation payable under 2, A(ii), above shall
be estimated by the parties for purposes of calculating the monthly installments
hereunder and adjustments paid to the appropriate party(ies) within ten (10)
days after the Companies' audited financial statements for each fiscal year are
prepared. All unpaid monthly installments of Base Compensation shall bear
interest compounded annually at the lesser of: (i) a per annum rate equal to the
Prime Rate adjusted on the first business day of each calendar quarter for so
long as any amounts remain unpaid hereunder, or (ii) the maximum rate allowed by
law until such time as such installment(s) are paid. The "Prime Rate" shall mean
the rate of interest reported as the prime rate from time to time in The Wall
Street
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Journal newspaper (or its successor in interest) in its "Money Rates" column;
provided, however, if more than one rate or a range of rates are reported as the
prime rate, then the higher or highest of such rates shall be considered the
Prime Rate.
C. The parties hereto agree to re-negotiate such annual rate of Base
Compensation in the event that, as a result of the acquisition by the Companies
of other companies or businesses, or otherwise, there is a material increase in
the level of services and responsibilities of Mentmore hereunder.
3. BUSINESS EXPENSES; WORKING FACILITIES.
A. During the term hereof, the Companies agree to pay or promptly reimburse
Mentmore for the aggregate of all direct and indirect costs which are incurred
or accrued by Mentmore or its employees or agents and which are, in the
reasonable business judgment of Mentmore, necessary for the performance of its
responsibilities and the rendering of the services required hereunder,
including, but not limited to:
1) all operating expenses (such as office costs, travel and
entertainment);
2) overhead costs (such as costs for office space and assets);
3) fees and other amounts paid to third parties;
4) any and all costs incurred or accrued in connection with the
termination or maintenance of any services or expenses incurred under this
Agreement that Mentmore in its business judgment no longer considers
appropriate or useful to the long term benefit of the Companies; and
5) an appropriate allocation for all costs incurred to acquire or
place in service and to thereafter utilize and maintain capital assets
(hereinafter, "Common Fixed Assets") that Mentmore uses in connection with
the performance of its responsibilities and the rendering of the services
required hereunder which capital assets are used for the common benefit of
the Companies as well as other companies or entities which are also managed
by Mentmore (individually an "Affiliated Corporation" and, collectively,
the "Affiliated Companies").
B. Examples of Common Fixed Assets contemplated by subparagraph (5) above
would include, but not be limited to, the purchase, use and maintenance of a
corporate airplane, corporate office(s) and apartment(s) or corporate
automobiles. The costs and expenses for Common Fixed Assets would be allocated
among the Affiliated Companies, as follows:
1) The cost to acquire or place in service a particular Common Fixed
Asset, together with the cost of all leasehold or other improvements
thereto,
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would be allocated among and paid by each of the Affiliated Companies,
including the Companies, based upon a fraction, the numerator of which is
the five-year moving average of revenues for each Affiliated Corporation
and the denominator of which is the aggregate of the five-year moving
averages of revenues for all of the Affiliated Companies.
2) In general, Common Fixed Asset related costs which are associated
with clearly identifiable usage by a particular Affiliated Corporation
would be billed to that Affiliated Corporation at a pre-determined fixed
rate. The fixed rate would be based upon incremental out-of-pocket costs.
The remaining costs for Common Fixed Assets (which arise both out of use
that is common (or indistinguishable as to a particular Affiliated
Corporation) as well as insufficient use to fully absorb all Common Fixed
Asset costs) would be allocated among all Affiliated Companies based upon
the formula described in subparagraph (1) above.
4. TERM AND TERMINATION.
A. The term of this Agreement (the "Term") shall commence as of the
Effective Date hereof and shall continue for an initial term expiring on
December 31, 2008, which Term shall be automatically extended for an additional
year as of December 31st of each year, commencing December 31, 1998, unless
either party shall have previously notified the other in writing, on or before
September 30th of any applicable year, that the Term of this Agreement shall not
be further extended, it being the intent of the parties that this Agreement
shall have a rolling "evergreen" term of not less than ten (10) years. To
illustrate, if neither party has notified the other in writing before September
30, 1998 that the Term of this Agreement shall not be further extended, as of
such date the Term of this Agreement shall continue until December 31, 2009. As
used herein, "term of this Agreement" shall include all extensions. Upon the
expiration of the final Term of this Agreement, all amounts owed or due and
owing to Mentmore shall be paid in full by the Companies.
B. Notwithstanding the terms of Section 4.A. above, Mentmore may terminate
this Agreement upon ninety (90) days' prior written notice to the Companies.
C. Notwithstanding the terms of Section 4.A. above, the Companies may
terminate this Agreement "for cause" upon the occurrence of: (i) the commission
of a felony, embezzlement, or any act of material dishonesty by any individual
providing services to the Companies hereunder on behalf of Mentmore which causes
material harm to the Companies, or (ii) a material failure of Mentmore to
provide the services contemplated hereunder and the failure of Mentmore to cure
the same within ninety (90) days following the date of receipt of written notice
thereof setting forth in detail the nature of such failure.
D. In the event of the termination of this Agreement by the Companies "for
cause," Mentmore shall receive payment in full of all amounts due and payable
hereunder
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through the effective date of such termination and during the period of any
judicial appeal of such termination, and in no event shall the effective date of
termination be earlier than the date of expiration of the ninety (90) day cure
period specified in Section 4.C. above. In the event of any termination of this
Agreement, amounts payable pursuant to Article 2 above shall be prorated based
upon the ratio of the number of days during the fiscal year during which
Mentmore shall be deemed hereunder to have provided such services to two hundred
fifty (250). All such amounts shall be paid by the Companies to Mentmore in cash
or its equivalent within a reasonable period of time, not to exceed thirty (30)
days, following such termination.
E. In the event of the termination of this Agreement, Mentmore will
cooperate and assist the Companies in order to effectuate a smooth and orderly
transition.
5. INDEPENDENT CONTRACTOR; INDEMNIFICATION.
A. Mentmore shall provide management advisory services to the Companies
hereunder only in the capacity as an independent contractor. Mentmore shall have
sole responsibility for the payment of all income, social security, employment
and related taxes with respect to amounts payable to Mentmore hereunder, and for
the provision of all welfare, pension and other employee benefits to the
employees of Mentmore.
B. With regard to the services to be provided and performed by Mentmore
pursuant to this Agreement, neither Mentmore nor its shareholders, directors,
officers, employees, agents or representatives shall be liable to the Companies
or any of its subsidiaries for any acts or omissions of Mentmore in the
provision or performance of such services, other than acts or omissions
resulting from the fraud, bad faith or gross negligence of Mentmore, its
shareholders, directors, officers, employees, agents or representatives. The
Companies shall hold harmless, defend and indemnify Mentmore, its shareholders,
directors, officers, employees, agents, representatives, successors and assigns
(the "Indemnified Parties") from and against any and all liabilities, costs,
damages, expenses and attorneys' fees resulting from or attributable to any and
all acts and omissions of the Indemnified Parties in providing or performing the
services required under this Agreement, other than acts or omissions resulting
from fraud, bad faith or gross negligence by any of the Indemnified Parties. To
the extent that any such liabilities, costs, damages, expenses and attorneys'
fees are compensated for by insurance purchased or arranged for by the
Companies, neither Mentmore nor any of the other Indemnified Parties shall be
required to reimburse the Companies on account thereof.
6. GENERAL PROVISIONS.
A. The construction and interpretation of this Agreement shall at all times
and in all respects be governed by the laws of the State of New York without
regard to its rules of conflicts of laws. The parties hereby consent to the
jurisdiction of the State of New York courts over disputes involving this
Agreement.
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B. All notices, requests, demands and other communications to be given by
the parties hereunder shall be in writing and shall be sent: (i) by United
States registered or certified mail, return receipt requested, postage prepaid,
(ii) by a recognized overnight commercial courier service, (iii) transmitted by
fax (confirmed by telephone), or (iv) delivered in person with a receipt
requested therefor to the following addresses or such other addresses of which
the other party hereto shall have been given notice pursuant to this Section
6.B.:
(1) If to the Companies:
President
Stellex Microwave, Inc.
Xxxxxxx Research Park
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Fax: 650/000-0000
with copies to:
President
Stellex Aerospace
00000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Facsimile: 818/710-7807
President
Monitor Aerospace Corporation
0000 Xxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Facsimile: 516/957-1114
(2) If to Mentmore:
President
Mentmore Holdings Corporation
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile:(000) 000-0000
All notices, requests, demands and other communications to be given by the
parties hereunder shall be effective (a) upon receipt or refusal if delivered
personally or by facsimile; (b) one (1) business day after depositing with such
an overnight courier service or (c) two (2) business days after deposit in the
mails, if mailed.
C. This Agreement shall be binding upon, and shall inure to the benefit of,
the Companies and Mentmore and their respective successors. The Companies shall
not assign this Agreement or any rights, duties or obligations hereunder.
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D. This Agreement contains the entire agreement and understandings by and
between the Companies and Mentmore with respect to the provision of management
advisory, consulting and other services, and no representations, promises,
agreements or understandings, written or oral, not contained herein shall be of
any force and effect. No change, modification or waiver of the effect of (or of
any breach or failure of) any term, condition or provision hereof shall be valid
or binding unless the same is in writing and signed by the party against whom
such change, modification or waiver is sought to be enforced; moreover, no valid
waiver of the effect of (or of any breach or failure of) any term, condition or
provision of this Agreement at any time shall be deemed to be a waiver of the
effect of (or of any breach or failure of) any other term, condition or
provision of this Agreement at such time or will be deemed a valid waiver of
such term, condition or provision at any other time. No failure to exercise, and
no delay in exercising, any right or power hereunder shall operate as a waiver
thereof.
E. Headings of the Articles of this Agreement are for the convenience of
the parties only, and shall be given no substantive or interpretive effect
whatsoever.
F. This Agreement may be executed in one (1) or more counterparts, all of
which together shall constitute one and the same instrument.
G. In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective for all purposes and in all respects as of the day and year first
above written.
STELLEX INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: President
-----------------------------------------
TSMD ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: President
-----------------------------------------
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STELLEX MICROWAVE SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Its: CEO
-----------------------------------------
STELLEX AEROSPACE HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: President
-----------------------------------------
MONITOR AEROSPACE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: Vice Chairman of the Board
-----------------------------------------
MONITOR MARINE PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: Vice Chairman of the Board
-----------------------------------------
MONITOR AEROSPACE INTERNATIONAL CORP.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: Vice Chairman of the Board
-----------------------------------------
KII HOLDING CORP.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: Vice Chairman of the Board
-----------------------------------------
KII ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: Vice Chairman of the Board
-----------------------------------------
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STELLEX AEROSPACE
By: /s/ Xxxxxxx X. Call
-----------------------------------------
Its: President
-----------------------------------------
PARAGON PRECISION PRODUCTS
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Its: CFO
-----------------------------------------
XXXXX MACHINING INTERNATIONAL
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Its: CFO
-----------------------------------------
SCANNING ELECTRON ANALYSIS LABORATORIES, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Its: CFO
-----------------------------------------
GENERAL INSPECTION LABORATORIES, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Its: CFO
-----------------------------------------
MENTMORE HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: President
-----------------------------------------
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