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Advisory Services Agreement

This is an actual contract by Stellex Technologies.

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Sectors: Telecommunications
Governing Law: New York, View New York State Laws
Effective Date: May 29, 1998
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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 W-J 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 KLEINERT INDUSTRIES, INC.), a California corporation, PARAGON PRECISION PRODUCTS, a California corporation, BANDY 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:


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.


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


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.


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

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


would be allocated among and paid by each of the Affiliated Companies,
including the Companies, based upon a
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