Exhibit 10.2
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT, made this 4th day of August, 1998,
by and between Bruckmann, Rosser, Sherrill & Co., Inc., a Delaware corporation
("BRS") and Penhall International Corp., an Arizona corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the BRS to provide
business and organizational strategy, financial and investment management, and
merchant and investment banking services to the Company and its subsidiaries,
upon the terms and conditions hereinafter set forth, and BRS is willing to
undertake such obligations;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
1. Appointment. The Company hereby engages BRS, and BRS hereby agrees
under the terms and conditions set forth herein, to provide certain services to
the Company as described in Section 3 hereof.
2. Term. The term of the Agreement (the "Term") shall commence on the
date hereof and shall continue until the tenth anniversary of this Agreement.
3. Duties of BRS. BRS shall provide the Company and its subsidiaries
with business and organizational strategy, financial and investment management,
and merchant and investment banking services (collectively, the "Services"). The
Services will be provided at such times and places as may reasonably be
determined by BRS.
3.1 Exclusions from "Services". Notwithstanding anything in
the foregoing to the contrary, the following services are specifically excluded
from the definition of "Services":
(i) Independent Accounting Services. Accounting Services
rendered to the Company or BRS, with prior notice and consultation with the
Company's management, by an independent accounting firm or accountant (i.e., an
accountant who is not an employee of BRS);
(ii) Legal Services. Legal services rendered to the Company
or BRS, with prior notice and consultation with the Company's management, by an
independent law firm or attorney (i.e., an attorney who is not an employee of
BRS); and
(iii) Transaction Services. Transactional services in
connection with any acquisition, divestiture, financing or other transaction in
which the Company or its subsidiaries may be, or may consider becoming,
involved, it being understood that BRS shall have the right to
be first approached and to have a thirty day discussion period concerning all
opportunities to perform, for an additional fee, any of such transaction-related
services.
4. Power of BRS. So that it may properly perform its duties hereunder,
BRS shall, subject to Section 7 hereof, have the authority and power to do all
things necessary and proper to carry out the duties set forth in Section 3.
5. Compensation. As consideration payable to BRS or any of its
affiliates for providing the Services to the Company, the Company shall make the
following payments to BRS.
(a) On the date hereof, a onetime fee to BRS in the amount of
$2,000,000 (the "Initial ------- Fee").
(b) On a semi-annual basis in advance, a management fee of
$300,000 per annum to BRS on each October 1 and April 1 commencing with
October 1, 1998 (the "Management Fee") (such first payment being a
prorated portion of the Management Fee for the period beginning on the
date hereof and ending on March 31, 1999). The Initial Fee and the
Management Fee are hereinafter collectively referred to as the "Fees".
(c) BRS may elect, by written notice to the Company, to defer
cash payment of all or any portion of the Management Fee due to BRS;
any Management Fee so deferred shall be accrued and shall be paid in
cash upon the written request of BRS.
(d) Actual and direct out-of pocket expenses (including fees
and disbursements of attorneys, accountants and other professionals and
consultants retained by BRS in connection with the Services provided
hereunder) incurred by BRS and its personnel in performing the
Services, which shall be reimbursed to BRS by the Company upon BRS's
rendering of a statement therefor together with such supporting data as
the Company reasonably shall require.
(e) Notwithstanding any other provision of this Section 5,
the Company shall not be required to pay any of the Management Fee, if
and to the extent such payment is expressly prohibited by the
provisions of the Credit Agreement, dated as of the date hereof
("Credit Agreement"), among the Company, Penhall Acquisition Corp.,
Bankers Trust Company, as Administrative Agent, Credit Suisse First
Boston, as Syndication Agent, and the lenders parties thereto, as may
be amended, modified or supplemented, from time to time, or any other
credit, financing or other agreements or instruments binding upon the
Company or their properties; provided, however, that if, as a result of
the operation of any such prohibitions, payments otherwise owed
hereunder are not made, such payments shall not be cancelled but rather
shall accrue, and shall be payable by the Company promptly when, and to
the extent that, the Company is no longer prohibited from making such
payments, together with accrued interest calculated at the rate of
interest then charged under the Credit Agreement from the date such
payment was due through the date of payment. Other than the Credit
Agreement, the Company will not enter into any such
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agreements or instruments without the prior written approval of BRS.
This Section 5(e) will not prohibit nor restrict, in any manner, the
Company's obligation to make the payment specified in Section 5(a), to
make reimbursements pursuant to Section 5(d), to provide
indemnification pursuant to Sections 6, 9 and 17, or to make any other
payments contemplated by this Agreement.
6. Indemnification. In the event that either BRS or any of its
affiliates, principals, partners, directors, stockholders, employees, agents and
representatives (collectively, the "Indemnified Parties") becomes involved in
any capacity in any action, proceeding or investigation in connection with any
matter referred to in or contemplated by this Agreement, or in connection with
its Services, the Company will indemnify and hold harmless the Indemnified
Parties from and against any actual or threatened claims, lawsuits, actions or
liabilities (including out-of-pocket expenses and the fees and expenses of
counsel and other litigation costs and the cost of any preparation or
investigation) of any kind or nature, arising as a result of or in connection
with this Agreement and its Services, activities and decisions hereunder, and
will periodically reimburse BRS for its expenses as described above, except that
the Company will not be obligated to so indemnify any Indemnified Party if, and
to the extent that, such claims, lawsuits, actions or liabilities against such
Indemnified Party directly result from the gross negligence or willful
misconduct of such Indemnified Party as admitted in any settlement by such
Indemnified Party or held in any final, non-appealable judicial or
administrative decision. In connection with such indemnification, the Company
will promptly remit or pay to BRS any amounts which BRS certifies to the Company
in writing are payable to BRS or other Indemnified Parties hereunder. The
reimbursement and indemnity obligations of the Company under this Section 6
shall be in addition to any liability which the Company may otherwise have,
shall extend upon the same terms and conditions to any Indemnified Party, as the
case may be, of BRS and any such affiliate and shall be binding upon and inure
to the benefit of any successors, assigns, heirs and personal representatives of
the Company, BRS, and any such Indemnified Party. The foregoing provisions shall
survive the termination of this Agreement.
7. Independent Contractors. Nothing herein shall be construed to
create a joint venture or partnership between the parties hereto or an
employee/employer relationship. BRS shall be an independent contractor pursuant
to this Agreement. Neither party hereto shall have any express or implied right
or authority to assume or create any obligations on behalf of or in the name of
the other party or to bind the other party to any contract, agreement or
undertaking with any third party.
8. Notices. Any notice or other communications required or permitted
to be given hereunder shall be in writing and delivered by hand or mailed by
registered or certified mail, return receipt requested, or by telecopier to the
party to whom it is to be given at its address set forth herein, or to such
other address as the party shall have specified by notice similarly given.
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(a) If to the Company, to it at:
Penhall International Corp.
c/o Penhall Rental Corp.
1801 Penhall Way
Anaheim, California 92803
Attention: John Sawyer
(b) If to BRS, to it at:
Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street
29th Floor
New York, New York 10022
Attention: Harold O. Rosser II
9. Liability. BRS is not and never shall be liable to any creditor of
the Company and the Company agrees to indemnify and hold each Indemnified Party
harmless from and against any and all such claims of alleged creditors of the
Company and against all costs, charges and expenses (including reasonable
attorneys fees and expenses) incurred or sustained by any Indemnified Party in
connection with any action, suit or proceeding to which it may be made a party
by any alleged creditor of the Company. Notwithstanding anything contained in
this Agreement to the contrary, the Company agrees and acknowledges that BRS and
its partners, principals, shareholders, directors, officers, employees and
affiliates intend to engage and participate in acquisitions and business
transactions outside of the scope of the relationship created by this Agreement
and they shall not be under any obligation whatsoever to make such acquisitions,
business transactions or other opportunities through the Company or offer such
acquisitions, business transactions or other opportunities to the Company.
10. Amendment. Any amendment to this Agreement requires the approval
of BRS.
11. Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties and their successors and assigns. However, neither this
Agreement nor any of the rights of the parties hereunder may be transferred or
assigned by either party hereto, except that (i) if the Company shall merge or
consolidate with or into, or sell or otherwise transfer substantially all its
assets to, another corporation which assumes the Company's obligations under
this Agreement, the Company may assign its rights hereunder to that corporation,
and (ii) BRS may assign its rights and obligations hereunder to any other person
or entity controlled, directly or indirectly, by Bruce C. Bruckmann, Harold O.
Rosser II, Stephen C. Sherrill and/or Stephen F. Edwards. Any attempted transfer
or assignment in violation of this Section 11 shall be void.
12. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes all prior agreements and undertakings,
oral and written, among the parties hereto with respect to the subject matter
hereof. All of the rights and obligations of the
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Company hereunder shall be the joint and several rights and obligations and
liabilities of the Company.
13. Section Headings. The section headings contained herein are
included for convenience or references only and shall not constitute a part of
this Agreement for any other purpose.
14. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
15. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York applicable to contracts
made and to be performed entirely within such State, regardless of the law that
might be applied under principles of conflicts of law.
16. Severability. In the event that any provision of this Agreement or
the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
17. Taxes. The amount of any payment paid by the Company under this
Agreement shall be increased by the amount, if any, of any taxes (other than
income taxes) or other governmental charges levied in respect of such payments,
so that BRS is made whole for such taxes or charges.
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IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written.
BRUCKMANN, ROSSER, SHERRILL & CO., INC.
By: /s/ Stephen F. Edwards
---------------------------------
Name: Stephen F. Edwards
Title: Managing Director
PENHALL INTERNATIONAL CORP.
By: /s/ John T. Sawyer
---------------------------------
Name: John T. Sawyer
Title: President
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