Exhibit 10.20
THIRD AMENDMENT TO MANAGEMENT AGREEMENT
THIS AMENDMENT TO MANAGEMENT AGREEMENT (this "Agreement") is made and
entered into as of July 30, 1999 (the "Effective Date") between Coventry
Industries Corp., a Florida corporation, whose principal place of business is
0000 Xxxxxxxxx Xxxx, Xxxxx 000 Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 (the "Company"),
and Xxxxxx Xxxxxxx, an individual whose address is 0000 XX 00xx Xxxx, Xxxx
Xxxxx, Xxxxxxx 00000 (the "Manager").
RECITALS
WHEREAS, the Company and Xxxxxxx are parties to that certain Management
Agreement dated as of July 1, 1997 and amended as of November 1, 1997 and
December 1, 1998, copies of which are attached hereto as Exhibit A and
incorporated herein by such reference (the "Management Agreement").
WHEREAS, the parties wish to amend certain specific terms of the Management
Agreement as herein after set forth.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Company and the Manager do hereby agree as follows:
1. The Executive shall serve as the President of the Company and shall be
responsible for all tasks and activities that are customarily the responsibility
of such officer and all tasks and activities reasonably determined by the Board
of Directors of the Company. The Executive shall continue to serve on the Board
of Directors of the Company or any committee thereof without additional
compensation.
2. Paragraph 3. of the agreement as written in the second amendment shall
be deleted and substituted as follows:
3. Compensation and Benefits. (a) As his sole compensation payable by the
Company under this Agreement, the Manager shall be entitled to receive the
following:
(1) an annual management fee of one hundred thirty one thousand
($131,000) dollars, payable in twelve equal monthly installments, with an
annual incremental increases of the greater of (i) the percentage increase
in the Consumer Price Index, all items, as published by the United States
Department of Labor, since the date of this Agreement (in the case of the
first annual increase) or since the most recent anniversary of the date of
this Agreement (in the case of all subsequent annual increases), or (ii)
six percent (6%) of the previous year's base management fee. This increase
will be effective on January 1st of each year of the management agreement.
(2) a car allowance of $1,500 per month to cover the cost of Manager's
automobile and operating expenses;
(3) to participate in any hospitalization or disability insurance
plans, health programs, pension plans, bonus plans or similar benefits that
may be available to other executives of the Company (including coverage
under any officers and directors liability insurance policy);
-1-
(4) such other compensation, including, without limitation, bonus
compensation, as may be determined by a majority of the Company's Board of
Directors, in their sole discretion.
(5) as consideration for the elimination of the 3% Net Pre-Tax Income
cash bonus and the stock options granted in the prior agreements, manager
hereby is granted 50,000 shares of the Company's common stock as
compensation for such consideration.
(b) The Manager shall be reimbursed for all reasonable expenses
incurred in the rendering of the services hereunder.
3. Paragraph 5 of the agreement as written in the second amendment
shall be deleted and substituted as follows:
5. Repayment of Loans, Accrued Dividends and Accrued Salary. As of the date
of this Agreement, Manager is owed approximately $400,000 consisting of accrued
salary, accrued dividends, accrued interest and loans to the Company. In order
to repay such amount as promptly as practicable, the Company will issue a note
(the "Note") to Manager. The Note will have the following terms:
(1) bear interest at 8% per annum,
(2) provide for a minimum of 24 equal monthly installments of
principal and interest that are payable in cash commencing August 1st,
1999. The Company, at it's option, may extend repayment of this notes up to
an additional 24 months if the cash flow requirements necessitate such
extension. The notes may be prepaid at any time without penalty.
(3) provide for acceleration upon the termination of this Agreement
without cause.
(4) Provide that if the manager is disabled, dies, is terminated with
cause, or the management agreement is not renewed, that the remaining
balance due on the note will be paid to the manager or manager's successors
or heirs in accordance with the terms outlined in (2) above.
4. Paragraph 6 of the agreement as written in the second amendment
shall be deleted and substituted as follows:
6. Redemption of Preferred Stock. (a) Manager and Manager's wife own
14,375 shares of the Company's Series E Preferred Stock (the
"Preferred Stock"). Manager and the Company have agreed that the
Preferred Stock will be exchanged for 143,750 shares of Common
Stock, of which 75,000 shares has been exchanged in conjunction
with the closing of the BSD transaction and the remaining 68,750
shall be exchanged prior to the closing of the People First
transaction. Effective on such exchange, the Management Fee
payable pursuant to Section 3(1) above will be increased by
$77,000, which amount is equal to the dividends on the Preferred
Stock. The Company and Manager agree to facilitate the sale of
these shares of Common Stock and Manager will use the proceeds of
such sales to repay principal and interest on the Manager's loan
from Chase Manhattan Bank in the approximate principal amount of
$1,115,000 (the "Loan"). The Company agrees that any shortfall
from the sale of stock will be compensated with additional shares
or cash in order to pay off in full the loan from Chase. The
management fee shall be reduced pro rata as Manager receives
funds from the Company with respect to the sale of Common Stock
and the interest payments decrease.
-2-
5. Manager and the Company agree not to invoke the "change in control"
provisions of Section 4 as a result of the transactions set forth in the
Exchange Agreement dated as of September 30, 1998.
6. Paragraphs 5 through 17 shall be renumbered to be 7 through 19. The
remaining terms and conditions of the Management Agreement remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written in Boca Raton, Florida.
COVENTRY INDUSTRIES CORP.
By: _____________________________
Name:
Title:
MANAGER
----------------------------
Xxxxxx X. Xxxxxxx
-3-
