EXHIBIT 10.7
MANAGEMENT BUY-SELL AGREEMENT
This BUY-SELL AGREEMENT (this "Agreement") is dated as of December 10,
2003, by and among Atrium Corporation, a Delaware corporation (the "Company"),
and Xxxx X. Xxxx (the "Stockholder").
WHEREAS, in connection with the execution of certain agreements,
including a Contribution and Subscription Agreement relating to the purchase of
shares of Common Stock, par value $0.01 of the Company (the "New Shares"),
Exchanged Stock Agreement relating to the exchange of certain shares of Atrium
Corporation (the "Rollover Shares" and, collectively with the New Shares, the
"Shares") in connection with the transactions contemplated by that certain
Merger Agreement, dated October 27, 2003, by and among Atrium Corporation, KAT
Holdings, Inc. and KAT Acquisition, Inc. and the other signatories thereto, as
amended (the "Merger Agreement"), Replacement Option Agreement relating to the
grant of certain options of Atrium Corporation pursuant to the Atrium
Replacement Option Plan (the "Rollover Options") or 2003 Stock Option Agreement
relating to the grant of certain options of Atrium Corporation pursuant to the
Atrium Corporation 2003 Option Plan (the "New Options", and, collectively with
the Rollover Options, the "Option Shares"), the Company and the Stockholder have
agreed to enter into a Buy-Sell Agreement in the form hereof with respect to the
Shares, the Option Shares and any other Common Stock or Common Stock Equivalents
otherwise acquired by the Stockholder from the Company.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the Company and the Stockholder agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
meanings specified below:
"Affiliate" means, as to any Person, a Person that directly,
or indirectly through one or more intermediaries, controls or
is controlled by, or is under common control with, such
Person.
"Board" means the Board of Directors of the Company.
"Call Notice" has the meaning specified in Section 2.2 hereof.
"Cause" means termination by action of the Board because of:
(a) the Stockholder's conviction of, or plea of nolo
contendere to, a felony or a crime involving moral turpitude;
(b) the Stockholder's personal dishonesty, incompetence,
willful misconduct, willful violation of any law, rule or
regulation (other than minor traffic violations or similar
offenses) or breach of fiduciary duty which involves personal
profit; (c) the Stockholder's commission of material
mismanagement in the conduct of his duties as
assigned to him by the Board or the Stockholder's supervising
officer or officers of the Company or any Related Entity; (d)
the Stockholder's willful failure to execute or comply with
the policies of the Company or any Related Entity or his
stated duties as established by the Board or the Stockholder's
supervising officer or officers of the Company or any Related
Entity, or the Stockholder's intentional failure to perform
the Stockholder's stated duties; or (e) substance abuse or
addiction on the part of the Stockholder. Notwithstanding the
foregoing, in the event that the Stockholder is at any time
subject to an employment agreement with the Company or any
Related Entity that contains a definition of "Cause" (or any
similar definition), then during the term of such employment
agreement the definition contained in such employment
agreement shall, for all purposes of this Agreement, be the
applicable definition of "Cause" hereunder and supersede the
foregoing definition for purposes of this Agreement.
"Common Stock" means the Company's authorized Common Stock,
$0.01 par value per share, and any other capital stock of the
Company which is (a) not preferred as to dividends or assets
over any class of stock of the Company, (b) not subject to
redemption, and (c) issued to the holders of shares of Common
Stock upon any reclassification thereof.
"Common Stock Equivalents" means, without duplication with any
other Common Stock or common stock equivalents, any rights,
warrants, options, convertible securities or indebtedness,
exchangeable securities or indebtedness, or other rights,
exercisable for or convertible or exchangeable into, directly
or indirectly, Common Stock of the Company and securities
convertible or exchangeable into Common Stock of the Company,
whether at the time of issuance or upon the passage of time or
the occurrence of some future event, provided that for
purposes of Section 2.3(b), Common Stock Equivalents and
Option Shares will not include (x) unvested options under the
2003 Stock Option Plan, and (y) 3,000 A Warrants and unvested
B Warrants (subject to the last sentence of this definition)
under the Hull Warrant; and provided further that, for
purposes of Section 2.3(a), Common Stock Equivalents and
Option Shares will not include unvested options under the 2003
Stock Option Plan. Vesting, for this purpose, will give effect
to any acceleration event in any employment, buy-sell, option
or other applicable agreement.
"Company" has the meaning specified in the preamble hereto.
"Company Non-Renewal" shall mean the non-renewal by the
Company or any Related Entity of any expired employment
agreement between the Company or any Related Entity and any
Stockholder (under circumstances not involving Cause),
provided that non-renewal will not be deemed to occur if the
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Company thereafter continues or offers to continue employment
(whether or not pursuant to such employment agreement) on
terms and conditions that would not give rise to a Good Reason
termination by the Stockholder.
"Delayed Closing Date" has the meaning specified in Section
5.2 hereto.
"Disability" means permanent disability as defined under the
appropriate provisions of the long-term disability plan
maintained for the benefit of employees of the Company or any
Related Entity who are regularly employed on a salaried basis
unless another meaning shall be agreed to in writing by the
Board and the Stockholder, or, to the extent defined
differently, shall have the meaning set forth in any
employment agreement between a Stockholder and the Company or
any Related Entity with respect to such Stockholder.
Notwithstanding the foregoing, in the event that the
Stockholder is at any time subject to an employment agreement
with the Company or any Related Entity that contains a
definition of "Disability" (or any similar definition), then
during the term of such employment agreement the definition
contained in such employment agreement shall, for all purposes
of this Agreement, be the applicable definition of
"Disability" hereunder, and supersede the foregoing definition
of this Agreement.
"EBITDA" means, with respect to the most recently completed 12
month period immediately preceding any applicable measuring
date, earnings before interest, taxes, depreciation and
amortization of the Company and all of its Subsidiaries on a
consolidated basis, but excluding any extraordinary gains or
losses, special charges, any compensation expense attributable
to the Company's equity securities, management fees paid to
the Company's equity sponsor, any accounts receivable
securitization expense, any transaction or merger-related
costs that are expensed rather than capitalized including any
effect of fair market value adjustments made pursuant to
purchase accounting and any other non-cash items, and adjusted
for all acquisitions and/or divestitures as if the
transactions had occurred at the beginning of such 12 month
period.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall, as it relates to the Company's
Common Stock or Common Stock Equivalents, mean the average of
the high and low prices of such Common Stock or Common Stock
Equivalents as reported on the principal national securities
exchange on which the shares of Common Stock or Common Stock
Equivalents are then listed on the date specified herein, or
if there were no sales on such date, on the next preceding day
on which there were sales, or if such Common Stock or Common
Stock Equivalents is not listed on a national securities
exchange, the last reported bid price in the
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over-the-counter market, or if such shares are not traded in
the over-the counter market, "Fair Market Value" shall be
computed as follows:
(A) by multiplying the Company's trailing 12-month EBITDA
at such time by 7.3, and adding to the resulting
product cash and cash equivalents of the Company (the
"Enterprise Value"); and
(B) by deducting from the Enterprise Value (a) all
indebtedness of the Company (including, without
limitation, any capitalized leases) for borrowed
money and (b) the aggregate liquidation preference of
any outstanding preferred stock of the Company (plus
accrued but unpaid dividends thereon), in each case
as of the end of the immediately preceding 12-month
period at such time and reflected on the face of the
Company's balance sheet.
If, at any time, a dispute arises between the Company and the
Stockholder regarding the determination of Fair Market Value,
then such determination shall be made, according to the
methodology described above, by an independent investment
banking, accounting firm or independent appraiser of
nationally recognized standing or regional prominence mutually
selected by the Company and the Stockholder.
"Family Members" means, with respect to any individual, any
Related Person or Family Trust of such individual.
"Family Trust" means, with respect to any individual, any
trust created for the benefit of one or more of such
individual's Related Persons and controlled by such
individual.
"Good Reason" means:
(i) any significant reduction, without the
Stockholder's consent, in the Stockholder's position,
authority, duties or responsibilities;
(ii) any failure by the Company to pay when due any
compensation or benefits due and owing to the
Employee, other than any such failure not occurring
in bad faith which is remedied by the Company
promptly after receipt of written notice thereof
given by the Stockholder;
(iii) any material breach by the Company of any
material agreement between the Stockholder and the
Company, including but not limited to any employment
agreement, other than any such breach not occurring
in bad faith which is remedied by the Company
promptly after receipt of written notice thereof
given by the Stockholder; or
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(iv) any material violation by the Company of any law
or regulation governing employment as such law or
regulation affects the Stockholder, other than any
such violation not occurring in bad faith which is
remedied by the Company promptly after receipt of
written notice thereof given by the Stockholder.
Notwithstanding the foregoing, in the event that the
Stockholder is at any time subject to an employment
agreement with the Company or any Related Entity that
contains a definition of "Good Reason" (or any
similar definition), then during the term of such
employment agreement the definition contained in such
employment agreement shall, for all purposes of this
Agreement, be the applicable definition of "Good
Reason" hereunder, and supersede the foregoing
definition of this Agreement.
"Hull Warrants" means that certain Warrant Agreement, dated
December 10, 2003, for 7,750 shares of Common Stock, entered
into with Xxxx X. Xxxx.
"Institutional Investors" means (i) ATR Acquisition LLC, (ii)
KAT L.P. and any other investment partnership or entity
managed or controlled by Kenner & Company, Inc. and/or its
Affiliates, (iii) UBS Capital Americas II, LLC and/or its
Affiliates, and (iv) ML IBK Positions, Inc. and/or its
Affiliates, and, in each case, any of such transferees as
permitted by the terms of the LLC Agreement or the
Stockholders Agreement.
"KAT L.P." means KAT Holdings, L.P., a Delaware limited
partnership.
"Lead Underwriter" has the meaning set forth in Section 10
hereof.
"LLC Agreement" means the Amended and Restated Limited
Liability Company Agreement, dated as of December 10, 2003, of
ATR Acquisition, LLC, as may be amended from time to time.
"Market Value Per Share" means, with respect to any date, the
quotient obtained by dividing (a) the Fair Market Value of the
entire common equity of the Company (without premium for
control or discounts for minority interests, restrictions on
transfer or lack of voting rights), calculated as of such
date, plus the aggregate consideration to be paid to the
Company upon the exercise, conversion or exchange of all then
outstanding and exercisable, convertible or exchangeable
Common Stock Equivalents, by (b) the sum of the number of
shares of Common Stock then outstanding, plus the number of
shares of Common Stock then issuable upon exercise, conversion
or exchange of then outstanding and exercisable, convertible
or exchangeable Common Stock Equivalents.
"Option Shares" has the meaning specified in the preamble
hereto.
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"Permitted Holders" means any Specified Holders.
"Permitted Transferee" means the Stockholder's Family Members
and Personal Representative.
"Person" means any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a
corporation, a partnership, a trust or other entity.
"Personal Representative" means with respect to any
individual, any executor, administrator, trustee, guardian or
other legal representative of such individual.
"Prime Rate" means, for any day, a rate per annum that is
equal to the corporate base rate of interest as stated in The
Wall Street Journal, changing when and as said corporate base
rate changes.
"Purchase Price Per Share" means $1,000 or, in the case of
Common Stock or Common Stock Equivalents other than the
Shares, the Rollover Options, the Hull Warrants and the New
Options issued and outstanding as of the date hereof, the
applicable purchase price or exercise or conversion price
under the terms of the option agreement or other agreement
governing the issuance of such Common Stock or Common Stock
Equivalents.
"Qualified Public Offering" means the consummation of an
underwritten public offering of Common Stock or other capital
stock of the Company that is listed for trading on the New
York Stock Exchange or the NASDAQ National Market (or any
successor exchange, market or organization thereto) resulting
in gross proceeds of at least $100,000,000.
"Related Entity" means, with respect to any entity, such
entity's direct and indirect parents and subsidiaries.
"Related Persons" means, with respect to any individual, such
individual's parents, spouse, children and grandchildren.
"Repurchase Notice" has the meaning specified in Section 3.3
hereof.
"Rollover Options" has the meaning specified in the preamble
hereto.
"Sale of the Company" means in any one or a series of
transactions, any (i) sale, lease, exchange or other transfer
of all or substantially all of the assets of the Company
(including the capital stock or assets of its operating
subsidiaries) to any Person other than a Specified Holder or
group of related Persons for purposes of Section 13(d) of the
Exchange Act ("Group") other
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than a Group controlled by one or more of the Specified
Holders, or (ii) sale or transfer of all of the shares of
capital stock of the Company (including, without limitation,
any merger, reorganization, consolidation, but excluding any
merger effected exclusively for the purpose of changing the
domicile of the Company) to any Person other than any of the
Specified Holders or Group other than a Group controlled by
one or more of the Specified Holders.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning specified in the preamble hereto.
"Specified Holders" means (i) KAT L.P. and any other
investment partnership or entity managed or controlled by
Kenner & Company, Inc. and/or its Affiliates, (ii) UBS Capital
Americas II, LLC and/or its Affiliates, (iii) ML IBK
Positions, Inc. and/or its Affiliates, (iv) any partners,
members or investors (either directly or indirectly through
any investment partnerships or entities) in the entities
described in clauses (i), (ii) and (iii) above who are
distributees of investments held by the entities described in
clauses (i), (ii) and (iii) above, (v) any immediate family
members or lineal descendents, or trusts or other entities for
their benefit in respect of the Persons described in clauses
(i), (ii), (iii) and (iv) above, and (vi) any Affiliates in
respect of the Persons described in clauses (i), (ii), (iii)
and (iv) above. Specified Holders will not include Masco
Corporation and its Affiliates.
"Stockholder" has the meaning specified in the introductory
paragraph hereof.
"Stockholder Non-Renewal" shall mean, upon the expiration of
any employment agreement between the Company or any Related
Entity and a Stockholder, the non-renewal of such agreement by
the Stockholder (under circumstances not involving Good
Reason).
"Stockholders Agreement" means the Stockholders Agreement,
dated as of December 10, 2003, by and among the Company and
the other signatories party thereto, as may be amended from
time to time.
"Subsidiary" means any corporation, association, trust, or
other business entity, of which the designated parent shall at
any time own or control directly or indirectly through a
Subsidiary or Subsidiaries at least a majority (by number of
votes) of the outstanding shares of capital stock (or other
shares of beneficial interest) entitled ordinarily to vote for
the election of such business entity's directors (or in the
case of a business entity that is not a corporation, for those
persons exercising functions similar to directors of a
corporation).
"Termination of Employment" means the termination of the
Stockholder's employment with the Company and all of its
Related Entities for any reason,
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including without limitation for retirement, death or
disability of the Stockholder, and whether or not for "Cause".
"Transfer" has the meaning specified in Section 3.1 hereof.
2. REPURCHASE OF SHARES.
2.1 Call on Shares. Upon the Termination of Employment at any time, or
a Sale of the Company, the Company and/or its designees may, at its option,
repurchase from the Stockholder or its Permitted Transferees, and the
Stockholder or its Permitted Transferees will at the request of the Company sell
to the Company and/or its designees, all (but not less than all) of the Shares,
Option Shares and other Common Stock and Common Stock Equivalents held by the
Stockholder or its Permitted Transferees at a purchase price per share
determined pursuant to paragraphs (a), (b) and (c) below:
(a) in the event that such Termination of Employment is by the
Company for Cause, or by the Stockholder under circumstances that do not involve
Good Reason including by the Stockholder under circumstances that involve
Stockholder Non-Renewal at a purchase price per share equal to the lesser of (i)
the Purchase Price Per Share and (ii) the Market Value Per Share as of the date
of such Termination of Employment, minus, in the case of a Common Stock
Equivalent, any exercise or conversion price; and
(b) in the event that such Termination of Employment is for
any reason not referenced in Section 2.1(a), including, without limitation,
termination by the Company or any Related Entity without Cause, death,
Disability, retirement, Good Reason, or Company Non-Renewal, at a purchase price
per share equal to the greater of (i) the Purchase Price Per Share and (ii) the
Market Value Per Share as of the date of such Termination of Employment, minus,
in the case of a Common Stock Equivalent, any exercise or conversion price; and
(c) in the event of a Sale of the Company, at a purchase price
per share equal to the same amount and type of consideration per share received
by each other holder of Common Stock in connection with such Sale of the
Company, minus, in the case of a Common Stock Equivalent, any exercise price or
conversion price.
2.2 Call Closing. The Company's call rights under Section 2 hereof
shall be exercisable by the Company at any time within 90 days following the
Termination of Employment or, in the case of a Sale of the Company, 30 days
prior to or 90 days following such Sale of the Company, by notice (the "Call
Notice") to the Stockholder specifying the number of Shares or other securities
being repurchased, the aggregate purchase price payable therefor and the date,
time and place of a closing for the repurchase, such closing to be held not
earlier than five (5) days nor later than thirty (30) days after delivery of the
Call Notice to the Stockholder. The Company's call rights under Section 2.1
above shall lapse if not exercised within the time periods specified
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above in accordance with the provisions hereof except as otherwise provided in
Section 5 hereof. Upon tender by the Company of the purchase price for the
Shares, Option Shares or other Common Stock or Common Stock Equivalents, being
repurchased hereunder in accordance with Section 6 hereof, all of the Shares,
Option Shares or other Common Stock or Common Stock Equivalents, being so
repurchased shall no longer be deemed to be outstanding, all of the
Stockholder's rights with respect to such Shares, Option Shares or other Common
Stock or Common Stock Equivalents, shall terminate with the exception of the
right of the Stockholder to receive the repurchase price in exchange therefor
pursuant to this Section 2.2, and the Stockholder hereby appoints the Company as
its attorney-in-fact to take all actions necessary and sign all documents
required to cancel such Shares, Option Shares or other Common Stock or Common
Stock Equivalents, on its books and records.
2.3 Put. If, in the event of (i) Termination of Employment by the
Company without Cause, (ii) Termination of Employment due to death or
Disability, (iii) Termination of Employment by the Stockholder with Good Reason,
(iv) Termination of Employment due to a Company Non-Renewal, or (v) a Sale of
the Company (other than a Sale of the Company subject to the Drag Along Right),
the Stockholder or his Personal Representative may require the Company to
purchase all (but not less than all) of the Shares, Option Shares and other
shares of Common Stock and Common Stock Equivalents, that are owned by the
Stockholder as of the effective date of such Termination of Employment or Sale
of the Company. In such event, the purchase price shall be as set forth in
Section 2.1(b) or 2.1(c) above, as the case may be.
(a) If, in the event of Termination of Employment by the
Stockholder without Good Reason, or in the event of a Stockholder Non-Renewal,
and if the Company does not exercise its option to purchase Shares, Option
Shares or any other shares of Common Stock or Common Stock Equivalents held by
the Stockholder, the Stockholder or his Personal Representative may require the
Company to purchase all (but not less than all) of the Shares, Option Shares and
other shares of Common Stock and Common Stock Equivalents, that are owned by the
Stockholder as of the effective date of such Termination of Employment In such
event, the purchase price shall be as set forth in Section 2.1(a) above.
2.4 Put Closing. If the Stockholder or his Personal Representative
elects to exercise his put option as described in Section 2.3 above, the
Stockholder or his Personal Representative shall give written notice to the
Company of such intention not later than ninety (90) days after his Termination
of Employment or Sale of the Company (other than a Sale of the Company subject
to the Drag-Along Right). The Closing of such repurchase shall otherwise be
effected in accordance with the provisions set forth in Section 2.2 hereof for a
call closing.
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3. RESTRICTIONS ON TRANSFER; DRAG-ALONG RIGHTS; TAG-ALONG RIGHTS.
3.1 Restrictions on Transfer of Shares. The Stockholder may not sell,
assign, transfer, pledge or otherwise dispose of ("Transfer") any of the Shares,
Option Shares or other Common Stock or Common Stock Equivalents, held by the
Stockholder, either voluntarily or involuntarily or by operation of law;
provided, however, that the Stockholder may Transfer any such securities (x) to
the Company pursuant to Section 2 hereof, (y) in accordance with this Section 3,
and (z) to Permitted Transferees of the Stockholder, so long as any such
transferee agrees to be bound by the provisions hereof.
3.2 Dispositions in Breach of this Agreement. Any disposition or
attempted disposition of any Shares, Option Shares or other Common Stock or
Common Stock Equivalents in breach of the provisions of Section 3.1 hereof shall
be void, shall constitute a breach of this Agreement and shall entitle the
Company or its designee to repurchase all of the Shares, Option Shares or other
Common Stock or Common Stock Equivalents, pursuant to the procedures set forth
in Section 3.3 hereof, at a purchase price per Share equal to the lower of the
Market Value Per Share or the Purchase Price Per Share as of the date of such
disposition or attempted disposition, minus, in the case of any Common Stock
Equivalents, the applicable exercise or conversion price. The repurchase rights
of the Company under this Section 3.2 will lapse if not exercised pursuant to
Section 3.3 hereof within 90 days of the date on which the Board of Directors of
the Company first receives actual notice of the disposition or attempted
disposition giving rise to such repurchase rights, but such failure to exercise
shall in no event constitute a waiver of any breach of this Agreement.
3.3 Repurchase Procedure. The Company may exercise its repurchase
rights under Section 3 hereof by giving notice (the "Repurchase Notice") to the
Stockholder within ninety (90) days after the Board obtains actual knowledge of
the breach giving rise to such repurchase rights. The Repurchase Notice shall
specify the aggregate purchase price for the Shares, Option Shares or other
Common Stock or Common Stock Equivalents, and the date, time and place for a
closing of the repurchase, such closing to be held not earlier than five (5)
days nor later than thirty (30) days after delivery of the Repurchase Notice by
the Company to the Stockholder. The Company's repurchase rights under Section
3.2 hereof shall lapse with respect to any event giving rise thereto if not
exercised within the foregoing time periods in accordance with the procedures
specified in this Section 3.3 except as otherwise provided in Section 5 hereof.
Upon tender by the Company of the purchase price for the securities being
repurchased hereunder in accordance with Section 6 hereof, all of the Shares,
Option Shares or other Common Stock or Common Stock Equivalents, being so
repurchased shall no longer be deemed to be outstanding, all of the
Stockholder's rights with respect to such Shares, Option Shares or other Common
Stock or Common Stock Equivalents, shall terminate with the exception of the
right of the Stockholder to receive the repurchase price in exchange therefor
pursuant to Section 3.2, and the Stockholder hereby appoints the
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Company as its attorney-in-fact to take all actions necessary and sign all
documents required to cancel such Shares, Option Shares or other Common Stock or
Common Stock Equivalents, on the Company's books and records.
3.4 Drag-Along Rights.
(a) If, at any time, any of the Institutional Investors
determines to transfer in a bona fide arm's length sale Common Stock and Common
Stock Equivalents owned by such Institutional Investor to any person or persons
who are not Affiliates of such Institutional Holder (the "Proposed Transferee")
and such transfer would trigger the drag-along rights provided under Section 9.5
of the LLC Agreement and/or the provisions of the Stockholders Agreement, such
Institutional Investor(s) shall have the right (the "Drag Along Right"), subject
to applicable law and compliance with any other restrictions applicable to such
transfer, to require the Stockholder to sell, pursuant to this Section 3.4, to
the Proposed Transferee, on the same terms and conditions as applicable to such
Institutional Investor except as limited in Section 3.4(b), that same portion of
the Common Stock, Shares, Option Shares and Common Stock Equivalents then held
by the Stockholder as the other Company Stockholders subject to the drag-along
rights set forth in Section 9.5 of the LLC Agreement and/or pursuant to the
Stockholders Agreement are obligated to sell pursuant to such agreements (the
"Drag-Along Securities); provided that the exercise or conversion price of any
Common Stock Equivalents will be subtracted from any purchase price otherwise
paid therefor.
(b) To exercise a Drag Along Right, KAT L.P. shall cause the
selling Institutional Investor(s) to give the Stockholder at least 15 days prior
to the proposed transfer to the Proposed Transferee, a written notice (the "Drag
Along Notice") containing (i) the name and address of the Proposed Transferee
and (ii) the proposed purchase price, the terms of payment and other material
terms and conditions of the Proposed Transferee's offer. The Stockholder shall
thereafter be obligated to sell all the Drag-Along Securities to the Proposed
Transferee. The Stockholder shall agree to enter into a purchase agreement in
form and substance approved by the Institutional Investor which may contain
provisions requiring customary representations as to ownership of the shares to
be purchased and the absence of liens thereon and customary indemnification
provisions, including indemnification from the Stockholder.
(c) The Stockholder will not be required to participate in a
Drag-Along Right pursuant to this Agreement if its express or contractual
liability for representations, warranties and indemnities pursuant to the
related transaction exceeds the proceeds received by the Stockholder pursuant to
that transaction.
3.5 Tag-Along Rights.
(a) If any Kenner Member (as defined in the LLC Agreement)
determines to sell, transfer or otherwise dispose of any shares of Common Stock
or Common Stock Equivalents then owned by the Institutional Investors (the
"Transfer
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Securities") to any Person or Persons (other than to the partners and
co-investors and their respective Affiliates of the Kenner Member) and such
sale, transfer or other disposition would trigger the tag-along rights provided
under Section 9.3 of the LLC Agreement and/or the provisions of the Stockholders
Agreement, KAT Holdings, L.P. shall cause the Kenner Member to notify the
Stockholder in writing (the "Tag Along Notice") of such proposed transfer and
its terms and conditions. Within 15 days of receipt of a Tag Along Notice, the
Stockholder shall notify (the "Tag Along Participation Notice") the Kenner
Member if it elects to participate in such transfer ("Tag Along Right") and
shall state the number of Shares, Rollover Options and other Common Stock that
the Stockholder desires to sell (the "Tag Along- Securities"). Upon electing to
transfer, the Stockholder shall be obligated to sell, at the same price and on
the same terms as the Kenner Member, the number of Tag-Along Securities stated
in its notice to the Kenner Member. The Stockholder may elect to sell such
number of Tag-Along Securities as is equal to the number of shares of Transfer
Securities to be purchased by the proposed transferee multiplied by a fraction,
the numerator of which shall be the number of Shares, Rollover Options and other
Common Stock held by the Stockholder and the denominator of which shall be the
aggregate number of shares of Common Stock or Common Stock Equivalents held by
the Kenner Member and all other stockholders exercising tag-along rights under
the LLC Agreement and/or the Stockholders Agreement and other Buy-Sell
Agreements (including the Stockholder); provided, however, that the sale of the
Transfer Securities contained in the Tag Along Notice is consummated within 90
days following delivery of the Tag-Along Notice. The Stockholder shall agree to
enter into a purchase agreement in form and substance approved by the Kenner
Member which may contain provisions requiring customary representations as to
ownership of the Tag-Along Securities to be purchased and the absence of liens
thereon and indemnifications from the Stockholder (provided, that the
Stockholder will not be required to undertake express or contractual liability
for representations, warranties and indemnities pursuant to the tag-along
transaction if such liability exceeds the proceeds received by the Stockholder
pursuant to such transactions). If the sale is not consummated within 90 days
following delivery of the Tag-Along Notice, then the Stockholder shall no longer
be obligated but shall continue to have the right to sell such Stockholder's
Tag-Along Securities pursuant to such Tag Along Right and shall have the rights
under, and remain subject to, the provisions of this Section 3.5 with respect to
any subsequent proposed transfer described in this Section 3.5. In the event
that the proposed transferee does not purchase the number of shares of Tag-Along
Securities that the Stockholder elects to sell pursuant to the foregoing on the
same terms and conditions as the securities purchased from the Kenner Member,
then the Kenner Member shall not be permitted to sell any securities to the
proposed transferee. If no Tag Along Participation Notice is received by the end
of the 15 days referred to above, the Kenner Member shall have the right to
transfer the securities to the proposed transferee.
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4. LEGENDS; STOP TRANSFER.
4.1 Each certificate representing the Shares shall bear legends in or
substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. NO TRANSFER,
SALE OR OTHER DISPOSITION OF THESE SHARES MAY BE MADE UNLESS A
REGISTRATION STATEMENT WITH RESPECT TO THESE SHARES HAS BECOME
EFFECTIVE UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES
LAWS, OR THE COMPANY HAS BEEN FURNISHED WITH AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
CERTAIN REPURCHASE AND OTHER RIGHTS IN FAVOR OF THE COMPANY
AND PROVISIONS RESTRICTING TRANSFER CONTAINED IN A BUY-SELL
AGREEMENT, DATED AS OF DECEMBER 10, 2003, A COPY OF WHICH WILL
BE FURNISHED BY THE COMPANY TO THE HOLDER OF THE SHARES
EVIDENCED BY THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT
CHARGE."
4.2 In addition, the Company shall make a notation regarding the
restrictions on transfer of the Shares in the stock books of the Company, and
such shares shall be transferred on the books of the Company only if and when
transferred or sold in compliance with all of the terms and conditions of this
Agreement.
5. REPURCHASE RESTRICTIONS.
5.1 Contractual Restrictions on Repurchase. Notwithstanding any
provision to the contrary in Sections 2 or 3 hereof, in the event that any
payment by the Company of any portion of the purchase price for any Shares, or
other Common Stock or Common Stock Equivalents, that the Company is obligated
pursuant to the put to repurchase is, at the time such payment would otherwise
be due hereunder, prohibited by the terms of any of the Company's or any of its
Subsidiaries' financing agreements or indentures with its lenders or creditors
to which the Company or any of its Subsidiaries is bound, the Company shall be
entitled, but not obligated, to complete the repurchase of such Shares, or other
Common Stock or Common Stock Equivalents, by tendering to the Stockholder (or
any Permitted Transferee pursuant to Section 3.1 hereof) (a) a check for that
portion (if any) of the cash purchase price the payment of which is not so
prohibited, and/or (b) a promissory note ("Note") for the entirety or balance of
the cash purchase price, as
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applicable. Each such Note shall (i) bear interest at the Prime Rate, (ii)
provide for the payment of the principal evidenced thereby in annual
installments commencing one (1) year after such repurchase in such amounts as
are satisfactory to the Company's and its Subsidiaries' lenders, and (iii) be
subordinated to the Company's or any of its Subsidiaries' indebtedness to its
lenders on terms satisfactory to such lenders.
Notwithstanding anything to the contrary contained in this Agreement,
the entire principal balance of the Note and any accrued and unpaid interest
under the Note shall be due and payable upon: (i) the Sale of the Company or
(ii) when the payment of such is no longer prohibited under the Company's
financing agreements or indentures. Once all accrued but unpaid interest has
been paid, the Company shall also periodically pay as much of the outstanding
principal balance of the Note when the payment of such is no longer prohibited
under the Company's financing agreements or indentures. While the Note will
provide for annual payments, the Company shall test on a quarterly basis (using
the Company's compliance certificates delivered under its financing agreements
and indentures for the following periods: March 31, June 30, September 30, and
December 31 of each year the Note is outstanding) to determine whether the
Company will be permitted to make the interest and principal payments required
by this paragraph. Each test shall be performed within ten (10) days of the
availability of the financial data required. Once it has been determined that
any payment of interest or principal is permitted, such payment(s) shall be made
within ten (10) days of the completion of the test.
5.2 Impairment of Capital. If, even after giving effect to the
provisions of Section 5.1 above, the Company is prohibited by law from
repurchasing any Shares, or other Common Stock or Common Stock Equivalents,
which it is obligated pursuant to the put to repurchase hereunder due to any
existing or prospective impairment of its capital, the closing of such
repurchase shall be delayed until the first date on which the Company has
sufficient capital to lawfully repurchase such Shares, or other Common Stock or
Common Stock Equivalents (the "Delayed Closing Date"). In the event of any such
delay, (a) the Company will be obligated to pay, on the Delayed Closing Date,
interest on the repurchase price for such Shares, or other Common Stock or
Common Stock Equivalents, at the Prime Rate from the date on which the closing
of the repurchase of such Shares, or other Common Stock or Common Stock
Equivalents, was originally scheduled to occur to the Delayed Closing Date, and
(b) the Stockholder shall remain bound by the restrictions on Transfer contained
herein during such delay.
6. PAYMENT FOR SHARES. At any closing held to consummate any repurchase of the
Shares, or other Common Stock or Common Stock Equivalents, hereunder, the
Stockholder shall deliver to the Company all certificates representing such
Shares, or other Common Stock or Common Stock Equivalents, duly endorsed in
blank or with duly executed stock powers attached, and the Company shall deliver
to the Stockholder a check in the amount of the repurchase price and/or a
promissory note as provided in Section 5.1 above.
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7. TERM. This Agreement, and, except as provided in the following sentence, the
repurchase rights and obligations and all of the restrictions on transfer
contained herein (including, without limitation, the repurchase rights of the
Company pursuant to Sections 2 and 3 hereof), shall terminate upon the earliest
of (a) Sale of the Company (provided, however, that, in the event of a Sale of
the Company, Sections 2, 5 and 6 of this Agreement (and the related definitions)
shall not terminate until such time as the repurchase provisions contained
therein have been satisfied or have otherwise terminated or expired) or, (b) a
Qualified Public Offering (provided however, Section 10 shall not terminate).
The termination of this Agreement shall not affect any repurchase rights or
obligations, which have arisen hereunder prior to such termination.
8. ADJUSTMENT OF REPURCHASE PRICE. Upon any stock split, reverse stock split,
recombination of shares or other similar reorganization of the capital structure
of the Company, the repurchase price otherwise payable to the Stockholder upon
the repurchase of any Shares, or other Common Stock or Common Stock Equivalents,
pursuant to Sections 2 and 3 hereof shall be proportionally adjusted to reflect
such reorganization.
9. CONSENT TO APPROVED SALE. If the Board and the holders of a majority of the
Common Stock then outstanding approve the Sale of the Company to an independent
third party pursuant to the Drag-Along Right (the "Approved Sale"), the
Stockholder shall consent to and raise no objections against the Approved Sale,
and if the Approved Sale is structured as a sale of capital stock, the
Stockholders shall agree to sell all of its Shares, Option Shares and other
Common Stock and Common Stock Equivalents (including, if applicable, the Common
Stock and Common Stock Equivalents excluded in clauses x and y of the definition
of Common Stock Equivalents) on the terms and conditions approved by the Board
and the holders of a majority of the Common Stock then outstanding. The
Stockholder shall take all necessary and desirable actions as determined by the
Company (including, without limitation, providing such customary representations
and warranties and customary indemnification) in connection with the
consummation of the Approved Sale. For purposes of this Section 9, an
"independent third party" is any person who does not own in excess of 5% of the
Common Stock on a fully diluted basis, who is not controlling, controlled by or
under common control with any such 5% owner of the Common Stock and who is not
the spouse, ancestor, descendant (by birth or adoption) or descendent of a
grandparent of any such 5% owner of the Common Stock. If the Company or the
holders of the Company's securities enter into any negotiation or transaction
for which Rule 506 (or any similar rule then in effect) promulgated pursuant to
the Securities Act may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization), the
Stockholder shall, at the request of the Company, appoint a purchaser
representative (as such term is defined in Rule 501 promulgated pursuant to the
Securities Act) reasonably acceptable to the Company. If the Stockholder
appoints the purchaser representative
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designated by the Company, the Company will pay the fees of such purchaser
representative, but if the Stockholder declines to appoint the purchaser
representative designated by the Company the Stockholder shall appoint another
purchaser representative (reasonably acceptable to the Company), and the
Stockholder shall be responsible for the fees of the purchaser representative so
appointed.
10. UNDERWRITER LOCK-UP PERIOD.
If requested by the Company and the lead underwriter of any public
offering (including a Qualified Public Offering) of the Common Stock (the "Lead
Underwriter"), the Stockholder shall irrevocably agree not to sell, contract to
sell, grant any option to purchase, transfer the economic risk of ownership in,
make any short sale of, pledge or otherwise transfer or dispose of, any interest
in any Shares, Option Shares, Common Stock or Common Stock Equivalents (except
Common Stock included in such public offering or acquired on the public market
after such offering) during such period of time following the effective date of
a registration statement of the Company filed under the Securities Act that the
Lead Underwriter shall specify (the "Lock-up Period"). The Stockholder shall
further agree to sign such documents as may be requested by the Lead Underwriter
to effect the foregoing and agree that the Company may impose stop-transfer
instructions with respect to Common Stock acquired pursuant to an award until
the end of such Lock-up Period.
11. GENERAL.
Notices. Any notice, demand, request or other communication given
hereunder to any party, shall be deemed to be sufficient if contained in a
written instrument delivered in person or duly sent by first class registered,
certified or overnight mail, postage prepaid, or telecopied with a confirmation
copy by regular, certified or overnight mail, addressed or telecopied, as the
case may be, (i) to the Stockholder, at his or her residence address last filed
with the Company and (ii) if to the Company, Atrium Corporation, 0000 X.
Xxxxxxxxxxx Xxxx, Xxxxx 0000X, Xxxxxx, Xxxxx 00000, Attn: General Counsel, or to
such other address as the addressee may have designated by notice to the
addressor. All such notices, requests, demands and other communications shall be
deemed to have been received: (i) in the case of personal delivery, on the date
of such delivery; (ii) if mailed, three (3) days after being mailed as described
above; or (iii) in the case of facsimile transmission, when confirmed by
facsimile machine report.
11.1 Equitable Remedies. Each of the parties hereto acknowledges and
agrees that upon any breach by the Stockholder of his or her obligations under
Sections 2, 3, 6, 9 or 10 hereof, the Company will have no adequate remedy at
law, and accordingly will be entitled to specific performance and other
appropriate injunctive and equitable relief.
11.2 Severability. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.
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11.3 Waivers. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any such right, power or
privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege.
11.4 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.5 Assigns. This Agreement shall be binding upon and inure to the
benefit of the heirs, successors and Permitted Transferees of each of the
parties hereto. It is expressly agreed that the Company may from time to time
assign any of its repurchase rights hereunder to one or more of the holders of
the Common Stock or Common Stock Equivalents.
11.6 Entire Agreement. This Agreement, together with any applicable
employment agreement, stock subscription agreement or stock option agreement to
which the Stockholder is a party, contains the entire understanding of the
parties hereto with respect to the subject matter contained herein, supersedes
all prior agreements and understandings relating to the subject matter hereof
and shall not be amended except by a written instrument hereafter signed by each
of the parties hereto. Nothing in this Agreement shall be construed as a grant
to the Stockholder of any right to continuing employment with the Company or any
of its Subsidiaries or to restrict in any way the Company's or any of its
Subsidiaries' right to terminate the Stockholder's employment at any time.
11.7 Third Parties. Each of the Institutional Investors is an intended
third party beneficiary of the provisions of Section 3.4 of this Agreement.
11.8 Governing Law. This Agreement and the obligations of the parties
hereunder shall be deemed to be a contract under seal and shall for all purposes
be governed by and construed in accordance with the internal laws of the State
of Delaware without reference to principles of conflicts of law.
11.9 Amendments and Waivers. Any provision of this Agreement may be
amended or waived only with the prior written consent of all parties hereto.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Buy-Sell Agreement to be duly executed as of the
date and year first above written.
THE COMPANY: ATRIUM CORPORATION
By:
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Name:
Title:
THE STOCKHOLDER:
By:
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Name:
Address:
KAT HOLDINGS, L.P.
By: KAT Group, L.P. its general partner
By: JLK Operations, Inc., its general partner
By:
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Name:
Title:
By:
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Name:
Title:
