EXHIBIT 10.2
MANAGEMENT AGREEMENT
THIS AGREEMENT is entered into as of this 8th day of March, 1988 by and
between The Bellfonte Company, a Minnesota corporation ("Bellfonte") and
Mid-South Acquisition Corporation, a Minnesota corporation (the "Corporation").
WHEREAS, the Corporation has been formed for the purpose, among other
matters, of acquiring all of the issued and outstanding shares of capital stock
of Mid-South Bottling Company, a Delaware corporation ("Mid-South"); and
WHEREAS, Bellfonte desires to enter into this Management Agreement for the
purposes of providing the services herein specified to the Corporation and, at
the request and direction of the Corporation, to Mid-South; and
WHEREAS, the Corporation desires to retain Bellfonte to perform the
services herein specified.
WHEREAS, it is contemplated and intended that the Corporation will be
merged into Mid-South.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
of the parties hereto and of other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, the parties agree as follows:
1. APPOINTMENT. The Corporation hereby appoints Bellfonte to render
services in managing the Corporation and to oversee the management of the
businesses and operations of the Corporation and Mid-South during the term of
this Agreement as herein contemplated.
2. MANAGEMENT SERVICES TO BE PROVIDED. Subject to (i) such guidelines
and limitations as the Board of Directors of the Corporation may from time to
time impose and (ii) conformity with the provisions of the Shareholders'
Agreement, Articles of Incorporation and Bylaws (the "Governing Documents")
of the Corporation, during the term of this Agreement, Bellfonte shall have
the authority to:
(a) Consistent with the Governing Documents, administer, manage, and
direct the Corporation and the businesses and properties of the Corporation
and Mid-South and, generally, render such services as may be required in
connection with the supervision of the businesses and properties of the
Corporation and Mid-South.
(b) Monitor the day-to-day operations of the Corporation and
Mid-South and make recommendations with respect thereto.
Page 1 Exhibit 10.2
(c) Investigate and make recommendations with respect to the
selection and conduct of relations with consultants and technical advisors
(including, without limitation, accountants and other similar advisors,
attorneys, corporate fiduciaries, escrow agents, depositories, custodians,
agents for collection, insurers, insurance agents and banks and persons
acting in any other capacity, in connection with the administration and
day-to-day operations of the Corporation and Mid-South.
(d) Conduct all negotiations with the franchisors under all
franchise agreements held by Mid-South and any of its subsidiaries and to be
held by the Corporation, Mid-South, and any of their respective
subsidiaries, relating to said franchise agreements, and take, or cause to
be taken, any and all acts which may be required in its judgment to comply
with said franchise agreements.
DUTIES AND POWERS OF BELLFONTE. In addition to the general authority
granted in paragraph 2 above, but subject to the provisions of the Governing
Documents, the contractual obligations of the Corporation and Mid-South, and
the provisions of that certain Purchase Agreement relating to Convertible
Preferred Stock Mid-South Acquisition Corporation dated as of March 7, 1988
(the "Preferred Stock Agreement"), Bellfonte shall have the power and
authority to make all decisions relating to the management and control of the
businesses and properties of the Corporation and Mid-South and shall have
complete discretion with respect thereto. Bellfonte may delegate the
authority, duties and obligations conferred under this Agreement to any
individual(s) or entities of its choice, without restriction, including but
not limited to employees of the Corporation or, after the merger, Mid-South.
The duties and responsibilities of Bellfonte shall be limited to those
expressly set forth in this Agreement. The powers granted to Bellfonte
hereby shall include (without limitation) powers to do the following, if, as
and when they become necessary, appropriate or desirable in the judgment of
Bellfonte:
(e) Cause either the Corporation or Mid-South to expend its or their
capital and earnings and profits in furtherance of the businesses of the
Corporation and/or Mid-South.
(f) Enter into amended franchise agreements with each of the
franchisors with respect to each of the franchises held by Mid-South or its
subsidiaries as held on the date of acquisition of the voting stock of
Mid-South by the Corporation.
(g) Manage and operate the bottling operations pursuant to the terms
and provisions of the franchise agreements.
(h) Sell, hypothecate, dispose of, trade, exchange, quit claim,
surrender or release the properties of the Corporation and/or Mid-South, or
interests therein.
(i) Give receipts, releases, and discharges in furtherance of the
authority herein granted.
(j) Cause the Corporation and/or Mid-South to borrow money from
third persons in the name and on behalf of the Corporation and/or Mid-South.
Page 2 Exhibit 10.2
(k) To the extent that any funds of the Corporation and/or Mid-South
are not, in the judgment of Bellfonte, required for the conduct of the
Corporation and/or Mid-South, temporarily to invest such funds in
interest-bearing bank accounts, certificates of deposit, or securities
issued or guaranteed as to principal and interest by the United States of
America or any agency, authority, or other entity controlled or supervised
by and acting as an instrumentality of the United States of America.
(l) Adjust, compromise, settle or refer to arbitration any claim in
favor of or against the Corporation and/or Mid-South and institute,
prosecute and defend any legal action or proceeding or any arbitration
proceeding.
(m) Enter into, make and perform any and all contracts, leases, and
other agreements in connection with the businesses and properties of the
Corporation and/or Mid-South, including, but not limited to, contracts,
leases and other agreements with Bellfonte and any affiliates as associates
of Bellfonte on terms not less favorable to the Corporation and/or Mid-South
than could be obtained in an arms'-length transaction with unaffiliated
third parties.
(n) Obtain for the purposes of the Corporation and/or Mid-South and
issue, accept, endorse, and execute promissory notes, bonds, or other
evidences of indebtedness and, as security therefor, mortgage, pledge, grant
security interests in, or otherwise encumber their assets; obtain
replacements of any mortgage or mortgages and prepay, in whole or in part,
refinance, recast, increase, modify, consolidate or extend any obligation
affecting the Corporation and/or mid-South.
(o) Acquire and enter into any contract of insurance necessary or
proper for the protection of the Corporation and/or Mid-South, the
conservation of their properties and businesses, the protection of Bellfonte
against liability to third parties arising out of the activities of the
Corporation and/or Mid-South and the activities of Bellfonte conducted on
behalf of the Corporation and/or Mid-South, and for any other purpose proper
and beneficial to the Corporation and/or Mid-South.
(p) Retain or employ and coordinate the services of all employees,
supervisors, accountants, attorneys, engineers, and other consultants and
any other persons or entities necessary or appropriate to carry out the
businesses and purposes of the corporation and/or Mid-South.
(q) Perform other obligations provided elsewhere in this Agreement
to be performed by Bellfonte.
(r) Execute, acknowledge, and deliver any and all documents and
instruments necessary or desirable in effectuating the foregoing.
3. AUTHORITY OF BELLFONTE; DEALINGS WITH THIRD PARTIES. Bellfonte shall
have the power to execute, deliver, perform and accept on behalf of the
Corporation and/or Mid-South any instrument and agreement incidental to the
businesses of the Corporation and/or Mid-South and in furtherance of the
services to be rendered, and the powers and
Page 3 Exhibit 10.2
authority granted pursuant to paragraphs 2 and 3 above, and such instrument
and agreement shall be deemed executed, delivered, performed and accepted, as
the case may be, by the Corporation and/or Mid-South. No person shall be
required to determine the authority of Bellfonte to engage in any act or
undertaking on behalf of the Corporation and/or Mid-South, and third parties
dealing with the Corporation and/or Mid-South may rely conclusively upon the
power and authority of Bellfonte to act as set forth herein and shall not be
required to inquire into or ascertain the authority of Bellfonte so to act.
4. CONFLICTS OF INTEREST. The Corporation and Mid-South acknowledge
that Bellfonte shall devote as much time to the management of the Corporation
and/or Mid-South and their respective businesses and properties as Bellfonte
may deem to be necessary under the circumstances. The Corporation and
Mid-South understand and agree, however, that, subject to the provisions of
the Shareholders Agreement and the Preferred Stock Agreement, Bellfonte may
engage in other businesses, including (without limitation) acting as
franchisee under franchise agreements providing for the bottling and
distribution of brand name soft drinks or otherwise owning or operating other
soft drink bottling businesses.
5. EXCULPATION. Bellfonte shall be exculpated from liability in
connection with the acceptance, performance or nonperformance of its duties
hereunder to the same extent that directors or officers of a corporation are
entitled to elimination of personal liability under Delaware law other than
for gross negligence or willful misconduct. Bellfonte shall incur no
liability with respect to any action taken by it in reliance upon any notice,
direction, instruction, consent, statement or other paper or document
provided to it by the Corporation, or any of its authorized representatives.
In all matters or questions arising under this Agreement which Bellfonte, in
its sole discretion and at its own expense, may seek and rely on the advice
of counsel, and such advice and reliance is made and taken in good faith
based on such advice, Bellfonte shall not be liable to any party, including
the Corporation and/or mid-South, or its or their successors and assigns, for
its actions so taken, whether or not such actions may constitute gross
negligence or willful misconduct.
INDEMNIFICATION OF BELLFONTE.
(a) The Corporation and/or Mid-South agrees to indemnify and hold
harmless Bellfonte against and in respect of any and all claims, suits,
actions, proceedings (formal or informal), investigations, judgments,
deficiencies, damages, settlements, liabilities, and legal and other
expenses (including legal fees and expenses of counsel chosen by Bellfonte)
as and when incurred arising out of, in connection with or based upon any
act or omission or alleged act or alleged omission by Bellfonte in
connection with the acceptance of, or the performance or nonperformance by
Bellfonte of any of its duties under this Agreement.
(b) Bellfonte shall give the Corporation and/or Mid-South prompt
notice of any claim asserted or threatened against Bellfonte on the basis of
which Bellfonte intends to seek indemnification from the Corporation and/or
Mid-South as herein permitted; however, the obligations of the Corporation
and/or Mid-South under this Section 7 shall not be conditioned upon receipt
of such notice.
Page 4 Exhibit 10.2
(c) Expenses incurred by Bellfonte in connection with any action,
suit, proceeding, or appeal thereof, described in Section 7(a) above, shall
be paid by the Corporation and/or Mid-South in advance of the final
disposition of such action, suit or proceeding within 20 days following
receipt of a notice from Bellfonte specifying the amount of such expenses
actually incurred by Bellfonte in connection with such action, suit, or
proceeding.
(d) The indemnification agreement provided for in this Section 7
shall survive the termination of this Agreement.
(e) Notwithstanding any other provision of this Section 7 to the
contrary, the Corporation and/or Mid-South shall not be liable to indemnify
Bellfonte in connection with any claim against Bellfonte (i) if a court of
competent jurisdiction has rendered a final decision that indemnification
relating to the claim would be unlawful; (ii) if a final decision by a
court of competent jurisdiction shall adjudge the conduct of Bellfonte to
have been taken not in good faith or not in a manner reasonably believed to
be in or not opposed to the best interests of the Corporation and/or
Mid-South; and (iii) if the claim is based upon Bellfonte's deriving an
unlawful benefit and a court of competent jurisdiction adjudges that such
benefit was unlawful in a final decision.
6. FEES. For services to be performed under this Management Agreement,
the Corporation and/or Mid-South, shall pay to Bellfonte the following:
(a) A Management Fee determined without regard to the income of the
Corporation and/or Mid-South, payable monthly in advance, as follows:
(i) During the period from the date hereof through December
31, 1989, at the rate of $300,000 per year;
(ii) During the period from January 1, 1990 through December
31, 1991, at the rate of $400,000 per year;
(iii) During the period from January 1, 1992 through December
31, 1993, at the rate of $500,000 per year; and
(iv) From January 1, 1994 through the termination of this
Agreement, at an annual rate, as adjusted effective each January 1 of
the remaining term, equal to (1) $400,000, multiplied by (2) the ratio
of (x) the Consumer Price Index ("CPI") as at the December 31 preceding
the date of computation to (y) the CPI at December 31, 1987; PROVIDED,
HOWEVER, that in no event shall the annual rate determined under this
clause (iv) be less than $500,000.
(b) A Transaction Fee for services rendered in connection with the
purchase of franchise territories (not including those held by Mid-South as
at March 6, 1988). The Transaction Fee shall be paid to Bellfonte at the
time of
Page 5 Exhibit 10.2
consummation of the acquisition of said franchise territories and
shall be an amount equal to 1-1/2% of the acquisition cost of such
franchises. The acquisition cost of such franchises shall be deemed to
include all amounts paid in cash, plus the aggregate amount of any seller
financing provided in connection with the acquisition, plus the aggregate
amount of all indebtedness assumed in connection with the acquisition.
(c) The Corporation and/or Mid-South shall reimburse Bellfonte for
all reasonable out-of-pocket expenses paid or incurred by Bellfonte for the
account of the Corporation and/or Mid-South in managing the businesses and
properties of the Corporation and/or Mid-South, assisting in the acquisition
of franchise territories and performing its duties hereunder (including,
without limitation, the fees and expenses of attorneys, accountants, and
other consultants and employees of Bellfonte, and the costs of equipment,
supplies and other materials, but excluding general overhead expenses and
compensation of officers, directors and employees of Bellfonte for time
which they devote to the management and supervision of the businesses of the
Corporation and/or Mid-South).
7. SOURCE OF PAYMENT. The Management Fee and the Transaction Fee set
forth in paragraph 13 of this Agreement shall be payable to Bellfonte from
the general funds of either the Corporation or Mid-South.
8. STATUS OF PARTIES. In the performance of its services under this
Agreement, Bellfonte shall be and is an independent contractor; provided,
however, in the event that Bellfonte acts on behalf of the Corporation and/or
Mid-South with respect to other parties, Bellfonte shall be deemed to do so
as an agent of the Corporation and/or Mid-South on behalf of the Corporation
or Mid-South. Based on the foregoing, Bellfonte shall not and will not incur
contractual or other liability solely because or as a result of its status as
a party hereto. The relationship between Bellfonte and the Corporation
and/or Mid-South is and shall solely be contractual.
9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on the
parties hereto, then successors and assigns; provided, however, that this
Agreement may not be assigned by either party without the consent of Board of
Directors of the Corporation and/or Mid-South.
10. TERM. This Agreement may be terminated by either party (i) at any
time after Bellfonte, any of its affiliates, or any of its subsidiaries
(wholly-owned or otherwise) cease to hold any common stock of the Corporation
or Mid-South, or their respective successors, or (ii) Bellfonte ceases to be
controlled by the Pohlad Group. For purposes of this Agreement, "affiliate
of Bellfonte" means any person controlling or controlled by or under common
control with Bellfonte, and "control," when used with respect to Bellfonte,
means the power to direct the management and policies of Bellfonte, directly
or indirectly, whether through the ownership of voting securities, by
contract, or otherwise. For purposes of this Agreement, "Pohlad Group" means
Xxxx X. Xxxxxx and his spouse, children, grandchildren, sons-in-law,
daughters-in-law, any corporation or partnership controlled by or affiliated
with any of the foregoing and any employees of such corporations or
partnerships, and any trust or foundation in which any of the foregoing has a
substantial beneficial interest or serves as
Page 6 Exhibit 10.2
a trustee or in any similar capacity and retains voting powers of securities
held in the trust or foundation.
11. GOVERNING LAW. All questions concerning the validity, operation,
interpretation, and construction of this Agreement shall be governed by and
determined in accordance with the internal laws of the State of Minnesota,
and all actions or claims under this Agreement shall be property venued only
in the County of Hennepin, State of Minnesota.
IN WITNESS WHEREOF, the parties have caused this Management Services
Agreement to be duly executed as of the date first written above.
MID-SOUTH ACQUISITION
CORPORATION
By /S/ XXXXXX X. XXXXXX
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Its President
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THE BELLFONTE COMPANY
By /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Its President
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Page 7 Exhibit 10.2
