Exhibit 10.24
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of the
27th day of September, 1999, by and between ICON Health & Fitness, Inc., a
Delaware corporation ("ICON"), HF Holdings, Inc., a Delaware corporation
("Holdings" and, together with ICON and each of its other direct and indirect
subsidiaries signatory hereto or hereafter becoming party hereto by executing a
counterpart signature page hereof, the "Company") and Gary E. Stevenson
("Stevenson").
WHEREAS, Holdings was formed for the purpose of effecting an overall
plan to restructure the capitalization of ICON (the "Restructuring"), and
becoming a direct parent of ICON on terms and subject to the conditions of (a)
the Exchange Offer and Consent Solicitation Statement, dated July 30, 1999, as
supplemented, for all outstanding 13% Senior Subordinated Notes due 2002 of
ICON, 15% Senior Secured Discount Notes due 2004 of IHF Holdings, Inc., a
Delaware corporation, and 14% Senior Discount Notes due 2006 of ICON Fitness
Corporation, a Delaware corporation, and (b) the Agreement and Plan of Merger,
dated as of September 27, 1999, among Holdings, HF Acquisition, Inc., a Delaware
corporation, and ICON.
WHEREAS, Stevenson has provided advisory and other services, and is
providing equity financing (the "Equity Investment"), in connection with the
Restructuring; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Company desires to retain Stevenson to be available to provide certain
management and advisory services to the Company as requested, and Stevenson
desires to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the making of the Equity Investment, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Services. Stevenson agrees that, during the term of this Agreement
(the "Term"), and separate and apart from any employment arrangement with
the Company or any continuation of such employment, he will:
(a) provide the Company, at its request, with advice in connection with
the negotiation and consummation of agreements, contracts, documents
and instruments necessary to provide the Company with financing from
banks or other financial institutions or other entities on terms and
conditions satisfactory to the Company; and
(b) provide ICON, at its request, with financial, managerial and
operational advice in connection with its day-to-day operations,
including, without limitation, advice with respect to the development
and implementation of strategies for improving the operating,
marketing and financial performance of ICON.
2. Payment of Fees. The Company hereby agrees to:
(a) pay to Stevenson a fee in the amount of $208,500 in connection
with the Restructuring, together with reimbursement of the fees and
disbursements of Hutchins, Wheeler & Dittmar, P.C., counsel to
Stevenson incurred by Stevenson in connection with the Restructuring
through the Closing Date (as defined in the Merger Agreement) in
connection with the Restructuring, such fees and expenses being
payable by ICON at the closing of the Restructuring or, if the
Restructuring is not consummated, promptly after the time the Company
has abandoned the Restructuring; and
(b) subject to the terms of the credit agreement from time to time in
effect providing for working capital financing to ICON, during the
Term, pay to Stevenson a management fee in an amount not to exceed
$33,500 per annum, such fee being payable by ICON quarterly in
arrears, with each payment being made sixty (60) days after the end of
each fiscal quarter of the Company.
Each payment made pursuant to this Section 2 shall, at the request of
Stevenson, be paid by wire transfer of immediately available federal funds
to such account(s) as Stevenson may specify to the Company in writing prior
to such payment.
3. Term. This Agreement shall commence on the Closing Date and continue
in full force and effect, unless and until terminated by mutual
consent of the parties, for so long as Stevenson remains available and
willing to carry on the business of providing services of the type
described in Section 1, regardless of his continued employment by the
Company or any affiliate thereof; provided, however, that (a) either
party may terminate this Agreement following a material breach of the
terms of this Agreement by the other party hereto and a failure to
cure such breach within 30 days following written notice thereof, (b)
Stevenson may terminate this Agreement upon not less than 60 days
written notice to the Company and (c) the Company may terminate this
Agreement upon the termination (as opposed to any assignment) of the
Management Agreement entered into between Bain Capital Partners IV,
L.P. and the Company, dated an even date herewith; and provided
further that each of (x) the obligations of the Company under Section
4, (y) any and all accrued and unpaid obligations of the Company owed
under Section 2 and (z) the provisions of Section 7 shall survive any
termination of this Agreement to the maximum extent permitted under
applicable law.
4. Expenses; Indemnification.
(a) Expenses. The Company agrees to pay on demand all legal expenses
incurred by Stevenson in connection with this Agreement
(including all legal expenses incurred in the collection of fees
hereunder) and in connection with such transactions as are
approved by the Board of Directors of the Company, ICON or
Holdings ; provided, however, that Stevenson's right to receive
payment of any such legal expenses is
limited to (i) such expenses being incurred at such time as Stevenson
is not employed by the Company, and (ii) a total payment to Stevenson
for such expenses incurred in any one year of no more than $10,000.
(b) Indemnity and Liability. In consideration of the execution and
delivery of this Agreement and the provision of the Equity Investment
by Stevenson, the companies constituting the "Company" hereby jointly
and severally agree to indemnify, exonerate and hold Stevenson and his
agents, advisors and attorneys (collectively, the "Indemnitees") free
and harmless from and against any and all actions, causes of action,
suits, losses, liabilities and damages, and expenses in connection
therewith, including without limitation attorneys' fees and
disbursements (collectively, "Liabilities"), incurred by the
Indemnitees or any of them solely as a result of Stevenson's role or
status as an officer, director or shareholder of ICON, Holdings, IHF
Capital, Inc., ICON Fitness Corporation, IHF Holdings, Inc., ICON of
Canada, Inc., ICON International Holdings, Inc., Universal Technical
Services, and Jumpking, Inc. (collectively, the "Indemnified
Liabilities"), except for any such Indemnified Liabilities arising on
account of such Indemnitee's willful misconduct or by reason of any
agreement to which Stevenson at any time is or was or becomes a party
in his own individual capacity, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the
companies constituting the "Company" hereby jointly and severally
agree to make the maximum contribution to the payment and satisfaction
of such otherwise payable Indemnified Liabilities which is permissible
under applicable law.
5. Assignment, etc. Except as provided below, neither party shall have the
right to assign this Agreement. Stevenson acknowledges that his services
under this Agreement are unique. Accordingly, any purported assignment by
Stevenson (other than as provided below) shall be void. Notwithstanding the
foregoing, (a) Stevenson may assign all or part of his rights and
obligations hereunder to any affiliate of Stevenson which provides services
similar to those called for by this Agreement, in which event Stevenson
shall be released of all of his rights and obligations hereunder and (b)
the provisions hereof for the benefit of Stevenson shall inure to the
benefit of his successors and assigns.
6. Amendments and Waivers. No amendment or waiver of any term, provision or
condition of this Agreement shall be effective, unless in writing and
executed by each of Stevenson and the Company. No waiver on any one
occasion shall extend to or effect or be construed as a waiver of any right
or remedy on any future occasion. No course of dealing of any person nor
any delay or omission in exercising any right or remedy shall constitute an
amendment of this Agreement or a waiver of any right or remedy of any party
hereto.
7. Miscellaneous.
(a) Choice of Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of Delaware
without giving effect to any choice or conflict of law provision or
rule that would cause the application of the domestic substantive laws
of any other jurisdiction.
(b) Consent to Jurisdiction. Each of the parties agrees that all actions,
suits or proceedings arising out of or based upon this Agreement or
the subject matter hereof shall be brought and maintained exclusively
in the federal and state courts of the State of Utah. Each of the
parties hereto by execution hereof (i) hereby irrevocably submits to
the jurisdiction of the federal and state courts in the State of Utah
for the purpose of any action, suit or proceeding arising out of or
based upon this Agreement or the subject matter hereof and (ii) hereby
waives to the extent not prohibited by applicable law, and agrees not
to assert, by way of motion, as a defense or otherwise, in any such
action, suit or proceeding, any claim that such party is not subject
personally to the jurisdiction of the above-named courts, that it or
he is immune from extraterritorial injunctive relief or other
injunctive relief, that its or his property is exempt or immune from
attachment or execution, that any such action, suit or proceeding may
not be brought or maintained in one of the above-named courts, that
any such action, suit or proceeding brought or maintained in one of
the above-named courts should be dismissed on grounds of forum non
conveniens, should be transferred to any court other than one of the
above-named courts, should be stayed by virtue of the pendency of any
other action, suit or proceeding in any court other than one of the
above-named courts, or that this Agreement or the subject matter
hereof may not be enforced in or by any of the above-named courts.
Each of the parties hereto hereby consents to service of process in
any such suit, action or proceeding in any manner permitted by the
laws of the State of Utah, agrees that service of process by
registered or certified mail, return receipt requested, at the address
specified in or pursuant to Section 9 is reasonably calculated to give
actual notice and waives and agrees not to assert by way of motion, as
a defense or otherwise, in any such action, suit or proceeding any
claim that service of process made in accordance with Section 9 does
not constitute good and sufficient service of process. The provisions
of this Section 7(b) shall not restrict the ability of any party to
enforce in any court any judgment obtained in a federal or state court
of the State of Utah.
(c) Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND
COVENANTS THAT SUCH PARTY WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT, OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING
AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each of the parties
hereto acknowledges that such party has been informed by each other
party that the provisions of this Section 7(c) constitute a material
inducement upon which such party is relying and will rely in entering
into this Agreement and the transactions contemplated hereby. Any of
the parties hereto may file an original counterpart or a copy of this
Agreement with any court as written evidence of the consent of each of
the parties hereto to the waiver of such party's right to trial by
jury.
(d) Withholding. The Company shall have the right to withhold, from or in
respect of any payment due to Stevenson hereunder, any federal, state
or local taxes of any kind required by law to be withheld with respect
thereto.
8. Merger/Entire Agreement. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof and supersedes any
prior communication or agreement with respect thereto.
9. Notice. All notices, demands, and communications of any kind which any
party may require or desire to serve upon any other party under this
Agreement shall be in writing and shall be served upon such other party and
such other party's copied persons as specified below by personal delivery
to the address set forth for such party below or to such other address as
such party shall have specified by notice to each other party or by mailing
a copy thereof by certified or registered mail, or by Federal Express or
any other reputable overnight courier service, postage prepaid, with return
receipt requested, addressed to such party and copied persons at such
addresses. In the case of service by personal delivery, it shall be deemed
complete on the first business day after the date of actual delivery to
such address. In case of service by mail or by overnight courier, it shall
be deemed complete, whether or not received, on the third day after the
date of mailing as shown by the registered or certified mail receipt or
courier service receipt. Notwithstanding the foregoing, notice to any party
or copied person of change of address shall be deemed complete only upon
actual receipt by an officer or agent of such party or copied person.
If to the Company, to it at:
HF Holdings, Inc.
1500 South 1000 West Logan,
Utah 84321
Attention: Chief Executive Officer
with a copy, if he is then employed by the Company, to:
Each member of the Board of Directors (at such addresses to which
notices are sent for meetings of the Board of Directors)
If to Stevenson, to him at:
Gary E. Stevenson
370 Abbey Lane
Providence, Utah 84332
with a copy to:
Hutchins, Wheeler & Dittmar
101 Federal Street Boston,
MA 02110
Attention: Charles W. Robins
10. Severability. If in any judicial or arbitral proceedings a court or
arbitrator shall refuse to enforce any provision of this Agreement, then
such unenforceable provision shall be deemed eliminated from this Agreement
for the purpose of such proceedings to the extent necessary to permit the
remaining provisions to be enforced. To the full extent, however, that the
provisions of any applicable law may be waived, they are hereby waived to
the end that this Agreement be deemed to be a valid and binding agreement
enforceable in accordance with its terms, and in the event that any
provision hereof shall be found to be invalid or unenforceable, such
provision shall be construed by limiting it so as to be valid and
enforceable to the maximum extent consistent with and possible under
applicable law.
11. Disclaimer and Limitation of Liability.
(a) Disclaimer. Stevenson makes no representations or warranties, express
or implied, in respect of the services to be provided by him
hereunder.
(b) Standard of Care. Neither Stevenson nor any other Indemnitee shall be
liable to the Company or any of its affiliates for any act, alleged
act, omission or alleged omission suffered or taken by Stevenson
hereunder or any other Indemnitee hereunder that does not constitute
willful misconduct.
(c) Limitation of Liability. In no event will either party hereto be
liable to the other for any indirect, special, incidental or
consequential damages, including lost profits or savings, whether or
not such damages are foreseeable, or in respect of any liabilities
relating to any third party claims (whether based in contract, tort or
otherwise) other than the Indemnified Liabilities to the extent
provided in Section 4(b), relating to the services to be provided by
Stevenson hereunder.
(d) Employment Agreements. Neither (i) this Agreement, as the same may be
amended from time to time, or the performance by Stevenson of any
services hereunder, nor (ii) any investment by Stevenson in HF
Investment Holdings, LLC ("HF LLC"), a Delaware limited liability
company, or the performance by Stevenson of any services under the HF
LLC Limited Liability Company Agreement, as the same may be amended
from time to time, shall constitute a violation of any employment
agreement between Stevenson and Holdings, ICON or the Company, or any
of their affiliates, including, but not limited to, the Employment
Agreement between Stevenson and the Company, dated an even date
herewith, as the same may be amended from time to time.
12. Counterparts. This Agreement may be executed in any number of counterparts
and by each of the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.
THE COMPANY: HF Holdings, Inc.
By /s/ S. Fred Beck
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Name: S. Fred Beck
Title: CFO, V.P. and Treasurer
ICON HEALTH & FITNESS, INC.
By /s/ S. Fred Beck
----------------
Name: S. Fred Beck
Title: CFO, V.P. and Treasurer
STEVENSON:
/s/ Gary E. Stevenson
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Gary E. Stevenson