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EXHIBIT 10.17
[LETTERHEAD OF XXXXXXX XXXXXX & CO.]
The Directors
Knowles Electronics Inc
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx
00000
28 June 1999
Dear Sirs
COMMISSION AGREEMENT
We refer to the Recapitalisation Agreement dated 23rd June 1999 in relation to
which Xxxxxxx Xxxxxx & Co Managers Limited ("DHCM") has agreed to assist you,
and you have agreed to work exclusively with DHCM in the recapitalisation (the
"Recapitalisation") of certain businesses comprising the Xxxxxxx Electronics Inc
("the Recapitalised Businesses"). For arranging bank finance for the purchase of
shares or assets in various legal entities, we have undertaken to negotiate the
details of the terms and agreements for such financing with Xxxxxxx Family ("the
Vendor") at a purchase price of US$530 million.
In consideration of DHCM providing these services to Xxxxxxx Electronics Inc, we
should now like to confirm our agreement concerning the commissions to be paid
to DHCM upon the successful completion of the Recapitalisation.
1. Xxxxxxx Electronics Inc intends to acquire 90% of certain of the Vendors'
interests in the Recapitalised Businesses.
2. DHCM has undertaken and continues to undertake to use its reasonable
endeavours to arrange the necessary senior debt and subordinated debt
financing for the Recapitalisation including in particular the following
services:
- Arranging Senior Term Loan Financing of US$200 million for the
purpose of financing the purchase price, the expenses of the
recapitalisation and the refinancing of the existing indebtedness of
the Company;
- Arranging for a Subordinated Debt Facility of US$150 million for the
purpose of financing the purchase price, the expenses of the
acquisition and the refinancing of the existing indebtedness of the
Vendors' interests;
- Arranging Working Capital Facilities of US$50 million for the
purpose of future working capital needs of the business;
- Arranging currency or interest rate swap and/or interest rate cap
and/or other hedging facilities to manage the interest rate and
foreign
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exchange risks of the business as needed;
o Negotiating and agreeing appropriate bank loan and security
documentation supporting the Senior Term Loan Facilities,
Subordinated Bridge Facility and the Working Capital Facility; and
3. Xxxxxxx Electronics Inc hereby agrees to pay DHCM arrangement commissions
in respect of the above equivalent to 0.5% of the Total Senior Bank
Facilities of US$200 million arranged for the Recapitalisation, plus 0.5%
of the Subordinated Debt Financing Facility of US$150 million plus 0.5% of
the Working Capital Facility of US$50 million. The total aggregate
commissions of US$2 million are due to DHCM only upon a successful
completion of the Recapitalisation, and are subject to the provisions
below.
The aggregate commissions shall become due and payable upon completion of
the Recapitalisation.
4. Xxxxxxx Electronics Inc hereby agrees that it will fully reimburse DHCM
for its out-of-pocket expenses (including VAT to the extent that it is
non-recoverable for DHCM); however, out-of-pocket expenses (including
non-recoverable VAT) shall only be chargeable insofar as the aggregate
amount of such expenses exceed the commissions payable above. Xxxxxxx
Electronics Inc will pay such an amount either in total or in instalments
when invoiced.
5. In addition, Xxxxxxx Electronics Inc hereby agrees that it will fully
reimburse DHCM for all expenses of all professional advisers engaged by
DHCM for the purpose of undertaking the activities listed above and
otherwise in connection with the Recapitalisation (including VAT to the
extent that it is non-recoverable for DHCM). Xxxxxxx Electronics Inc will
pay such expenses either in total or in instalments when invoiced. For the
avoidance of doubt, DHCM's professional advisers shall include, inter
alia, PriceWaterhouseCoopers (financial due diligence and tax);
Environmental Resources Management (environmental due diligence); Xxxxxxxx
& Xxxxx (Co-ordination of legal due diligence, senior facilities
documentation, sale and purchase documentation, shareholders agreement
documentation subordinated loan documentation); Xxxxxx Xxxxxxx (insurance
due diligence); Frost & Xxxxxxxx (technical due diligence) and such other
legal, tax, accounting, environmental and other consultant professional
advisers as DHCM may engage from time to time in the course of the
Recapitalisation.
6. DHCM has undertaken and continues to undertake to keep secret and
confidential all information which we have received or which we will
receive in rendering services stipulated under this agreement except as
required under DHCM's obligations relating to Xxxxxxx Xxxxxx & Co Funds.
7. Xxxxxxx Electronics Inc has agreed and confirms such agreement that in
fulfilling its obligations under this agreement, DHCM is entitled to enter
into sub-contractor agreements with third parties to which DHCM passes
over its confidentiality obligations as mentioned above.
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8. This agreement is governed by the laws of England.
Please signify your agreement to the above terms by countersigning the attached
copy of this letter and sending the signed version back to us.
/s/ Xxx Xxxxx
For and on behalf of
Xxxxxxx Xxxxxx & Co Managers Limited
We agree with the contents of this letter
/s/ Reg X. Xxxxxxx
Xxxxxxx Electronics Inc
