Exhibit
10.6


 


Kohlberg
Kravis Roberts & Co. L.P.

2800 Sand Hill Road, Suite 200

Menlo Park, California 94025


 


 


November 22, 2005


 


 


Accellent
Inc.


200 West 7th Avenue


Collegeville, PA  19426-0992


 


 


Ladies and Gentlemen:


 


This
letter serves to confirm the retention by Accellent Inc. (the “Company”)
of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) to provide
management, consulting and financial services to the Company and its divisions,
subsidiaries and affiliates (collectively, “Accellent”), as follows:


 


1.             The Company
has retained us, and we hereby agree to accept such retention, to provide to
Accellent, when and if called upon, certain management, consulting and
financial services of the type customarily performed by us.  The Company agrees to pay us an annual fee in
an amount equal to one million dollars ($1,000,000.00), such fee to be
increased at a rate of 5% annually, effective as of September 30th
of each such year, payable in quarterly installments in arrears at the end of
each calendar quarter.


 


2.             In consideration
for our structuring services rendered in connection with the merger of
Accellent Merger Sub Inc. with and into the Company (the “Transaction”),
which such services included, but were not limited to, financial advisory
services and capital structure review, the Company agrees to also pay a
one-time transaction fee to us in a total amount equal to thirteen million
dollars ($13,000,000.00), payable immediately upon the completion of the
Transaction.


 


3.             We may
also invoice the Company for additional fees in connection with acquisition or
divestiture transactions or in the event that we, or any of our affiliates,
perform services for Accellent above and beyond those called for by this
agreement.


 


4.             In
addition to any fees that may be payable to us under this agreement, the
Company also agrees to reimburse us and our affiliates, from time to time upon
request, for all reasonable out-of-pocket expenses incurred, including
unreimbursed expenses incurred to the date hereof, in connection with this
retention, including travel expenses and expenses of our counsel.


 





















 


5.             The
Company agrees to indemnify and hold us, our affiliates (including, without
limitation, affiliated investment entities) and their and our respective
partners, executives, officers, directors, employees, agents and controlling
persons (each such person, including us, being an “Indemnified Party”)
harmless from and against (i) any and all losses, claims, damages and
liabilities (including, without limitation, losses, claims, damages and liabilities
arising from or in connection with legal actions brought by or on behalf of the
holders or future holders of the outstanding securities of Accellent or
creditors or future creditors of Accellent), joint, several or otherwise, to
which such Indemnified Party may become subject under any applicable federal or
state law, or otherwise, related to or arising out of any activity contemplated
by this agreement or our retention pursuant to, and our or our affiliates’
performance of the services contemplated by, this agreement and (ii) any
and all losses, claims, damages and liabilities, joint, several or otherwise,
related to or arising out of any action or omission or alleged action or
omission related to the Company or any of its direct or indirect subsidiaries
or the securities or obligations of any such entities.  The Company will further, subject to the
proviso to the immediately preceding sentence, reimburse any Indemnified Party
for all expenses (including counsel fees and disbursements) upon request as
they are incurred in connection with the investigation of, preparation for or
defense of any pending or threatened claim or any action or proceeding arising
from any of the foregoing, whether or not such Indemnified Party is a party and
whether or not such claim, action or proceeding is initiated or brought by the
Company; provided, however, that the Company will not be liable
under the foregoing indemnification provision (and amounts previously paid that
are determined not required to be paid by the Company pursuant to the terms of
this paragraph shall be repaid promptly) to the extent that any loss, claim,
damage, liability or expense is found in a final judgment by a court to have
resulted from our willful misconduct or gross negligence.  The Company agrees that no Indemnified Party
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to Accellent related to or arising out of our retention pursuant to,
or our affiliates’ performance of the services contemplated by, this agreement
except to the extent that any loss, claim, damage, liability or expense is
found in a final, non-appealable judgment by a court to have resulted from our
willful misconduct, bad faith or gross negligence.


 


The
Company also agrees that, without our prior written consent, it will not
settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which an Indemnified Party is an
actual or potential party and in respect of which indemnification could be
sought under the indemnification provision in the immediately preceding
paragraph, unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Party from all liability arising out
of such claim, action or proceeding.


 


Promptly
after receipt by an Indemnified Party of notice of any suit, action, proceeding
or investigation with respect to which an Indemnified Party may be entitled to
indemnification hereunder, such Indemnified Party will notify the Company in
writing of the assertion of such claim or the commencement of such suit,
action, proceeding or investigation, but the failure to so notify the Company
shall not relieve the Company from any liability which it may have hereunder,
except to the extent that such failure has materially prejudiced the
Company.  If the Company so elects within
a reasonable time after receipt of such notice, the Company may participate at
its own expense in the defense of such suit, action, proceeding or
investigation.  Each Indemnified Party
may employ separate counsel to represent it or defend it


 


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in any such suit, action,
proceeding or investigation in which it may become involved or is named as a
defendant and, in such event, the reasonable fees and disbursements of such
counsel shall be borne by the Company; provided, however, that
the Company will not be required in connection with any such suit, action,
proceeding or investigation, or separate but substantially similar actions
arising out of the same general allegations or circumstances, to pay the fees
and disbursements of more than one separate counsel (other than local counsel)
for all Indemnified Parties in any single action or proceeding.  Whether or not the Company participates in
the defense of any claim, the Company and we shall cooperate in the defense
thereof and shall furnish such records, information and testimony, and attend
such conferences, discovery proceedings, hearings, trials and appeals, as may
be reasonably requested in connection therewith.


 


If the
indemnification provided for in clause (i) of the first sentence of this Section 5
is finally judicially determined by a court of competent jurisdiction to be
unavailable to an Indemnified Party, or insufficient to hold any Indemnified
Party harmless, in respect of any losses, claims, damages or liabilities (other
than any losses, claims, damages or liabilities found in a final judgment by a
court to have resulted from our willful misconduct or gross negligence), then
the Company, on the one hand, in lieu of indemnifying such Indemnified Party,
and we, on the other hand, will contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received, or sought to be received, by Accellent on the one
hand and us, solely in our capacity as an advisor under this agreement, on the
other hand in connection with the transactions to which such indemnification,
contribution or reimbursement is sought, or (ii) if (but only if) the
allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the relative fault of
Accellent on the one hand and us on the other, as well as any other relevant
equitable considerations; provided, however, that in no event
shall our aggregate contribution hereunder exceed the amount of fees actually
received by us in respect of the transaction at issue pursuant to this
agreement.  The amount paid or payable by
a party as a result of the losses, claims, damages and liabilities referred to
above will be deemed to include any legal or other fees or expenses reasonably
incurred in defending any action or claim. 
The Company and we agree that it would not be just and equitable if
contribution pursuant to this paragraph were determined by pro rata allocation
or by any other method which does not take into account the equitable
considerations referred to in this paragraph. 
The indemnity, contribution and expense reimbursement obligations that
the Company has under this letter shall be in addition to any the Company or
Accellent may have, and notwithstanding any other provision of this letter,
shall survive the termination of this agreement.


 


6.             Any
advice or opinions provided by us may not be disclosed or referred to publicly
or to any third party (other than Accellent’s legal, tax, financial or other
advisors), except in accordance with our prior written consent.


 


7.             We shall
act as an independent contractor, with duties solely to Accellent.  The provisions hereof shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
successors and assigns.  Nothing in this
agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and assigns, and, to the
extent expressly set forth herein, the Indemnified Parties, any rights or


 


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remedies under or by
reason of this agreement.  Without
limiting the generality of the foregoing, the parties acknowledge that nothing
in this agreement, expressed or implied, is intended to confer on any present
or future holders of any securities of the Company or its subsidiaries or
affiliates, or any present or future creditor of the Company or its
subsidiaries or affiliates, any rights or remedies under or by reason of this agreement
or any performance hereunder.


 


8.             This
agreement shall be governed by and construed in accordance with the internal
laws of the State of New York.


 


9.             This
agreement shall continue in effect from year to year unless amended or
terminated by mutual consent.


 


10.           Each party
hereto represents and warrants that the execution and delivery of this
agreement by such party has been duly authorized by all necessary action of
such party.


 


11.           If any
term or provision of this agreement or the application thereof shall, in any
jurisdiction and to any extent, be invalid and unenforceable, such term or
provision shall be ineffective, as to such jurisdiction, solely to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable any remaining terms or provisions hereof or affecting the
validity or enforceability of such term or provision in any other
jurisdiction.  To the extent permitted by
applicable law, the parties hereto waive any provision of law that renders any
term or provision of this agreement invalid or unenforceable in any respect.


 


12.           Each party
hereto waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) related to or
arising out of our retention pursuant to, or our performance of the services
contemplated by this agreement.


 


13.           It is
expressly understood that the foregoing paragraphs 2-6, 11, 12 and this
paragraph 13, in their entirety, survive any termination of this agreement.


 


14.           This
agreement may be executed in counterparts, each of which shall be deemed an
original agreement, but all of which together shall constitute one and the same
instrument.


 


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If the
foregoing sets forth the understanding between us, please so indicate on the
enclosed signed copy of this letter in the space provided therefor and return
it to us, whereupon this letter shall constitute a binding agreement among us.


 


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Kohlberg Kravis Roberts & Co. L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Michael W. Michelson

  	
   

  
	
   

  	
   

  	
   Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AGREED TO AND ACCEPTED BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Accellent Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ron Sparks

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Ron Sparks

  	
   

  	
   

  
	
   

  	
   

  	
  Title: President and CEO

  	
   

  	
   

  
							



 


 


KKR Monitoring Agreement – Signature Page