Annex H (i)
Letter to Mr Kevin Maxwell
from Mr Michael Stoney, Pergamon AGB plc
GEOFFREY
ROBINSON
I refer to Geoffrey's letter to you of 4 April 1990
in connection with Transtec's proposal for a management contract
on the following basis:
1. An option to buy Lock International for £4
million at any time up to 31 December 1990; or £5 million
at any time up to 31 December 1991; or
2. 30% share of the audited combined PBT for
the 2 years of the management contract.
I have already advised Geoffrey that the "option
to buy" proposal is not acceptable.
I also believe the 30% share of the audited combined
PBT for the 2 years provides Transtec with the potential for an
uncapped incentive.
Proposal
1. As I understand it, Transtec is intending
to provide substantial management support to the business including:
2. I would recommend that we obtain from Transtec
further details of the support and agree with them a management
contract of, say, £150,000 to £360,000 per annum. The
amount of the payment will be conditional on the amount of support
Transtec is giving.
3. In addition to the above, Transtec should
receive an over-riding incentive based on the audited profits
of the business as follows:
| a. Year 1: |
|
| Profit up to £750k
| 10% |
| Profit in excess of £750k
| 15% |
| b. Year 2: |
|
| Profit up to £750k
| nil |
| Profit between £750k to £1.25m
| 5% |
| Profit between £1.25m to £2.0m
| 10% |
| Profit in excess of £2m
| 15% |
The structure of the share in Year 2 is designed
to provide a considerable incentive to ensure that he profits
show a substantial increase over Year 1.
20 April 1990
| 
