1
EXHIBIT 10.8
MANAGEMENT AND CONSULTING AGREEMENT
This Management and Consulting Agreement ("Agreement") is made this 24th
day of June, 1997, and is between Oxford Automotive, Inc., a Michigan
corporation (the "Company"), and The Oxford Investment Group, Inc., a Michigan
corporation ("Consultant").
BACKGROUND
A. Consultant currently provides consulting and management services to
BMG North America Limited ("BMG") pursuant to a Management and Consulting
Agreement dated October 25, 1995 (the "BMG Agreement") and to Lobdell Emery
Corporation ("Lobdell") pursuant to a Management and Consulting Agreement dated
January 10, 1997 (the "Lobdell Agreement" and together with the BMG Agreement
the "Subsidiary Agreements"). Each of BMG and Lobdell are subsidiaries of the
Company.
B. The Company desires to terminate the Subsidiary Agreements and to
enter into an agreement directly with Consultant to receive various consulting
and management services from Consultant for a period of at least five (5) years
beginning on and after the date hereof, and Consultant is willing to terminate
the Subsidiary Agreements and to provide such services to the Company.
C. Consultant is the owner of the trademarks (the "Marks") and the
federal registrations (and applications therefor) thereof listed in Schedule A,
attached to this Agreement and the Company desires to use these Marks in
connection with its business. Consultant will permit the Company to use the
Marks subject to the terms and conditions stated below.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements hereinafter set forth, the Company and Consultant agree
as follows:
SECTION 1. Services to be Rendered.
Consultant will perform various consulting, management and advisory
services on behalf of the Company with respect to all matters relating to or
affecting the Company's business at its facilities at such reasonable times as
the Company may request. Consultant will perform the following specific
services (the "Consulting Services") upon request:
(a) Consultant will meet with the Company's officers and/or
managers regarding operations and productivity and will review
treasury aspects of the Company's business;
(b) Consultant will attend meetings with the Company's customers;
2
(c) Consultant will review with members of management of the
Company the Company's financial plans and assist in analyzing the
Company's strategic plans and business alternatives;
(d) Consultant will advise and assist the Company from time to
time in identifying potential Subject Companies (as defined below)
and will advise and assist the Company in connection with any
Acquisition Transaction (as defined below) with a potential Subject
Company; and
(e) Consultant will render such other management and advisory
services as may from time to time be agreed upon by Consultant and
the Company.
Provided, however, that in the performance of the Consulting Services,
Consultant is not obligated to make available to the Company any investment or
business opportunities that Consultant (including its directors, officers and
employees) becomes aware of in the ordinary course of its business or as a
result of Consultant's affiliation with certain other entities, regardless of
whether any of these entities is in the same line of business as the Company.
The Company recognizes that Consultant is a merchant banking and business
development company and receives substantial numbers of proposed acquisition
transactions each month. The Company acknowledges the right of and consents to
Consultant consummating any such transactions, in any ownership structure as
Consultant deems appropriate, including offering such transaction to any
affiliate, including the Company, if Consultant, in its sole and complete
discretion, determines such decision is appropriate or desirable.
For purposes of this Agreement, the term "Acquisition Transaction" means
any acquisition (by merger, stock purchase, tender offer or otherwise) by the
Company (or a subsidiary of the Company) of another company or companies (each,
a "Subject Company") or the purchase by the Company (or a subsidiary of the
Company) of all or a portion of the assets, or more that 20% of the equity
securities, of one or more Subject Companies; provided however, that in no
event shall the term Acquisition Transaction mean any acquisition by the
Company of any Subject Company for Aggregate Consideration (as defined below)
of less than $2,500,000.
SECTION 2. Location of Services.
It is understood that Consultant's services will be rendered largely at
Bloomfield Hills, Michigan, but that Consultant will, on reasonable request,
render such Consulting Services at such other places as mutually agreed upon by
the Company and Consultant.
SECTION 3. Fees.
The Company shall pay Consultant for the Consulting Services hereunder and
the License referred to in Section 5, the following cash fees:
2
3
(a) The Company shall pay Consultant a base management fee ("Base
Management Fee") of $1,000,000 annually, payable in equal monthly
installments of $83,334 on or before the first (1st) day of each
month on account of the prior month (with the payment for any
partial month pro rated accordingly).
(b) In addition to the Base Management Fee, the Company shall pay
to Consultant the following investment banking fees:
(i) A fee equal to 1.0% of the Aggregate Consideration (as
defined below) with respect to any Acquisition Transaction
consummated with a Subject Company located in North America,
such fee to be contingent upon consummation of the
Acquisition Transaction and payable at the closing of such
transaction; and
(ii) A fee equal to 1.25% of the Aggregate Consideration with
respect to any Acquisition Transaction consummated with a
Subject Company located outside of North America, such fee
to be contingent upon consummation of the Acquisition
Transaction and payable at the closing of such transaction;
provided, however, that in no event shall either fee described in
Sections 3b(i) or (ii) above be less than $200,000.
(c) The Company and Consultant acknowledge that the Base Management Fee
has been determined based upon the Company's current operations and
both parties agree that such Base Management Fee shall be adjusted
from time to time, as mutually acceptable to the Company and
Consultant, to reflect the increased size and complexity of the
Company's operations as a result of any Acquisition Transactions or
any other transactions affecting the Company's operations.
"Aggregate Consideration" shall mean, with respect to any Acquisition
Transaction, the total proceeds and other consideration paid and to be paid
(which shall be deemed to include amounts paid and to be paid into escrow) by
the Company to a Subject Company (including any of its affiliates or holders of
its securities), including, without limitation: (i) cash; (ii) notes,
securities and other property valued at the fair market value thereof; (iii)
payments made in installments; (iv) amounts paid or payable under consulting
agreements, agreements not to compete or similar arrangements; (v) any possible
contingent payments, including payments determined by reference to the future
sales, earnings or other results of the Company or the Subject Company; and
(vi) the book value of all funded debt of the Subject Company or its
affiliates, the payment of which is assumed by the Company. For purposes
hereof, (i) any such consideration in the form of securities which are publicly
traded prior to the closing (the "Closing") of the Acquisition Transaction
shall be valued at the average of their closing price for the twenty (20)
trading days prior to the Closing, (ii) any such consideration in the form of
securities which are not publicly traded prior to the Closing, but become
publicly traded after the Closing, shall be valued at the quoted when issued
price of such securities on the day prior to the Closing (if such quotes are
available), and (iii) any
3
4
other consideration shall be valued at the fair market value thereof as
determined in good faith by the Company and Consultant, or in the absence of
agreement, by an independent arbiter mutually satisfactory to both parties. In
determining the Aggregate Consideration involving deferred payments or other
consideration, such consideration shall be valued at its fair market value on
the date of Closing and the fee attributable thereto shall be paid at Closing.
No fee payable to any other financial advisor or other person by the
Company in connection with the subject matter of this Agreement shall reduce or
otherwise affect any fee payable to Consultant hereunder.
SECTION 4. Expenses.
In addition to any fees that may be payable to Consultant hereunder, the
Company agrees, from time to time upon request, to reimburse Consultant for
Consultant's out-of-pocket expenses incurred in connection with providing the
Consulting Services hereunder, including reasonable fees and disbursements of
Consultant's attorneys.
SECTION 5. Trademark License.
Consultant hereby grants to the Company a limited-term, non-exclusive,
non-transferable license ("License") to use the Marks in connection with the
goods and services identified in the federal registrations (and applications
therefor) referred to in Schedule A. This License is granted in accordance
with the following:
(a) This License is granted for the term of this Agreement, but
may be terminated by either party upon reasonable written notice.
(b) The Company acknowledges that Consultant is the sole and
lawful owner of the Marks and their corresponding federal
registrations (and applications therefor) and agrees that it will
not challenge or contest Consultant's rights in and to the Marks
during the term of this Agreement or at any time thereafter.
(c) The Company agrees that all of its use of the Marks, pursuant
to this Agreement, shall inure directly and solely to the benefit of
Consultant as the owner of the Marks and as licensor.
(d) The Company agrees that, for purposes of this Agreement, the
method of manufacture of the products sold under the Marks, the
quality of the products sold under the Marks, the quality of the
services sold under the marks, and the display of the Marks shall
conform to standards set by and be under the control of Consultant.
The Company, as licensee, further agrees that it will not depart
from the standards of quality for products and services sold under
the Marks during the term of this Agreement.
4
5
(e) The Company acknowledges that Consultant, as licensor, is
entitled to inspect its manufacturing and business facilities during
business hours and upon reasonable notice, during the term of this
Agreement, for the sole purpose of determining whether standards of
quality for the products and services are being maintained in a
manner that is consistent and in keeping with the terms of this
Agreement.
(f) The Company agrees that it will not at any time apply for any
registration of any copyright, trademark, service mark or other
designation which would affect the ownership of the Marks licensed
herein, or file any document with any governmental authority or take
any action which would affect the ownership of the Marks licensed
herein or aid or abet anyone in doing so.
(g) The Company will manufacture, promote, distribute and sell
products and services pursuant to this Agreement in a legal and
ethical manner, in accordance with industry practices and custom,
and in accordance with the intent of this Agreement.
(h) Upon termination of this Agreement, the Company agrees to
discontinue immediately all use of the Marks and shall, at the
discretion of Consultant, either destroy or turn over to Consultant
any materials, including brochures, containers, labels or other
materials bearing the Marks.
SECTION 6. Indemnification.
The Company shall and hereby agrees to indemnify, defend and hold harmless
Consultant and its affiliates, the respective directors, officers, agents and
employees of Consultant and its affiliates and each other person, if any,
controlling Consultant or any of its affiliates, to the full extent lawful,
from and against any and all liabilities or claims arising out of or in
connection with Consultant's performance of its duties and obligations
hereunder, and will reimburse Consultant and any other party entitled to be
indemnified hereunder for all expenses (including attorneys' fees) as they are
incurred by Consultant or any other such indemnified party in connection with
investigating, preparing or defending any such action or claim. The Company
will not, however, be responsible for any liabilities or claims which are
finally judicially or otherwise determined to have resulted primarily from
Consultant's willful misconduct or gross negligence. The foregoing provisions
shall be in addition to any rights that Consultant or any indemnified party may
have at common law or otherwise, including, but not limited to, any right to
contribution.
The Company further agrees that it will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not Consultant or any indemnified party is an actual or potential party to
such claim, action, suit or proceeding) unless such settlement, compromise or
consent includes an unconditional release of Consultant and each other
indemnified party hereunder from all liability arising out of such claim,
action, suit or proceeding.
5
6
The provisions of this Section 6 shall survive the termination of this
Agreement.
SECTION 7. Term.
This Agreement will be for the period commencing on the date hereof and
terminating on December 31, 2001 ("Terminate Date"), provided, however, that
either party shall have given written notice to the other, not later than six
(6) months prior to the Termination Date, of its intention to terminate,
otherwise this Agreement will continue for additional one (1) year periods
thereafter. A party shall give notice of intent to terminate, during any such
one (1) year period, not later than December 1 of each such year in which event
this Agreement will terminate on December 31 of such year.
SECTION 8. Status of Consultant.
This contract calls for the performance of the services of Consultant as
an independent contractor with control over and responsibility for its own
operations and employees, and neither Consultant nor its employees will be
considered officers, employees or agents of the Company for any purpose.
SECTION 9. Confidentiality.
During the term of this Agreement, Consultant shall not and shall not
permit any of its agents or employees to use or disclose to any person or
organization, except as required by law or under court order, any trade secrets
or other confidential information relating to the Company that Consultant may
acquire during the performance of its services without the prior written
consent of the Company. However, the foregoing restrictions shall not apply to
the extent that such information (i) is publicly available or became publicly
available through an action or fault of Consultant, (ii) was already in
Consultant's possession or known to Consultant prior to being disclosed or
provided to Consultant by the Company, or (iii) was or is obtained by the
Company from a third party which is not otherwise bound by a contractual, legal
or fiduciary obligation of confidentiality to the Company with respect to such
information.
SECTION 10. Disputes.
Any dispute or claim involving this Agreement shall be exclusively
resolved by arbitration conducted in accordance with the Rules of the American
Arbitration Association ("AAA") as specified below. Any dispute or claim shall
be deemed waived unless arbitration is demanded within ninety (90) days of the
occurrence giving rise to the dispute or claim. All arbitrations shall be
conducted by a single arbitrator selected from the commercial panel of the
Detroit office of AAA. Arbitrations shall be conducted in Oakland County,
Michigan, unless the Company and Consultant otherwise agree in writing. All
arbitrations shall comply with the following procedures:
6
7
(a) The arbitration proceeding shall be limited to presentations
by each party of written argument and exhibits of not more than
thirty (30) pages. Each party shall have two (2) hours to present
its position, and the arbitrator shall render his or her written
decision within fifteen (15) days of the conclusion of the
proceeding;
(b) Any arbitration proceeding shall be commenced within thirty
(30) days of the date in which a party files a claim for arbitration
with AAA. Each party shall serve copies of all correspondence,
filings or submissions upon all other parties at the same time
originally made;
(c) The arbitrator shall have no authority to change any
provision of this Agreement; the arbitrator's sole authority shall
be to interpret or apply the provisions of this Agreement; and
(d) The decision of the arbitrator shall be final and binding,
and judgment shall enter on the arbitrator's findings in a court of
competent jurisdiction in accordance with MCLA Section 600.5001, et
seq., MSA Section 27A.5001, et seq.
SECTION 11. Miscellaneous.
(a) Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be by personal delivery or by mail,
addressed to the Company, at 2365 Franklin Road, Bloomfield Hills, Michigan
48203-0333 and addressed to Consultant at 2000 North Woodward Avenue, Suite
130, Bloomfield Hills, Michigan 48304. The addresses so indicated for any
party may be changed by similar written notice.
(b) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be treated as an original but all of which,
collectively, shall constitute a single instrument.
(c) Construction. This Agreement shall be construed in accordance with
the laws of the State of Michigan without regard to its rules regarding choice
of law. The titles of the Sections have been inserted as a matter of
convenience and reference only and shall not control or affect the meaning or
construction of this Agreement.
(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all other agreements or arrangements, oral
and written, between the parties hereto relating to the matters set forth
herein.
(e) Assignment. This Agreement may not be assigned by any party hereto
without the written consent of the other party.
[this space intentionally left blank]
7
8
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
OXFORD AUTOMOTIVE, INC.
By:______________________________
Its:_____________________________
THE OXFORD INVESTMENT GROUP, INC.
By:______________________________
Its:_____________________________
8