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EXHIBIT 10.2
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of August 1, 2000 (the
"Agreement"), by and between Harvest Partners, Inc., a New York corporation
("Harvest"), and Global Energy Equipment Group, L.L.C., a Delaware limited
liability company (the "Company").
W I T N E S S E T H:
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WHEREAS, the Company is engaged in the power generation
industry and activities related to the foregoing (the "Business"); and
WHEREAS, affiliates of Harvest have caused GEEG Acquisition
Holdings Corp. ("Holdings") to be formed to invest in the membership interests
of the Company; and
WHEREAS, Holdings, GEEG Acquisition, L.L.C., a Delaware
limited liability company ("Acquisition"), the Company and Saw Mill Investments
LLC have entered into a Merger Agreement (the "Merger Agreement"), dated as of
July 14, 2000, pursuant to which Acquisition has been merged (the "Merger") with
and into the Company, with the Company as the surviving entity;
WHEREAS, the Company desires that Harvest cause Holdings to
designate representatives with financial and/or management expertise to serve on
the Board of Directors of the Company, and Harvest desires to cause Holdings to
designate such representatives to serve on the Board of Directors of the
Company, and that such representatives render counsel, guidance and directorial
assistance to the Company and/or its subsidiaries and affiliates while serving
on the Board of Directors of the Company (the "Services"); and
WHEREAS, the Company further desires that Harvest provide the
Company and/or its subsidiaries and affiliates with financial advisory and
strategic planning services (the "Harvest Services").
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, hereto, intending to
be legally bound hereby, agree as follows:
1. Effective Date. This Agreement shall be effective as of the
date first above written (the "Effective Date").
2. Services. Harvest hereby agrees to provide Director
Services to the Company as follows: Harvest shall cause certain of its
employees, directors or designees (the "Harvest Directors") with financial
and/or management expertise to serve on the Board of Directors of the Company.
The Harvest Directors shall provide guidance, counsel and directorial assistance
to the Company in providing such Director Services and shall devote such time
and attention as is reasonably necessary to provide the Director Services.
Harvest will also provide
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the Harvest Services to the Company from time to time as requested by the
Company. The Harvest Services may be rendered both through the Harvest Directors
and directly by Harvest.
3. Compensation. (a) Subject to Sections 3(f) and 4 below, as
full payment for the Director Services and Harvest Services to be rendered by
the Harvest Directors to the Company hereunder, the Company shall pay to Harvest
a fee (the "Harvest Fee") equal to the sum of $750,000, (the "Harvest Fee
Amount") for each year (such years to begin on each August 2 and ending on each
August 1, commencing August 2, 2000 (each, a "Harvest Year"). Except as
otherwise provided in Section 3(c) below, the Harvest Fee Amount shall be
payable in equal semi-annual installments during each year of this Agreement, in
advance, on the first day of each semi-annual period commencing on August 2,
2000.
(b) In addition to the payment of the Harvest Fee provided for
in Section 3(a) above and in Section 3(c) below, the Company agrees to pay to
Harvest, in consideration of Harvest's efforts to direct the relevant entity to,
and provide advice and strategic planning to the relevant entity in connection
with a Transaction, a fee (the "Transaction Fee") concurrently, with, and as a
condition to, the closing of (i) a sale, merger (other than the "Merger"), joint
venture formation or other business combination or recapitalization of the
Company or one or more of its subsidiaries or affiliates in connection with
which direct or indirect control of such entity is assumed by an unaffiliated
third party (each, a "Business Combination"), (ii) a sale, lease or conveyance
of all or substantially all of the Company's or one or more of its subsidiaries'
assets (an "Asset Sale"), (iii) any offering of the Company's or one or more of
its subsidiaries' securities (an "Offering"), or (iv) any acquisition by the
Company or one or more of its subsidiaries of the capital stock or assets
(whether by purchase, merger, consolidation, joint venture formation or other
business combination, or otherwise) of any other person or entity that is
directly or indirectly engaged in the Business (an "Acquisition" and, together
with a Business Combination, an Asset Sale, and an Offering, a "Transaction").
The amount of the Transaction Fee shall be equal to (x) 2% of the "Transaction
Amount" (as defined below) in connection with a Business Combination, Asset Sale
or Acquisition, and (y) 2% of the net proceeds to the relevant entity in
connection with an Offering. "Transaction Amount" as used herein shall mean the
total consideration (including cash, securities, notes, property, dividends or
other distribution, to stockholders, evidences of indebtedness, all debt,
capital leases and preferred securities or interests remaining on the financial
statements, other indebtedness, capital leases, preferred securities or
interests and other obligations assumed, retired or defeased by the purchaser,
and any other form of consideration) paid, payable, contributed or otherwise to
be distributed, directly or indirectly, for the assets and/or existing and newly
issued stock and/or other ownership interest in connection with the relevant
Transaction. Any securities that form part or all of the Transaction Amount will
be valued at the quoted public market price or, in the absence of a quoted
market price, the fair value thereof, as determined in good faith by the Board
of Directors of the Company. The Transaction Amount shall be payable in cash at
closing of a Transaction under all circumstances. In the event of a
recapitalization, Transaction Amount shall also include, without duplication,
the value of cash, notes, property and securities distributed to the entity's
stockholders or members. The Transaction Fee will be payable so long as a
Transaction is consummated or a definitive agreement providing for a Transaction
is entered into at any time during the Initial Term or Renewal Term or within
the two (2) year period subsequent to the termination hereof. Notwithstanding
anything else herein to the contrary, in lieu of payment
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thereof by the Company, the Company may cause any of its subsidiaries to pay any
Transaction Fee payable to Harvest in connection with a Transaction; provided,
that nothing in this sentence shall affect the absolute right of Harvest to be
paid such Transaction Fee and the Company shall in all respects remain liable
therefor until such obligation is paid in full.
(c) Concurrent with, and as a condition to, the closing of any
Business Combination or Asset Sale involving the Company, the Company shall pay
to Harvest, in a lump sum payment, an amount equal to the aggregate Harvest Fee
which would otherwise be payable by the Company through the completion of the
then-remaining Initial Term or Renewal Term, as the case may be. It shall be a
condition of the Company's making such payment and the payment of any
Transaction Fee that this Agreement shall automatically terminate and be of no
further force and effect upon the making of each such payment. Notwithstanding
anything else herein to the contrary, in lieu of payment thereof by the Company,
the Company may cause any of its subsidiaries to pay the amount of any Harvest
Fee payable to Harvest pursuant to this Section 3(c); provided, that nothing in
this sentence shall affect the absolute right of Harvest to be paid such Harvest
Fee and the Company shall in all respects remain liable therefor until such
obligation is paid in full.
(d) In addition to the fees provided for in Section 3(a), (b)
and (c) above, the Company agrees to pay to Harvest a fee in the amount of
$5,000,000 (the "Closing Fee") upon consummation of the Merger. The Closing Fee
shall be payable in cash upon consummation of the Merger.
(e) In addition to the fees to be paid to Harvest under
Sections 3(a), 3(b), 3(c) and 3(d), the Company shall pay to, or on behalf of,
Harvest, promptly as billed, all reasonable out-of-pocket expenses incurred by
Harvest in connection with the Director Services and the Harvest Services
rendered hereunder. Such expenses shall include, among other things, reasonable
fees and disbursements of counsel, travel expenses, messenger and duplicating
services, facsimile expenses and other reasonable and customary expenditures.
(f) In addition to the fees otherwise payable hereunder, in
consideration of the Director Services provided to the Company by any Harvest
Director who is not an employee or director of Harvest, the Company shall pay
reasonable and customary director's fees to such Harvest Director, in addition
to reimbursing reasonable out-of-pocket expenses (including, but not limited to,
travel expenses) of such Harvest Director.
4. Term. Subject to the final sentence of Section 3(c) hereof,
the term of this Agreement shall commence on the date hereof and shall terminate
upon the earlier of (a) August 1, 2003 (such period being referred to herein as
the "Initial Term"), unless this Agreement is automatically renewed as provided
below in this Section 4, or (b) the date on which this Agreement is terminated
for cause as provided in Section 6 below. Notwithstanding the foregoing,
commencing on August 1, 2001 and continuing indefinitely thereafter, the term of
this Agreement will automatically and immediately be extended for an additional
one-year period (each such period being referred to herein as a "Renewal Term")
if written notice of termination of this Agreement has not been given by Harvest
to the Company. Each Renewal Term shall be deemed to commence immediately after
the then-existing last day of the term hereof.
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5. Right to Engage in Other Activities. The Director Services
provided herein are not to be deemed exclusive. Nothing contained herein shall
restrict Harvest or any of its shareholders, directors, officers, employees or
agents from engaging in any other business or devoting time and attention to the
management, investment, involvement or other aspects of any other business,
including becoming an officer or director thereof, or rendering services of any
kind to any other Company, firm, individual or association.
6. Termination for Cause. This Agreement may be terminated for
cause by the party whose conduct is not the cause for such termination if (a)
either party commits an act of criminal misconduct or gross malfeasance in any
material respect of its obligations as set forth herein, or (b) either party
files a voluntary petition in bankruptcy or is adjudicated as bankrupt or
insolvent, or such party files a petition under any chapter of the United States
Bankruptcy Code or any other present or future applicable Federal, state or
other statute or law regarding bankruptcy, insolvency or other relief for
debtors, or any party seeks, or consents to, or acquiesces in the appointment
of, any trustee, receiver, conservator or liquidator of itself or of all or any
substantial portion of its property.
7. Indemnification. The Company shall (i) indemnify Harvest,
its affiliates, and their respective partners, directors, officers, employees,
agents and controlling persons and their respective affiliates, and any Harvest
Directors (collectively, the "Indemnified Parties"), to the fullest extent
permitted by law, from and against any and all losses, claims, damages and
liabilities, joint or several, to which any Indemnified Party may become
subject, caused by, related to or arising out of the Director Services or the
Harvest Services or any other advice or services contemplated by this Agreement
or the engagement of Harvest pursuant to, and the performance by any Indemnified
Party of the Director Services or the Harvest Services contemplated by, this
Agreement, and (ii) promptly reimburse each Indemnified Party for all costs and
expenses (including reasonable attorney's fees and expenses), as incurred, in
connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by or on behalf of the Company and whether or
not resulting in any liability.
8. Limited Liability. The Company agrees that no Indemnified
Party shall have any liability (whether direct or indirect, in contract or tort,
or otherwise) to the Company, holders of its securities or its creditors related
to or arising out of the engagement of Harvest pursuant to, or the performance
by any Indemnified Party of the Director Services or the Harvest Services
contemplated by, this Agreement, except to the extent that any loss, claim,
damage, liability, cost or expense is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from Harvest's willful
misconduct or gross negligence.
9. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the court,
shall be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
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10. Assignment. Neither Harvest nor the Company may assign
this Agreement or any of their respective rights or obligations hereunder,
except that either of them may assign or transfer this Agreement to any other
person who or which acquires all or substantially all of their respective
property, business and assets, provided, however, that, in the case of Harvest,
this Agreement may be assigned or transferred, in whole or in part, to any
affiliate of Harvest, and thereafter references in this Agreement to "Harvest"
shall include such affiliate.
11. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not in any manner or way affect any other
provision hereof, and this Agreement shall be construed, if possible, as if
amended to conform to legal requirements, failing which it shall be construed as
if any such offending provision were omitted.
12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
13. Entire Agreement. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
14. Binding Nature. Subject to the restrictions on
assignability contained herein and the rights and obligations of the Indemnified
Parties under Sections 7 and 8 above, each and all of the covenants, terms,
conditions, provisions and agreements herein contained shall be binding upon,
and inure only to the benefit of, the parties hereto and their respective
successors, heirs and permitted assigns.
15. Amendment, etc. The provisions of this Agreement may not
be amended, waived, modified or changed except by an instrument in writing
signed by all of the parties hereto. No waiver of any breach or condition of
this Agreement shall be deemed to be a waiver of any other or subsequent breach
or condition, whether of like or different nature.
16. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Management Agreement to be executed by their representatives thereunto duly
authorized on the date first above written.
HARVEST PARTNERS, INC., a New York Company
By: /s/ Xxxxxxx Xxxxxxxxxx
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Name: Xxxxxxx Xxxxxxxxxx
Title:
GLOBAL ENERGY EQUIPMENT GROUP,
L.L.C., a Delaware limited liability company
By: /s/ Xxxxx Xxxxxxx
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Name:
Title:
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