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EXHIBIT 10.2
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is dated
on or after the consummation of the tender offer by and among Bucyrus
International, Inc., a Delaware corporation (the "Corporation"),
Boonville Mining Services, Inc., a Delaware corporation, Minserco,
Inc., a Delaware corporation and Von's Welding, Inc., a Wyoming
corporation (collectively the "Subsidiaries"); and American
Industrial Partners, a Delaware general partnership ("AIP").
Background
Subject to terms and conditions of this Agreement, the
Corporation desires to retain AIP to provide certain management
services to the Corporation.
Terms and Conditions
In consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the parties agree as follows:
1. Management Services: During the term of this Agreement, AIP
shall provide general management, financial and other corporate
advisory services to the Corporation. Such management services shall
be performed by the qualified officers, employees or agents or AIP,
and AIP shall at all times direct, monitor and supervise the
performance of such services by such officers, employees or agents.
2. Fees and Expenses:
(a) The Corporation shall pay to AIP an annual management fee
(the "Management Fee") of One Million Four Hundred Fifty Thousand
Dollars ($1,450,000). The Management Fee shall be payable
semi-annually forty-five (45) days after the scheduled interest
payment date for the Company's 9 3/4% Senior Notes Due 2007,
beginning on or after the consummation of the Tender Offer or at such
other times as the Corporation and AIP shall otherwise agree;
provided that if any date on which payment of the Management Fee is
required hereunder is not a business day, the Corporation shall pay
such Management Fee on the first business day following the date on which
payment was otherwise due.
(b) In addition to the Management Fees payable pursuant to this
Section 2, the Corporation agrees to promptly reimburse AIP for all
out-of-pocket expenses
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incurred by AIP in providing the services contemplated by this Agreement,
including fees and expenses paid to consultants, subcontractors and other
third parties in connection with such services.
(c) The Corporation and the Subsidiaries (collectively, the
"Guarantors"), jointly and severally, hereby guarantee the
Corporation's payment of all amounts owing to AIP (i) subject to
paragraph 2(d) below, under paragraph 2(a) of this Agreement and (ii)
under paragraph 2(b) of this Agreement.
(d) Notwithstanding anything to the contrary contained herein:
(i) the Corporation shall not be required to pay the Management Fee
if and for so long as (A) any such payment would violate, breach or
otherwise constitute a default (or any event which might with the
lapse of time or giving of notice or both, constitute a default)
under any of the Corporation's financing agreements, and (ii) none of
the Guarantors shall be required to make any payments pursuant to
Section 2(c)(i) of this Agreement if any such payment would violate,
breach or otherwise constitute a default (or any event which might
constitute a default) under any of the Guarantors' financing
agreements, including, without limitation, the Credit Agreement,
dated as of September 24, 1997, among the Corporation, Bank One,
Wisconsin, and the Lenders from time to time party thereto.
(e) Interest will accrue on all due and unpaid Management Fees
at the lower of (i) the rate per annum equal to ten percent (10%) or
(ii) the maximum rate permitted by law until such time as such
Management Fees are paid, and such interest shall compound annually.
(f) Notwithstanding the provisions of Section 2(a) hereof, the
lability of the Corporation for any semi-annual Management Fee
payment hereunder shall not accrue, and AIP shall have no right for
payment in respect thereto, unless AIP continues to perform the
management services described in Section 1 through the end of the
applicable semi-annual period, and no payment obligation shall arise
on the part of the Corporation for the performance of services by AIP
for any partial semi-annual period (except for any partial
semi-annual period ending on the termination of this Agreement,
whereupon the Management Fee shall be pro rated, and shall be
payable, for such period).
3. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
successors and permitted
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assigns. This Agreement may not be transferred or assigned by any
party without the written consent of each other party.
4. Entire Agreement; Amendment. This Agreement constitutes the
entire agreement and understanding between the parties with respect
to the subject matter hereof. This Agreement may be amended or
modified, or any provision hereof may be waived, provided that such
amendment or waiver is set forth in a writing executed by the
parties. No courses of dealing between or among any persons having
any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or
obligations or any person under or by reason of this Agreement.
5. Term. Except as provided for herein, this Agreement shall
commence on the date hereof and shall terminate on the earlier of (i)
the tenth anniversary of the date hereof and (ii) such other date as
to which AIP and the Corporation mutually agree. The provisions of
Section 6 shall survive the termination of this Agreement.
6. Indemnification. The Corporation and the Guarantors hereby
jointly and severally agree to indemnify and hold harmless AIP and
its partners, employees, agents, representatives and affiliates (each
being an "Indemnified Party") from and against any and all losses,
claims, damages and liabilities to which such Indemnified Party may
become subject under any applicable federal or state law, any claim
made by any third party or otherwise, relating to or arising out of
the engagement of AIP pursuant to, and the performance by AIP of the
services contemplated by, this Agreement, and the Corporation and the
Guarantors jointly and severally will reimburse any indemnified Party
for all costs and expenses (including attorneys' fees and expenses)
as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatening claim, or
any action or proceeding arising therefrom, whether or not such
Indemnified Party is a party hereto. None of the Corporation and the
Guarantors will be liable under this Section 6, and an Indemnified
Party shall reimburse the Corporation or the Guarantors for any
related payments made by it under this Section 6, to the extent that
any loss, claim, damage, liability, cost or expense is determined by
a court, in a final judgment from which not further appeal may be
taken, to have resulted primarily from the gross negligence or
willful misconduct of such Indemnified Party. No Indemnified Party shall
be liable to the Corporation or any of the
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Guarantors for honest mistakes of judgment, or for action or
inaction, taken in good faith in the performance of management
services under this Agreement to the extent such action would satisfy
the standards for indemnification set forth in Section 6.
7. Permissible Activities. Subject to all applicable provisions
of Delaware law that impose fiduciary duties upon AIP or its partners
or affiliates, nothing herein shall in any way preclude AIP, it
partners or affiliates from engaging in any business activities or
from performing services for its or their own account or for the
account of others.
8. Governing Law. The validity, performance, construction and
effect of this Agreement shall be governed by and construed in
accordance with the internal law of the State of New York.
BUCYRUS INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Smoke
Its: Vice President and Chief Financial Officer
BOONVILLE MINING SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxx
Its: Vice President
MINSERCO, INC.
By: /s/ Xxxxx X. Xxxxxx
Its: Vice President
VON'S WELDING, INC.
By: /s/ Xxxxx X. Xxxxxx
Its: Vice President
AMERICAN INDUSTRIAL PARTNERS, A
DELAWARE GENERAL PARTNERSHIP
By: /s/ Xxxxxxx X. Xxxxxxx
Its: Chief Financial Officer
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