Exhibit 10.11
AMENDED AND RESTATED MANAGEMENT AGREEMENT
AMENDED AND RESTATED MANAGEMENT AGREEMENT
(this "Agreement"), dated as of May , 1999, by and among (i) Ardshiel, Inc., a
Delaware corporation ("Ardshiel"), (ii) D and W Holdings, Inc., a Delaware
corporation ("Holdings"), (iii) Atrium Corporation, a Delaware corporation
("Atrium"), and (iv) Atrium Companies, Inc., a Delaware corporation ("ACI" and,
together with Holdings and Atrium, the "Companies").
RECITALS:
WHEREAS, the parties wish to amend and restate the Management
Agreement dated as of October 2, 1998; and
WHEREAS, the parties wish to provide for management advisory
services and, as and when any of the Companies requires, investment advisory
services to be rendered by Ardshiel to Holdings and its subsidiaries.
NOW THEREFORE, in consideration of the mutual premises, agreements
and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending legally to be bound, hereby agree as follows:
1. SERVICES. Each of the Companies hereby engages Ardshiel to
provide to it and its subsidiaries advice with respect to business strategy,
operations and budgeting and financial controls.
2. ANNUAL MANAGEMENT FEE. Ardshiel hereby accepts the engagement
described in Section 1 hereof. For the above management advisory services, the
Companies shall pay Ardshiel a fee (the "Management Fee") of $1.9 million
dollars per annum, payable monthly in arrears.
3. RIGHT OF FIRST REFUSAL. Before entering into any transaction
that involves engaging a financial advisor to perform services in connection
with the sale or purchase of a business or entity or any financing, the
Companies and their subsidiaries shall, unless engaging Ardshiel to perform such
services would result in a conflict of interest or would otherwise be adverse to
the interests of Holdings or any of its subsidiaries in the reasonable exercise
of the business judgment of Holdings' Board of Directors, offer to Ardshiel the
opportunity to perform such services and Ardshiel shall have five (5) business
days within which to accept the Companies' offer. Ardshiel shall charge any of
the Companies or any of their subsidiaries (as applicable) a fee for such
services (a "Closing Fee"), payable only upon the consummation of such sale or
purchase, which fee shall not be greater than 2% of the total purchase or sale
price for
such business or entity, provided that Ardshiel will not include in the Closing
Fee any charges for services that are included in the annual fee set forth in
Section 2 hereof. The consent of GE Investment Private Placement Partners II, a
Limited Partnership ("GEIPPPII") shall be required prior to the payment by any
of the Companies or any of their subsidiaries of any Closing Fee where any of
the Companies or any of their respective subsidiaries is paying similar fees to
other entities for similar services described in this Agreement. GEIPPPII shall
be a third party beneficiary of the agreement made in the preceding sentence.
4. TERM. The term of Ardshiel's engagement hereunder and the right
of first refusal stated in Section 3 hereof shall commence as of October 2, 1998
and shall continue thereafter for a period of ten (10) years through and
including October 2, 2008; provided, that the right of first refusal stated in
Section 3 hereof shall terminate upon Ardshiel and its affiliates ceasing to be
affiliates of all the Companies; provided, further, that, unless Ardshiel and
its affiliates maintain control of the majority of the Board of Directors of
Holdings under the Stockholders Agreement among the Company and certain of its
stockholders dated as of October 2, 1998, the right to receive the Management
Fee shall terminate; provided, further, that the Management Fee shall cease to
be payable when GEIPPPII ceases to hold at least 10% of the voting securities of
Holdings (on a fully diluted basis). This Agreement shall terminate upon (i) the
sale (including by way of sale of all of the capital stock or a merger) by
Holdings of Atrium and its subsidiaries in their entirety or all or
substantially all of the assets of Atrium and its subsidiaries, (ii) the
termination of the Investment Agreement, dated as of June 24, 1997 by and
between GE Investment Management Incorporated and Ardshiel (as amended, amended
and restated or otherwise modified in accordance with the terms thereof)
pursuant to Section 6.14(b) thereof, or (iii) Ardshiel and all its affiliates
ceasing to be direct or indirect stockholders of all the Companies. This
Agreement shall be automatically renewed for additional one-year periods unless
either party gives the other written notice to the contrary at least thirty (30)
days before the end of the term or any extended term of this Agreement. The
Management Fee shall be prorated in connection with any termination or
expiration of this Agreement. Closing Fees shall be payable to Ardshiel for any
transactions for which Ardshiel is engaged that are commenced during the term of
this Agreement, notwithstanding that any such transactions may close after the
termination or expiration of this Agreement.
5. REIMBURSEMENT FOR EXPENSES. The Companies and their
subsidiaries shall reimburse Ardshiel for its reasonable out-of-pocket expenses,
including, but not limited to, reasonable fees and expenses of counsel (the
"Management Expenses"), incurred during the period of its engagement under this
Agreement with respect to any services rendered or to be rendered by Ardshiel
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pursuant to Section 1 hereof. The Management Expenses shall be paid by the
Companies and their subsidiaries when billed by Ardshiel and shall be in
addition to the Management Fee. In addition, the Companies and their
subsidiaries shall reimburse Ardshiel for its reasonable out-of-pocket expenses,
including, but not limited to, reasonable fees and expenses of counsel (the
"Transaction Expenses"), incurred during the period of its engagement under this
Agreement with respect to any services rendered or to be rendered by Ardshiel
pursuant to Section 3 hereof. The Transaction Expenses shall be paid by the
Companies and their subsidiaries when billed by Ardshiel and shall be in
addition to any Closing Fees.
6. INDEMNITY. Each of the Companies agrees to, and shall cause its
subsidiaries to, indemnify and hold harmless Ardshiel and its affiliates and
their respective officers, directors, employees, stockholders, representatives
and agents from and against any claims, damages, losses, liabilities, costs and
expenses, including, without limitation, any settlement costs and reasonable
legal expenses incurred in connection with investigating or defending any
actions or threatened actions ("Losses") related to or arising out of this
engagement or Ardshiel's connection therewith; provided, however, that none of
the Companies nor any of its subsidiaries shall be responsible for any Losses to
the extent that such Losses result primarily from actions taken or omitted to be
taken by Ardshiel or such other indemnified person due to Ardshiel's or such
other indemnified person's gross negligence or willful misconduct or that such
Losses arise primarily out of or are based primarily upon any material untrue
statement or omission made (i) in any document or writing in reliance upon and
in conformity with written information furnished to any of the Companies or any
of its subsidiaries by Ardshiel or such other indemnified person for use in such
document or writing, or (ii) in any document created by Ardshiel in connection
with the engagement and used by Ardshiel without the prior approval of Holdings
or any of its subsidiaries.
If any action or proceeding (including any governmental
investigation) shall be brought or asserted against either Ardshiel or any other
indemnified person in respect of which indemnity shall be sought from any of the
Companies or any of their subsidiaries, Ardshiel or any such other indemnified
person, as the case may be, shall promptly notify the Company or subsidiary from
which indemnification is sought in writing, and such Company and/or subsidiary
shall assume the defense thereof, employ counsel reasonably satisfactory to
Ardshiel and pay all fees and disbursements of such counsel and all other
expenses related to such action or proceeding. Ardshiel or any such other
indemnified person shall have the right to employ separate counsel in any such
action or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of Ardshiel or such other
indemnified person and not at the expense of any of the Companies or any of
their subsidiaries unless (i) such Company or subsidiary has agreed to pay such
fees and expenses, (ii)
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such Company or subsidiary shall have failed promptly to assume the defense of
such action or proceeding or employ counsel satisfactory to Ardshiel in any such
action or proceeding, or (iii) Ardshiel's counsel shall determine that there is
or could reasonably be expected to be a conflict of interest by reason of having
common counsel in any action or proceeding, in which case, if Ardshiel or such
other indemnified person notifies such Company or subsidiary in writing that it
elects to employ separate counsel at the expense of such Company or subsidiary,
such Company or subsidiary shall not have the right to assume the defense of
such action or proceeding on behalf of Ardshiel or any such other indemnified
person, it being understood, however, that none of the Companies nor any of
their subsidiaries shall, in connection with any one such action or proceeding
or separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for Ardshiel or
any such other indemnified person, which firms shall be designated in writing by
Ardshiel. None of the Companies nor any of their subsidiaries shall be liable
for any settlement of any such action or proceeding effected without the written
consent of such Company or subsidiary of the Company from which indemnification
is sought, which consent shall not be reasonably withheld, but if such action or
proceeding is settled with the written consent of any of the Companies or any
subsidiary from which indemnification is sought or if there is a judgment for
the plaintiff in any such action or proceeding, such Company and such
subsidiaries agree to indemnify and hold harmless Ardshiel and any such other
indemnified person from and against any Losses (to the extent stated above) by
reason of such settlement or judgment.
If for any reason the indemnification provided for herein is
unavailable to any indemnified party under the first paragraph of this Section 6
in respect of any Losses referred to therein or if such indemnification shall be
insufficient to hold such indemnified party harmless from all such Losses, then
the Companies and their subsidiaries, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such Losses (i) in such proportion as is appropriate to reflect
the relative benefits received by the Companies and their subsidiaries on the
one hand and Ardshiel on the other hand or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of the Companies and their subsidiaries on the one
hand and of Ardshiel on the other as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the Losses
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of this Section 6, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. This Section 6 shall survive the termination or
expiration of this Agreement.
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7. CLOSING FEE. The Companies shall pay to Ardshiel (i) a closing
fee of $1.275 million upon the closing of the acquisition of Heat, Inc., a
Delaware corporation (the "Heat Acquisition"), (ii) a closing fee of $52,500
upon the closing of the acquisition of Champagne Industries, Inc. (the
"Champagne Acquisition"), and (iii) all out-of-pocket fees and expenses incurred
by Ardshiel and its affiliates in connection with the Heat Acquisition, the
Champagne Acquisition and the related transactions.
8. NON-DISCLOSURE. Except (a) as may be necessary to enforce any
rights hereunder or relating hereto or (b) for delivery of this Agreement to the
arrangers, agents and lenders party to that certain Credit Agreement (the
"Credit Agreement") dated October 2, 1998 by and among Holdings, ACI, certain
lenders party thereto, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith, as lead arranger, syndication agent and documentation agent, and
BankBoston, N.A., as administrative agent, the advice provided under this
Agreements shall not be disclosed to any party (other than officers, directors,
employees, stockholders, representatives and agents of the Companies on a
need-to-know basis), except with the express written consent of Ardshiel (which
consent shall not be unreasonably withheld), unless required by law or legal
process.
9. NO INCONSISTENT AGREEMENTS; ASSIGNMENT. Ardshiel shall not
provide or enter into any agreement to provide advisory services to the
Companies other than consistent with the terms hereof. Neither this Agreement
nor any rights, interests or obligations hereunder may be assigned by any party
without the prior written consent of all other parties hereto; provided that
Ardshiel may assign its rights, interests and obligations hereunder to any of
its affiliates who are reasonably capable of performing Ardshiel's duties
hereunder.
10. SUBORDINATION. Anything in this Agreement to the contrary
notwithstanding, any amount hereunder that the Companies are not permitted to
pay on a current cash basis to Ardshiel pursuant to the terms of the Credit
Agreement (the "Accruing Portion") shall accrue hereunder on a subordinated
basis to all Obligations (as defined in the Credit Agreement) under the Credit
Agreement, including, without limitation, under Atrium's guarantee of the
Obligations under the Credit Agreement, (such Obligations and other indebtedness
and obligations in connection with any renewal, refunding, restructuring or
refinancing thereof, including interest thereon accruing after the commencement
of any proceedings referred to in clause (i) below, whether or not such interest
is an allowed claim in such proceeding, being hereinafter collectively referred
to as "SENIOR INDEBTEDNESS"). The payment of such subordinated
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amounts shall be subject to the following provisions:
(a) In the event of any insolvency or bankruptcy proceedings, and
any receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to it or to its creditors, as such, or to its
property, and in the event of any proceedings for voluntary liquidation,
dissolution or other windings up of ACI or Atrium, whether or not involving
insolvency or bankruptcy, then (x) the holders of Senior Indebtedness shall be
paid in full in cash in respect of all amounts constituting Senior Indebtedness
before Ardshiel is entitled to receive (whether directly or indirectly), or make
any demands for, the Accruing Portion and (y) until the holders of Senior
Indebtedness are paid in full in cash in respect of all amounts constituting
Senior Indebtedness, any Accruing Portion to which Ardshiel would otherwise be
entitled (other than debt securities of Atrium and ACI that are subordinated, to
at lease the same extent as payments under this Agreement, to the payment of all
Senior Indebtedness then outstanding (such securities being hereinafter referred
to as "RESTRUCTURED DEBT SECURITIES")) shall be made to the holders of Senior
Indebtedness.
(b) If any payment or distribution of any character, whether in
cash, securities or other property (other than Restructured Debt Securities),
under this Agreement shall (despite these subordination provisions) be received
by Ardshiel in violation of clause (i) before all Senior Indebtedness shall have
been paid in full in cash, such payment or distribution shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness (or their representatives), ratably according to the
respective aggregate amounts remaining unpaid thereon, to the extent necessary
to pay all Senior Indebtedness in full in cash.
To the full extent permitted by law, no present or future holder
or Senior Indebtedness shall be prejudiced in its right to enforce the
subordination provisions of this Agreement by any act or failure to act on the
part of Atrium or ACI or by any act or failure to act on the part of such holder
or any trustee or agent for such holder. Ardshiel, Atrium and ACI hereby agree
that the foregoing subordination provisions of this Agreement are for the
benefit of the Creditors (as such term is defined in the Credit Agreement) and
the Administrative Agent (as defined in the Credit Agreement) may, on behalf of
the Creditors, proceed to enforce the subordination provisions herein.
Nothing contained in the subordination provisions set forth above
is intended to or will impair, as among the Atrium, ACI and Ardshiel, the
obligations of Atrium and ACI, which are absolute and unconditional, to pay to
Ardshiel all payments due under this Agreement as and when due and payable in
accordance with its terms, or is intended to or will affect the relative rights
of Ardshiel and other creditors of
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Atrium and ACI other than the holders of Senior Indebtedness.
11. MISCELLANEOUS.
(a) FURTHER ASSURANCES. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement.
(b) TERMINATION OF MANAGEMENT AGREEMENTS WITH CERTAIN SUBSIDIARIES
OF THE COMPANIES; ENTIRE AGREEMENT; AMENDMENT; WAIVER. The parties hereto
acknowledge and agree that the Management and Investment Banking Agreements
entered into by and between (i) Ardshiel and Wing Industries Holdings, Inc. and
(ii) Ardshiel and Door Holdings, Inc. are hereby terminated and of no further
force and effect.
This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, supersedes all prior and
contemporaneous agreements and understandings, if any, with respect thereto, may
not be amended or supplemented except by an instrument or counterparts thereof
in writing signed by a duly authorized representative of the parties hereto and
may not be discharged except by such written instrument or by performance. No
waiver of any term or provision of this Agreement shall be effective unless in
writing signed by the parties hereto and such waiver shall not be effective as
to any other provision of this Agreement.
(c) BINDING EFFECT. This Agreement shall be binding on and inure
to the benefit of the parties hereto and, subject to the terms and provisions
hereof, their respective successors and permitted assigns.
(d) INVALIDITY OF PROVISION. The invalidity or unenforceability of
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
(e) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which taken together shall be deemed one and the same
instrument.
(f) HEADINGS. The descriptive headings of the several
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sections of this Agreement are inserted for convenience only and do not
constitute part of this Agreement.
(g) THIRD-PARTY BENEFICIARY. Except as otherwise expressly set
forth herein, no individual or entity shall be a third-party beneficiary of the
representations, warranties, covenants and agreements made by any party hereto.
(h) GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of New York without regard
to the principles of conflict of laws. The parties agree to submit to the
personal and exclusive jurisdiction of the state and federal courts serving New
York, New York with respect to the enforcement or interpretation of this
Agreement or the parties' obligations hereunder. Each party hereto irrevocably
waives, to the full extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. Nothing in this Section shall affect the right
of any party hereto to serve legal process in any manner permitted by law.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
ARDSHIEL, INC.
By: /s/ DENNIS McCORMICK
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Name: Dennis McCormick
Title: Senior Managing Partner
D AND W HOLDINGS, INC.
By: /s/ JEFF L. HULL
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Name: Jeff L. Hull
Title: Executive Vice President
Chief Financial Officer
Treasurer, Secretary
ATRIUM CORPORATION
By: /s/ JEFF L. HULL
------------------------------------------
Name: Jeff L. Hull
Title: Executive Vice President
Chief Financial Officer
Treasurer and Secretary
ATRIUM COMPANIES, INC.
By: /s/ JEFF L. HULL
------------------------------------------
Name: Jeff L. Hull
Title: Executive Vice President
Chief Financial Officer
Treasurer and Secretary
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