EXHIBIT 10.31
MANAGEMENT AGREEMENT
This Management Agreement, dated as of December 21st, 1995, by and
between General Manufactured Housing, Inc., a Georgia corporation (the
"Company"), and Strategic Investments & Holdings, Inc., a Delaware corporation
("Strategic").
WHEREAS, the Company desires to engage Strategic to render certain
management services to the Company and Strategic desires to provide such
services to the Company.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
Section 1. Services.
1.1 Engagement of Strategic. The Company hereby retains Strategic to
render the management services described in this Section 1 during the term of
this Agreement, and Strategic hereby agrees to provide such services to the
Company during the term hereof.
1.2 Management Services. During the term of this Agreement,
Strategic agrees to:
(a) provide ongoing management and consulting services to the
Company, including strategic planning, marketing, consulting, financial planning
and capital budgeting, executive compensation program analysis and such other
management and consulting services as may, from time to time, be reasonably
requested by the Company;
(b) monitor the business of the Company and conduct periodic
reviews and analyses of such business as reasonably requested by the Company;
and
(c) assist the Company in developing a long-term strategic plan
with respect to the business of the Company and identify, review and analyze
merger and acquisition opportunities for the Company.
1.3 Extent of Services. In carrying out its obligations under this
Section 1, Strategic shall devote such of its time and personnel as may be
reasonably required to discharge its obligations to provide services hereunder
and shall have regard to the objectives of the Company with respect to its
business and any specific instructions from time to time communicated in writing
by the Company to Strategic with respect to the business of the Company and the
services provided hereunder. Strategic shall be free to render similar services
to others.
Section 2. Expense Reimbursement and Compensation.
2.1 Reimbursement of Expenses. Strategic shall be reimbursed within
ten (10) business days after the submission to the Company of a reasonably
detailed invoice for any out-of-pocket expenses reasonably incurred by Strategic
or any of its personnel in connection with the provision of the services
described in Section 1 hereof including, without limitation, travel, meals,
lodging, messengers or couriers; provided, that such fees and expenses shall not
exceed $50,000 per annum. In addition, each of SIHI-GMH LLC, a New York limited
liability company ("SIHI-GMH") and Bulldog Holdings LLC, a New York limited
liability company ("Bulldog") shall be reimbursed within ten (10) business days
after the submission to the Company of a reasonably detailed invoice for any out
of pocket expenses reasonably incurred by either SIHI-GMH or Bulldog in
connection with each of their filing or reporting obligations arising out of
Bulldog's investment in Holdings or SIHI-GMH's being the managing member of
Bulldog, including, without limitation, costs of preparing periodic financial
statements, tax returns and other similar items, and various filing or reporting
fees or state income or franchise taxes; provided, that such fees and expenses,
in the aggregate will not exceed $5,000 per annum.
2.2 Closing Fee. At the closing of the acquisition of the stock of
the Company by GMH Acquisition Corp., Strategic shall receive from the Company,
a closing fee equal to $500,000 plus reimbursement for all expenses incurred by
it in connection with such acquisition.
2.3 Management Fee. As compensation for the services provided
pursuant to this Agreement, Strategic shall be entitled to receive from the
Company an annual fee in an amount equal to $500,000, payable as follows:
(a) $250,000 per annum (the "Base Fee"), payable in equal quarterly
installments in arrears commencing on March 31, 1996; provided that the first
such payment shall be prorated from the date hereof to such first quarterly
payment date. The Base Fee shall be adjusted annually on January 1 of each year
during the term hereof, commencing in 1997 (each, an "Adjustment Year"). The
adjustment in the Base Fee (the "Adjustment") shall be the lesser of (i) 3% per
annum or (ii) a percentage of the Base Fee equal to the percentage increase or
decrease in the United States Department of Labor, Bureau of Labor Statistics
Consumer Price Index for all Urban Consumers (CPI-U), all items, U.S. City
Average (1982-84 = 100), or any successor or substitute index, between January 1
of the year immediately prior to the Adjustment Year and December 31 of such
prior year (the "Index Year"); provided, however, in no event shall the Base Fee
ever be less than $250,000. The Adjustment shall be calculated as soon as the
Consumer Price Index information for December of the year immediately prior to
the Adjustment Year is made available, and the adjustment shall be effective as
of January 1 of the Adjustment Year. Any adjustment in the Base Fee pursuant to
this Section 2.3 shall be added or subtracted, as the case may be, to the then
current Base Fee being paid to Strategic, and the result thereof shall then
become the Base Fee for each successive year, until further adjusted in
accordance with the provisions of this Section 2.3.
(b) $250,000 per annum (the "Incentive Fee"), payable in equal
quarterly installments in arrears on the last day of each March, June, September
and December of each year, commencing March 31, 1996; provided, that the
Incentive Fee shall be paid pro rata with the dividends payable by GMH Holdings,
Inc. ("Holdings") on its Series A Preferred Stock, so that if, for example, 50%
of the dividends owed on the Series A Preferred Stock were paid, then 50% of the
Incentive Fee would be paid to Strategic. If any quarterly installment of the
Incentive Fee under this Section 2.3(b) hereof is not paid to Strategic when due
hereunder solely because of a restriction contained in any applicable lending
documents to which the Company is a party, such Incentive Fee shall be accrued
by the Company and shall be payable to Strategic by the Company as soon
thereafter as permitted under such lending documents.
Section 3. Termination.
3.1 Term of Agreement. Subject to Section 3.2 hereof, this Agreement
shall become effective on the date hereof and shall continue in force and effect
until December 31, 2010.
3.2 Termination.
(a) Right of Termination. The Company may terminate this Agreement
upon sixty (60) days' prior written notice to Strategic if Strategic is in
material breach of its obligations under this Agreement, and Strategic may
terminate this Agreement upon sixty (60) days' prior written notice to the
Company.
(b) Effect of Termination. From and after the effective date of any
termination, whether pursuant to Section 3.2(a) hereof or at the end of the term
specified in Section 3.1 hereof, the Company shall have no liability to
Strategic for any compensation hereunder (other than compensation accrued prior
to the effective date of termination and remaining unpaid and a reasonable fee
for any final report requested pursuant to this Section), and Strategic shall
have no obligation to perform services hereunder. Upon effectiveness of the
termination of this Agreement, Strategic shall provide the Company all records
relating to the Company and shall, upon request of the Company, render a final
report to the Company with respect to the services provided hereunder.
Notwithstanding anything to the contrary contained herein, in the event of
termination of this Agreement, the Company shall remain obligated to reimburse
Bulldog and SIHI-GMH for their expenses incurred in accordance with the
provisions of Section 2.1 hereof.
Section 4. Miscellaneous
4.1 SUBORDINATION. STRATEGIC HEREBY ACKNOWLEDGES THAT THE INCENTIVE
FEE PAYABLE TO IT BY THE COMPANY HEREUNDER IS AND SHALL BE SUBORDINATE AND
SUBJECT TO THE CLAIMS AND RIGHTS OF FIRST SOURCE FINANCIAL LLP, HOLDERS OF THE
SENIOR SUBORDINATED NOTES, RFE INVESTMENT PARTNERS V, L.P., THE STATE TREASURER
OF MICHIGAN, AS CUSTODIAN AND STERLING COMMERCIAL CAPITAL, INC. (COLLECTIVELY,
THE "INVESTORS") PURSUANT TO AND TO THE EXTENT PROVIDED IN THE SUBORDINATION
AGREEMENT, DATED AS OF THE DATE HEREOF, BY AND BETWEEN HOLDINGS, THE COMPANY,
STRATEGIC AND THE INVESTORS.
4.2 Assignment. Neither Strategic nor the Company may assign this
Agreement or their respective rights or obligations hereunder to any third
party; provided, however, that Strategic may assign any or all of its rights or
obligations hereunder to an entity which controls, is controlled by, or is under
common control with Strategic.
4.3 Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be sent by registered or
certified mail, postage prepaid, or shall be delivered personally or by
overnight courier, or shall be sent by telecopy or similar means of simultaneous
transmission and receipt to the party to whom it is to be given at the address
or telecopy number of such party set forth below (or to such other address as
the party shall have furnished in writing in accordance with the provisions of
this Section 4.3):
(a) If to the Company, to:
General Manufactured Housing, Inc.
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx
Telecopy: (000) 000-0000
(b) If to Strategic, to:
Strategic Investments & Holdings, Inc.
The Cyclorama Building
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
Telecopy: (000) 000-0000
Notices shall be deemed to have been given on the fifth day after being so
mailed, the next business day after delivery to an overnight courier, when sent
by telecopier (with receipt acknowledged) or upon receipt when delivered
personally.
4.4 Waiver; Remedies. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of this Agreement. The failure of a party to insist upon
strict adherence to any term of this Agreement on one or more occasions will not
be considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement. Any
waiver hereunder must be in writing. All rights and remedies which the Company
or Strategic may have under this Agreement are cumulative and in addition to any
rights or remedies under applicable law or in equity.
4.5 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Company and Strategic and their
respective successors and permitted assigns.
4.6 No Third Party Beneficiaries. Except for SIHI-GMH and Bulldog,
this Agreement does not create, and shall not be construed as creating, any
rights enforceable by any person not a party to this Agreement. Each of SIHI-GMH
and Bulldog shall be entitled to enforce this Agreement as if they were parties
hereto.
4.7 Headings. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
4.8 Counterparts; Governing Law. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. This Agreement
shall be governed by and construed in accordance with the laws of New York,
without giving effect to conflict of laws principles.
4.9 Relationship of Parties. The parties agree that Strategic in the
performance of its duties hereunder is an independent contractor acting as the
agent of the Company, and that nothing contained herein shall constitute either
party as employee or legal representative of the other for any purpose
whatsoever, nor shall this Agreement be deemed to create any form of business
organization, joint venture, or partnership between the parties hereto or as
giving Strategic any type of property interest in the Company, nor is any party
granted any right or authority to assume or create any obligation or
responsibility on behalf of the other party, except as otherwise provided
herein, nor shall any party be in any way liable to the other party for any debt
of the other. The Company acknowledges that neither Strategic nor any of its
principals is registered under any federal or state law, rule or regulation as
an investment advisor or securities broker or dealer and agrees that Strategic,
unless and until registered, shall not be subject to restrictions thereunder in
its relationship with the Company, including without limitation the nature and
amount of compensation received for services hereunder.
4.10 Modification. This Agreement sets forth the entire understanding
of the parties with respect to the subject matter hereof and may be modified
only by a written instrument duly executed by each party hereto.
4.11 Indemnification. The Company hereby agrees to indemnify and hold
Strategic harmless from, against, for and in respect of any loss, obligation,
claim, liability, settlement payment, award, judgment, fine, penalty, interest
charged, expense, damage or deficiency or other charge or expense (including
attorneys fees and disbursements and related court filing fees, court costs,
witness fees and similar matters) incurred or required to be paid as a result of
or arising out of its entering into this Agreement or its providing services
hereunder; provided, however, that Strategic shall not be entitled to any
indemnification pursuant to this Section 4.11 if a court of competent
jurisdiction has finally determined that Strategic is guilty of actual fraud or
willful misconduct.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
GENERAL MANUFACTURED HOUSING, INC.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: President
STRATEGIC INVESTMENTS & HOLDINGS,
INC.
By: /s/ Xxxxx X. XxxXxxxx
-------------------------------
Name: Xxxxx X. XxxXxxxx
Title: Vice President
