INTERIM MANAGEMENT AGREEMENT
This Management Agreement made as of the 16th day of June, 1999.
AMONG:
APTEC INSTRUMENTS LTD.,
a company organized pursuant to the
laws of the Province of Ontario, Canada
(hereinafter referred to as "Aptec")
- and -
▇▇▇▇▇▇ ▇▇▇▇▇,
an individual resident in the City in
Aurora, in the Province of Ontario, Canada
(hereinafter referred to as "▇▇▇▇▇")
- and -
NUCLEAR RESEARCH CORPORATION,
a corporation organized pursuant to the laws of the
Commonwealth of Pennsylvania, U. S. A.
(hereinafter referred to as "NRC")
- and -
▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
individuals resident in the Town of Montgomeryville,
in the Commonwealth of Pennsylvania, U. S. A.
(hereinafter respectively referred to as "▇▇▇▇▇▇▇" and "▇▇▇▇▇▇▇")
WHEREAS each of ▇▇▇▇▇, Aptec, ▇▇▇▇▇▇▇ and NRC executed a Memorandum of
Understanding dated the 26th day of February, 1999 (the "MOU") relating inter
alia, to the proposed merger of the assets and businesses of Aptec and NRC
pursuant to which ▇▇▇▇▇▇▇ and certain of the other shareholders of NRC
(collectively, the "▇▇▇▇▇▇▇ Group") are to own 32%, and ▇▇▇▇▇ and/or his
affiliates (collectively, the "▇▇▇▇▇ Group") are to own 68% of the number of
issued shares in the resulting entity which is to own (directly and/or
indirectly) the assets and businesses of both Aptec and NRC;
AND WHEREAS each of Eurisys Mesures, S.A. ("EM"), NRC, ▇▇▇▇▇▇▇, Aptec (and its
wholly-owned subsidiary, Aptec Instruments, Inc.) and ▇▇▇▇▇ entered into a
Letter of Intent dated the 26th day of March, 1999 (the "LOI") which essentially
provided that each of the ▇▇▇▇▇ Group and the ▇▇▇▇▇▇▇ Group is to sell to EM, on
a prorated basis, such number of shares of the resulting entity of the merger
("Mergeco") so as to provide EM with 51% of the issued shares of Mergeco;
AND WHEREAS the MOU provided in clause B under the heading "Interim Period" that
beginning on the date of the execution of the definitive agreement governing the
matters set out in the MOU and terminating with the closing of such
transactions, ▇▇▇▇▇▇▇ is to take such steps so as to permit ▇▇▇▇▇ to have de
facto management and control over the operations and business of NRC;
AND WHEREAS in section 9 of the LOI, EM acknowledged the provisions of the MOU
referred to in the recital immediately above;
AND WHEREAS certain of the parties hereto have executed an Agreement and Plan of
Merger (the "APM") and a Stock Acquisition Agreement (the "ASA") both dated the
16th day of June, 1999 (collectively, the "Definitive Agreements") this day as
contemplated by the MOU and the LOI and accordingly the parties are desirous of
entering into this Management Agreement (the "Agreement") to more fully document
their understanding with respect to the management and control over the
operations and business of NRC from the date hereof until the closing of
transactions governed by the Definitive Agreements (the "Closing");
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and for other good and valuable consideration and the payment of two dollars
(USD 2.00) by each party to each of the other parties hereto, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby covenant
and agree each with the others as follows:
1. Appointment of ▇▇▇▇▇
Each of NRC and ▇▇▇▇▇▇▇ hereby covenants and agrees to take the necessary steps
to cause the Board of Directors of NRC to appoint ▇▇▇▇▇ as Interim Chief
Executive Officer ("ICEO") and Interim Chief Operating Officer ("ICOO") of NRC
effective the date hereof. Such appointment shall continue without interruption
until the earliest of the occurrence of any of the following events at which
time his appointment as ICEO and ICOO will automatically terminate without
further action of the Board of Directors of NRC:
(a) November 24, 1999;
(b) The date on which any of the Definitive Agreements is/are terminated in
accordance with its/their terms;
(c) The date of the Closing; or
(d) The date, if any, on which ▇▇▇▇▇ is terminated for cause by NRC's Board
of Directors. For this purpose "cause" shall occur in the event the
Board of Directors (with ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ abstaining) determines
that ▇▇▇▇▇ has violated his duties to NRC either in a willful or
grossly negligent manner or has taken any action outside the scope of
his duties as set forth below.
-2-
During the term hereof, neither ▇▇▇▇▇▇▇ nor ▇▇▇▇▇▇▇ shall serve as either chief
executive officer or chief operating officer of NRC nor hold any office of NRC
which is superior to the aforesaid offices.
2. ▇▇▇▇▇'▇ Responsibilities as ICEO and ICOO of NRC
▇▇▇▇▇ shall, and shall be authorized by the NRC Board to, undertake and execute
the following responsibilities in his capacity as ICEO and ICOO of NRC without
interference from either the Board or any of the senior officers of NRC:
a) To have complete management and control over the day to day affairs and
business of NRC;
b) To have complete and final authority in respect of the undertaking of
any present or future obligation and/or liability by NRC, subject to
the approval of the Board of Directors (with ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
refraining from voting) for matters outside of the normal course of
business;
c) To have complete and final authority over any bids or work projects
involving matters under $2 million; in cases of bids or work projects
valued at $2 million or more, decision making authority shall also rest
with ▇▇▇▇▇ subject to final approval of the Board of Directors of NRC
(with ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ refraining from voting thereon);
d) To have all senior officers of NRC report, and be accountable, to
▇▇▇▇▇;
e) To have complete and final authority over all hiring and firing
decisions in respect of all NRC personnel (other than himself and
▇▇▇▇▇▇▇, who shall be accountable to the Board of Directors) as well as
employee compensation (other than as to ▇▇▇▇▇▇▇), responsibilities,
accountabilities and evaluation standards; To assist in the planning of
the operational implementation of the proposed merger of NRC and Aptec;
and
g) To create the foundation of a strategic plan for the Aptec/NRC merged
entity.
Prior to undertaking any discussions, meetings or other communications with
NRC's bankers, ▇▇▇▇▇ shall first consult with ▇▇▇▇▇▇▇ or his personal legal
representative, which until otherwise advised is to be ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, and
shall provide ▇▇▇▇▇▇▇ or Schildhorn with a summary of the proposed discussions
or meetings. In all cases, no meetings shall be held as between ▇▇▇▇▇ and NRC's
bankers without first providing Schildhorn with an opportunity to attend such
discussions or meetings. Neither ▇▇▇▇▇ nor ▇▇▇▇▇▇▇ shall take any actions with
respect to NRC's banking arrangements without first securing the approval of the
other and such approval shall not be unreasonably withheld.
The above listing of responsibilities and authorities shall not necessarily be
considered to be exhaustive nor be considered to in any way limit the scope and
duties of ▇▇▇▇▇ in his role as ICEO and ICOO of NRC other than as limited in
this Agreement. Each of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and NRC hereby agrees to support, and
work with, ▇▇▇▇▇ in order to enable ▇▇▇▇▇
-3-
to best carry out his duties hereunder. ▇▇▇▇▇▇▇ shall serve as a key advisor to
▇▇▇▇▇; however, for greater certainty, in the event that ▇▇▇▇▇▇▇ and ▇▇▇▇▇
cannot reach agreement in respect of any matter which comes within the domain of
▇▇▇▇▇ hereunder, ▇▇▇▇▇ shall have final authority thereon.
Notwithstanding anything to the contrary above, ▇▇▇▇▇ shall not discharge or
replace any of NRC's counsel, auditors or KMR Management Inc., or hire any new
firms providing such, services, without the approval of NRC's Board of
Directors.
3. ▇▇▇▇▇'▇ Duties
▇▇▇▇▇ shall devote a substantial amount of his time (and in no event less than
six (6) days per calendar month attending at NRC's facilities) in order for him
to conduct, operate and manage NRC and he shall use his utmost skill and
endeavour to promote the business of NRC in a diligent and professional manner
solely for the benefit of NRC and its shareholders.
▇▇▇▇▇ shall not knowingly undertake any activities which would have the effect
of : (a) Rendering any of the representations and/or warranties of NRC as
contained in either the APM or the SAA untrue or inaccurate insofar as such
representations and warranties were accurate and truthful as at the date hereof;
or (b) Making any of the covenants or conditions of NRC in either of the APM or
SAA unachievable (assuming such covenants or conditions would otherwise be
achievable). Further, ▇▇▇▇▇ shall not have the authority to bind NRC to any
amendments or modifications to the Definitive Agreements.
4. Other ▇▇▇▇▇ Responsibilitics
▇▇▇▇▇ shall be permitted to carry out his responsibilities and undertakings as
President of Aptec contemporaneous with his duties hereunder, subject to Section
3 above.
5. ▇▇▇▇▇'▇ Compensation
As compensation for the full and faithful performance of the duties and services
to be rendered by ▇▇▇▇▇ to NRC hereunder, during the term hereof, NRC shall pay
to ▇▇▇▇▇ a monthly salary of USD 10,000.00 payable semi-monthly in equal
installments. As well, ▇▇▇▇▇ shall be reimbursed in fall for all reasonable
business and travel expenses (including, but not limited to, his accommodation
expenses in the Philadelphia area) directly and/or indirectly incurred in the
execution of the duties and services contemplated herein. NRC shall reimburse
▇▇▇▇▇ for all such expenses upon the presentation by ▇▇▇▇▇ from time to time, of
an itemized account of such expenditures, together with supporting vouchers. NRC
and ▇▇▇▇▇ hereby agree that ▇▇▇▇▇ may direct NRC to compensate him through a
mutually acceptable United States vehicle owned directly or indirectly by ▇▇▇▇▇.
6. Independent Contractor
Each of ▇▇▇▇▇ and NRC agrees that ▇▇▇▇▇ is being retained hereunder as an
independent contractor and not as an employee and accordingly NRC shall not be
entitled,, to effect the
-4-
usual employee source deductions in respect of this Agreement. Payment of any
income or other taxes which accrue on compensation payable hereunder shall be
the responsibility of ▇▇▇▇▇ or as may be otherwise mutually agreed upon by the
parties in contemplation of this section 6.
7. Indemnity of ▇▇▇▇▇ and Aptec by NRC
NRC hereby agrees to be liable for and indemnify and save harmless ▇▇▇▇▇ and
Aptec of, and from, all manner of actions, causes of action, proceedings,
claims, demands, losses, costs, damages and expenses whatsoever which may be
brought or made against ▇▇▇▇▇ and/or Aptec or which ▇▇▇▇▇ and/or Aptec may
sustain, pay or incur by reason of:
(1) ▇▇▇▇▇'▇ service as ICEO and ICOO of NRC hereunder; and
(2) Any mistake or any matter or thing done or omitted to be done under or
in relation to this Agreement save for ▇▇▇▇▇'▇ wilful and wrongful
neglect or default.
8. Governing Law
This Agreement shall be governed by, and interpreted in accordance with, the
laws of the Commonwealth of Pennsylvania.
9. Partial Invalidity
If any provision of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, the remaining provisions shall
nevertheless continue in full force and effect without being impaired or
invalidated in any way.
10. Time of the Essence
Time shall be of the essence of this Agreement.
11. Assignment
This Agreement is personal to ▇▇▇▇▇ and may not be assigned by ▇▇▇▇▇ without the
prior written approval of each of the parties hereto.
-5-
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the day
and year first above written.
APTEC INSTRUMENTS LTD.
per:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, President
/s/ XXXXXXXXXXXXX /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------- ---------------------------------
Witness ▇▇▇▇▇▇ ▇▇▇▇▇
NUCLEAR RESEARCH CORPORATION
per:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, President
/s/ XXXXXXXXXXXXXX /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ ---------------------------------
Witness ▇▇▇▇ ▇▇▇▇▇▇▇
/s/ XXXXXXXXXXXXXX /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ ---------------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-6-