EXHIBIT 10.2
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of June 30, 2000 (the "Agreement")
between Windward Capital Management, LLC, a Delaware limited liability company
(the "Advisor"), and Mobile Storage Group, Inc., a California corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, the Company is owned in part by Windward Capital Partners II,
L.P., a Delaware limited liability company ("Windward"), and Windward Capital XX
XX, LLC, a Delaware limited liability company ("WCL"), and Windward/MSG
Co-Invest, LLC, a Delaware limited liability company ("WCI", collectively, with
Windward, WCL and Windward Acquisition/MS, LLC, a Delaware limited liability
company (collectively, the "Windward Entities");
WHEREAS, on the date hereof, the Company acquired all of the issued and
outstanding Ordinary Shares of Mobile Storage (U.K.) Limited ("MS UK");
WHEREAS, the Company has requested that the Advisor make available to
the Company certain management and financial advisory services commencing on the
date hereof; and
WHEREAS, the Advisor desires to provide such management and financial
advisory services to the Company commencing on the date hereof;
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, it is agreed as follows:
SECTION 1. ENGAGEMENT AND DUTIES
(a) The Company hereby appoints the Advisor as an advisor to the
Company, whereby the Advisor shall, from time to time, to the extent reasonably
requested by the Company, provide those management and financial advisory
services to the Company and its subsidiaries which are set forth in Section 1(b)
hereof. The Advisor hereby accepts such appointment and agrees to provide each
of the services required to be provided by it under this Agreement and to make
itself available from time-to-time, on a part-time basis, to consult with the
management and Board of Directors of the Company in connection with such
services. In addition to the services of its own personnel, the Advisor shall be
permitted, to the extent that it determines in its sole discretion that it would
be advisable or appropriate in order to perform its services hereunder, to
arrange for and coordinate the services of other professionals, experts and
consultants.
(b) Upon the reasonable request of the Board of Directors of the
Company, the Advisor hereby agrees to provide the following services to the
Company and its subsidiaries:
(i) review periodically the business, operations, financial
condition and prospects of the Company and its subsidiaries, including,
without limitation: (A) reviewing the strategic direction and plans of
the Company and its subsidiaries; (B) reviewing and evaluating the
annual business plan and budget of the Company and its subsidiaries; (C)
reviewing and evaluating the sales, profitability and working capital
and other financing requirements of the Company and its subsidiaries;
and (D) reviewing the salary and benefit levels of the senior management
of the Company and its subsidiaries and reviewing and evaluating the
performance of the senior management of the Company and its
subsidiaries;
(ii) assist the Company and its subsidiaries in the planning,
structuring and negotiation of each potential acquisition by the Company
of another business operating within the Company's industry or any
related industry;
(iii) assist the Company and its subsidiaries in seeking out and
negotiating with potential financing sources in connection with the
financing of any transaction referred to in clause (ii) above;
(iv) provide to the Company and its subsidiaries such other
management and financial advisory services as may be reasonably
requested by the Board of Directors of the Company; and
(v) assist the Company and its subsidiaries regarding any claims
for indemnification on behalf of the Company or its subsidiaries.
SECTION 2. NATURE OF RELATIONSHIP
Notwithstanding the services provided by the Advisor, the Advisor shall
be deemed to be an independent contractor and, unless otherwise expressly
authorized by the Company's Board of Directors, shall not be authorized to
manage the affairs of, act in the name of, or bind the Company. The Company
shall not be obligated to follow or accept any advice or recommendation made by
the Advisor, and the management, policies and operations of the Company shall be
the sole responsibility of the Board of Directors and the management of the
Company. The obligations of the Advisor to the Company are not exclusive, and
the Advisor may, in its sole discretion, render the same or similar services to
any other person or entity. Nothing set forth in this Agreement shall be deemed
to prohibit the Advisor from serving any other person or entity in any capacity
the Advisor may deem appropriate or from conducting its business and affairs in
any manner it may elect, whether or not such activities might involve an actual
or potential conflict of interest vis-a-vis the Company or any of its
subsidiaries.
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SECTION 3. TERM
Subject to the termination provisions of Section 6 hereof, the initial
term of this Agreement shall commence on the date hereof and continue for a
period of three (3) years following the date hereof; thereafter, the term of
this Agreement shall be extended automatically for successive one-year periods
unless the Board of Directors of the Company or the Advisor shall give written
notice to the other party at least six (6) months prior to the end of the
initial three-year term or prior to the end of any one-year extended period then
in effect (as the case may be).
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services to be provided by the Advisor to
the Company and its subsidiaries, the Company shall pay the Advisor an annual
management fee of $235,000 (the "Management Fee"), payable in advance in
semi-annual installments of $117,500 each on January 1 and July 1 of each year.
In addition, in the event of a Change in Control (as defined in the Shareholders
Agreement, dated as of even date herewith, by and among the Windward Entities,
the Company, and certain shareholders of the Company identified therein (the
"Shareholders Agreement")), the Advisor shall be entitled to a fee equal to one
percent (1%) of Transaction Value (as defined below), in each case, as
determined in good faith by the Board of Directors of the Company. The Company
shall also pay or reimburse the Advisor for all Expenses (as defined below) in
accordance with Section 4(b) below. Notwithstanding the foregoing, the payment
of such fees shall be subject to any reasonable restrictions set forth in that
agreements executed by the Company with respect to the Senior Debt Facility (as
defined in the Amended and Restated Agreement and Plan of Merger, dated as of
April 3, 2000, by and among the Windward Entities, the Company and certain of
the Company's shareholders (the "Merger Agreement")) as in effect on the date
hereof. Upon any termination of this Agreement, the Management Fee payable with
respect to the then-current semi-annual period shall be prorated to reflect the
actual number of days during which this Agreement was in effect; provided that
no proration shall be made by the Company if the Company elects to terminate
this Agreement as provided under Section 6(a) or if this Agreement is terminated
as the result of the operation of Section 6(b) and the Advisor shall be entitled
to the full Management Fee for such semi-annual period.
(b) The term "Expenses" shall mean all fees, costs and expenses
reasonably incurred by the Advisor in connection with its provision of services
hereunder, including, without limitation: (i) all fees and expenses of legal
counsel, accountants and other consultants and experts retained by the Advisor
in connection with its provision of services hereunder, (ii) all travel and
other out-of-pocket costs and expenses incurred by the Advisor in connection
herewith, (iii) all other costs and expenses incurred by the Advisor related to
its duties hereunder and (iv) all Losses (as defined herein) that are the
subject of indemnification pursuant to this Agreement. The Company shall
reimburse the Advisor promptly for all Expenses upon the Advisor's presentation
of invoices or other documents reasonably evidencing such Expenses.
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(c) The term "Transaction Value" shall mean the total fair market value
on the closing date of all consideration, including cash, securities, property,
indebtedness and obligations (including capitalized lease and preferred equity
obligations) assumed by the Company and any other form of consideration, such as
covenants not to compete, paid or payable, directly and indirectly, to entity or
business so acquired and/or its securityholders and/or holders of options,
warrants and similar rights in connection with the Acquisition or any
transaction related thereto. "Transaction Value" shall also include any
indebtedness or other obligations of the entity or business so acquired which
are assumed by the Company, in the case of an acquisition of assets or similar
transaction, or existing on the balance sheet of the entity or business so
acquired, in the case of an acquisition of stock or similar transaction.
(d) The term "Acquisition" shall mean the purchase of any business or
company (whether in the form of equity, assets or otherwise).
SECTION 5. INDEMNIFICATION
(a) The Company shall, to the fullest extent permitted by law, indemnify
the Advisor and each officer, director, employee, partner, Affiliate (as defined
in the Merger Agreement), agent and representative of the Advisor (collectively,
the "Indemnitees") against, and the Company will hold harmless and will release
each Indemnitee from, any and all Losses (as defined below), including any
incurred in connection with any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or commission,
whether pending or threatened, whether or not any Indemnitee is or may be a
party thereto, which arise out of, relate to or are in connection with the
provision of any services hereunder or otherwise relate to this Agreement or the
management or conduct of the business or affairs of the Company or any of its
subsidiaries, except for any Losses that are found by a court of competent
jurisdiction to have resulted primarily from the gross negligence or willful
misconduct of the Indemnitee seeking indemnification. The term "Losses" shall
mean all losses, claims, damages or liabilities of each Indemnitee, joint or
several, and all judgments, fines, penalties, interest and charges, and all
costs and expenses incurred in connection with the investigation, defense or
settlement of any pending or threatened claims (including, without limitation,
attorneys' fees and expenses related thereto).
(b) The termination of any proceeding by settlement shall not, of
itself, create a presumption that the Indemnitee acted in a manner which
constituted gross negligence, willful misconduct or a knowing violation of law.
The right of any Indemnitee to the indemnification provided herein shall be
cumulative of, and in addition to, any and all rights to which such Indemnitee
may otherwise be entitled by contract or as a matter of law or equity and shall
extend to his heirs, successors, assigns and legal representatives.
(c) Promptly after receipt by an Indemnitee hereunder of written notice
of the commencement of any action or proceeding with respect to which a claim
for indemnification may be made pursuant to this Section 5, such Indemnitee
will, if a claim in respect thereof is to be made against the Company, promptly
give written notice to the Company of the
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commencement of such action; provided that the failure of any Indemnitee to give
notice as provided herein shall not relieve the Company of its obligations under
this Section 5, except to the extent that the Company is actually and materially
prejudiced by such failure to give notice. In case any such action is brought
against an Indemnitee, unless in such Indemnitee's reasonable judgment a
conflict of interest between such Indemnitee and the Company may exist in
respect of such claim, the Company will be entitled to participate in and to
assume the defense thereof, to the extent that it may wish, with counsel
reasonably satisfactory to such Indemnitee, and after notice from the Company of
its election so to assume the defense thereof, the Company will not be liable to
such Indemnitee for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof, unless in such Indemnitee's
reasonable judgment a conflict of interest between the Indemnitee and the
Company arises in respect of such claim after the assumption of the defense
thereof (in which case, the Company shall not assume the defense thereof, but
shall be responsible for the fees and expenses of one counsel in each
jurisdiction for all parties indemnified by the Company, subject to the same
exception as is set forth in the last sentence of this subsection (c)), and the
Company will not be subject to any liability for any settlement made without its
consent (which consent shall not be unreasonably withheld). The Company will not
consent to entry of any judgment or enter into any settlement (i) which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all liability in respect to such claim or
litigation, and (ii) that imposes any obligation on an Indemnitee (except any
obligation to make payments which the Company shall, and promptly does, pay). If
the Company elects not to assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by the Company with respect to such claim, unless in the reasonable
judgment of any Indemnitee a conflict of interest may exist between such
Indemnitee and any other of such Indemnitees with respect to such claim, in
which event the Company shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) Notwithstanding any termination of this Agreement pursuant to
Section 6, the expiration of the term hereof pursuant to Section 2 or otherwise,
the indemnification provided under this Agreement shall remain in full force and
effect thereafter.
(e) No Indemnitee shall be liable to the Company or its subsidiaries for
any error of judgment or mistake of law or for any loss incurred by the Company
or its subsidiaries or any of their respective Affiliates in connection with the
matters to which this Agreement relates, except for any damages that are found
by a court of competent jurisdiction to have resulted primarily from the gross
negligence or willful misconduct of the Indemnitee seeking indemnification. In
no event shall the Advisor or any Indemnitee be liable for any indirect, special
or consequential damages arising out of or in connection with this Agreement.
The Advisor and the Indemnitees may consult with legal counsel, accountants and
other consultants and experts in respect of the affairs of the Company and its
subsidiaries and shall be fully protected and justified in acting, or failing to
act, in a manner consistent with the advice or opinion of such legal counsel,
accountants and other consultants and experts.
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SECTION 6. TERMINATION
Notwithstanding anything to the contrary contained in this Agreement,
(a) this Agreement may be terminated by either the Advisor or the Company upon
at least six (6) months prior written notice to the other party, and (b) this
Agreement shall terminate automatically without any action on the part of either
party hereto (i) upon the consummation of a Change in Control (as defined in the
Shareholders Agreement) or (ii) at such time, if any, that the Company is no
longer a majority-owned subsidiary of the Windward Entities.
SECTION 7. NOTICES
Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given only if delivered personally to the address set forth
below (to the attention of the person identified below) or sent by telefax,
telegram or by registered or certified mail, postage prepaid, return receipt
requested as follows:
If to the Company: Mobile Storage Group, Inc.
0000 Xxxxxxxx Xxxx., 0xx Xxxxx
Xx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Advisor: Windward Capital Management, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as the addressee may have specified in a notice duly
given to the sender and to counsel as provided herein. Any notice, request,
demand, waiver, consent, approval or other communication given (a) personally
shall be effective when delivered, (b) by mail or telegram shall be effective
when received and (c) by facsimile shall be effective when the appropriate
facsimile answer back or confirmation is received.
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SECTION 8. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof. It supersedes any prior agreement or
understanding among them, and it may not be modified or amended in any manner
other than by an instrument in writing signed by both parties hereto, or their
respective successors or assigns, or otherwise as provided herein.
SECTION 9. CHOICE OF LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF.
SECTION 10. SUCCESSORS AND ASSIGNS
Except as herein otherwise specifically provided, this Agreement shall
be binding upon and inure to the benefit of the parties and their legal
representatives, heirs, administrators, executors, successors and assigns.
SECTION 11. FORCE MAJEURE
If the performance by the Advisor of any of its services hereunder is
prevented, restricted or interfered with in whole or in part by reason of any
event or cause whatsoever beyond the reasonable control of the Advisor, then in
any such event, the Advisor shall be excused from such performance to the extent
of such prevention, restriction or interference, and the Management Fee payable
hereunder shall be reduced proportionately.
SECTION 12. CAPTIONS
Captions contained in this Agreement are inserted only as a matter of
convenience and in no way define, limit or extend the scope or intent of this
Agreement or any provision hereof.
SECTION 13. SEVERABILITY
If any provision of this Agreement, or the application of such provision
to any person or circumstance, shall-be held invalid, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
SECTION 14. WAIVERS
No provision of this Agreement shall be deemed to have been waived
unless such waiver is contained in a written notice given to the party claiming
such waiver, and no such
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waiver shall be deemed to be a waiver of any other or further obligation or
liability of the party or parties in whose favor the waiver was given.
SECTION 15. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall
constitute one and the same instrument. It shall not be necessary in making
proof of this Agreement or any counterpart hereof to produce or account for any
of the other counterparts.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
WINDWARD CAPITAL MANAGEMENT, LLC
By ______________________________________
Name: ________________________________
Title:________________________________
MOBILE STORAGE GROUP, INC.
By ______________________________________
Name: Xxxxxx X. Xxxxxxx
Title: President
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