**Exhibit10.3**

 

**ExecutionCopy**

 

ADVISORY AGREEMENT

 

This Advisory Agreement(this “Agreement”) is made and entered into as of April 15, 2003 byand among Euramax International, Inc., a Delaware corporation (“Euramax”and together with all of the direct and indirect subsidiaries of Euramax, the “EuramaxGroup”), and CVC Management LLC, a Delaware limited liability company (“Advisor”).

 

WHEREAS, pursuant to theStock Purchase Agreement, dated the date hereof, by and among Euramax,Citigroup Venture Capital Equity Partners, L.P., CVC Executive Fund LLC andCVC/SSB Employee Fund, L.P. (collectively, the “Fund”), and thestockholders of Euramax named therein (the “Purchase Agreement”), theFund will purchase at the Closing (as defined in the Purchase Agreement) sharesof Euramax’s common stock from certain stockholders of the Company on the termsand subject to the conditions set forth in the Purchase Agreement;

 

WHEREAS, Advisor is anaffiliate of the Fund and an indirect wholly-owned subsidiary of CitigroupInc.;

 

WHEREAS, Euramax, onbehalf of the Euramax Group, desires to retain Advisor and Advisor desires toperform for Euramax and/or the Euramax Group certain services;

 

NOW, THEREFORE, inconsideration of the premises and the mutual covenants contained herein andintending to be legally bound hereby, and for good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged, the partieshereto, effective as of the Closing (the “Effective Time”) and withoutany further action required by any party hereto, hereby agree as follows:

 

1.                                       Term.  This Agreement shall be in effect for aninitial term of ten (10) years commencing at the Effective Time (the “Term”),and shall be automatically extended thereafter on a year to year basis unlessEuramax or Advisor provides written notice of its desire to terminate thisAgreement to the other party 90 days prior to the expiration of the Term or anyextension thereof; provided, however, that this Agreement shallautomatically terminate upon the closing of any transaction that constitutes a“Change of Control” or a “Public Offering” (as each such term is defined in theCompany’s 2003 Equity Compensation Plan) of the Company.

 

2.                                       Services.Advisor shall perform or cause to be performed such services for the Euramaxand/or members of the Euramax Group as directed by Euramax’s board ofdirectors, which may include, without limitation, the following:

 

(a)                                  identification,support and analysis of acquisitions and dispositions by Euramax or itssubsidiaries;

 

(b)                                 supportand analysis of financing alternatives, including, without limitation, inconnection with acquisitions, capital expenditures and refinancing of existingindebtedness;

 

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(c)                                  financefunctions, including assistance in the preparation of financial projections,and monitoring of compliance with financing agreements;

 

(d)                                 humanresource functions, including searching and hiring of executives; and

 

(e)                                  otherservices for Euramax or its subsidiaries upon which Euramax’s board ofdirectors and Advisor agree.

 

Notwithstanding anyprovision in this Agreement to the contrary, each of the parties heretoacknowledges and agrees that there are no minimum levels of services requiredto be provided to the Euramax Group pursuant to this Agreement.

 

3.                                       AdvisoryFee.

 

(a)                                  Subjectto the terms and conditions herein, payment for services rendered by Advisorand/or its affiliates pursuant to this Agreement will equal the greater of (i)$600,000 per annum and (ii) One percent (1%) of annual Consolidated EBITDA (asdefined below).  All fees described inthis Section 3(a) shall be payable to Advisor or its designee on a quarterlybasis in advance (based upon the parties’ estimate of the amount of fees andexpenses that shall become due and payable for such quarter) commencing as ofthe Effective Time with respect to the first quarter of the current fiscal year(all such management fees, being “Advance Management Fees”).  Within ninety days after the end of eachfiscal year of Euramax (commencing with the current fiscal year of Euramax),the Euramax Group will pay to Advisor an amount equal the greater of (A)$600,000 and (B) One percent (1%) of Consolidated EBITDA for such fiscal yearas reflected in the audited consolidated financial statements of Euramax forsuch year less the aggregate of all Advance Management Fees paid toAdvisor with respect to such fiscal year (the “Management Fees”); provided,that in no event shall Advisor be required to return any portion of the AdvanceManagement Fees.  The Management Feespursuant to this Section 3(a) for the fiscal year ended December 26, 2003shall be calculated for the period beginning on December 28, 2002 andending on the last day of such fiscal year. For purposes hereof, the term “Consolidated EBITDA” means for Euramaxand its subsidiaries, operating income, plus depreciation, amortization, anynon-cash charges relating to write-downs of impaired assets or any othernon-recurring charges and, to the extent deducted in determining operatingincome, any fees and expenses incurred pursuant to this Agreement.

 

(b)                                 TransactionFees.  The Euramax Group herebyagrees to pay to Advisor or its designee on the Closing Date (as defined in thePurchase Agreement) upon the consummation of the transactions contemplated bythe Purchase Agreement a fee for services rendered in connection with thestructuring of and assistance with the transactions contemplated by thePurchase Agreement and certain other management services in the amount of OneMillion Dollars ($1,000,000.00), plus reasonable out-of-pocket expenses.  Such fees shall be payable to Advisor or itsdesignees by wire transfer to an account designated in writing by theAdvisor.  In addition, during the termof this Agreement, the Euramax Group shall pay to Advisor or its designees a transactionfee in connection with the consummation of each acquisition, divestiture orfinancing (including any refinancing) by Euramax or any of its subsidiaries inan amount equal to One (1%) of the value of such transaction, plus reasonableout-of-pocket expenses;

 

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provided, however, that nosuch transaction fee shall be payable in connection with transactions that areacquisitions, divestitures or financings (including any refinancings) betweenor among the Company and one or more of its subsidiaries or between or amongsubsidiaries.

 

(c)                                  Collectionof Fee.  Subject to the limitationdescribed in Section 3(e) below, the decision whether to collect any feecontemplated by this Agreement (an “Advisory Fee”) in a given period shall bein the Advisor’s sole discretion.  TheAdvisor’s decision not to collect or to defer an Advisory Fee in any given yearshall not be construed to be a waiver of the Advisor’s right to collect adeferred Advisory Fee or an Advisory Fee in any future period.

 

(d)                                 Euramaxhereby agrees to pay the reasonable out-of-pocket expenses of Advisor and itsaffiliates incurred in connection with the performance of the servicescontemplated by this Agreement.

 

(e)                                  Restrictions.  Notwithstanding any other provision of thisSection 3, the Euramax Group shall not be required to pay any of the ManagementFees contemplated by Section 3(a), if and to the extent such payment isexpressly prohibited by the provisions of (i) the Indenture dated as ofSeptember 25, 1996, as supplemented by the Amended and RestatedSupplemental Indenture, dated as of December 14, 1999, by and amongEuramax International Limited, certain other subsidiaries of Euramax namedtherein and Chase Manhattan Bank as Trustee or (ii) the Second Amended andRestated Credit Agreement, dated as of March 15, 2002, among the Company,certain subsidiaries of the Company named therein, the Lenders named thereinand BNP Paribas as Agent, as the same may be amended, modified or supplemented,from time to time (the “Facility Agreements”), or any other credit,financing or other agreements or instruments binding upon the Euramax Group ortheir properties; provided, however, that if, as a result of theoperation of any such prohibitions, payments otherwise owed hereunder are notmade, such payments shall not be cancelled but rather shall accrue, and shallbe payable by the Euramax group promptly when, and to the extent that, theEuramax Group is no longer prohibited from making such payments, together withaccrued interest calculated at the Base Rate of interest then charged under theforegoing Second Amended and Restated Credit Agreement from the date suchpayment was due through the date of payment. No amendment to this Agreement which results or could reasonably beexpected to result in the incurrence of any additional liabilities by theCompany hereunder shall be effective without the affirmative consent of theindependent members of the board of directors of the Company.  This Section 3(e) will not prohibit norrestrict, in any manner, the Euramax Group’s obligation to make the paymentsspecified in Section 3(a) or Section 3(b), to make reimbursements pursuant toSection 3(d), to provide indemnification pursuant to Section 6, or tomake any other payments contemplated by this Agreement.

 

4.                                       Personnel.  Advisor shall provide and devote to theperformance of this Agreement such partners, employees and agents of Advisor asAdvisor shall deem appropriate to the furnishing of the services required.

 

5.                                       Liability.  Neither Advisor nor any other Indemnitee (asdefined in Section 6 below) shall be liable to Euramax or any of itssubsidiaries or affiliates for any loss, liability, damage or expense arisingout of or in connection with the performance of services contemplated

 

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by this Agreement, unless such loss, liability, damage or expense shallbe proven to result directly from gross negligence, willful misconduct or badfaith on the part of an Indemnitee acting within the scope of such person’semployment or authority. Advisor makes no representations or warranties,express or implied, in respect of the services to be provided by Advisor or anyof the other Indemnitees.  Except asAdvisor may otherwise agree in writing after the date hereof:  (i) Advisor shall have the right to,and shall have no duty (contractual or otherwise) not to, directly orindirectly:  (A) engage in the sameor similar business activities or lines of business as Euramax or any of itssubsidiaries, including those competing with Euramax or any of its subsidiariesand (B) do business with any client or customer of Euramax or any of itssubsidiaries; (ii) neither Advisor nor any officer, director, employee,partner, affiliate or associated entity thereof shall be liable to Euramax orany of its subsidiaries or affiliates for breach of any duty (contractual orotherwise) by reason of any such activities of or of such person’sparticipation therein; and (iii) in the event that Advisor acquiresknowledge of a potential transaction or matter that may be a corporateopportunity for Euramax or any of its subsidiaries, on the one hand, andAdvisor, on the other hand, or any other person, Advisor shall have no duty(contractual or otherwise) to communicate or present such corporate opportunityto Euramax or any of its subsidiaries and, notwithstanding any provision ofthis Agreement to the contrary, shall not be liable to the Euramax Group or anyof their affiliates for breach of any duty (contractual or otherwise) byreasons of the fact that Advisor directly or indirectly pursues or acquiressuch opportunity for itself, directs such opportunity to another person, ordoes not present such opportunity to the Euramax Group.  In no event will any of the parties heretobe liable to any other party hereto for any indirect, special, incidental orconsequential damages, including lost profits or savings, whether or not suchdamages are foreseeable, or in respect of any liabilities relating to any thirdparty claims (whether based in contract, tort or otherwise) other than theClaims (as defined in Section 6 below) relating to the service to be providedby Advisor hereunder.

 

6.                                       Indemnity.  Each of Euramax and its subsidiaries shalldefend, indemnify and hold harmless each of Advisor, its affiliates, members,partners, employees and agents (collectively, the “Indemnitees”) fromand against any and all loss, liability, damage or expenses arising from anyclaim by any person with respect to, or in any way related to, the performanceof services contemplated by this Agreement (including attorneys’ fees)(collectively, “Claims”) resulting from any act or omission of any ofthe Indemnitees, other than for Claims which shall be proven to be the directresult of gross negligence, bad faith or willful misconduct by anIndemnitee.  Each of Euramax and itssubsidiaries shall defend at its own cost and expense any and all suits oractions (just or unjust) which may be brought against Euramax, any of itssubsidiaries or any of the Indemnitees or in which any of the Indemnitees maybe impleaded with others upon any Claims, or upon any matter, directly orindirectly, related to or arising out of this Agreement or the performancehereof by any of the Indemnitees, except that if such damage shall be proven tobe the direct result of gross negligence, bad faith or willful misconduct by anIndemnitee, then Advisor shall reimburse Euramax and its subsidiaries for thecosts of defense and other costs incurred by Euramax and its subsidiaries tothe extent due to such gross negligence, bad faith or willful misconduct.

 

7.                                       Notices.  All notices hereunder shall be in writingand shall be delivered personally or mailed by United States mail, postageprepaid, addressed to the parties as follows:

 

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To Euramax or theEuramax Group:

 

Euramax International,Inc.

5445 Triangle Parkway,Suite 350

Norcross, Georgia 30092

Attention:  Chief Executive Officer

Facsimile:  770.263.8031

 

To Advisor:

 

CVC Management LLC

399 Park Avenue, 14thFloor

New York, NY 10043

Attention:  Joseph M. Silvestri

Facsimile:  212.888.2940

 

8.                                       Assignment.  Neither Euramax nor any member of theEuramax Group may assign any obligations hereunder to any other party withoutthe prior written consent of Advisor (which consent shall not be unreasonablywithheld), and Advisor may not assign any Advisor obligations hereunder to anyother party without the prior written consent of Euramax (which consent shallnot be unreasonably withheld); provided, that Advisor may, withoutconsent of Euramax, assign its rights and obligations under this Agreement toany Permitted Transferee (as such term is defined in the Securities HoldersAgreement, dated the date hereof, by and among Euramax and the stockholders ofEuramax named therein) of the Fund.

 

9.                                       Successors.  This Agreement and all the obligations andbenefits hereunder shall inure to the successors and assigns of the parties.

 

10.                                 Counterparts.  This Agreement may be executed and deliveredby each party hereto in separate counterparts, each of which when so executedand delivered shall be deemed an original and all of which taken together shallconstitute but one and the same agreement.

 

11.                                 EntireAgreement; Modification; Governing Law. The terms and conditions hereof constitute the entire agreement betweenthe parties hereto with respect to the subject matter of this Agreement andsupersede all previous communications, either oral or written, representationsor warranties of any kind whatsoever, except as expressly set forthherein.  No modifications of thisAgreement nor waiver of the terms or conditions thereof shall be binding uponeither party unless approved in writing by an authorized representative of suchparty.  All issues concerning thisAgreement shall be governed by and construed in accordance with the laws of theState of New York, without giving effect to any choice of law or conflict oflaw provision or rule (whether of the State of New York or any other jurisdiction)that would cause the application of the law of any jurisdiction other than theState of New York.

 

12.                                 EffectiveTime.  This Agreement shall beeffective as of the Effective Time without further action required on the partof any party hereto.  If the Closingdoes not

 

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occur and the Purchase Agreement is terminated, this Agreement shallhave no force or effect and shall be deemed void ab initio.

 

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IN WITNESS WHEREOF, theparties have executed this Advisory Agreement as of the date first writtenabove.

 

 
|   | EURAMAX INTERNATIONAL,  INC. |
|--------|------------------------------|
|   |                         |
|   |                         |
|   | By:                          |   |
|   | Name:                        |
|   | Title:                       |
|   |                         |
|   |                         |
|   | CVC MANAGEMENT LLC           |
|   |                         |
|   |                         |
|   | By:                          |   |
|   | Name:                        |
|   | Title:                       |

 

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