Exhibit 10.20
PROFESSIONAL SERVICES AGREEMENT
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THIS AGREEMENT ("Agreement") is dated as of August 12, 1999, by and between
TC Management Partners IV, L.L.C., a Delaware limited liability company ("TMP"),
and Empyrean Group Holdings, Inc., a Delaware corporation f/k/a Business
Solutions Group, Inc. (the "Company").
Recitals
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A. Thayer Equity Investors IV, L.P., a Delaware limited partnership
("Purchaser"), of which TMP is the managing agent, has, pursuant to an indirect
investment in Thayer ITECH Holdings, L.L.C. ("Thayer"), acquired (the
"Investment") a portion of the Company's common stock, par value $.01 per share
(the "Common Stock"), and Class A preferred stock, par value $.01 per share (the
"Class A Preferred" and together with the Common Stock, the "Stock") pursuant to
that certain Recapitalization Agreement (the "Recapitalization Agreement") dated
August 12, 1999 among Thayer, the Company, BSG Holdings, Inc., a Georgia
corporation, and the shareholders of BSG Holdings, Inc. named therein.
B. The Company desires to receive financial and management consulting
services from TMP, and obtain the benefit of TMP's experience in business and
financial management generally and the benefit of TMP's knowledge of the Company
and the Company's financial affairs in particular.
C. In connection with the Investment, TMP is willing to provide financial
and management consulting services to the Company and the compensation
arrangements set forth in this Agreement are designed to compensate TMP for such
services.
Agreement
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In consideration of the foregoing premises and the respective agreements
hereinafter set forth and the mutual benefits to be derived herefrom, TMP and
the Company hereby agree as follows:
1. Engagement. The Company hereby engages TMP as a financial and management
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consultant, and TMP hereby agrees to provide financial and management consulting
services to the Company, all on the terms and subject to the conditions set
forth below.
2. Services of TMP. TMP hereby agrees during the term of this engagement to
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consult with the Company's board of directors (the "Board") and the management
of the
Company and its subsidiaries in such manner and on such business and financial
matters as may be reasonably requested from time to time by the Board, including
but not limited to:
(i) corporate strategy;
(ii) budgeting of future corporate investments;
(iii) acquisition and divestiture strategies; and
(iv) debt and equity financings.
3. Personnel. TMP shall provide and devote to the performance of this
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Agreement such members, officers, employees and agents of TMP as TMP shall deem
appropriate for the furnishing of the services required hereby.
4. Investment Fee. The Company shall pay to TMP an investment fee of
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$370,000 upon the closing of the Recapitalization Agreement. After the
Recapitalization Agreement, at the time of (a) the purchase of Stock by Thayer
of additional shares of Common Stock or Preferred pursuant to an equity purchase
agreement between the Company and Thayer, or (b) the consummation of any other
debt or equity financing of the Company after the date hereof, the Company shall
pay to TMP an investment fee in immediately available funds equal to one percent
(1%) of the amount paid to the Company or other consideration paid by or
received by the Company in connection with such purchase or financing
("Investment Fee"); provided, however, that such Investment Fees with respect to
debt financing arranged after the date hereof shall apply only to additional
incremental financing received by the Company and not to the refinancing of
existing amounts of indebtedness.
5. Management Fee. During the term of this Agreement, the Company shall pay
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TMP a quarterly management fee of $50,000 per fiscal quarter ("Management Fee");
provided that such fee shall be pro rated for the quarter ending September 30,
1999 (i.e., such fee shall equal $25,000). Each quarterly management fee shall
be payable in cash upfront in advance on the first business day of each fiscal
quarter commencing with the Company's fiscal quarter beginning August 15, 1999
(with the first quarter fee due and payable prior to August 15, 1999).
6. Expenses. The Company shall promptly reimburse TMP for such reasonable
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travel expenses and other out-of-pocket fees and expenses as have been or may be
incurred by TMP, its members, officers, employees and agents in connection with
the Closing (as defined in the Recapitalization Agreement) and in connection
with the rendering of any services hereunder (including, without limitation,
fees and expenses incurred in attending Company-related meetings).
7. Term. This Agreement will continue from the date hereof until the
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earlier of (i) the date that Thayer ceases to own at least 15% of each of the
Common Stock and the Class A Preferred and (ii) the effective date of an initial
public offering of the Company's common stock with net proceeds to the Company
and the selling stockholders prior to any redemption of preferred stock of not
less than $30 million. No termination of this Agreement, whether pursuant
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to this Section 7 or otherwise, shall affect the Company's obligations with
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respect to the fees, costs and expenses incurred by TMP in rendering services
hereunder and not reimbursed by the Company as of the effective date of such
termination. Fees, costs and expenses payable hereunder by the Company shall be
deferred at any time when payment thereof would be prohibited under the terms of
the Company's senior credit facilities.
8. 15% of Investment Fees to Empyrean. TMP shall assign 15% of all
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Investment Fees received hereunder to the Company on behalf of the then current
executives of the Company listed on Exhibit A hereto, which list shall be
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updated from time to time to (i) include additional executives employed by the
Company after the date hereof and (ii) exclude any executives no longer employed
by the Company (collectively, the "Empyrean Executives").
9. Liability. Neither TMP nor any of its affiliates, members, officers,
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employees or agents shall be liable to the Company or any of its subsidiaries or
affiliates for any loss, liability, damage or expense arising out of or in
connection with the performance of services contemplated by this Agreement,
unless such loss, liability, damage or expense shall be proven to result
directly from the gross negligence or willful misconduct of TMP.
10. Indemnification. The Company agrees to indemnify and hold harmless TMP,
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its affiliates, members, officers, employees or agents from and against any and
all loss, liability, suits, claims, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees) arising from their performance
hereunder, except as a result of their gross negligence or willful misconduct.
11. TMP an Independent Contractor. TMP and the Company agree that TMP shall
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perform services hereunder as an independent contractor, retaining control over
and responsibility for its own operations and personnel. Neither TMP nor its
members, officers, employees or agents shall be considered employees or agents
of the Company as a result of this Agreement nor shall any of them have
authority to contract in the name of the Company or bind the Company, except as
expressly agreed to in writing by the Company.
12. Notices. Any notice, report or payment required or permitted to be
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given or made under this Agreement by one party to the other shall be deemed to
have been duly given or made if personally delivered or, if mailed, when mailed
by registered or certified mail, postage prepaid, to the other party at the
following addresses (or at such other address as shall be given in writing by
one party to the other):
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If to TMP:
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Thayer Management Partners, L.L.C.
1455 Pennsylvania Avenue, NW
Suite 350
Washington, DC 20004
Attention: Robert Michalik
Tel: (202) 371-0150
Fax: (202) 371-0391
with a copy to:
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Hogan & Hartson, LLP
13th Street, N.W.
Washington, DC 20004
Attention: Christopher J. Hagan
Tel: (202) 637-5771
Fax: (202) 637-5910
If to the Company:
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8300 Boone Boulevard
Suite 250
Vienna, Virginia 22182
Attention: Jason H. Levine
Graham B. Perkins
Tel: (703) 790-9276
Fax: (703) 790-9033
12. Entire Agreement: Modification. This Agreement (a) contains the
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complete and entire understanding and agreement of TMP and the Company with
respect to the subject matter hereof; and (b) supersedes all prior and
contemporaneous understandings, conditions and agreements, oral or written,
express or implied, respecting the engagement of TMP in connection with the
subject matter hereof
13. Waiver of Breach. The waiver by either party of a breach of any
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provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach of that provision or any other provision
hereof.
14. Assignment. Neither TMP nor the Company may assign its rights or
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obligations under this Agreement without the express written consent of the
other.
15. Successors and Assigns. This Agreement and all the obligations and
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benefits hereunder shall inure to the successors and permitted assigns of the
parties.
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16. Counterparts; Facsimile Transmission. This Agreement may be executed
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and delivered by each party hereto in separate counterparts, each of which when
so executed and delivered shall be deemed an original and both of which taken
together shall constitute one and the same agreement. Each party to this
Agreement agrees that it will be bound by its own telecopied signature and that
it accepts the telecopied signature of the other party to this Agreement.
17. Choice of Law. This Agreement shall be governed by and construed in
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accordance with the domestic laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, TMP and the Company have caused this Professional
Services Agreement to be duly executed and delivered on the date and year first
above written.
EMPYREAN GROUP HOLDINGS, INC.
By: /s/ Stuart C. Johnson
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Name: Stuart C. Johnson
Title: President and CEO
TC MANAGEMENT PARTNERS IV, L.L.C.
By: /s/ Robert E. Michalik
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Robert E. Michalik
Member
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Exhibit A
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Empyrean Executive
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Stuart C. Johnson
Graham B. Perkins
Bruce H. Allan
Thomas B. Modly
Jason H. Levine
David T. Fu
Matthew B. Walker
Patricia A. Withers
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