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EXHIBIT 10.4
FEE AGREEMENT
FEE AGREEMENT dated as of August 12, 1992 among NORTHWESTERN STEEL AND
WIRE COMPANY, an Illinois corporation (the "Company"), and KOHLBERG & CO.,
L.P., a Delaware limited partnership ("KoCo").
KoCo has previously provided services to the Company in connection
with the transactions contemplated by the Stock Purchase Agreement dated as of
July 27, 1992 between the Company and KNSW Acquisition Company, L.P. The
Company desires for KoCo to provide certain ongoing management and advisory
services to the Company, and KoCo is willing to provide such services subject
to the terms and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Services. During the term of this Agreement, KoCo shall
provide such advisory and management services to the Company and its
subsidiaries as the Board of Directors of the Company shall reasonably request.
Such services shall be performed at KoCo's offices.
Section 2. Compensation. In consideration of the services previously
provided and to be provided in accordance with Section 1, the Company shall pay
to Kohlberg (i) an advisory fee of $2 million by wire transfer of immediately
available funds on August 12, 1993, and (ii) an annual management fee of
$187,500 accruing from the date hereof, payable quarterly in advance.
Section 3. Reimbursement. KoCo and its affiliates shall be entitled to
reimbursement of all reasonable out-of-pocket expenses (including travel
expenses) incurred in connection with the transactions contemplated by the
Stock Purchase Agreement and in connection with the performance of this
Agreement (other than salary expenses and associate overhead charges), which
amounts shall be promptly reimbursed by the Company upon request.
Section 4. No Liability. (a) None of KoCo, any of its affiliates or
any of their respective partners, officers, directors, stockholders, agents or
employees (an "Indemnified Party") shall have any liability to the Company for
any services provided pursuant to this Agreement, except as may result from
such Indemnified Party's gross negligence or willful misconduct.
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(b) The Company hereby agrees to indemnify each Indemnified Party
against any and all damages, costs, liabilities, losses, judgments, penalties,
fines, expenses or other costs, including attorney's fees, arising from any
claims by third parties relating to this Agreement, the Purchase Transaction or
any Indemnified Party's equity interest in the Company.
Section 5. Notice. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally,
mailed by certified or registered mail, return receipt requested and postage
prepaid, or sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient. Such notices, demands and other communications will
be sent to the address indicated below:
To the Company:
Northwestern Steel and Wire Company
121 Wallace Street
Sterling, Illinois 61081
Attention: President
Telecopy No.: (815) 625-8937
To KoCo:
Kohlberg & Co., L.P.
116 Radio Circle
Mt. Kisco, NY 10549
Attention: Kim G. Davis
Christopher Lacovara
Telecopy No.: (914) 241-7476
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
Section 6. Additional Compensation. Neither KoCo nor any affiliate of
KoCo shall receive any compensation in addition to that set forth in this
Agreement without the approval of a majority of the members of the Company's
board of directors that are not affiliated with KoCo.
Section 7. Governing Law; Submission to Jurisdiction. All questions
concerning the construction, validity and interpretation of this Agreement will
be governed by and construed in accordance with the internal law (and not the
law of conflicts) of the State of New York.
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Section 8. Termination. This Agreement may be terminated by KoCo at
any time by written notice to the Company. In addition, this Agreement will
terminate automatically as of the earlier of (i) the tenth anniversary of this
Agreement and (ii) the end of the fiscal year in which KNSW Acquisition Company,
L.P.'s percentage interest in the Company's outstanding common stock falls
below 25%. The provisions of Section 4 shall survive any termination of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
NORTHWESTERN STEEL AND WIRE COMPANY
By: /s/ R.N. Gurnitz
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Name:
Title:
KOHLBERG & CO., L.P.
By: /s/ George W. Peck III
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Name:
Title: