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Exhibit 10.25
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement") is made and entered into as of
the 27th day of August, 1999, by and between WinsLoew Furniture, Inc., a Florida
corporation (the "COMPANY"), and Trivest II, Inc., a Florida corporation
("TRIVEST").
1. APPOINTMENT OF TRIVEST. On the terms and subject to the conditions
set forth in this Agreement, the Company appoints Trivest and Trivest accepts
appointment as the sole and exclusive manager of, and consultant to, the
Company's business, including without limitation any subsidiaries of the Company
and any other corporations hereafter formed or acquired by the Company to engage
in any business.
2. BOARD OF DIRECTORS SUPERVISION; CERTAIN ACTIONS SUBJECT TO APPROVAL
OF DISINTERESTED DIRECTORS OR BOARD OBSERVERS.
(a) The activities of Trivest to be performed under this Agreement
shall be subject to the supervision of the Board of Directors of the Company
(the "BOARD") to the extent required by applicable law or regulation and subject
to reasonable policies not inconsistent with the terms of this Agreement adopted
by the Board and in effect from time to time. Where not required by applicable
law or regulation, Trivest shall not require the prior approval of the Board to
perform its duties under this Agreement.
(b) Any determination of the amount of any increase in Base
Compensation in connection with the acquisition of an Additional Business
pursuant to clause (ii) of Section 6(b) below and any compensation arrangement
approved by the Board pursuant to clause (ii) of Section 6(c) below shall, in
order to be effective, require the affirmative approval of a majority of the
Disinterested Directors and, if Trivest Furniture Partners, Ltd., a Florida
limited partnership ("TRIVEST FURNITURE PARTNERS"), is at such time a holder of
any equity securities of the Company, a majority in interest of the holders of
limited partnership interests of Trivest Furniture Partners. For purposes of
this Agreement the term "DISINTERESTED DIRECTORS" shall mean those members of
the Board (if any) who, at the time of such approval, are neither employees of
the Company nor directors, officers or stockholders of Trivest or (subject to
the last sentence of this Section 2(b), any of its affiliates. Nothing herein
shall be deemed to prevent any individual who owns less than five percent in the
aggregate of the equity securities of any class of any issuer whose shares are
registered under '12(b) or 12(g) of the Securities Exchange Act of 1933, as
amended, and are listed or admitted for trading on any United States national
securities exchange or are quoted on the National Association of Securities
Dealers Automated Quotations System, or any similar system of automated
dissemination of quotations of securities prices in common use, from being
deemed to be a Disinterested Director so long as such individual is not a member
of any "control group" (within the meaning of the rules and regulations of the
United States Securities and Exchange Commission) of any such issuer.
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3. AUTHORITY OF TRIVEST. Subject to any limitations imposed by
applicable law or regulation, Trivest shall render management, consulting and
financial services to the Company, which services shall include advice and
assistance concerning any and all aspects of the operations, strategic and
capital planning and financing of the Company and its subsidiaries as needed
from time to time, including conducting relations on behalf of the Company with
accountants, attorneys, financial advisors and other professionals. Trivest will
also make periodic reports to the Company with respect to the services provided
hereunder. Trivest will use its best efforts to cause its employees and agents
to give the Company the benefit of their special knowledge, skill and business
expertise to the extent relevant to the Company's business and affairs. In
addition, Trivest shall render advice and expertise in connection with any
acquisitions or dispositions undertaken by the Company.
4. REIMBURSEMENT OF EXPENSES; INDEPENDENT CONTRACTOR. All obligations
or expenses incurred by Trivest in the performance of its duties under this
Agreement shall be for the account of, on behalf of, and at the expense of the
Company. Trivest shall not be obligated to make any advance to or for the
account of the Company or to pay any sums, except out of funds held in accounts
maintained by the Company nor shall Trivest be obligated to incur any liability
or obligation for the account of the Company without assurance that the
necessary funds for the discharge of such liability or obligation will be
provided. In the event the Company utilizes the services of Trivest's legal
department, then the Company shall promptly reimburse Trivest for such expenses
at prevailing rates. Trivest shall be an independent contractor, and nothing
obtained in this Agreement shall be deemed or construed (i) to create a
partnership or joint venture between the Company and Trivest, or (ii) to cause
Trivest to be responsible in any way for the debts, liabilities or obligations
of the Company or any other party, or (iii) to constitute Trivest or any of its
employees as employees, officers or agents of the Company.
5. OTHER ACTIVITIES OF TRIVEST. The Company acknowledges and agrees
that neither Trivest nor any of Trivest's employees, officers, directors,
affiliates or associates shall be required to devote full time and business
efforts to the duties of Trivest specified in this Agreement, but instead shall
devote only so much of such time and efforts as Trivest reasonably deems
necessary. The Company further acknowledges and agrees that Trivest and its
affiliates are engaged in the business of investing in, acquiring and/or
managing businesses for Trivest's own account, for the account of Trivest's
affiliates and associates and for the account of unaffiliated parties, and
understands that Trivest plans to continue to be engaged in such businesses (and
other business or investment activities) during the term of this Agreement. No
aspect or element of such activities shall be deemed to be engaged in for the
benefit of the Company or any of its subsidiaries nor to constitute a conflict
of interest.
6. COMPENSATION OF TRIVEST.
(a) BASE COMPENSATION. During the term of this Agreement, Trivest shall
receive annually with respect to the management of the business operations of
the Company and its
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subsidiaries (including subsidiaries of subsidiaries), a base cash consulting
and management fee equal to $350,000, payable in advance in equal quarterly
installments (the "BASE COMPENSATION"). The Base Compensation shall be adjusted
annually to reflect any increase from the previous year in the Consumer Price
Index. For purposes of this Agreement, the term "CONSUMER PRICE INDEX" shall
mean the "Consumer Price Index For All Urban Consumers" base year 1982-1984 =
100 for the Southern region, published by the United States Department of Labor,
Bureau of Labor Statistics. The Company acknowledges that the determination of
the amount of the initial Base Compensation payable to Trivest hereunder is
based upon the Company's present business activities.
(b) ADDITIONAL BUSINESS OPERATIONS. In the event that any additional
business operations are acquired by the Company or its subsidiaries after the
date of this Agreement (each an "ADDITIONAL BUSINESS"), then, with respect to
each such Additional Business which has EBITA of $2,000,000 or more, the Base
Compensation shall be increased (as of the date such Additional Business is
acquired) by an amount equal to the greater of (i) $50,000 and (ii) subject to
Section 2(b), above, an amount determined in good faith by Trivest and the Board
prior to the date such Additional Business is acquired. For purposes of this
Agreement, the term "EBITA" shall mean the projected annual earnings before
income taxes, interest expense and amortization of goodwill for each Additional
Business for the fiscal year in which the acquisition of such Additional
Business occurs, as computed in accordance with generally accepted accounting
principles consistently applied with prior years (but excluding from such
computation any purchase adjustments and compensation payable to Trivest as a
result of the terms of this Agreement).
(c) ADDITIONAL INCENTIVE COMPENSATION.
(i) As additional compensation, Trivest shall be entitled to
a one-time fee (the "ADDITIONAL INCENTIVE COMPENSATION") with respect
to (A) any acquisition of a business operation by the Company or its
subsidiaries introduced or negotiated by Trivest or its affiliates, and
(B) any disposition of a business operation by the Company or its
subsidiaries negotiated by Trivest or its affiliates. The Additional
Incentive Compensation shall be paid at the closing of the acquisition
or disposition of any such business operation. The Additional Incentive
Compensation shall be a cash sum equal to the following percentages of
the purchase price (which on acquisitions or dispositions of assets
shall also include the book value of the assumed liabilities, and on
acquisitions or dispositions of stock shall also include liabilities of
the acquired entity that are required to be paid with funds provided by
the Company or any of its subsidiaries in connection with such
acquisition) for the acquisition or disposition:
PURCHASE PRICE PERCENTAGE
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$1 to $10,000,000 3.00%
$10,000,001 to $50,000,000 1.25%
$50,000,001 and over 0.75%
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By way of illustration, an acquisition or disposition with a purchase
price of $60,000,000 would generate Additional Incentive Compensation
of $875,000 (3.00% of the first $10,000,000, 1.25% of the next
$40,000,000 and 0.75% of the remaining $10,000,000). This Section
6(c)(i) shall not apply to any transaction (a "SALE OF THE COMPANY")
which is (x) the sale of all, or substantially all, of the Company's
consolidated assets in any single transaction or series of related
transactions; (y) the sale or issuance, or series of related sales or
issuances, of equity securities of the Company in any single
transaction or series of related transactions which results in any
person or group of affiliated persons (other than affiliates of
Trivest) owning (on a fully-diluted basis) more than 50% of the
Company=s securities having ordinary voting power to elect directors
outstanding at the time of such sale or issuance or such series of
sales and/or issuances; or (z) any merger or consolidation of the
Company with or into another corporation (regardless of which entity is
the surviving corporation) if, after giving effect to such merger or
consolidation, the holders of the Company's securities having ordinary
voting power to elect directors (on a fully-diluted basis) immediately
prior to the merger or consolidation own securities of the surviving or
resulting corporation representing 50% or less of the ordinary voting
power to elect directors of the surviving or resulting corporation (on
a fully-diluted basis). The amount of any fee payable to Trivest in
connection with a Sale of the Company shall be determined pursuant to
the provisions of Section 6(c)(ii) below.
(ii) In the event of any other transaction not in the
ordinary course of business, including a Sale of the Company and any
public or private debt or equity financing or unusual efforts extended
or results obtained by Trivest on behalf or for the benefit of the
Company or its subsidiaries, the Board shall in good faith negotiate
with Trivest to determine a fair compensation arrangement to compensate
Trivest for such matters.
7. TERM. Notwithstanding anything herein to the contrary, this
Agreement shall become effective only upon the consummation of the proposed
merger of Trivest Furniture Corporation with and into the Company, and shall
thereafter remain in effect for a period of 10 years unless terminated earlier
in accordance with the provisions of this Agreement.
8. EARLY TERMINATION.
(a) TERMINATION UPON BREACH. Either the Company or Trivest
may terminate this Agreement in the event of the breach of any of the material
terms or provisions of this Agreement by the other party, which breach is not
cured within 10 business days after notice of the same is given to the party
alleged to be in breach by the other party. In the event this Agreement is
terminated by Trivest because of the breach of any of the material terms or
provisions hereof by the Company, Trivest shall be entitled to recover damages
from the
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Company and shall not be required to mitigate or reduce damages by seeking or
undertaking other management arrangements or business opportunities.
(b) TERMINATION UPON CONSUMMATION OF A SALE OF THE COMPANY.
Trivest's engagement under this Agreement may be terminated by a majority of the
Disinterested Directors (or, if Trivest Furniture Partners is then a holder of
any equity securities of the Company, by a majority in interest of the holders
of limited partnership interests of Trivest Furniture Partners) effective upon
the occurrence of a Sale of the Company. Any such termination shall be
communicated by written notice of Termination to Trivest, which notice shall be
given no sooner than 20 business days prior to and no later than five business
days after the consummation of a Sale of the Company.
9. STANDARD OF CARE. Trivest (including any person or entity acting for
or on behalf of Trivest) shall not be liable for any mistakes of fact, errors of
judgment, for losses sustained by the Company or for any acts or omissions of
any kind (including acts or omissions of Trivest), unless the Company's losses
(including expenses, costs and attorneys' fees) are finally and judicially
determined to have resulted from the gross negligence or willful misconduct of
Trivest.
10. INDEMNIFICATION OF TRIVEST. The Company hereby agrees to indemnify
and hold harmless Trivest and its present and future officers, directors,
affiliates, employees and agents ("Indemnified Parties") to the fullest extent
not prohibited by law as if any of the Indemnified Parties were an officer or
director of the Company and/or its subsidiaries. The Company further agrees to
reimburse the Indemnified Parties on a monthly basis for any cost of defending
any action or investigation (including attorneys' fees and expenses), subject to
an undertaking from such Indemnified Party to repay the Company if such party is
determined not to be entitled to such indemnity.
11. NO ASSIGNMENT. Without the consent of Trivest, the Company shall
not assign, transfer or convey any of its rights, duties or interest under this
Agreement, nor shall it delegate any of the obligations or duties required to be
kept or performed by it hereunder. Without the prior written consent of the
Company, Trivest shall not assign, transfer or convey any of its rights, duties
or interests under this Agreement, nor shall it delegate any of the obligations
or duties required to be kept or performed by it under this Agreement.
12. NOTICES. All notices, demands, consents, approvals and requests
given by either party to the other hereunder shall be in writing and shall be
personally delivered or sent by registered or certified mail, return receipt
requested, postage prepaid, to the parties at the following addresses:
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If to the Company: WinsLoew Furniture, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
If to Trivest: Trivest II, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: General Counsel
Any party may at any time change its respective address by sending written
notice to the other party of the change in the manner hereinabove prescribed.
13. SEVERABILITY. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or enforceable, shall not be affected thereby, and each term
and provision of this Agreement shall be valid and be enforced to the fullest
extent permitted by law.
14. NO WAIVER. The failure of the Company or Trivest to seek redress
for any violation of, or to insist upon the strict performance of, any term or
condition of this Agreement shall not prevent a subsequent act by the Company or
Trivest, which would have originally constituted a violation of this Agreement
by the Company or Trivest, from having all the force and effect of any original
violation. The failure by the Company or Trivest to insist upon the strict
performance of any one of the terms or conditions of the Agreement or to
exercise any right, remedy or elections herein contained or permitted by law
shall not constitute or be construed as a waiver or relinquishment for the
future of such term, condition, right, remedy or election, but the same shall
continue and remain in full force and effect. Except as the Company's rights of
termination are limited herein, all rights and remedies that the Company or
Trivest may have at law, in equity or otherwise upon breach of any term or
condition of this Agreement, shall be distinct, separate and cumulative rights
and remedies and no one of them, whether exercised by the Company or Trivest or
not, shall be deemed to be in exclusion of any other right or remedy of the
Company or Trivest.
15. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto with respect to the matters herein contained and any
agreement hereafter made shall be ineffective to effect any change or
modification, in whole or in part, unless such agreement is in writing and
signed by the party against whom enforcement of the change or modification is
sought.
16. GOVERNING LAWS. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida without reference to the
laws of any other state.
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17. NO THIRD PARTY BENEFICIARY. Except for the parties to this
Agreement and their respective successors and assigns, nothing expressed or
implied in this Agreement is intended, or will be construed, to confer upon or
give any person other than the parties hereto and their respective successors
and assigns any rights or remedies under or by reason of this Agreement;
PROVIDED, HOWEVER, that the provisions of Sections 2(b), 6(b)(ii), 6(c)(ii) and
8(b), above, to the extent that they provide rights which may be exercised by a
majority in interest of the limited partners of Trivest Furniture Partners,
shall be deemed to be for the benefit of Trivest Furniture Partners and its
partners and may be enforced by Trivest Furniture Partners or its partners.
SIGNATURES APPEAR ON FOLLOWING PAGE
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly exercised by their authorized representatives as of the date first above
written.
WINSLOEW FURNITURE, INC.
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, President
TRIVEST II, INC.
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, President
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