1
Exhibit (c)(3)
INVESTORS' AGREEMENT
THIS INVESTORS' AGREEMENT (this "Agreement"), dated the 27th day of
August 1999, is by and among (i) Trivest Furniture Corporation, a Florida
corporation (the "Company," which term shall refer to WinsLoew Furniture, Inc.
upon the consummation of the Merger), (ii) Trivest Furniture Partners, Ltd.
(the "Institutional Investor"), (iii) Trivest Fund II Group, Ltd. (the "Lead
Trivest Investor" and, together with the Institutional Investor, the "Trivest
Investors") and (iv) Xxxxx Xxxxxx, R. Xxxxx Xxxxx, Xxxxxxx X. Xxxx, Xxxxxxx X.
Xxxxxxxxx, Xx. (both in his individual capacity and as the beneficiary of the
Xxxxxxx X. Xxxxxxxxx, Xx. Individual Retirement Account, Account #1238SD,
Community Bank (Blountsville, Alabama), Custodian (the "Xxxxxxxxx XXX"), Xxxx
X. Xxxxxxx, Xxxxx X. Xxxx, Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, M.D., Xxxx X.
Xxxxxxxxx, Brevator X. Xxxxxx, M.D. and Xxxxx X. Xxxxx (collectively, the
"Individual Investors"). The Trivest Investors and the Individual Investors are
collectively referred to herein as the "Investors". Certain other terms are
defined in section 1.
The Investors have agreed to acquire certain securities from the
Company. In consideration of the premises and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged by the
parties hereto, and in order to induce the Investors to purchase such
securities from the Company, the parties hereby agree as follows:
1. Certain Definitions. Capitalized terms used in this Agreement
without definition have the respective meanings ascribed hereto in the
Subscription Agreement (it being agreed that, for purposes of this Agreement,
no amendment to any of such terms shall be effective without the consent of the
requisite parties to this Agreement specified in section 11). In addition, the
following terms have the following respective meanings:
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
"Applicable Percentage" as applied to any holder of Restricted
Securities on any date shall mean a fraction (expressed as a percentage), the
numerator of which is the aggregate number of Restricted Securities to be
transferred by the Lead Trivest Investor and the denominator of which is the
aggregate number of Restricted Securities owned by (and/or purchasable by) the
Lead Trivest Investor; all such calculations shall be on a fully-diluted basis
and carried out to one hundredth of a share and then rounded to the nearest
share.
"Buyer" shall have the meaning specified in section 3.
"Company Common Stock" shall mean the Company's common stock, par
value $.01 per share.
"Company Registration Statement" shall have the meaning specified in
section 5.6.
"Drag Along Notice" shall have the meaning specified in section 3.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2
"Exempt Transfer" shall mean:
(a) any pro rata distribution of Restricted Securities by either
Trivest Investor to its partners (in accordance with their
respective agreements of limited partnership); provided, that
the restrictions contained in this Agreement shall continue
to be applicable to Restricted Securities after any such
transfer; provided, further, that the transferees of such
Restricted Securities have agreed in writing to be bound by
the provisions of this Agreement relating to Restricted
Securities; provided, further, that any such distribution of
Restricted Securities by the Lead Trivest Investor shall
require the consent of a majority in interest of the limited
partners of the Institutional Investor;
(b) any transfer of Restricted Securities by an Individual
Investor to or among such Individual Investor's Family Group
or by will or pursuant to applicable laws of descent and
distribution to an Individual Investor's Family Group;
provided, that the restrictions contained in this Agreement
shall continue to be applicable to Restricted Securities
after any such transfer; provided, further, that the
transferees of such Restricted Securities have agreed in
writing to be bound by the provisions of this Agreement
relating to Restricted Securities;
(c) any transfer to the public pursuant to a registration
effected in accordance with section 5 of this Agreement; or
(d) any transfer made in compliance with sections 3, 4 or 6 of
this Agreement.
"Family Group" shall mean an individual's spouse and lineal
descendants, parents, grandparents and any family limited partnership or trust
or other fiduciary relationship solely for the benefit of such individual
and/or such individual's spouse, parents, grandparents and/or lineal
descendants.
"Indemnified Person" shall have the meaning specified in section 5.
"Merger" shall mean the merger of Trivest Furniture Corporation with
and into WinsLoew Furniture, Inc., which shall be the surviving corporation.
"Notice of Sale" shall have the meaning specified in section 6.
"Notice of Transfer" shall have the meaning specified in section 4.
"Person" shall mean any individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"qualification" or "compliance" shall mean the qualification or
compliance of all Registrable Shares included in any registration pursuant to
section 5 under all applicable blue sky or other applicable securities laws.
2
3
"Qualified Public Offering" shall mean a firm commitment underwritten
public offering of the Company's Common Stock underwritten by a nationally
recognized full-service investment bank pursuant to which the aggregate gross
proceeds received by the Company is at least $20,000,000 at a price per share
of not less than $10.00 (following appropriate adjustment in the event of any
stock dividends, stock split, combination or other similar recapitalization
affecting such shares).
"register", "registered" and "registration" as used in section 5 refer
to a registration effected by filing a registration statement in compliance
with the Securities Act to permit the sale and disposition of the Registrable
Shares and any amendment filed or required to be filed to permit any such
disposition.
"Registrable Shares" shall mean any shares of Company Common Stock
held by the Investors, except that, as to any particular Registrable Shares,
such securities, once issued, shall cease to be Registrable Shares when (a) a
registration statement covering such securities has been declared effective and
such securities have been disposed of pursuant to an effective registration
statement, or (b) such securities have been sold to the public without
registration in accordance with Rule 144 (or any similar provision then in
force) under the Securities Act.
"Registration Expenses" shall mean all fees, expenses and
disbursements related to any registration, qualification or compliance pursuant
to section 5, including, without limitation, all registration, filing, rating
and listing fees, blue sky fees and expenses, printing expenses, reasonable
fees and disbursements of counsel (including, without limitation, the
reasonable fees, expenses and disbursements of one counsel for the holder or
holders of the Registrable Shares), and reasonable expenses of any special
audits incidental to or required by any registration, qualification or
compliance, except that Registration Expenses shall not include any Selling
Expenses.
"Remaining Holders" shall have the meaning specified in section 3.
"Restricted Securities" shall mean all shares of Company Common Stock
and all securities convertible into or exercisable or exchangeable for Company
Common Stock.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subscription Agreement" shall mean the Exchange and Subscription
Agreement dated the date hereof by and among the Company and each of the
Investors named therein, in the form attached hereto as Exhibit A, as amended,
modified or supplemented from time to time.
"Selling Expenses" shall mean all underwriters' discounts, selling
commissions, transfer taxes and other similar expenses (except to the extent
included in Registration Expenses) attributable to the Registrable Shares.
"Subject Securities" shall have the meaning specified in section 6.
"transfer" shall mean any issue, sale, pledge, gift, assignment or
other transfer.
3
4
"Trivest Affiliates" shall mean each of the Trivest Investors and each
other Person that is controlled directly or indirectly by the Persons now or
hereafter controlling directly or indirectly the Trivest Investors.
2. General Restriction on Transfers of Restricted Securities. Any
transfer of Restricted Securities by or to any Investor which is not
consummated in accordance with this Agreement shall be void. The Investors
shall not directly or indirectly transfer (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law)
any interest in or any beneficial interest in any Restricted Securities except
pursuant to an Exempt Transfer; provided, that the Lead Trivest Investor may
not so transfer any Restricted Securities or any interest therein (except
pursuant to clause (a) of the definition of "Exempt Transfer") unless the
Institutional Investor contemporaneously transfers an Applicable Percentage of
the Restricted Securities owned by (and/or purchasable by) the Institutional
Investor at the same per share price and on the same terms and conditions,
subject to the provisions of sections 3 and 4 hereof, as applicable.
3. Drag Along Rights.
(a) If, at any time following the date hereof, the Lead
Trivest Investor shall enter into an agreement to sell, in a single transaction
or a series of transactions, any of the Restricted Securities at the time owned
by (and/or purchasable by) the Lead Trivest Investor to any Person or group of
Persons who are not Affiliates of the Company or any of the Trivest Investors
(the "Buyer") (including, without limitation, a sale of the Company by merger,
consolidation, sale of all or substantially all of its assets, sale of all of
the outstanding Company Common Stock or otherwise), then the Lead Trivest
Investor may require each holder of Restricted Securities (the "Remaining
Holders") to sell all of the Restricted Securities owned by (and/or purchasable
by) such Remaining Holders to the Buyer contemporaneously with the sale by the
Lead Trivest Investor and at the same price per share and on the same terms and
conditions as are applicable to the Restricted Securities to be sold by the
Lead Trivest Investor; provided, that if the Lead Trivest Investor is selling
less than all of Restricted Securities owned by (and/or purchasable by) it,
each Remaining Holder shall sell an Applicable Percentage of the Restricted
Securities owned by (and/or purchasable by) such Remaining Holder; provided,
further, that, notwithstanding anything to the contrary herein, the
Institutional Investor shall not be required in connection with any such
transaction to make any representation or warranty other than those relating to
the Institutional Investor's power and authority to effect such transfer
without contravention of any of its organizational documents or any agreement,
document, instrument, judgment, decree, order, law, statute, rule or regulation
applicable to it or to any of its properties and as to the Institutional
Investor's title to the Restricted Securities to be transferred by it being
free and clear of liens (other than liens created hereby or liens of general
applicability arising under applicable Securities laws); provided, further,
that, notwithstanding anything to the contrary herein, the Institutional
Investor shall be obligated to indemnify the proposed transferee or transferees
upon the same terms and conditions as are applicable to the indemnification
given by the Lead Trivest Investor in connection with such proposed transfer so
long as (i) all indemnification obligations are several, and not joint and
several, among all transferors in proportion to the consideration paid to each
transferor and (ii) the maximum obligation of the Institutional Investor shall
not exceed the net cash proceeds actually received by it as a result of such
transfer. Without limitation as to the foregoing, the Remaining Holders shall
4
5
consent to and raise no objections against such a sale. If such sale is
structured as a merger or consolidation, each Remaining Holder shall waive any
dissenters rights, appraisal rights or similar rights in connection with such
merger or consolidation.
(b) If the Lead Trivest Investor wishes to exercise the right
granted pursuant to section 3(a), the Lead Trivest Investor must give written
notice to such effect to each of the Remaining Holders (a "Drag-Along Notice")
not less than 20 nor more than 60 days prior to the date upon which such sale
is scheduled to close. Each Drag-Along Notice shall (i) specify in reasonable
detail all of the terms and conditions upon which such sale is to occur
(including a description of all consideration payable in connection with the
sale) and (ii) make explicit reference to this section 3 and state that each of
the Remaining Holders is obligated to sell its Restricted Securities pursuant
to such sale. Upon request by any Remaining Holder, the Lead Trivest Investor
and the Company shall provide to each Remaining Holder copies of all
documentation relating to the proposed sale as any such holder may from time to
time reasonably request.
(c) If the Lead Trivest Investor exercises the right granted
pursuant to section 3(a), subject to the consummation of the sale of all
Restricted Securities to the Buyer and subject to compliance with the other
applicable terms of this Agreement and the Subscription Agreements, each of the
Remaining Holders shall promptly take such actions and shall promptly execute
such documents and instruments as shall be necessary and desirable to
consummate the proposed sale.
(d) At the closing of any such sale, each of the Remaining
Holders shall deliver a certificate or certificates, registered in such
holder's name, properly endorsed and with all required transfer stamps, if any,
representing the securities being sold by such holder against delivery of the
applicable consideration from the Buyer.
4. Co-Sale Rights of the Institutional Investor and Individual
Investors with Respects to Transfers by the Lead Trivest Investor.
(a) Subject to section 3, if the Lead Trivest Investor at any
time proposes to transfer any Restricted Securities (other than pursuant to any
other Exempt Transfer by the Lead Trivest Investor), then, as a condition
precedent thereto, the Lead Trivest Investor shall afford the Institutional
Investor and each Individual Investor the right to participate in such transfer
in accordance with this section 4.
(b) The Lead Trivest Investor shall give written notice to
the Institutional Investor and each Individual Investor (a "Notice of
Transfer") not less than twenty (20) nor more than sixty (60) days prior to any
proposed transfer of any such Restricted Securities. Each such Notice of
Transfer shall:
(i) specify in reasonable detail (A) the number and
type of Restricted Securities which the Lead Trivest Investor proposes
to transfer, (B) the identity of the proposed transferee or
transferees of such Restricted Securities, (C) the time within which,
the price per share at which and all other terms and conditions upon
which the Lead Trivest Investor proposes to transfer such Restricted
Securities, (including a description of all consideration payable in
connection with the transfer) and (D) the percentage of the Restricted
5
6
Securities then owned by the Lead Trivest Investor which the Lead
Trivest Investor proposes to transfer to such proposed transferee or
transferees; and
(ii) make explicit reference to this section 4 and
state that the right of the Institutional Investor and each Individual
Investor to participate in such transfer under this section 4 shall
expire unless exercised within fifteen (15) days after receipt of such
Notice of Transfer.
(c) The Institutional Investor and each Individual Investor
shall have the right to transfer to the proposed transferee or transferees that
number of Restricted Securities which is equal to the Applicable Percentage of
the Restricted Securities owned by (and/or purchasable by) such Investor, at
the same price per share and on the same terms and conditions as are applicable
to the proposed transfer by the Lead Trivest Investor; provided, that,
notwithstanding anything to the contrary herein, the Institutional Investor
shall not be required in connection with any such transaction to make any
representation or warranty other than those relating to the Institutional
Investor's power and authority to effect such transfer without contravention of
any of its organizational documents or any agreement, document, instrument,
judgment, decree, order, law, statute, rule or regulation applicable to it or
to any of its properties and as to the Institutional Investor's title to the
Restricted Securities to be transferred by it being free and clear of liens
(other than liens created hereby or liens of general applicability arising
under applicable Securities laws); provided, further, that, notwithstanding
anything to the contrary herein, the Institutional Investor shall be obligated
to indemnify the proposed transferee or transferees upon the same terms and
conditions as are applicable to the indemnification given by the Lead Trivest
Investor in connection with such proposed transfer so long as (i) all
indemnification obligations are several, and not joint and several, among all
transferors in proportion to the consideration paid to each transferor and (ii)
the maximum obligation of the Institutional Investor shall not exceed the net
cash proceeds actually received by it as a result of such transfer.
(d) The Institutional Investor and each Individual Investor
must notify the Lead Trivest Investor, within fifteen (15) days after receipt
of the Notice of Transfer, if such Investor desires to accept such offer and to
transfer any of its Restricted Securities in accordance with this section 4.
The failure of any such Investor to provide such notice within such 15-day
period shall, for the purposes of this section 4, be deemed to constitute a
waiver by such Investor of its right to transfer any of its Restricted
Securities in connection with the proposed transfer described in such Notice of
Transfer. The Lead Trivest Investor shall use all commercially reasonable
efforts to obtain the agreement of the prospective transferee or transferees to
the participation of each Investor electing to participate in such proposed
transfer and shall not consummate any such proposed transfer unless each such
electing Investor is permitted to participate in accordance with the provisions
of this section 4. Neither the Institutional Investor nor any Individual
Investor shall be obligated to transfer any Restricted Securities pursuant to
this section 4. Any and all transfers of Restricted Securities by any such
Investor pursuant to this section 4 shall be made concurrently with the
transfer of Restricted Securities by the Lead Trivest Investor.
(e) Subject to the consummation of the transfer contemplated
by the Notice of Transfer and subject to compliance with the other applicable
terms of this Agreement and the Subscription Agreements, each Investor that
exercises its right granted pursuant to section 4(a) shall promptly take such
6
7
actions and shall promptly execute such documents and instruments as shall be
necessary and desirable to consummate the proposed sale.
(f) At the closing of any such transfer, each Investor which
exercises the right granted pursuant to section 4(a) shall deliver a
certificate or certificates, registered in such Investor's name, properly
endorsed and with all required transfer stamps, if any, representing the
securities being sold by such Investor against delivery of the applicable
consideration by the proposed transferee.
(g) Notwithstanding anything to the contrary contained in
this section 4, no Individual Investor shall have any rights pursuant to this
section 4 to participate in any other Exempt Transfer by either Trivest
Investor.
5. Registration Rights.
5.1 Incidental Registration.
(a) If, after a Qualified Public Offering, the Company at any
time or from time to time shall determine to effect the registration,
qualification and/or compliance of any of its equity securities (otherwise than
pursuant to a registration on a form inappropriate for an underwritten public
offering or relating solely to securities to be issued in a merger, acquisition
of the stock or assets of another entity or in a similar transaction or
relating solely to securities issued or to be issued under any employee stock
option or purchase plan), then, in each such case, the Company shall:
(i) promptly give written notice of the proposed
registration, qualification and/or compliance (which shall include a
list of the jurisdictions in which the Company intends to register or
qualify such securities under the applicable blue sky or other
securities laws) to each holder of any Registrable Shares; and
(ii) use all commercially reasonable efforts to
include among the securities which it then registers or qualifies all
Registrable Shares specified by any holder thereof in a written
request or requests, made within 30 days after receipt of such written
notice from the Company; provided, however, that the Company shall not
include the Registrable Shares of the Lead Trivest Investor unless it
includes Registrable Shares of both Trivest Investors, pro rata based
upon the number of Registrable Shares owned by such holders.
(b) The obligations of the Company under this section 5.1 are
subject to the following qualifications:
(i) subject to section 5.8, the Company shall pay
all Registration Expenses related to any registration, qualification
and/or compliance requested pursuant to this section 5.1 and the
holders of the Registrable Shares shall pay their respective Selling
Expenses pro rata on the basis of the Registrable Shares so registered
and sold; and
7
8
(ii) in the event that any registration pursuant to
this section 5.1 shall be, in whole or in part, an underwritten public
offering of Company Common Stock, the number of Registrable Shares to
be included in such an underwriting may be reduced (pro rata among the
requesting holders based upon the number of Registrable Shares owned
by such holders) if and to the extent that the managing underwriter
shall be of the opinion that the inclusion of some or all of the
Registrable Shares would adversely affect the marketing of the
securities to be sold by the Company therein; provided, that any such
limitation shall be imposed in such manner so as to avoid any
diminution in the number of shares the Company may register for sale
by (i) giving first priority for the shares to be registered for
issuance and sale by the Company, (ii) giving second priority for the
shares to be registered pursuant to this section 5.1 and (iii) giving
third priority for other securities requested to be in such
registration not covered by clauses (i) or (ii) above.
5.2 S-3 Registration. In addition to the rights under section
5.1, so long as the Company is then eligible to file a registration statement
on Form S-3 (or any successor form) under the Securities Act, then, upon the
written request by the holder or holders of at least 20% of the Registrable
Shares, the Company shall use all commercially reasonable efforts to effect the
registration (on such Form S-3 (or any successor form)), qualification and
compliance of all of the Registrable Shares of the holder or holders making
such request; provided, that the Company shall not be obligated to effect any
such registration unless the reasonably anticipated price to the public of the
Registrable Shares to be registered and sold pursuant thereto exceeds
$2,000,000; provided, however, that the Company shall not include the
Registrable Shares of the Lead Trivest Investor unless it includes Registrable
Shares of both Trivest Investors, pro rata based upon the number of Registrable
Shares owned by such holders. The Company shall not be obligated to effect more
than three (3) registrations pursuant to this section 5.2, nor shall it be
obligated to effect any registration requested pursuant to this section 5.2
within one hundred eighty (180) days after the effective date of any
registration in which the holders of Registrable Shares shall have been
permitted to fully participate under section 5.1. Subject to section 5.8, the
Company shall pay all Registration Expenses related to each such registration,
qualification and compliance contemplated by this section 5.2, and the holders
of the Registrable Shares shall pay their respective Selling Expenses pro rata
on the basis of the Registrable Shares so registered and sold.
5.3 Registration Procedures. In the case of each
registration, qualification and/or compliance contemplated by this section 5,
the Company shall keep the holder or holders of Registrable Shares advised in
writing as to the initiation of proceedings for such registration,
qualification and compliance and as to the completion thereof, and shall advise
each such holder, upon request, of the progress of such proceedings. In
addition, the Company shall follow procedures customarily observed by issuers
in public offerings, and accord to the holder or holders of Registrable Shares
all rights (including, without limitation, the right to perform appropriate
"due diligence") customarily accorded to selling shareholders in secondary
distributions and accord such rights to the managing underwriters if the
transaction in question is an underwritten public offering. At the expense of
the Company or of the party or parties bearing the expenses of such
registration, qualification and compliance, the Company shall (a) use all
commercially reasonable efforts to keep such registration, qualification and
compliance current and effective by such action as may be necessary or
appropriate, including, without limitation, the filing of post-effective
8
9
amendments and supplements to any registration statement or prospectus, for
such period (not to exceed one hundred eighty (180) days in the case of section
5.1 and ninety (90) days in the case of section 5.2) as is necessary to permit
the sale and distribution of the Registrable Shares pursuant thereto, (b) use
all commercially reasonable efforts to take all necessary action under any
applicable blue sky or other applicable securities law to permit such sale
and/or distribution, all as reasonably requested by the holder or holders of
Registrable Shares included therein, and comply with applicable requirements of
all regulatory entities, provided, that the Company shall not be required to so
register or qualify the Registrable Shares in any jurisdiction if, solely as a
result thereof, the Company must qualify generally to do business therein,
consent to general service of process therein, or submit to liability for state
or local taxes, (c) furnish each holder of Registrable Shares included therein
such number of registration statements, prospectuses, supplements, amendments,
and offering circulars as such holder from time to tie may reasonably request,
(d) use all commercially reasonable efforts to list all Registrable Shares on
each securities exchange on which securities of the same class are then listed
and (e) use all commercially reasonable efforts to furnish (or cause to be
furnished) to the managing underwriters all undertakings, agreements,
certificates, opinions, financial statements and "comfort letters" of the sort
customarily provided to managing underwriters, if the transaction in question
is an underwritten public offering. In connection with and as a condition to
each registration hereunder, the sellers of Registrable Shares shall (a)
provide such information and execute such documents as may reasonably be
required in connection with such registration, (b) agree to sell Registrable
Shares on the basis provided in any underwriting arrangements, and (c) complete
and execute all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required or requested under the terms
of such underwriting arrangements. In connection with each registration
pursuant to section 5.1 covering an underwritten public offering, the Company
and each seller agree to enter into a written agreement with the managing
underwriter in such form and containing such provisions as are customary in the
securities business for such an arrangement between such underwriter and
companies of the Company's size and investment stature.
5.4 Indemnification.
(a) The Company shall indemnify, defend and hold harmless
each holder of Registrable Shares included in any registration, qualification
or compliance contemplated by this section 5 and each Person, if any, who
controls each such holder within the meaning of applicable securities laws, and
their respective directors, officers, employees, agents, advisors and
Affiliates (each, an "Indemnified Person"), to the fullest extent enforceable
under applicable law against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, supplement, amendment or offering circular related to
any registration, qualification or compliance or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation (or
alleged violation) of applicable securities laws in connection with any such
registration, qualification or compliance, and shall reimburse each such
Indemnified Person for any legal or any other expenses reasonably incurred in
connection with investigating and/or defending (and/or preparing for any
investigation or defense of) any such claim, loss, damage, liability, action or
violation; provided, that the Company shall not be liable in any such case to
any such Indemnified Person if, but only to the extent that, any such claim,
loss, damage, liability, action, violation or expense arises out of or is based
upon any untrue statement or alleged untrue statement in or omission or alleged
9
10
omission if so made in reliance upon and in conformity with written information
furnished to the Company by such Indemnified Person specifically for use
therein; provided, further, however, that the Company shall not be liable to an
Indemnified Person in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue or alleged
untrue statement or omission or an alleged omission made in any preliminary
prospectus or final prospectus if (1) such Indemnified Person failed to send or
deliver a copy of the final prospectus or prospectus supplement with or prior
to the delivery of written confirmation of the sale of the Registrable Shares,
and (2) the final prospectus or prospectus supplement would have corrected such
untrue statement or omission.
(b) Each holder of Registrable Shares shall, if securities
held by such holder are included in a registration, qualification or compliance
contemplated pursuant to this section 5, indemnify, defend and hold harmless
the Company, each of its directors and officers and each Person, if any, who
controls the Company or such underwriter within the meaning of applicable
securities laws, and their respective directors, officers, employees, agents,
advisors and Affiliates, to the fullest extent enforceable under applicable law
against all claims, losses, damages and liabilities (or actions in respect
thereto) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, supplement, amendment or offering circular related to any such
registration, qualification or compliance, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
the Company and such directors, officers or other Persons for any legal or any
other expenses reasonably incurred in connection with investigating or
defending (and/or preparing for any investigation or defense of') any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) was made in (or omitted from) such registration
statement, prospectus, supplement, amendment or offering circular in reliance
upon and in conformity with written information furnished to the Company by
such holder specifically for use therein; provided, that the aggregate
liability of any such holder under this section 5.4 shall be limited to the net
sales proceeds actually received by such holder as a result of the sale by it
of securities in such registration, qualification or compliance.
(c) Promptly after receipt by an indemnified party under this
section 5.4 of notice of the commencement of any action, such party shall, if a
claim in respect thereof is to be made against the indemnifying party under
this section 5.4, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve the indemnifying
party from any liability which it may have to such indemnified party except to
the extent the indemnifying party is prejudiced by such omission. In case any
such action shall be brought against any indemnified party and such indemnified
party shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
part, under this section 5.4 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof, provided, that,
if the defendants in any such action include both the indemnified party and the
10
11
indemnifying party and the indemnified party shall have reasonably concluded
(based upon the advice of counsel) that there may be reasonable defenses
available to it that are different from or additional to those available to the
indemnifying party or if the interests of the indemnified party reasonably may
be deemed to conflict with the interests of the indemnifying party, then the
indemnified party shall have the right to select one separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such one separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel as required by the local rules of such jurisdiction) at any time for
all such indemnified parties.
(d) To provide for just and equitable, contribution to joint
liability under the Securities Act in any case in which (i) an indemnified
party makes a claim for indemnification pursuant to this section 5.4 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this section 5.4 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of the Company, any selling holder of Registrable
Securities, any director or officer of the Company or any controlling person
(within the meaning of applicable securities laws) of any of the foregoing
Persons in circumstances for which indemnification is provided under this
section 5.4, then, and in each such case, the Company and such selling holder
shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others) as is appropriate to
reflect the relative fault of the Company and such holder in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as the relative benefit received by the Company and such
holder as a result of the offering in question, it being understood that the
parties acknowledge that the overriding equitable consideration to be given
effect in connection with this provision is the ability of one party or the
other to correct the statement or omission which resulted in such losses,
claims, damages or liabilities, and that it would not be just and equitable if
contribution pursuant thereto were to be determined by pro rata allocation or
by any other method of allocation which does not take into consideration the
foregoing equitable considerations; provided, that (x) in any such case no
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation, and (y) in no event
shall any, holder of Registrable Shares be obligated to make any contribution
in excess of the amount specified in section 5.4(b).
5.5 Restrictions on Other Agreements. The Company shall not
grant any right relating to the registration, qualification or compliance of
its securities if the exercise thereof violates or is inconsistent with any of
the rights granted under this section 5, without the written consent of each
Trivest Investor, which consent may be given or withheld in the sole discretion
of such holders. The Company shall not permit any of its Subsidiaries to
effect, or to grant any right relating to, the registration of its securities.
11
12
5.6 Limitations on Registration Rights.
(a) Notwithstanding anything to the contrary contained in
this Agreement, the Company may delay the filing or effectiveness of a
registration statement under section 5.2 for such time as may reasonably be
required by the Company (i) to obtain such audited and unaudited financial
statements as may be required by law to be included in the registration
statement; provided, that the Company shall use all commercially reasonable
efforts to obtain such financial statements as promptly as practicable, or (ii)
if the Company's board of directors believes that the offering of Registrable
Shares pursuant thereto would have a material adverse effect upon the Company;
provided, further, however, that the Company's ability to delay such
registration shall be limited to durations of no longer than one hundred eighty
(180) days and the Company shall not delay more than once during any twelve
(12) month period.
(b) Notwithstanding anything to the contrary contained in
this Agreement, the Company may delay the filing or effectiveness of, or may
terminate or withdraw, any registration statement referred under section 5.1 at
any time for any reason whatsoever without incurring any liability to the
holders of Registrable Shares, but the Company shall be and remain obligated to
pay all Registration Expenses, if any, incurred in connection therewith.
(c) If during any period when a registration statement
covering Registrable Shares filed pursuant to section 5.2 is effective, Company
proposes to file a registration statement on Forms S-1 or S-4 (or any of their
respective successor forms), then the Company shall have the right to terminate
the effectiveness of the registration statement covering such Registrable
Shares; provided, that the Company shall, within ninety (90) days thereof,
prepare and file a registration statement (the "Company Registration
Statement") covering the Registrable Shares sought to be registered by the
Company and the Registrable Shares for which such effective registration
statement was filed. In any such event, the participating holders shall include
such Registrable Shares in or with the Company Registration Statement. If the
Company does not file a Company Registration Statement within such ninety (90)
day period, then the holders shall have one additional right to require a
registration under section 5.2.
5.7 Holdback Agreement.
(a) In addition to any other restrictions on transfer of the
Registrable Shares contained in this Agreement, if the Company shall at any
time register securities under the Securities Act (including, without
limitation, any registration relating to a Qualified Public Offering or any
registration pursuant to this section 5) for offer or sale to the public, then
none of the holders of Registrable Shares shall make any short sale of, grant
an option for the transfer of, or otherwise transfer, any Registrable Shares
(other than (i) for the public sale of those Registrable Shares included in and
sold pursuant to such registration in accordance with this section 5 or (ii) in
a private sale complying with this Agreement to transferee who agrees to the
restrictions in this section 5.7(a)) without the prior written consent of the
Company for such reasonable period (but in no event longer than 180 days
following the effective date of the related registration statement) as may be
designated in writing to the holders of Registrable Shares by the Company, or,
if the registration shall be, in whole or in part, an underwritten offering, by
the managing underwriter; provided, that, in each case (except as set forth in
the following proviso), all of the Investors are subject to the same
12
13
restrictions; provided, further, that, after the Company's initial public
offering, the foregoing provisions of this section 5.7(a) shall only apply to a
holder of Registrable Shares that (A) is offering Registrable Shares for sale
to the public in connection with such registration or (B) beneficially owns (as
that term is used in Rule 13d-3 promulgated under the Exchange Act) five
percent or more of the outstanding shares of Company Common Stock.
(b) In addition to the restriction contained in section
5.7(a), each holder of Registrable Shares shall execute any restrictive
agreement or "lock-up" agreement that any underwriter engaged by the Company in
connection with any underwritten public offering shall request; provided, that
(i) the restrictive or "lock-up" period thereunder is not more than one hundred
eighty (180) days after the effective date of the registration statement for
which such restrictive agreement or "lock-up" agreement is sought and (ii),
except as set forth in the following proviso, all of the Investors are subject
to the same restrictions; provided, further, that, after the Company's initial
public offering, the foregoing provisions of this section 5.7(b) shall only
apply to a holder of Registrable Shares that (A) is offering Registrable Shares
for sale to the public in the offering or (B) beneficially owns (as that term
is used in Rule 13d-3 promulgated under the Exchange Act) five percent or more
of the outstanding shares of Company Common Stock.
(c) The Company may impose stop-transfer instructions with
respect to the Registrable Shares until the end of any restrictive period
provided for pursuant to this section 5.7.
5.8 Registration Expenses and Selling Expenses. The Company
shall pay all Registration Expenses related to any registration, qualification
and/or compliance contemplated by this Agreement, except (i) to the extent that
such Registration Expenses relate to any Registrable Shares requested to be
included in any registration proceeding pursuant to section 5.1, the request of
which has been withdrawn by the holders of a majority of the Registrable Shares
requested to be so registered, or (ii) for those related exclusively to a
registration proceeding begun pursuant to section 5.2, the request of which has
been subsequently withdrawn by the holders of a majority of the Registrable
Shares requested to be registered, in either of which cases, such Registration
Expenses shall be borne by the holders of Registrable Shares requesting or
causing such withdrawal, and, in any such case, such holders shall reimburse
the Company for all Registration Expenses paid or incurred by the Company in
connection with such withdrawn registration proceeding prior to such
withdrawal.
5.9 Changes in Company Common Stock. If, and as often as,
there is any change in the Company Common Stock by way of a stock split, stock
dividend, combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Company Common
Stock as so changed.
5.10 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Securities and Exchange
Commission that may at any time permit the resale of the Registrable Shares
without registration, the Company will at all times after 90 days after the
first registration statement covering a public offering of securities of the
Company under the Securities Act shall have become effective or following
registration under Section 12 of the Exchange Act, use its commercially
13
14
reasonable efforts to: (i) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act; (ii)
file with the Securities and Exchange Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and (iii) furnish to each holder of Registrable Shares forthwith
upon request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Registrable Shares without
registration.
6. Right of First Offer.
(a) At least sixty (60) days prior to making any transfer
(other than pursuant to another Exempt Transfer), each Individual Investor
shall deliver a written notice (the "Notice of Sale") to the Company and the
other Investors. The Notice of Sale shall disclose in reasonable detail the
identity of the prospective transferees) and the terms and conditions of the
proposed transfer. The Company shall use all commercially reasonable efforts to
purchase all (but not less than all) of the Restricted Securities to be
transferred (the "Subject Securities") upon the same terms and conditions as
those set forth in the Notice of Sale within sixty (60) days after the
Company's receipt of the Notice of Sale. If, after all commercially reasonable
efforts, the Company is unable to effect such purchase during such sixty (60)
day period, then the Company shall deliver a written notice thereof to each
Investor within seventy (70) days after the Company's receipt of the Notice of
Sale. Upon receipt of such notice from the Company, the Lead Trivest Investor
and the other Individual Investors may elect to purchase all (but not less than
all) of the Subject Securities upon the same terms and conditions as those set
forth in the Notice of Sale by delivering a written notice of such election to
the Investor within sixty (60) days after their receipt of the Company's
notice. If more than one of such Investors elects to purchase all of the
offered shares, such shares shall be purchased by such Investors so electing
pro rata based upon the number of shares of Common Stock owned by each such
Investor. Each such Investor shall be given up to sixty (60) days (after it has
been determined that such Investor has such right) to consummate the purchase
and sale of Subject Securities (the "Authorization Period"). If neither any
Individual Investor nor the Lead Trivest Investor has elected to purchase all
of the Subject Securities, then the selling Investor may transfer the Subject
Securities at a price and on terms no more favorable to the transferee(s)
thereof than specified in the Notice of Sale during the sixty (60) day period
immediately following the Authorization Period. Any Subject Securities not
transferred within such sixty (60) day period shall be subject to the
provisions of this section 6(a) upon subsequent transfer.
(b) The restrictions on the transfer set forth in this
section 6 shall continue with respect to each share of Restricted Securities
until the date on which such share has been transferred in a transaction
permitted by this section 6; provided, however, that each such share shall
continue to be subject to all other provisions of this Agreement.
7. Board Observation Rights. The Company shall permit all individuals
designated by the Trivest Investors, including pursuant to Section 5.4J of the
Institutional Investor's agreement of limited partnership, to have the
following rights: (i) to attend (without voting rights, unless such party is
14
15
otherwise a director) all meetings of the Company's Board of Directors; and
(ii) to receive copies of all meeting minutes and all materials distributed at
or prior to meetings or otherwise distributed to the directors of the Company,
subject to the obligation to maintain the confidentiality of the discussions
and resolutions of such meetings and all materials circulated thereat or in
connection therewith, provided, however, that such individuals shall be
permitted to share such information with the Trivest Investors, their limited
partners and their respective authorized representatives and with other holders
of Company Common Stock.
8. Stock Option Plans. The Company shall not create or adopt any
employee stock option or stock appreciation rights plan or arrangement prior to
a Qualified Public Offering; provided, however, that this section 8 shall
terminate effective upon the consummation of a Qualified Public Offering and
shall not be deemed to prohibit any such plan or arrangement from becoming
effective upon the consummation of a Qualified Public Offering; provided,
further, that nothing herein shall be deemed to prohibit the Company from (i)
issuing Company Common Stock to employees and independent sales representatives
of the Company and its subsidiaries under the 1999 WinsLoew Key Employee Equity
Plan or (ii) issuing Company Common Stock in any other transaction for fair
market value as determined by the Company's board of directors from time to
time; provided, further, that the consideration for the issuance of the Common
in both (i) and (ii) shall consist solely of cash and/or promissory notes of
the purchaser thereof.
9. Affiliated Transactions; Limitation on Fees Payable to Trivest.
(a) Subject to the provisions of Section 9(b), below, the
Company will not, and will not permit any of its subsidiaries to, engage in any
transaction (including, without limitation, the purchase, sale or exchange of
any properties and assets or the rendering of any services or the payment of
compensation) with an Affiliate of the Company or of any of its subsidiaries on
terms less favorable to the Company or any of its subsidiaries in any material
respect than would be obtainable at the time in comparable transactions with a
Person that is not such an Affiliate.
(b) The Company shall not, and shall not permit any of its
subsidiaries to, make any payment of any directors fee, management fee or
similar amount to the Lead Trivest Investor or any of its Affiliates; provided,
however, that:
(i) the Company may pay to Trivest II, Inc.
management fees, transaction fees and other amounts (including the
reimbursement of reasonable out-of-pocket expenses) required or
permitted to be paid pursuant to the Management Agreement, dated as of
the date hereof, between the Company and Trivest II, Inc. (as in
effect on the date of this Agreement), a copy of which is attached to
this Agreement as Exhibit B;
(ii) the Company or any of its subsidiaries may
reimburse Trivest II, Inc. for the allocable charges (including the
reimbursement of reasonable out-of-pocket expenses) of the Trivest
Legal Department for services actually rendered to the Company and its
subsidiaries, provided that such charges are at rates no less
favorable to the Company than rates which would be charged for similar
services rendered by persons who are not Affiliates of the Company or
the Lead Trivest Investor; and
15
16
(iii) the Company may pay to Trivest II, Inc., at or
promptly following the effective time of the Merger, a transaction fee
of no more than $3.0 million and may reimburse Trivest II, Inc. and
its Affiliates for (i) reasonable out-of-pocket expenses incurred by
them in connection with the Merger (including, without limitation, the
financing thereof) and (ii) allocable charges (including the
reimbursement of reasonable out-of-pocket expenses) of the Trivest
Legal Department for services actually rendered in connection with the
Merger (including, without limitation, the financing thereof and any
litigation arising in connection therewith), provided that such
charges are at rates no less favorable to the Company than rates which
would be charged for similar services rendered by persons who are not
Affiliates of the Company or the Lead Trivest Investor.
10. Termination. Notwithstanding anything to the contrary contained in
this Agreement, sections 2, 3, 4, 6, 7 and 9 of this Agreement shall terminate
after a Qualified Public Offering upon the liquidation of the Institutional
Investor in accordance with its agreement of limited partnership.
11. Notices. All communications provided for herein shall be in
writing and sent (a) by telecopy or electronic mail if the sender on the same
day sends a confirming copy of such communication by a recognized overnight
delivery service (charges prepaid), (b) by a recognized overnight delivery
service (charges prepaid), or (c) by messenger. The respective addresses of the
parties hereto for the purposes of this Agreement are set forth on the
signature pages or Exhibit C attached hereto. Any party may change its address
(or telecopy number) by notice to each of the other parties in accordance with
this section 11. Communications under this Agreement shall be deemed given only
when actually received.
12. Binding Agreement. This Agreement shall be binding on and shall
inure to the benefit of each of the parties hereto and their respective
successors and assigns.
13. Amendments and Waivers. This Agreement may not be amended except
by a written instrument signed by the Company and each Trivest Investor;
provided, that no amendment or waiver may adversely affect an Individual
Investor in a manner different from any other Trivest Investor without the
written consent of such Individual Investor. No course of dealing between any
parties hereto and no delay by any party in exercising its rights hereunder
shall operate as a waiver of any, rights of any party. No waiver shall be
deemed to be made by any party of its rights hereunder unless the same shall be
in writing signed on behalf of such party, and each waiver, if any, shall be a
waiver only with respect to the specific instance involved and shall in no way
impair the rights or obligations of any other party in any other respect at any
other time.
14. Specific Performance. The parties hereto stipulate that the
remedies at law of any party hereto in the event of any default or threatened
default by any other party hereto in the performance of or compliance with the
terms hereof are not and shall not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance thereof, whether by an injunction against violation
thereof or otherwise.
15. Legends. No Restricted Securities held by the parties hereto may
be transferred except pursuant to a registration under applicable securities
16
17
laws or pursuant to an exemption from such registration. Until the date on
which such Restricted Securities are so registered, each certificate evidencing
the same shall bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
APPLICABLE SECURITIES LAW AND MAY NOT BE TRANSFERRED IN THE
ABSENCE OF REGISTRATION THEREUNDER OR AN EXEMPTION
THEREFROM."
So long as any Restricted Securities held by the parties hereto shall be
subject to the terms of this Agreement, all certificates evidencing the same
shall bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS
OF THE INVESTORS' AGREEMENT DATED AUGUST 27, 1999 AMONG THE
ISSUER HEREOF AND CERTAIN OTHER PERSONS, AS AMENDED, MODIFIED
AND SUPPLEMENTED FROM TIME TO TIME. COPIES OF SUCH AGREEMENT
ARE ON FILE AT THE ISSUER'S PRINCIPAL OFFICES AND, UPON
WRITTEN REQUEST, COPIES THEREOF SHALL BE MAILED WITHOUT
CHARGE WITHIN TEN DAYS OF RECEIPT OF SUCH REQUEST TO
APPROPRIATELY INTERESTED PERSONS."
Upon receipt from any holder of any Restricted Securities by the Company of an
opinion of counsel reasonably satisfactory to it to the effect that any of the
foregoing legends are no longer required or applicable, the Company shall
reissue the certificates evidencing the applicable Restricted Securities
without such legends.
16. Governing Law: Jurisdiction; Waiver of Jury Trial. This Agreement,
including the validity hereof and the rights and obligations of the parties
hereunder, and all amendments and supplements hereof and all waivers and
consents hereunder, shall be construed in accordance with and governed by the
domestic substantive laws of the State of Florida without giving effect to any
choice of law or conflicts of law provision or rule that would cause the
application of the domestic substantive laws of any other jurisdiction. Each of
the parties hereto, to the extent that it may lawfully do so, hereby consents
to service of process, and to be sued, in the State of Florida and consents to
the jurisdiction of the courts of the State of Florida and the United States
District Court sitting in the County of Miami-Dade, as well as to the
jurisdiction of all courts to which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising out of any of
its obligations hereunder or with respect to the transactions contemplated
hereby, and expressly waives any and all objections it may have as to venue in
any such courts. Each of the parties hereto further agrees that a summons and
complaint commencing an action or proceeding in any of such courts shall be
properly served and shall confer personal jurisdiction if served personally or
by certified mail to it at its address referred to in section 11 or as
otherwise provided under the laws of the State of Florida. Notwithstanding the
foregoing, each of the parties hereto agrees that nothing contained in this
section 16 shall preclude the institution of any such suit, action or other
17
18
proceeding in any jurisdiction other than the State of Florida. EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT,
ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST IT IN RESPECT OF ITS
OBLIGATIONS HEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY.
17. Miscellaneous. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof. This
Agreement embodies the entire agreement and understanding among the parties
hereto relating to the subject matter hereof and supersedes all prior
agreements and understandings relating to the subject matter hereof. Each
covenant contained herein shall be construed (absent an express provision to
the contrary) as being independent of each other covenant contained herein, so
that compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with any other covenant. If
any provision in this Agreement refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision
shall be applicable, whether such action is taken directly or indirectly by
such Person. In case any provision in this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired hereby. This Agreement
may be executed in any number of counterparts and by the parties hereto or
thereto, as the case may be, on separate counterparts but all such counterparts
shall together constitute but one and the same instrument.
[The remainder of this page is intentionally left blank.]
18
19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above written.
TRIVEST FURNITURE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx, Xx.
-----------------------------------------------
Xxxxxxx X. Xxxxxxxxx, Xx., Vice President
TRIVEST FUND II GROUP, LTD.
By: Trivest Equities, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxx, Xx.
------------------------------------------
Xxxxxxx X. Xxxxxxxxx, Xx., Managing Director
TRIVEST FURNITURE PARTNERS, LTD.
By: TFP, Ltd.
By: Trivest II, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxx, Xx.
-------------------------------------------
Xxxxxxx X. Xxxxxxxxx, Xx., Managing Director
/s/ Xxxxx Xxxxxx
---------------------------------------------------
Xxxxx Xxxxxx
/s/ R. Xxxxx Xxxxx
---------------------------------------------------
R. Xxxxx Xxxxx
/s/ Xxxxxxx X. Xxxx
---------------------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxxxx X. Xxxxxxxxx, Xx.
---------------------------------------------------
Xxxxxxx X. Xxxxxxxxx, Xx. (individually and as
beneficial owner of the Xxxxxxxxx XXX)
/s/ Xxxx X. Xxxxxxxx
---------------------------------------------------
Xxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxx
---------------------------------------------------
Xxxxx X. Xxxx
/s/ Xxxx X. Xxxxxx
---------------------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx, M.D.
---------------------------------------------------
Xxxxxxx X. Xxxxxx, M.D
/s/ Brevator X. Xxxxxx, M.D.
---------------------------------------------------
Brevator X. Xxxxxx, M.D.
/s/ Xxxxx Xxxxx
---------------------------------------------------
Xxxxx Xxxxx
/s/ Xxxx X. Xxxxxxxxx
---------------------------------------------------
Xxxx X. Xxxxxxxxx
20
EXHIBIT A
SUBSCRIPTION AGREEMENT
See attached
21
EXCHANGE AND SUBSCRIPTION AGREEMENT
THIS EXCHANGE AND SUBSCRIPTION AGREEMENT (this "Agreement") is made as
of August 27, 1999, by and among Trivest Furniture Corporation, a Florida
corporation (the "Company," which term shall refer to WinsLoew Furniture, Inc.,
a Florida corporation ("WinsLoew"), upon the consummation of the merger of
Trivest Furniture Corporation with and into WinsLoew), and the investors
identified on the schedule attached hereto (collectively, the "Investors," and
each individually, an "Investor").
PRELIMINARY STATEMENTS:
A. Certain of the Investors desire to exchange certain shares of
WinsLoew's common stock, $.01 par value per share ("WinsLoew Common Stock"),
held by them for shares of the Company's common stock, $.01 par value per share
("Company Common Stock"), on the terms and subject to the conditions set forth
in this Agreement.
B. Certain of the Investors desire to purchase shares of Company
Common Stock in exchange for cash in the amount of $100 per share on the terms
and subject to the conditions set forth in this Agreement.
C. The Company desires to issue the Company Common Stock to the
Investors.
D. The Company and the Investors desire to enter into this Agreement
setting forth the terms and conditions relating to the acquisition of Company
Common Stock by the Investors.
E. Contemporaneously with the execution and delivery of this
Agreement, the Company and each Investor are executing and delivering an
Investors' Agreement that will restrict the Investors' ability to transfer the
Company Common Stock acquired hereunder and create certain other rights and
obligations in respect thereof.
F. The transactions contemplated hereby are intended to qualify as a
transaction described in Section 351 of the Internal Revenue Code of 1986, as
amended.
AGREEMENT:
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Exchange of WinsLoew Common Stock. Each Investor whose name appears
on Schedule A hereto hereby sells, transfers, conveys, assigns and contributes
to the Company that number of shares of WinsLoew Common Stock set forth beside
such Investor's name on Schedule A hereto, free and clear of all encumbrances.
Each such Investor has heretofore delivered or shall deliver to the Company a
certificate or certificates representing the shares of WinsLoew Common Stock
transferred by such Investor to the Company hereunder, duly endorsed in blank
or accompanied by stock powers duly executed in blank, in form and substance
satisfactory to the Company to effect such transfer. In exchange for the shares
of WinsLoew Common Stock transferred to the Company hereunder, the Company
shall issue and deliver to each such Investor a certificate or certificates for
-1-
22
the number of shares of Company Common Stock set forth beside such Investor's
name on Schedule A hereto, which shares shall be validly issued, fully paid and
nonassessable.
2. Purchase of Company Common Stock. Each Investor whose name appears
on Schedule B hereto hereby subscribes for and agrees to purchase, concurrently
with the execution and delivery of this Agreement by such Investor, and the
Company hereby agrees to issue and sell to such Investor, the number of shares
of Company Common Stock set forth beside such Investor's name on Schedule B
hereto, for the aggregate purchase price set forth on Schedule B (the
"Subscription Price"). Each such Investor has heretofore delivered or shall
deliver to the Company immediately available funds in an amount equal to the
Subscription Price for such shares. In exchange for payment of the Subscription
Price hereunder, the Company shall issue and deliver to each such Investor a
certificate or certificates for the number of shares of Company Common Stock
set forth beside such Investor's name on Schedule B hereto, which shares shall
be validly issued, fully paid and nonassessable.
3. Representations and Warranties.
(a) Representations and Warranties of the Company. The
Company hereby represents and warrants to the Investors as follows:
(i) Organization, Power and Authority. The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Florida. The Company has full corporate power and
authority to carry on the business in which it is engaged and to own and use
the property owned and used by it.
(ii) Authorization of Transaction. The Company has
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Company, enforceable in accordance with its
terms.
(iii) Capitalization. The authorized capital stock
of the Company consists of 1,000,000 shares of Company Common Stock, none of
which are outstanding prior to the exchange, purchase and sale of the shares of
Company Common Stock provided for herein. Upon the consummation of the
transactions contemplated by Sections 1 and 2 above, the shares of Company
Common Stock acquired by each Investor pursuant to the provisions of this
Agreement will be duly authorized, validly issued, fully paid and
nonassessable.
(b) Representations and Warranties of Investors. Each
Investor, severally and not jointly, hereby represents and warrants to the
Company with respect to such Investor and its exchange or purchase of shares of
Company Common Stock as follows:
(i) Residence. If the Investor is a natural person,
the Investor a resident of, and received this Agreement and first learned of
the offer and sale of the shares of Company Common Stock contemplated hereby
in, the State set forth opposite the name of such Investor under the heading
"State" on Schedule A or Schedule B attached hereto, as the case may be. The
Investor intends that the laws of such State govern the acquisition of such
shares by the Investor. If the Investor is a limited partnership, the Investor
is organized under and governed by the laws of, and it's principal place of
-2-
23
business is located in, the State set forth opposite the name of such Investor
under the heading "State" on Schedule A or Schedule B attached hereto, as the
case may be.
(ii) Capacity; Authorization; Valid and Binding
Obligation. If the Investor is a natural person, the Investor has full capacity
to execute and deliver this Agreement and to perform the Investor's obligations
hereunder. If the Investor is a limited partnership, the Investor has full
partnership or other power and authority to enter into and perform this
Agreement in accordance with its terms. This Agreement constitutes the valid
and legally binding obligation of the Investor enforceable against the Investor
in accordance with its terms.
(iii) Ownership of WinsLoew Common Stock. If the
Investor is exchanging WinsLoew Common Stock for Company Common Stock, such
Investor is the lawful owner, of record and beneficially, of the shares of
WinsLoew Common Stock owned by such Investor (which are those shares of
WinsLoew Common Stock listed beside such Investor's name on Schedule A hereto)
and has good title to such shares, free and clear of any and all encumbrances.
Such Investor has transferred and conveyed, and the Company has acquired, good
title to those shares of WinsLoew Common Stock listed beside such Investor's
name on Schedule A hereto, free and clear of any and all encumbrances.
(iv) Acquisition for Investment; Accredited Investor
Status; Sophistication. It is the present intention of the Investor that the
shares of Company Common Stock being acquired by such Investor are being
acquired for such Investor's own account for the purpose of investment and not
with a present view to or for sale in connection with any distribution thereof;
provided, however, that the disposition of the property of each Investor shall
at all times be within its control. The Investor is an "accredited investor"
within the meaning of Rule 501 of Regulation D under the Securities Act of
1933, as amended ("Rule 501"), and, if such Investor is not an individual
person, either (A) it was not organized for the specific purpose of acquiring
the shares of Company Common Stock, or (B) each person who has invested in the
Investor is an "accredited investor" within the meaning of Rule 501. The
Investor is sophisticated in financial matters and has sufficient knowledge and
experience so as to be able to evaluate the risks and merits of the Investor's
investment in the Company and is able financially to bear the risks thereof.
(v) Certain Risk Factors; Opportunity to Ask
Questions; Reliance. The Investor understands the speculative nature of and
risks involved in the proposed investment in the Company and that the
investment is suitable only for persons of adequate financial means who have no
need for liquidity in the investment in that the Investor may not be able to
liquidate the investment in the event of an emergency, transferability is
limited and, in the event of a disposition, the Investor could sustain a
complete loss of the entire investment. The Investor is familiar with and has
had an opportunity to ask questions and receive answers concerning the
financial condition and operations of the Company and its subsidiaries and has
had full access to such other information concerning the Company and its
subsidiaries as the Investor has requested. The Investor is acquiring the
shares of Company Common Stock without having been furnished any
representations or warranties of any kind whatsoever with respect to the
business and financial condition of the Company and its subsidiaries, other
than the representations contained herein.
-3-
24
4. Florida Rescission Right. ANY SALE MADE PURSUANT TO FLORIDA
STATUTES SECTION 517.061 IS VOIDABLE BY THE PURCHASER WITHIN THREE DAYS AFTER
THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN
AGENT OF THE ISSUER, OR AN ESCROW AGENT.
5. Miscellaneous. If any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement
will be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
This Agreement constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way. This Agreement may be executed in counterparts and any
telecopied signature shall be deemed a manually executed and delivered
original. This Agreement is intended to bind and inure to the benefit of and be
enforceable by the Investors, the Company and their respective successors and
assigns and, where applicable, heirs and personal representatives. Except as
otherwise provided herein, this Agreement shall be governed and construed in
accordance with the laws of the State of Florida without regard to conflicts of
laws principles. Each party hereby irrevocably submits to the exclusive
jurisdiction of any state or federal court sitting in Miami-Dade County,
Florida in any action or proceeding arising out of or relating to this
Agreement and hereby irrevocably waives any objection such person may now or
hereafter have as to the venue of any such suit, action or proceeding brought
in such a court or that such court is an inconvenient forum. No provision of
this Agreement may be amended or waived without the prior written consent of
the Company and the particular Investor whose Agreement is sought to be amended
or waived.
-4-
25
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
TRIVEST FURNITURE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx, Xx.
-----------------------------------------
Xxxxxxx X. Xxxxxxxxx, Xx., Vice President
INVESTORS:
TRIVEST FURNITURE PARTNERS, LTD.
By: TFP, Ltd., its General Partner
By: Trivest II, Inc., its General Partner
By: /s/ B. Xxx Xxxxxxxx
-----------------------------------
B. Xxx Xxxxxxxx, Director
Address:
c/o Trivest, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Taxpayer Identification Number: 00-0000000
TRIVEST FUND II GROUP, LTD.
By: Trivest Equities, Inc.,
its General Partner
By: /s/ B. Xxx Xxxxxxxx
-----------------------------------
B. Xxx Xxxxxxxx, Director
Address:
c/o Trivest, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Taxpayer Identification Number: 00-0000000
-5-
26
/s/ XXXX X. XXXXXX
--------------------------------------------
XXXX X. XXXXXX
Address:
c/o Trivest, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Taxpayer Identification Number: ###-##-####
/s/ XXXXXXX X. XXXXXX, M.D.
--------------------------------------------
XXXXXXX X. XXXXXX, M.D.
Address:
c/o Trivest, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Taxpayer Identification Number: ###-##-####
/s/ XXXX X. XXXXXXXXX
--------------------------------------------
XXXX X. XXXXXXXXX
Address:
c/o Trivest, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Taxpayer Identification Number: ###-##-####
/s/ BREVATOR X. XXXXXX, M.D.
--------------------------------------------
BREVATOR X. XXXXXX, M.D.
Address:
000 Xxxx Xxxxx Xxxxxx, Xxxxx X
Xxxxx, Xxxxxxxxxx 00000
Taxpayer Identification Number: ###-##-####
-6-
27
/s/ XXXXX X. XXXXX
--------------------------------------------
XXXXX X. XXXXX
Address:
c/o Resource Holdings, Ltd.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Taxpayer Identification Number: ###-##-####
/s/ XXXXX XXXXXX
--------------------------------------------
XXXXX XXXXXX
Address:
c/o WinsLoew Furniture, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Taxpayer Identification Number: ###-##-####
/s/ XXXXXXX X. XXXX
--------------------------------------------
XXXXXXX X. XXXX
Address:
c/o WinsLoew Furniture, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Taxpayer Identification Number: ###-##-####
/s/ R. XXXXX XXXXX
--------------------------------------------
R. XXXXX XXXXX
Address:
c/o Loewenstein Furniture Group, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Taxpayer Identification Number: ###-##-####
-7-
28
/s/ XXXXXXX X. XXXXXXXXX
--------------------------------------------
XXXXXXX X. XXXXXXXXX
Address:
c/o WinsLoew Furniture, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Taxpayer Identification Number: ###-##-####
/s/ XXXX X. XXXXXXXX
--------------------------------------------
XXXX X. XXXXXXXX
Address:
c/o WinsLoew Furniture, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Taxpayer Identification Number: ###-##-####
/s/ XXXXX X. XXXX
--------------------------------------------
XXXXX X. XXXX
Address:
c/o WinsLoew Furniture, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Taxpayer Identification Number: ###-##-####
-8-
29
SCHEDULE A
TO EXCHANGE AND SUBSCRIPTION AGREEMENT
NUMBER OF NUMBER OF
INVESTOR WINSLOEW SHARES COMPANY SHARES STATE
-------------------------------------- --------------- -------------- ---------
1. Trivest Furniture Partners, Ltd. 117,500 40,831.2500 Florida
2. Xxxx X. Xxxxxx 86,331 30,000.0225 Florida
3. Xxxxxxx X. Xxxxxx, M.D. 28,187 9,794.9825 Florida
4. Xxxx X. Xxxxxxxxx 1,050 364.8750 Florida
5. Xxxxx X. Xxxxx 4,798 1,667.3050 Florida
6. Brevator X. Xxxxxx, M.D. 2,399 833.6525 California
7. Xxxxx Xxxxxx 33,323 11,579.7425 Alabama
8. Xxxxxxx X. Xxxx 10,000 3,475.0000 Alabama
9. R. Xxxxx Xxxxx 25,900 9,000.2500 Florida
10. Xxxx X. Xxxxxxxx 14,978 5,204.8550 Alabama
11. Xxxxxxx X. Xxxxxxxxx XXX(1) 10,072 3,500.0200 Alabama
12. Xxxxx X. Xxxx 1,762 612.2950 Alabama
TOTAL 336,300 116,864.2500
--------
(1) Xxxxxxx X. Xxxxxxxxx, Xx. Individual Retirement Account, Account #1238SD,
Community Bank (Blountsville, Alabama), Custodian
30
SCHEDULE B
TO EXCHANGE AND SUBSCRIPTION AGREEMENT
AGGREGATE
PURCHASE NUMBER OF
INVESTOR PRICE COMPANY SHARES STATE
-------------------------------------- --------------- -------------- ---------
1. Trivest Furniture Partners, Ltd. $33,625,000.00 336,250.0000 Florida
2. Trivest Fund II Group, Ltd. $31,164,799.25 311,647.9925 Florida
3. Xxxxxxx X. Xxxxxxxxx $349,998 3,499.9800 Alabama
4. Xxxx X. Xxxxxxxx $179,514.50 1,795.1450 Alabama
5. Xxxxx X. Xxxx $138,770.50 1,387.7050 Alabama
TOTAL $65,458,082.25 654,580.8225
31
EXHIBIT B
MANAGEMENT AGREEMENT
See attached.
32
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.
33
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 subsidiaries (including subsidiaries of
-2-
34
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
-------------- ----------
$1 to $10,000,000 3.00%
$10,000,001 to $50,000,000 1.25%
$50,000,001 and over 0.75%
-3-
35
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 Company and shall not be required to mitigate or reduce damages by
seeking or undertaking other management arrangements or business opportunities.
-4-
36
(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:
-5-
37
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.
-6-
38
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
-7-
39
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
-------------------------------
Xxxxx Xxxxxx, President
TRIVEST II, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxx, President
-8-
40
EXHIBIT C
ADDRESSES FOR NOTICES
To the Company, Trivest, Inc.
either Trivest Investor, 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxxx, Xx. Xxxxxx or Xxxxx, Xxxxxxx 00000
Xx. Xxxxxxxxx: Attn: General Counsel
Fax: (000) 000-0000
To Messrs. Tesney, Hess, WinsLoew Furniture, Inc.
Xxxxxxxxx (and the Xxxxxxxxx XXX), 000 Xxxxxxx Xxxxxx
Xxxxxxxx or Camp: Xxxxxxxxxx, Xxxxxxx 00000
Attn: such Individual Investor
Fax: (000) 000-0000
To Xx. Xxxxx: Loewenstein, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn: R. Xxxxx Xxxxx
Fax: (000) 000-0000
To. Xx. Xxxxxx: 000 Xxxx Xxxxx Xxxxxx, Xxxxx X
Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
To Xx. Xxxxx: c/o Resource Holdings, Ltd.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
