EXHIBIT 10.24
MANAGEMENT CONSULTING AGREEMENT
THIS AGREEMENT, dated as of December 10, 2003, by and among Atrium
Corporation, a Delaware corporation ("Holdings"), Atrium Companies, Inc., a
Delaware corporation and wholly-owned subsidiary of Holdings ("Atrium Companies"
and, together with Holdings, hereinafter collectively referred to as the
"Company"), and JLK Operations, Inc., a Delaware corporation (the "Consultant").
WITNESSETH
WHEREAS, the Consultant has and/or has access to personnel who are
highly skilled in the field of rendering advice to businesses and financial
advice to the Company;
WHEREAS, the Board of Directors of the Company has been made fully
aware of the relationships of certain members of the Company's Board of
Directors to the Consultant;
WHEREAS, the Company's Board of Directors has reviewed in detail and
discussed the terms and provisions of this Agreement and the fairness of this
Agreement and whether more favorable agreements for the Company could be
obtained from unaffiliated third parties; and
WHEREAS, on the basis of its review of this Agreement, the Board of
Directors of the Company deemed it advisable and in the best interests of the
Company and necessary to the conduct, promotion, and attainment of the business
objectives of the Company that the Company retain Consultant to provide business
and financial advice the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto do hereby agree as
follows:
1. The Company hereby retains the Consultant, through the Consultant's
own personnel or through personnel available to the Consultant, to render
consulting services from time to time to the Company and its direct and indirect
subsidiaries (whether now or hereafter acquired), in connection with their
financial and business affairs, their relationships with their lenders and
stockholders and other third party associates or affiliates, and the operation
and expansion of their businesses, including, without limitation, their
acquisition, divestitures and investments. The term of this Agreement shall
commence on the date hereof and continue until December 31, 2013, unless
extended, or sooner terminated, as provided in Section 3 below. The Consultant's
personnel shall be available to the Company's managers, auditors, and other
personnel for consultation and advice, subject to the Consultant's reasonable
convenience and scheduling. Services may be rendered at the Consultant's offices
or at such other locations selected the Consultant as the Company shall from
time to time agree upon. The provisions of this Agreement shall not, however,
confer any power or authority on the Consultant to enter into any transaction on
behalf of or in any way bind the Company without the prior written consent of
the Company. In no event shall the Consultant be treated as an agent of the
Company without the prior written consent of the Company except as otherwise
expressly set forth herein.
2. Subject to Section 3 hereof, the Company agrees to pay an annual
consulting services fee of $250,000, payable in advance in equal installments of
$62,500, on the first day of each calendar quarter, commencing January 1, 2004,
with the fee payable on January 1, 2004
further paying in arrears and reflecting all accrued and prorated fees from the
date of this Agreement through January 1, 2004. All reasonable out-of-pocket
expenses incurred by the Consultant and its personnel in connection with the
performance by the Consultant of services hereunder to the Company and its
subsidiaries (including the expenses of third parties engaged by the Consultant)
shall be promptly reimbursed to it by the Company upon the Consultant's
rendering of a statement therefor, together with supporting data as the Company
shall reasonably require, in accordance with Company policy; provided, that, for
so long as the ML Group and the UBS Group are each entitled to exercise the
approval rights set forth in Section 5.14(a)(iv) of the ATR LLC Agreement and
Section ___ of the Atrium Stockholders Agreement, promptly following the end of
each fiscal year during the term of this Agreement the Consultant shall provide
to each of ML IBK Positions, Inc., Xxxxxxx Xxxxx Ventures, L.P. 2001 and UBS
Capital Americas II, LLC copies of all reimbursement requests submitted to the
Company during such immediately preceding fiscal year.
3. The term of this Agreement shall be automatically renewed for
successive one-year terms commencing December 31, 2013, unless thirty (30) days
prior to such anniversary, either the Consultant or the Company notifies the
other as to its desire to terminate this Agreement, in which case, the term of
this Agreement will terminate on such anniversary. Notwithstanding the
foregoing, (i) this Agreement shall be terminated in its entirety by the Company
upon not less than thirty days' prior written notice from the Company to the
Consultant (A) upon the consummation of a Qualified Public Offering of the
Company, or (B) upon a Change of Control of the Company, and (ii) Section 2 of
this Agreement shall terminate at such time as (A) KAT Holdings, L.P. and its
Permitted Transferees ceases to own at least 50% of the Operating Company Share
Equivalents owned by KAT Holdings, L.P. as of the date hereof, or (B) there
shall have occurred a transfer by the Kenner Parties (as hereinafter defined) in
violation of Section 1 of that certain letter agreement by and among ML IBK
Positions, Inc., Xxxxxxx Xxxxx Ventures, L.P. 2001, UBS Capital Americas II,
LLC, KAT Group, L.P. and the individuals party thereto (KAT Group, L.P. and such
individuals, collectively, the "Kenner Parties").
For purposes of Section 2 and this Section 3, the terms "Change of
Control", "Qualified Public Offering", "ML Group", "Permitted Transferees" and
"UBS Group" shall have the respective meanings given such terms in the ATR LLC
Agreement and the Atrium Stockholders Agreement.
4. In recognition of the services rendered by the Consultant in
connection with the evaluation, negotiation, structuring, financing and closing
of the Agreement and Plan of Merger, dated October 27, 2003, by and among the
Company and the parties identified therein, and related financing and
transactions, the Company will pay Consultant a fee of $8,000,000 upon the
closing of the transactions contemplated thereby. The Company acknowledges that
Consultant may share a portion of such fee with other direct or indirect
investors in the Company.
5. Notwithstanding the foregoing, the Company shall not pay the fees
under Sections 2 and 4 and such fees shall accrue pursuant to the second
sentence of this Section 5, (a) if and to the extent expressly prohibited by the
provisions of any credit, stock, financing or other agreements or instruments
binding upon the Company, its subsidiaries or properties, (b) if
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the Company has not paid cash interest on any interest payment date or has
postponed or not made any principal payments with respect to any of their
indebtedness on any scheduled payment dates, or (c) if the Company has not paid
cash dividends on any dividend payment date as set forth in its certificate of
incorporation or as declared by its Board of Directors, or has postponed or not
made any redemptions on any redemption date as set forth in its certificate of
incorporation or any certificate of designation with respect to its preferred
stock, if any. Any payments otherwise owed hereunder, which are not made for any
of the above-mentioned reasons, shall not be cancelled but rather shall accrue,
without interest, and shall be payable by the Company promptly when, and to the
extent, that the Company is no longer prohibited from making such payments and
when the Company has become current with respect to such principal or interest
payments, has become current with respect to such dividends and has made such
redemptions with respect to such preferred stock, if any. This Section 5 will
not, in any event, restrict or limit the Company's other obligations under this
Agreement, which will be absolute and not subject to set-off.
6. The Consultant shall have no liability to the Company on account of
(i) any advice which it renders to the Company or any of its direct or indirect
subsidiaries, or (ii) the Consultant's inability to obtain financing or achieve
other results desired by the Company at any particular time or from time to
time, or (iii) the failure of any acquisition, divestiture, financing or
business plan to meet the financial, operating, or other expectations of the
Company or any of its direct or indirect subsidiaries.
7. Notwithstanding anything contained in this Agreement to the
contrary, the Company agrees and acknowledges for itself and on behalf of its
direct and indirect subsidiaries the Consultant, its affiliates and their
respective shareholders, employees, partners, principals, directors, affiliates
and portfolio companies intend to engage and participate in acquisitions and
business transactions outside of the scope of the relationship created by this
Agreement and neither the Consultant, any of its affiliates, nor any of their
respective shareholders, employees, partners, principals, directors, affiliates
or portfolio companies shall be under any obligation whatsoever (except to the
extent that fiduciary duty principles under applicable corporate law may be
applicable to individual directors and officers of the Company and except as
otherwise provided in any other agreement between the Company or its affiliates
and the Consultant or its affiliates) to make such acquisitions, business
transactions or other opportunities through the Company or offer such
acquisitions, business transactions or other opportunities to the Company or any
of its direct or indirect subsidiaries.
8. The Company will, and will cause each of its direct and indirect
subsidiaries, indemnify and hold harmless to the fullest extent permitted by
applicable law the Consultant, its affiliates and associates, each of their
respective principals, partners, officers, directors, employees and agents of
each of the foregoing, from and against any loss, liability, damage, claim or
expenses (including the reasonable fees and expenses of counsel) arising as a
result or in connection with this Agreement or the Consultant's services
hereunder or other activities on behalf of the Company and its direct and
indirect subsidiaries, except to the extent such loss, liability, damage, claim
or expenses resulted from any gross negligence or willful misconduct or bad
faith on the part of the Consultant.
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9. Consultant hereby agrees to be bound by the provisions of Section
6.8 [Outside Businesses] of the ATR LLC Agreement and Section ___ of the Atrium
Stockholders Agreement as if a party thereto.
10. (a) The parties hereto acknowledge that all information provided to
the Consultant in connection with the provision of services hereunder shall be
subject to the confidentiality provisions set forth in Section 11.16 of the ATR
LLC Agreement and Section [ ] of the Atrium Stockholders Agreement.
(a) This Agreement sets forth the entire understanding of the parties
with respect to the Consultant's rendering of services to the Company. This
Agreement or any provision hereof may not be modified, waived, terminated or
amended except expressly by an instrument in writing signed by the Consultant
and the Company and in compliance with the Limited Liability Company Agreement
of ATR Acquisition, LLC, dated as of December 10, 2003, as may be amended from
time to time, (the "ATR LLC Agreement") and the Stockholders Agreement of Atrium
Corporation, dated as of December 10, 2003, as may be amended from time to time
(the "Atrium Stockholders Agreement").
(b) This Agreement may not be assigned by either party without the
consent of the other party; provided, however, this Agreement may be assigned by
Consultant without the prior consent of the Company to any of its affiliates;
provided, further, that any assignment of this Agreement shall not relieve such
party from its obligations hereunder. Any assignment of this Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
(d) In the event that any provision of this Agreement shall be held to
be void or unenforceable, in whole or in part, the remaining provisions of this
Agreement and the remaining portion of any provisions held void or unenforceable
in part shall continue in full force and effect.
(e) Except as otherwise specifically provided herein, notice given
hereunder shall be deemed sufficient only upon receipt if delivered personally
or sent by registered or certified mail to the address of the party for whom
intended at the principal executive offices of such party, or at such other
address as such party may hereinafter specify by written notice to the other
party.
(f) No waiver by either party of any breach of any provision of this
Agreement shall be deemed a continuing waiver or a waiver of any preceding or
succeeding breach of such provision or of any other provision herein contained.
(g) The Consultant and its personnel shall, for purposes of this
Agreement, be independent contractors with respect to the Company.
(h) If at any time after the date upon which this Agreement is
executed, the Company acquires or creates one or more subsidiary corporations (a
"Subsequent Subsidiary"), the Company shall cause such Subsequent Subsidiary to
be subject to this Agreement and all references herein to the Company or to the
Company's "direct and indirect Subsidiaries" shall be interpreted to include all
Subsequent Subsidiaries.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first above written.
COMPANY:
ATRIUM CORPORATION
By:
Name:
Title:
ATRIUM COMPANIES, INC.
By:
Name:
Title:
CONSULTANT:
JLK OPERATIONS, INC.
By:
Name:
Title:
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