EXHIBIT 10.16
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") is made and entered into as
of January 17, 1997 by and among Perini Corporation, a Massachusetts corporation
("Perini"), Xxxxx-Xxxxxx Corporation, a California corporation ("Xxxxx-Xxxxxx")
and Xxxxxx X. Tutor ("Tutor"), an individual and President of Xxxxx-Xxxxxx.
WHEREAS, Perini has had some difficulty meeting its cash requirements
for the past year due to, inter alia, its high level of capital-intensive civil
construction work and the cash support required by its real estate assets;
WHEREAS, Perini's financial condition has impeded its ability to
perform on existing projects and to bid on new projects;
WHEREAS, during the course of 1996, Perini engaged in an extensive
search for new capital to support its cash needs and to provide it the
opportunity to improve operations and improve its competitiveness in the general
contracting and construction industry;
WHEREAS, as a result of its search for capital, Perini entered into a
Stock Purchase and Sale Agreement dated July 24, 1996 by and among Xxxxxx, XX
Capital Partners, L.P., a Delaware limited partnership ("PB Capital Partners"),
and Xxxxxxx X. Xxxx & Associates, L.P., a California limited partnership
("RCBA") (as amended through the date hereof, the "Stock Purchase Agreement"),
pursuant to which it is contemplated that Perini will issue convertible
preferred stock to PB Capital Partners in exchange for an investment by PB
Capital Partners of $30,030,000 (the "Investment");
WHEREAS, Xxxxx-Xxxxxx is a limited partner of PB Capital Partners;
WHEREAS, Xxxxx-Xxxxxx directly owns approximately 7.24% of the
outstanding common stock, par value $1.00 per share (the "Common Stock") of
Perini;
WHEREAS, Xxxxx-Xxxxxx has from time to time engaged in construction
joint ventures with Perini under the name Xxxxx-Xxxxxx/Xxxxxx;
WHEREAS, considering the existing and potential relationships, direct
and indirect, between Xxxxx-Xxxxxx and Perini, as well as Tutor's expertise and
achievements in the construction industry, the parties hereto desire, in
connection with and contingent upon the Investment, that Xxxxx-Xxxxxx provide
the services of Tutor to Perini, for the purpose of providing direction to
Perini with respect to its ongoing and future construction operations and
improving Perini's operating efficiency and thus its ability to successfully
compete for new projects and in new areas;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereby agree as follows:
1. Effectiveness. Unless sooner terminated pursuant to Section 6
hereof, this Agreement shall become effective on the date of the closing of the
Investment (the "Effective Date").
2. Management.
(a) Xxxxx-Xxxxxx and Tutor each hereby agree to provide to
Perini the management services of Tutor, to assist Perini from time to time (but
for no more than ten (10) days in any calendar month, unless the parties
otherwise agree in writing) as described in Section 2(b) hereof or as the
parties hereto may otherwise agree.
(b) Tutor shall initially serve as acting Chief Operating
Officer of Perini, and will provide direction with respect to Perini's ongoing
and future construction operations, with the goal of achieving greater operating
efficiencies, reducing Perini's need for working capital, reducing Perini's
exposure to risk by negotiating and bidding on construction projects that will
yield higher profit margins than current projects, negotiating with Perini's
lenders, bonding companies and insurers, and generally improving Perini's cash
flow situation and competitive position in the general contracting and
construction industry.
(c) Perini hereby agrees to take all action which may be
required to: (i) appoint Tutor acting Chief Operating Officer of Perini; (ii)
provide Tutor with the use of an office at Perini's principal executive offices
and administrative and other support services as may be reasonably necessary in
connection with the performance of Tutor's services under Section 2(b) hereof;
(iii) make available to Tutor the services of such of its employees and
consultants as may be reasonably necessary to the performance of the services
described in Section 2(b) above; and (iv) issue the Option (as defined below)
and otherwise pay the management fee pursuant to Section 3 hereof.
3. Compensation. In return for the provision of Tutor's services,
Perini shall pay a management fee as follows:
(a) On the Effective Date, Perini shall issue to Tutor,
pursuant to Perini's 1982 Stock Option and Long-Term Performance Incentive
Compensation Plan, as amended (the "Plan") (or, in the event options are
unavailable for issuance under such plan, with similar terms and conditions as
under the Plan), an option (the "Option") exercisable for 150,000 shares of
Common Stock, with an exercise price per share equal to the closing price of the
Common Stock on the American Stock Exchange on the day prior to the Effective
Date. The Option will first become exercisable forty months after the Effective
Date.
(b) Beginning on the Effective Date, Perini shall pay a fee to
Xxxxx-Xxxxxx at the rate of $150,000 per year, such amount to be paid in twelve
equal monthly installments in arrears on the 15th of each month, or as the
parties hereto shall otherwise agree in writing.
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4. Limitation of Liability.
(a) Neither Tutor nor Xxxxx-Xxxxxx makes any express or
implied representation, warranty or guaranty to Perini relating to the services
to be performed by Tutor pursuant to this Agreement or the quality or results of
such services.
(b) Neither Tutor nor Xxxxx-Xxxxxx shall be liable to Perini
or to any of its subsidiaries or affiliates or to any third party for failure to
perform the services to be performed by either of them pursuant to this
Agreement for any expense, claim, loss or damage, including, without limitation,
indirect, special, consequential or exemplary damages, suffered other than by
reason of such party's intentional failure to perform the services to be
performed by such party pursuant to this Agreement, or by reason of action taken
or omitted to be taken by such party which was in bad faith and in a manner not
reasonably believed by such party to be in the best interests of Perini.
5. Indemnification. Perini shall indemnify and hold Tutor and
Xxxxx-Xxxxxx harmless against all loss, cost, liability and expense arising out
of the performance of this Agreement by Tutor and Xxxxx-Xxxxxx, upon the same
terms and conditions as those provided to officers and directors of Perini by
Section 9 of the By-laws of Perini. A true, complete and correct copy of Section
9 of the By-laws of Perini is attached hereto as Exhibit A.
6. Termination. Unless earlier terminated by the parties, this
Agreement shall terminate upon the earliest to occur of (i) December 31, 1998,
(ii) Tutor's inability to perform the services contemplated hereby, whether
because of death, disability or otherwise, (iii) written notice from Perini to
Tutor after, in the determination of a majority of the Executive Committee of
the Board of Directors of Perini, Tutor has failed to perform his obligations
under this Agreement, and (iv) the reasonable determination by the Board of
Directors or Executive Committee of Perini, and written notice thereof to Tutor,
that it would be inadvisable for Tutor to continue performing the services
contemplated by this Agreement.
7. Governing Law. This Agreement shall be construed under and governed
by the internal laws of the Commonwealth of Massachusetts without regard to its
conflict of laws provisions.
8. Notices. Any notice, request, demand or other communication required
or permitted hereunder shall be in writing and shall be deemed to have been
given if delivered or sent by facsimile transmission, upon receipt, or if sent
by registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three days after deposit in United States post
office facilities properly addressed with postage prepaid. All notices to a
party will be sent to the addresses set forth below or to such other address or
person as such party may designate by notice to each other party hereunder:
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TO XXXXX-XXXXXX
OR TUTOR: Xxxxx-Xxxxxx Corporation
c/o Xxxxxx X. Tutor
00000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
TO PERINI: Perini Corporation
00 Xx. Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xx. Xxxxx X. Xxxxxx
With a copy to: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Any notice given hereunder may be given on behalf of any party by such party's
counsel or other authorized representative.
9. Entire Agreement. This Agreement, including the exhibit referred to
herein, is complete, reflects the entire agreement of the parties with respect
to its subject matter, and supersedes all previous written or oral negotiations,
commitments and writings. No promises, representations, understandings,
warranties and agreements have been made by any of the parties hereto except as
referred to herein; and all inducements to the making of this Agreement relied
upon by either party hereto have been expressed herein.
10. Assignability; Binding Effect. This Agreement shall not be
assignable by any of the parties hereto without the written consent of the other
parties. This Agreement shall be binding upon and enforceable by, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns.
11. Execution in Counterparts. For the convenience of the parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
12. Amendments. This Agreement may not be amended or modified, nor may
compliance with any covenant set forth herein be waived, except by a writing
duly and validly executed by each party hereto, or in the case of a waiver, the
party waiving compliance.
13. Confidentiality. Xxxxx-Xxxxxx and Tutor each hereby agree (i) to
keep confidential and not use in any manner adverse to Perini or any of its
subsidiaries or affiliates any confidential information about Perini, any of its
subsidiaries or any of its affiliates,
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including without limitation financial information, trade secrets, bidding
processes and other information with respect to actual or prospective bids made
or being considered to be made by any of them and (ii) to indemnify and hold
harmless Perini, its subsidiaries and its affiliates for any and all loss, cost,
liability and expense arising out of a breach of this provision.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above by their duly authorized
representatives.
PERINI CORPORATION
By:
Title:
XXXXX-XXXXXX CORPORATION
By:
Title:
XXXXXX X. TUTOR
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EXHIBIT A
SECTION 9. Indemnification of Directors and Officers
9.1 General. Subject to the provision of this Section and any
limitations imposed by law, the corporation shall indemnify its directors and
officers against all expenses incurred by them in connection with any proceeding
in which they are involved by reason of their serving in such capacities except
that (i) no indemnification shall be provided for any director or officer with
respect to any matter as to which he shall have been adjudicated not to have
acted in good faith and in the reasonable belief that his action was in the best
interests of the corporation, or with respect to a criminal matter, that he had
reasonable cause to believe that his conduct was unlawful, and (ii) no
indemnification shall be provided for any director or officer with respect to a
proceeding by or in the right of the corporation in which he is adjudicated to
be liable to the corporation. Such indemnification may be provided to an officer
or director in connection with a proceeding in which it is alleged that he
received an improper personal benefit by reason of his position, regardless of
whether the claim involves his services in such capacity, subject to the
foregoing limitation, unless it shall have been determined that an improper
personal benefit was received by the director or officer. Except as provided in
Section 9.2, indemnification under this Section 9 shall be authorized in each
case as determined by the board of directors, which may act notwithstanding that
one or more of these members are parties to the proceeding in question or
otherwise have an interest in such indemnification.
9.2 Mandatory Indemnification. Notwithstanding any contrary provisions
of this Section, if a director or officer of the corporation has been wholly
successful on the merits in defense of any proceeding in which he was involved
by reason of his position or as a result of his serving in such capacity
(including the termination of investigative or other proceedings without a
finding of fault on the part of the director of officer), he shall be
indemnified by the corporation against all expenses incurred by him in
connection therewith.
9.3 Definitions. For purposes of this Section 9:
(a) A "director" or "officer" means any person serving in an
office filled by appointment or election by the directors or the stockholders
and also includes (i) a director or officer of the corporation serving at the
request of the corporation as a director, officer, employee, trustee, partner or
other agent of another organization, (ii) any person who formerly served as a
director or officer, and (iii) the heirs or personal representatives of such
persons;
(b) "Expenses" means all expenses (including attorneys' fees
and disbursements) actually and reasonably incurred in defense of a proceeding
or in successfully seeking indemnification under Section 9.2 hereof, and any
judgments, awards, fines, penalties and reasonable amounts paid in settlement of
a proceeding; and
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(c) A "proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, and any claim which could be the subject of a proceeding.
9.4 Advances. Except as limited by law, expenses incurred by a director
or officer in defending any proceeding in which he is involved by reason of
serving in such capacities may be paid by the corporation in advance of final
disposition of the proceeding upon receipt of his written undertaking to repay
such amount if it is ultimately determined that he is not eligible to be
indemnified, which undertaking shall be an unlimited general obligation but need
not be secured and may be accepted without regard to the financial ability of
such persons to make repayment; provided, that no such advance payment shall be
made if it is determined by the board of directors on the basis of the
circumstances known at the time (without further investigation) that said
director or officer will ultimately be ineligible to be indemnified under this
Section 9.
9.5 Settlement Proceedings. If a proceeding is compromised or settled
in a manner which imposes a liability or obligation upon a director or officer,
(i) no indemnification shall be provided to him with respect to a proceeding by
or in the right of the corporation unless the board of directors determines in
its discretion that indemnification is appropriate under the circumstances, and
(ii) no indemnification shall be provided to him with respect to any other type
of proceeding if it is determined by the board of directors that said director
or officer is ineligible to be indemnified under this Section 9. The
determination by the board of directors in each case shall be made on the basis
of the circumstances know to it at that time without further investigation.
9.6 Insurance. The corporation shall have power to purchase and
maintain insurance on behalf of any director, officer, employee or agent of the
corporation against any liability or cost incurred by him in any such capacity
or arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability or cost.
9.7 Employee Benefit Plans. If the corporation or any of its directors
or officers sponsors, undertakes or incurs any responsibility as a fiduciary
with respect to an employee benefit plan, then, for purposes of indemnification
of such person under this Section (i) a "director" or "officer" shall be deemed
to include any director or officer of the corporation who serves at its request
in any capacity with respect to said plan, (ii) such director or officer shall
be deemed not to have failed to have acted in good faith and in the reasonable
belief that his action has in the best interests of the corporation if he acted
in good faith and in the reasonable belief that his action was in the best
interest of the participants or beneficiaries of said plan, and (iii) "expenses"
shall be deemed to include any taxes or penalties assessed on such director or
officer with respect to said plan under applicable law.
9.8 Other Provisions. The provisions of this Section 9 shall not be
construed to limit the power of the corporation to indemnify its officers or
directors to the full extent permitted by law and enter specific agreements or
arrangements for this purpose. In addition, the corporation shall have power to
indemnify any of its agents or employees who
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are not directors or officers on any terms consistent with law which it deems to
be appropriate.
9.9 Amendment. The provisions of this Section 9 may be amended or
repealed by the stockholders; however, no such amendment or repeal which
adversely affects the rights of a director of officer under this Section 9 with
respect to his acts or omissions at any time prior to such amendment or repeal,
shall apply to him without consent.
326593.c5
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