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EXHIBIT 10.10
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of November 7, 1996, by and between Atrium Corporation, a
Delaware corporation (hereinafter, together with its successors, referred to as
the "Company"), Xxxxxxx X. Xxxxxxxx (hereinafter referred to as the
"Executive") and, for the limited purposes set forth in Section 22 hereof,
Xxxxxxxx Companies, Inc., a Texas corporation ("Sub").
RECITALS:
A. HMTF Acquisition Corp., a Delaware corporation (the "Buyer"),
the Company and the Selling Securityholders named therein have entered into a
Stock Purchase Agreement dated as of the date hereof (the "Purchase
Agreement"), pursuant to which the Company will issue and sell to Buyer, and
Buyer shall purchase from the Company, certain shares of the Company's common
stock, par value $0.01 per share ("Common Stock").
X. Xxxxxxxx/Heritage Acquisition Company, a Delaware corporation,
and the Executive entered into an Employment and Non-Competition Agreement
dated as of July 3, 1995 (the "Original Employment Agreement").
X. Xxxxxxxx/Heritage Acquisition Company has been merged with and
into Sub.
D. The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
to employ the Executive on the terms and conditions set forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the respective agreements and
covenants set forth herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Definitions.
(a) Accrued Obligations means the sum of (i) the
Executive's Annual Base Salary (as hereinafter defined) earned or accrued
through the Date of Termination (as hereinafter defined) to the extent not
theretofore paid, (ii) reimbursement for any and all monies advanced by
Executive in connection with the Executive's employment for reasonable and
necessary expenses incurred by the Executive through the Date of Termination,
and (iii) any unpaid accrued vacation pay.
(b) Act means the Securities Exchange Act of 1934, as
amended.
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(c) Cause means (i) a breach by the Executive of the
Executive's obligations under Section 3 (other than as a result of physical or
mental incapacity) which constitutes a continued material nonperformance by the
Executive of his obligations and duties thereunder, as determined by the Board
in good faith, and which is not cured within 30 days after receipt of written
notice from the Company specifying such breach, (ii) commission by the
Executive of an act of fraud upon, or willful misconduct toward, the Company,
as reasonably determined by a majority of the disinterested members of the
Board after a hearing by the Board following ten days' notice to the Executive
of such hearing, (iii) the illegal use by the Executive of any drugs, (iv) a
material breach by the Executive of Section 7, Section 9 or Section 10, (v) the
conviction of the Executive of any felony or any crime involving moral
turpitude (or a plea of nolo contendere thereto); and (vi) the failure of the
Executive to carry out, or comply with, in any material respect any legal
directive of the Board consistent with the terms of this Agreement, which is
not cured within 30 days after receipt of written notice from the Company
specifying such failure. The Company may suspend the Executive's title and
authority pending the hearing provided for in clause (ii) above, and such
suspension shall not constitute "Good Reason", as defined below.
(d) Disability means the Executive's inability to perform
his duties and obligations hereunder for a period of 180 consecutive days due
to mental or physical incapacity as determined by a physician selected by the
Company or its insurers and reasonably acceptable to the Executive.
(e) Good Reason means (i) without the Executive's written
consent, any reduction, approved by the Board, in the amount of the Executive's
annual salary or any adverse change, approved by the Board, in the manner in
which the Executive's opportunity for an annual bonus is determined, (ii) any
material reduction, approved by the Board without the Executive's written
consent, in the aggregate value of the Executive's benefits under Section 4
hereof (other than annual salary or bonus) as in effect from time to time
(unless such reduction is pursuant to a general change in benefits applicable
to all similarly situated employees of the Company), (iii) any material breach
by the Company of this Agreement (other than a breach caused solely by the
Executive), or (iv) any significant reduction, approved by the Board without
the Executive's written consent, in the Executive's title, duties or
responsibilities. Notwithstanding the above, the occurrence of any of the
events described above will not constitute Good Reason unless the Executive
gives the Company written notice that such event constitutes Good Reason, and
the Company thereafter fails to cure the event within 30 days after receipt of
such notice.
(f) Initial Investment means the 32,000,000 shares of
Common Stock to be held by Buyer immediately following the closing of the
transactions contemplated in the Purchase Agreement.
(g) Initial Investment Amount means $32,000,000 to be
paid by Buyer to the Company in connection with its Initial Investment.
(h) Person means any "person", within the meaning of
Sections 13(d) and 14(d) of the Act, including a "group" as therein defined.
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(i) Subsidiary means, with respect to any Person, any
other Person of which such first Person owns or has the power to vote, directly
or indirectly, securities representing a majority of the votes ordinarily
entitled to be cast for the election of directors or other governing Persons.
(j) Target IRR means an internal rate of return of at
least 8%, as determined in good faith by the Board and calculated in accordance
with generally accepted financial practice, on the Initial Investment Amount
determined commencing as of the date of closing of the transactions
contemplated in the Purchase Agreement.
(k) Triggering Event means a date upon which the Target
IRR is achieved.
2. Term of Employment. Subject to the terms and provisions of
this Agreement, the Company hereby agrees to employ the Executive, and the
Executive hereby agrees to be employed by the Company, for a period (the
"Employment Period") commencing on the date that the transactions contemplated
in the Purchase Agreement are consummated (the "Effective Date") and ending on
the third anniversary of the Effective Date.
3. Position and Duties.
(a) During the term of the Executive's employment, the
Executive shall serve as President and Chief Executive Officer of the Company
and, in so doing, shall report to the Board. Subject to and in accordance with
the authority and direction of the Board, the Executive shall have supervision
and control over, and responsibility for, such management and operational
functions of the Company currently assigned to such position, and shall have
such other powers and duties (including holding officer positions with one or
more Subsidiaries of the Company) as may from time to time be prescribed by the
Board, so long as such powers and duties are reasonable and customary for the
President and Chief Executive Officer of an enterprise comparable to the
Company.
(b) During the term of the Executive's employment, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote full business time to the business and
affairs of the Company and to use the Executive's best efforts to perform
faithfully, effectively and efficiently such responsibilities. During the term
of Executive's employment it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures or fulfill speaking engagements and (C) manage personal
and family investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement.
4. Compensation. During the Employment Period, the Executive
shall be compensated by the Company or one or more of the Company's
Subsidiaries as follows:
(a) The Executive shall receive an annual base salary
("Annual Base Salary"), which shall be paid in accordance with the customary
payroll practices of the Company, in an amount equal to $350,000. The Board, in
its discretion, may at any time increase the amount of the
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Annual Base Salary to such greater amount as it may determine appropriate, and
the term "Annual Base Salary," as used in this Agreement, shall refer to Annual
Base Salary as it may be so increased.
(b) In addition to Annual Base Salary, the Executive
shall be eligible to receive an annual performance bonus in such amount, if any
(which amount shall not exceed $150,000), as shall be determined appropriate by
the Board pursuant to the applicable annual performance bonus plan as may be
adopted by the Board from time to time.
(c) The Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other executives of the Company ("Investment Plans").
(d) The Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs
("Welfare Plans") provided by the Company (including, without limitation,
medical, prescription, dental, disability, salary continuance, employee life,
group life, accidental death and travel accident insurance plans and programs)
to the extent applicable generally to other executives of the Company.
(e) The Executive shall be entitled to receive (in
addition to the benefits described above) such perquisites and fringe benefits
appertaining to his position in accordance with any practices as may be
established by the Board from time to time.
(f) The Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by the Executive
in accordance with the policies, practices and procedures of the Company
established by the Board from time to time.
(g) The Executive shall be entitled to paid holidays in
accordance with the plans, policies, programs and practices of the Company for
its executive officers.
(h) The Executive shall be entitled to four (4) weeks
paid vacation each calendar year. Any vacation shall be taken at the reasonable
and mutual convenience of the Company and the Executive. Accrued vacation not
taken in any calendar year will not be carried forward or used in any
subsequent calendar year.
(i) The Executive shall be entitled to receive
reimbursement for the documented expenses incurred by him in connection with
purchasing, leasing or otherwise procuring the use of an automobile, in an
amount not to exceed $1,000 per month, plus reasonable and documented expenses
for the use of a car telephone, fuel, oil and maintenance and repairs for such
automobile.
(j) The Executive shall be entitled to receive
reimbursement for reasonable expenses incurred by him in connection with
obtaining comprehensive insurance coverage for the automobile described in
paragraph 4(i) above, which amount shall be in addition to the $1,000 per
month mentioned in paragraph 4(i) above.
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(k) The Executive shall be entitled to an expense
allowance of $1,000 per month, to be used for any purpose that the Executive
deems appropriate.
(l) On the Effective Date, the Company will grant to the
Executive a warrant (the "Executive Warrant") exercisable for 2,195,222 shares
of Common Stock. The Executive Warrant will entitle the Executive to purchase
from the Company (i) at the A Warrant Exercise Price (hereinafter defined),
1,333,333 shares of Common Stock, and (ii), at the B Warrant Exercise Price
(hereinafter defined), 861,889 shares of Common Stock. For purposes of this
Agreement, the "A Warrant Price" shall be an amount equal to $0.01 per share
and the "B Warrant Price" shall be an amount equal to $1.00 per share. The A
Warrant Price and the B Warrant Price shall be subject to adjustments to reflect
stock splits, reverse stock splits, stock dividends, combinations and
reclassifications; provided, that no such adjustment shall reduce either of
such exercise prices to an amount below $0.01 per share of Common Stock. The
Executive's right to exercise the A Warrant will be entirely vested on the
Effective Date. The Executive's right to exercise the B Warrant will vest with
respect to 1/1095 of the shares of Common Stock subject to the B Warrant on
each day following the Effective Date, such that all of the shares of Common
Stock issuable upon exercise of the B Warrant shall be vested on the third
anniversary of the Effective Date; provided that in no event may the B Warrant
be exercised prior to the Triggering Event. Subject to the provisions set forth
in Section 5 of this Agreement, the Executive Warrant shall be exercisable
until 5:00 p.m., Dallas, Texas time, on the tenth anniversary of the Effective
Date, at which time it shall expire. The Executive Warrant shall be in the form
attached as Exhibit A hereto.
5. Termination of Employment.
(a) Any termination by the Company for Cause or without
Cause, or by the Executive for Good Reason or without Good Reason, shall be
communicated by means of a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which specifies the effective date of the termination (which date shall not be
more than 15 days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstances in enforcing
the Executive's or the Company's rights hereunder.
(b) "Date of Termination" means (A) if the Executive's
employment is terminated by the Company for Cause or without Cause (including
because of Disability), or by the Executive for Good Reason or without Good
Reason, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided, that if the Executive's
employment is terminated by the Company for Cause, such date shall not be
deemed to occur prior to the expiration of any applicable notice or cure period
contemplated in Section I (c), if any, (B) if the Executive's employment is
terminated by reason of death, the date of death of the Executive, and (C) if
the Executive's employment is not renewed upon expiration of the Employment
Period for any reason, the last day of the Employment Period.
(c) If the Executive's employment is terminated by the
Company other than for either Cause or Disability or the Executive shall
terminate his employment for Good Reason, and
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the termination of the Executive's employment in any case is not due to his
death or retirement, as his exclusive right and remedy in respect of such
termination:
(i) the Company shall pay to the Executive (A) in
a lump sum in cash within ten days after the Date of Termination the
Accrued Obligations (other than any severance under any Company
severance policy generally applicable to the Company's salaried
employees), and any amount arising from Executive's participation in,
or benefits under, any Investment Plans ("Accrued Investments"), which
amounts shall be payable in accordance with the terms and conditions
of such Investment Plans, (B) in regular installments in accordance
with the customary payroll practices of the Company, the Executive's
then current Annual Base Salary for a period which ends on the later
to occur of (1) the last day of the Employment Period, or (2) the date
which is 18 months from the Date of Termination, (C) in regular
installments in accordance with the customary payroll practices of the
Company, the amounts contemplated in paragraphs 4(i) and 4(k), for a
period which ends on the later to occur of (1) the last day of the
Employment Period, or (2) the date which is 18 months from the Date of
Termination, and (D) an annual bonus in an amount equal to $50,000 for
each year in the remainder of the Employment Period, to be paid in
accordance with the Company's customary payroll practices at the times
that the Executive would have been eligible to receive an annual
performance bonus had his employment not been terminated.
(ii) Notwithstanding the terms or conditions of
the Executive Warrant or any stock option, stock appreciation right or
similar agreements between the Company and the Executive, the
Executive shall vest, as of the Date of Termination, in all rights
under such agreements (i.e., the Executive Warrant and any other stock
options that would otherwise vest after the Date of Termination) and
thereafter shall be permitted to exercise any and all such vested
rights until the expiration of the Executive Warrant or such other
stock option, stock appreciation right or similar agreement, as the
case may be, pursuant to its terms.
(iii) The Executive shall continue to be covered at
the expense of the Company by the same or equivalent medical, dental
and life insurance coverages as in effect for the Executive
immediately prior to the Date of Termination, until the earlier of (A)
the expiration of the Employment Period or (B) the date the Executive
has commenced new employment and has thereby become eligible for
comparable medical benefits.
(d) If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, the Company shall pay to
his legal representatives (i) in a lump sum in cash within thirty days after
the Date of Termination the Accrued Obligations; (ii) in regular installments
in accordance with the Customary Payroll practices of the Company, the
Executive's then current Annual Base Salary through the end of the Employment
Period; and (iii) the Accrued Investments, which amounts shall be payable in
accordance with the terms and conditions of the Investment Plans. Further,
notwithstanding the terms or conditions of the Executive Warrant or any other
stock option, stock appreciation right or similar agreements between the
Company and the Executive, the Executive shall vest, as of the Date of
Termination, in all rights under such agreements (i.e., the Executive Warrant
and any other stock options that would otherwise vest after the Date of
Termination) and thereafter his legal representatives shall be permitted to
exercise any
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and all such vested rights until the expiration of the Executive Warrant or
such other stock option, stock appreciation right or similar agreement pursuant
to its terms. If the Executive's employment is terminated by reason of the
Executive's death, then except as provided in this paragraph, the Company shall
have no further payment obligations to the Executive or his legal
representatives under this Agreement.
(e) If the Executive's employment is terminated by reason
of the Executive's Disability (or retirement pursuant to the Company's
Board-approved retirement plan, "Retirement") during the Employment Period, the
Company shall pay to the Executive (i) in regular installments in accordance
with the customary payroll practices of the Company, the Executive's then
current Annual Base Salary through the end of the Employment Period; (ii) in a
lump sum in cash within thirty days of the Date of Termination the Accrued
Obligations and (iii) the Accrued Investments, which amounts shall be payable
in accordance with the terms and conditions of the Investment Plans. Further,
notwithstanding the terms or conditions of the Executive Warrant or any other
stock option, stock appreciation right or similar agreements between the
Company and the Executive, the Executive shall vest, as of the Date of
Termination, in all rights under such agreements (i.e., the Executive Warrant
and any other stock options that would otherwise vest after the Date of
Termination) and thereafter shall be permitted to exercise any and all such
vested rights until the expiration of the Executive Warrant or such other stock
option, stock appreciation right or similar agreement pursuant to its terms.
(f) If the Executive's employment shall be terminated by
the Company for Cause or by the Executive without Good Reason (other than
because of death, Disability or Retirement) during the Employment Period, the
Company shall have no further payment obligations to the Executive other than
for payment of Accrued Obligations and Accrued Investments to the Date of
Termination. Further, notwithstanding the terms or conditions of the Executive
Warrant or any other stock option, stock appreciation right or similar
agreements between the Company and the Executive, the Executive shall cease to
vest, as of the Date of Termination, in all rights under such agreements (i.e.,
the Executive Warrant and any other stock options that would otherwise vest
after the Date of Termination) and, to the extent the Executive's vested rights
under the Executive Warrant or such other stock option, stock appreciation
right or similar agreement have not been exercised prior to the Date of
Termination, the Executive shall forfeit his rights to exercise any and all
such rights on and as of the Date of Termination; provided, that the Executive
shall be permitted to exercise any or all of that portion of the B Warrant
which is vested on the Date of Termination until the fifth day following the
date that the Board delivers to the Executive a written notice of a
determination that a Triggering Event has occurred; provided, further, that if
the Board delivers to the Executive a written notice of a determination that a
Triggering Event had not occurred as of the Date of Termination, the Executive
shall have forfeited, and shall be deemed to have forfeited, his rights to
exercise any or all of the B Warrant on and as of the Date of Termination.
6. Full Settlement Mitigation. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement and such amounts shall not be reduced whether or not the
Executive obtains other employment (except as otherwise provided in Section
5(c)(iii)(B)). Neither the Executive nor the Company shall be liable to the
other party for any damages in addition to the amounts payable under Section 5
arising out of the termination of the Executive's employment
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prior to the end of the Employment Period; provided, however, that the Company
shall be entitled to seek damages for any breach of Sections 7, 8, 9 or 10 or
criminal misconduct.
7. Confidential Information.
(a) The Executive acknowledges that the Company and its
affiliates have trade, business and financial secrets and other confidential
and proprietary information (collectively, the "Confidential Information").
Confidential Information shall not include (i) information that is generally
known to other persons or entities who can obtain economic value from its
disclosure or use and (ii) information required to be disclosed by the
Executive pursuant to a subpoena or court order, or pursuant to a requirement
of a governmental agency or law of the United States of America or a state
thereof or any governmental or political subdivision thereof; provided,
however, that the Executive shall take all reasonable steps to prohibit
disclosure pursuant to subsection (ii) above.
(b) During and following the Executive's employment by
the Company, the Executive shall hold in confidence and not directly or
indirectly disclose or use or copy or make lists of any confidential
information or proprietary data of the Company, or its Subsidiaries except to
the extent authorized in writing by the Board or required by any court or
administrative agency, other than to an employee of the Company, or its
Subsidiaries or a Person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of duties as an
executive of the Company.
(c) The Executive further agrees not to use any
Confidential Information for the benefit of any person or entity other than the
Company.
8. Surrender of Materials Upon Termination. All records, files,
documents and materials, or copies thereof, relating to the Company's and its
respective Subsidiaries' business which the Executive shall prepare, or use, or
come into contact with, shall be and remain the sole property of the Company or
its Subsidiaries, as the case may be, and shall be promptly returned by the
Executive to the owner upon termination of the Executive's employment with the
Company.
9. Non-Competition. As used in this Section 9, "Company" shall
include the Company and any of its Subsidiaries.
(a) The term of Non-Competition (herein so called) shall
be for a term beginning on the date hereof and continuing until the later of
(i) the expiration of the Employment Period or (ii) if applicable, the date
which is eighteen months after the Date of Termination.
(b) During the term of Non-Competition, the Executive
will not (other than for the benefit of the Company pursuant to this Agreement)
directly or indirectly, individually or as an officer, director, employee,
shareholder, equity owner, consultant, contractor, partner, joint venturer,
agent, equity owner or in any capacity whatsoever, (i) engage in the business
of manufacturing, marketing or distributing aluminum, wood or vinyl windows or
doors or in any other business activity that the Company is conducting on the
Date of Termination or has notified the Executive that it proposes to conduct
in the United States (a "Competing Business"), (ii) hire, attempt to hire, or
contact or solicit with respect to hiring any employee of the Company, or (iii)
divert or take away
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any customers or suppliers of the Company. Notwithstanding the foregoing, the
Company agrees that the Executive may own less than five percent of the
outstanding voting securities of any publicly traded company that is a
Competing Business so long as the Executive does not otherwise participate in
such Competing Business in any way prohibited by the preceding clause.
(c) During the term of Non-Competition, the Executive
will not use the Executive's access to, knowledge of, or application of
Confidential Information to perform any duty for any Competing Business; it
being understood and agreed to that this Section 9(c) shall be in addition to
and not be construed as a limitation upon the covenants in Section 9(b) hereof.
(d) The Executive acknowledges that the geographic
boundaries, scope of prohibited activities, and time duration of the preceding
paragraphs are reasonable in nature and are no broader than are necessary to
maintain the confidentiality and the goodwill of the Company's proprietary
information, plans and services and to protect the other legitimate business
interests of the Company.
(e) If any court determines that any portion of this
Section 9 is invalid or unenforceable, the remainder of this Section 9 shall
not thereby be affected and shall be given full effect without regard to the
invalid provisions. If any court construes any of the provisions of this
Section 9, or any part thereof, to be unreasonable because of the duration or
scope of such provision, such court shall have the power to reduce the duration
or scope of such provision and to enforce such provision as so reduced.
10. Inventions; Assignment. All rights to discoveries,
inventions, improvements and innovations (including all data and records
pertaining thereto) related to the Executive's business, whether or not
patentable, copyrightable, registrable as a trademark, or reduced to writing,
that the Executive may discover, invent or originate during the Employment
Period, and for a period of twelve (12) months thereafter, either alone or with
others and whether or not during working hours or by the use of the facilities
of the Company or any of the Company's Subsidiaries ("Inventions"), shall be
the exclusive property of the Company and/or such Subsidiary. The Executive
shall promptly disclose all Inventions to the Company, shall execute at the
request of the Company any assignments or other documents the Company may deem
necessary to protect or perfect its rights therein, and shall assist the
Company, at the Company's expense, in obtaining, defending and enforcing the
Company's rights therein. The Executive hereby appoints the Company as his
attorney-in-fact to execute on his behalf any assignments or other documents
deemed necessary by the Company to protect or perfect its rights to any
Inventions.
11. Successors. The Company may assign its rights under this
Agreement to any successor to all or substantially all the assets of the
Company, by merger or otherwise, and may assign or encumber this Agreement and
its rights hereunder as security for indebtedness of the Company and its
Subsidiaries. The rights of Executive under this Agreement may not be assigned
or encumbered by the Executive, voluntarily or involuntarily, during his
lifetime, and any such purported assignment shall be void. However, all rights
of the Executive under this Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, estates,
executors, administrators, heirs and beneficiaries. All amounts payable to the
Executive hereunder
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shall be paid, in the event of the Executive's death, to the Executive's
estate, heirs and representatives.
12. Enforcement. The provisions of this Agreement shall be
regarded as divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remainder of such provisions or parts hereof
and the applicability thereof shall not be affected thereby.
13. Amendment. This Agreement may not be amended or modified at
any time except by a written instrument approved by the Board and executed by
the Company and the Executive.
14. Withholding. The Company shall be entitled to withhold from
amounts to be paid to the Executive hereunder any federal, state, local, or
foreign withholding or other taxes or charges which it is from time to time
required to withhold. The Company shall be entitled to rely on an opinion of
counsel if any question as to the amount or requirement of any such withholding
shall arise.
15. Effect of Agreement on Other Benefits. The existence of this
Agreement shall not prohibit or restrict the Executive's entitlement to full
participation in the executive compensation, employee benefit and other plans
or programs in which executives of the Company are eligible to participate.
16. Governing Law. This Agreement and the rights and obligations
hereunder shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to principles of conflicts of law of Delaware
or any other jurisdiction.
17. Miscellaneous.
(a) The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. Whenever the terms
"hereof", "hereby", "herein", or words of similar import are used in this
Agreement they shall be construed as referring to this Agreement in its
entirety rather than to a particular section or provision, unless the context
specifically indicates to the contrary. Any reference to a particular "Section"
or "paragraph" shall be construed as referring to the indicated section or
paragraph of this Agreement unless the context indicates to the contrary. The
use of the term "including" herein shall be construed as meaning "including
without limitation." This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
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If to the Executive: Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
If to the Company: Atrium Corporation
0000 Xxxx Xxxxxxxxxxx Xxxx, Xxxxx 0000X
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopier Number: (000) 000-0000
with a copy to:
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Xx.
Managing Director & Principal
Telecopier Number: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxx
Xxxxxx & Xxxxxx L.L.P.
3700 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Telecopier Number: (000) 000-0000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
18. No Waiver. The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement. No waiver by either party at any
time of any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at any time.
19. Headings. The headings herein contained are for reference only
and shall not affect the meaning or interpretation of any provision of this
Agreement.
20. Complete Agreement. The provisions of this Agreement
constitute the complete understanding and agreement between the parties with
respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts.
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21. Arbitration. In the event any dispute or controversy arises
under this Agreement and is not resolved by mutual written agreement between
the Executive and the Company within 30 days after notice of the dispute is
first given, then, upon the written request of the Executive or the Company,
such dispute or controversy shall be submitted to arbitration to be conducted
in accordance with the rules of the American Arbitration Association; provided,
that the Company shall be entitled to seek injunctive and/or other equitable
relief for a breach of any provision of Section 7, 8, 9 or 10, as to which the
Company may seek and obtain relief from a court of competent jurisdiction. Any
arbitrator's award or finding or any judgment or verdict thereon will be final,
binding and unappealable, except to the extent that judicial review is
permitted by law. All parties agree that venue for arbitration will be in
Dallas, Texas, and that any arbitration commenced in any other venue will be
transferred to Dallas, Texas, upon the written request of any party to this
Agreement. All arbitrations will have three individuals acting as arbitrators:
one arbitrator will be selected by the Executive, one arbitrator will be
selected by the Company, and the two arbitrators so selected will select a
third arbitrator. Any arbitrator selected by a party will not be affiliated,
associated or related to the party selecting that arbitrator in any matter
whatsoever. Unless otherwise provided in the arbitrator's award, each party
shall pay for its own costs and attorney's fees, if any.
22. Effectiveness of Agreement. The Company, Sub and the Executive
agree that if the Purchase Agreement is terminated in accordance with its
terms, this Agreement shall terminate and the parties hereto shall have no
further obligations to any other party hereunder; provided, that the Original
Employment Agreement shall remain in full force and effect in accordance with
its terms. The Company, Sub and the Executive agree that if the transactions
contemplated in the Purchase Agreement are consummated, the Original Employment
Agreement shall terminate and the parties thereto shall have no further
obligations to the other thereunder. Each provision of this Agreement shall,
unless otherwise expressly stated by its own terms, survive termination of the
Executive's employment hereunder.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
12
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
EXECUTIVE
/s/ XXXXXXX X. XXXXXXXX
------------------------------------------------
Xxxxxxx X. Xxxxxxxx
ATRIUM CORPORATION
By: /s/ XXXXX X. XXXX, XX.
--------------------------------------------
Xxxxx X. Xxxx, Xx.
Executive Vice President
XXXXXXXX COMPANIES, INC.,
for the limited purposes set forth in Section 22
By: /s/ XXXXX X. XXXX, XX.
--------------------------------------------
Xxxxx X. Xxxx, Xx.
Executive Vice President
13
14
EXHIBIT A
TO EMPLOYMENT AGREEMENT
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED
FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION
OF COUNSEL IN FORM AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT REQUIRED UNDER ANY
SUCH LAWS. THE OFFERING OF THIS SECURITY HAS NOT BEEN REVIEWED OR APPROVED BY
ANY STATE'S SECURITIES ADMINISTRATOR. THIS WARRANT AND THE SHARES OF COMMON
STOCK PURCHASABLE HEREUNDER ARE ALSO SUBJECT TO A STOCKHOLDERS AGREEMENT, DATED
AS OF [CLOSING DATE], 1996, BY AND AMONG THE COMPANY AND THE OTHER PARTIES
LISTED THEREIN, COPIES OF WHICH ARE ON FILE WITH THE COMPANY AND WILL BE
FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE. THIS WARRANT IS ALSO
SUBJECT TO AN EXECUTIVE EMPLOYMENT AGREEMENT DATED AS OF NOVEMBER 7, 1996 BY
AND BETWEEN THE COMPANY AND XXXXXXX X. XXXXXXXX, A COPY OF WHICH IS ON FILE
WITH THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE
TO THE REGISTERED HOLDER OF THIS WARRANT.
Dated: [CLOSING DATE], 1996
WARRANT
To Purchase 2,195,222 Shares of Common Stock
ATRIUM CORPORATION
EXPIRING [CLOSING DATE], 2006.
THIS IS TO CERTIFY THAT, for value received, Xxxxxxx X. Xxxxxxxx, or
registered assigns as a holder of this Warrant (the "Holder") is entitled to
purchase from Atrium Corporation, a Delaware corporation (the "Company"), at
any time or from time to time prior to 5:00 p.m., Dallas, Texas time, [CLOSING
DATE], 2006 at the place where the Warrant Agency (as hereinafter defined) is
located, (i) at the A Exercise Price (as hereinafter defined) 1,333,333 shares
of common stock, par value $.01 per share (the "Common Stock"), of the Company
(the "A Warrant"), and (ii) at the B Exercise Price (as hereinafter defined) a
number of shares of Common Stock equal to the product obtained when 861,889 is
multiplied by a fraction, the numerator of which is the number of days prior to
[CLOSING DATE], 1999 which have elapsed after (and excluding) the date hereof
and the
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denominator of which is 1095 (the "B Warrant", and, collectively with the A
Warrant, the "Warrant"), all subject to adjustment and upon the terms and
conditions as hereinafter provided; provided, however, in no event may the B
Warrant be exercised by the Holder prior to the occurrence of a Triggering
Event (as hereinafter defined). The Holder shall designate at the time of
exercise whether the Holder is exercising an A Warrant or a B Warrant and the
number of shares of Common Stock to be purchased respectively thereunder.
Certain terms used in this Warrant are defined in Article V.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company, at the Warrant Agency, (a) this
Warrant, (b) a written notice, in substantially the form of the Subscription
Notice attached hereto as Annex A, of such Holder's election to exercise this
Warrant, which notice shall specify (i) whether the Holder is exercising an A
Warrant and/or a B Warrant, (ii) the number of shares of Common Stock to be
purchased under an A Warrant and/or a B Warrant, as applicable, (iii) the
denominations of the share certificate or certificates desired, (iv) the name
or names in which such certificate or certificates are to the registered, and
(v) with respect to the exercise of a B Warrant, that Holder requests the Board
of Directors to determine whether a Triggering Event has occurred, (c) if the
Common Stock to be received upon the exercise of this Warrant has not been
registered under the Securities Act, a written certification in substantially
the form of the Certification attached hereto as Annex B, and (d) payment of
the Exercise Price with respect to such shares. Such payment may be made, at
the option of the Holder, by cash, money order, certified or bank cashier's
check or wire transfer.
If the Holder delivers to the Company a written notice of exercise of
any vested portion of the B Warrant as contemplated in the first paragraph of
this Section 1.1, the Company's Board of Directors (the "Board") shall, within
thirty (30) days of the date such notice of exercise is received by the
Company, deliver to Holder a written notice stating whether a Triggering Event
had occurred as of the date the written exercise notice is received by the
Company. If Holder disagrees with such determination, Holder and the Board
shall proceed diligently and in good faith to agree on whether a Triggering
Event had occurred as of the date the written exercise notice was received by
the Company. If such an agreement has not been reached within fifteen (15)
days from the date the written notice of determination was delivered by the
Board to the Executive, the determination of whether a Triggering Event had
occurred as of the date the written exercise notice was received by the Company
shall be made by a "Big Six" accounting firm selected by the Company, and
reasonably acceptable to Holder, within forty-five (45) days from the date
written notice was delivered by the Board to the Executive that no Triggering
Event had occurred. If such Big Six accounting firm determines that a
Triggering Event had occurred as of the date the exercise notice was received,
the fees and expenses of such accounting firm incurred in making such
determination shall be paid by the Company. If such Big Six accounting firm
determines that a Triggering Event had not occurred as of the date the exercise
notice was received, the fees and expenses of such accounting firm shall
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be paid by Holder. In no event shall the Holder be entitled to deliver a
notice of exercise for all or any portion of the B Warrant more than twice in
any twelve month period which begins on [CLOSING DATE] of any year prior to
2006.
With respect to the exercise of the A Warrant, the Company shall, as
promptly as practicable and in any event within five Business Days after
receipt of such written notice of exercise, execute and deliver or cause to be
executed and delivered, in accordance with such notice, a certificate or
certificates representing the aggregate number of shares of Common Stock
specified in said notice. With respect to the exercise of the B Warrant, the
Company shall, as promptly as practicable, and in any event within five
Business Days after the final determination that a Triggering Event had
occurred as contemplated in the second paragraph of this Section 1.1, execute
and deliver or cause to be executed and delivered, in accordance with such
notice, a certificate or certificates representing the aggregate number of
shares of Common Stock specified in said notice. The share certificate or
certificates so delivered shall be in such denominations as may be specified in
such notice or, if such notice shall not specify denominations, shall be in the
amount of the number of shares of Common Stock for which the Warrant is being
exercised, and shall be issued in the name of the Holder or such other name or
names as shall be designated in such notice. Such certificate or certificates
shall be deemed to have been issued, and such Holder or any other Person so
designated to be named therein shall be deemed for all purposes to have become
a holder of record of such shares, as of the date the aforementioned notice is
received by the Company. If this Warrant shall have been exercised only in
part, the Company shall, at the time of delivery of the certificate or
certificates, deliver to the Holder a new Warrant evidencing the rights to
purchase the remaining shares of Common Stock which may be purchased under the
A Warrant and/or the B Warrant, as applicable, which new Warrant shall in all
other respects be identical with this Warrant, or, at the request of the
Holder, appropriate notation may be made on this Warrant which shall then be
returned to the Holder. The Company shall pay all expenses, taxes (if any) and
other charges payable in connection with the preparation, issuance and delivery
of share certificates and a new Warrant, except that, if share certificates or
a new Warrant shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes payable as a result of such
transfer shall be paid by the Holder at the time of delivery of the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable and free from all preemptive rights of any
stockholder, and from all taxes.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the Company
shall pay to the Holder, in cash, an amount equal to such fraction of the Fair
Market Value per share of Common Stock of the Company on the Business Day
immediately prior to the date of such exercise.
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1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
"This security has not been registered under the Securities Act of
1933, as amended, or under the securities laws of any state or other
jurisdiction and may not be sold, offered for sale or otherwise
transferred unless registered or qualified under said Act and
applicable state securities laws or unless the Company receives an
opinion of counsel in form and scope reasonably satisfactory to the
Company that registration, qualification or other such actions are
not required under any such laws. The offering of this security has
not been reviewed or approved by any state securities administrator.
This security is subject to a Stockholders Agreement, dated as of
[CLOSING DATE], 1996, between the Company and the other parties
listed therein, copies of which are on file with the Company and will
be furnished upon written request and without charge."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act) shall also bear such legend unless, in the opinion of
counsel selected by the holder of such certificate and reasonably acceptable to
the Company, the securities represented thereby are no longer subject to
restrictions on resale under the Securities Act.
1.5 Reservation; Authorization. The Company has reserved and will
keep available for issuance upon exercise of this Warrant the total number of
shares of Common Stock deliverable upon exercise of this Warrant from time to
time outstanding. The issuance of such shares has been duly and validly
authorized and, when issued and sold in accordance with this Warrant, such
shares will be duly and validly issued, fully paid and nonassessable.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE
AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. At any time after a public offering of
Common Stock registered under the Securities Act, the Company may promptly
appoint and thereafter maintain, at its own expense, an agency in New York, New
York, which agency may be the Company's then existing transfer agent (the
"Warrant Agency"), for certain purposes specified herein, and shall give prompt
notice of such appointment (and appointment of any successor Warrant Agency) to
the Holder. Until an independent Warrant Agency is so appointed, the Company
shall perform the obligations of the Warrant Agency provided herein at its
address as specified on the signature page hereto or such other address as the
Company shall specify by notice to the Holder.
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2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Warrant Agency) for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. Holder may not sell, assign, transfer,
pledge or otherwise dispose of ("Transfer") all or any portion of this Warrant,
either voluntarily or involuntarily or by operation of law, other than by will
or the laws of descent and distribution; provided, that Holder may Transfer all
or any portion of the Warrant to Holder's Personal Representative, so long as
such Personal Representative agrees to be bound by the provisions hereof.
2.4 Division of Warrant. This Warrant may be divided upon
surrender hereof to the Warrant Agency, together with a written notice
specifying the names and denominations in which the new Warrants are to be
issued, signed by the Holder. Subject to compliance with Section 2.3 as to any
Transfer which may be involved in the division, the Company shall execute and
deliver new Warrants in exchange for the Warrant or Warrants to be divided in
accordance with such notice.
2.5 Loss, Theft, Destruction or Mutilation of Warrants. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same aggregate number of shares of
Common Stock as provided for in such lost, stolen, destroyed or mutilated
Warrant.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant and the
Common Stock issuable hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1 Stockholders Agreement. This Warrant and the Common Stock
issuable upon exercise of this Warrant are subject to a Stockholders Agreement
dated as of [CLOSING DATE], 1996, by and among the Company and the other
parties listed therein (the "Stockholders Agreement"). The Company shall keep
a copy of the Stockholders Agreement, and any amendments thereto, at the
Warrant Agency and shall furnish copies thereof to the Holder upon request.
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3.2 Notice of Fair Market Value. Upon each determination of Fair
Market Value hereunder (other than a determination relating solely to setting
the value of fractional shares), the Company shall promptly give notice thereof
to the Holder.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and the number of
shares of Common Stock (or other securities or property) issuable upon exercise
of this warrant shall be subject to adjustment from time to time upon the
occurrence of certain events, as provided in this Article IV.
4.2 Common Stock Reorganization. If the Company shall after the
date of issuance of this Warrant subdivide its outstanding shares of Common
Stock into a greater number of shares or consolidate its outstanding shares of
Common Stock into a smaller number of shares (any such event being called a
"Common Stock Reorganization"), then (a) the A Exercise Price and the B
Exercise Price shall each be adjusted, effective immediately after the record
date at which the holders of shares of Common Stock are determined for purposes
of such Common Stock Reorganization, to a price determined by multiplying the
applicable Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding on such record date before giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such Common Stock
Reorganization, and (b) the number of shares of Common Stock subject to
purchase upon exercise of the A Warrant and the B Warrant shall each be
adjusted, effective at such time, to a number determined by multiplying the
number of shares of Common Stock subject to purchase immediately before such
Common Stock Reorganization by a fraction, the numerator of which shall be the
number of shares outstanding after giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
Common Stock outstanding immediately before such Common Stock Reorganization.
4.3 Capital Reorganization. If after the date of issuance of this
Warrant there shall be any consolidation or merger to which the Company is a
party, other than a consolidation or a merger in which the Company is a
continuing corporation and which does not result in any reclassification of, or
change (other than a Common Stock Reorganization or a change in par value) in,
outstanding shares of Common Stock, or any sale or conveyance of the property
of the Company as an entirety or substantially as an entirety (any such event
being called a "Capital Reorganization"), then, effective upon the effective
date of such Capital Reorganization, the Holder shall have the right to
purchase, upon exercise of this Warrant, the kind and amount of shares of stock
and other securities and property (including cash) which the Holder would have
owned or have been entitled to receive after such Capital Reorganization if
this Warrant had been exercised as permitted herein immediately prior to such
Capital Reorganization. As a condition to effecting any Capital
Reorganization, the Company or the successor or surviving corporation, as the
case may be, shall execute and deliver to the Holder an agreement as to the
Holder's rights in accordance with this Section 4.2, providing for
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subsequent adjustments as nearly equivalent as may be practicable to the
adjustments provided for in this Article IV. The provisions of this Section
4.2 shall similarly apply to successive Capital Reorganizations.
4.4 Certain Other Events. If any event occurs after the date of
issuance of this Warrant as to which the foregoing provisions of this Article
IV are not strictly applicable or, if strictly applicable, would not, in the
good faith judgment of the Board of Directors of the Company (the "Board"),
fairly protect the purchase rights of the Holder in accordance with the
essential intent and principles of such provisions, then the Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of the Board, to protect such purchase rights as aforesaid.
4.5 Adjustment Rules.
(a) Any adjustments pursuant to this Article IV shall be made
successively whenever an event referred to herein shall occur.
(b) If the Company shall set a record date to determine the
holders of shares of Common Stock for purposes of a Common Stock Reorganization
or Capital Reorganization, and shall legally abandon such action prior to
effecting such action, then no adjustment shall be made pursuant to this
Article IV in respect of such action.
(c) No adjustment in the amount of shares purchasable upon
exercise of this Warrant or in either of the Exercise Prices shall be made
hereunder unless such adjustment increases or decreases such amount or price by
one percent or more, but any such lesser adjustment shall be carried forward
and shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall serve to adjust
such amount or price by one percent or more.
(d) No adjustment in the Exercise Price shall be made hereunder if
such adjustment would reduce the exercise price to an amount below par value of
the Common Stock, which par value shall initially be $.01 per share of Common
Stock.
4.6 Notice of Adjustment. The Company shall give the Holder
reasonable notice of the record date or effective date, as the case may be, of
any action which requires or might require an adjustment or readjustment
pursuant to this Article IV. Such notice shall describe such event in
reasonable detail and specify the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give reasonable notice to the Holder of such
adjustment and computation promptly after such adjustment becomes determinable.
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ARTICLE V
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"A Exercise Price" means for a particular exercise of the A Warrant, a
per share price of $0.01, as such per share price may be adjusted from time to
time pursuant to Article IV hereof.
"B Exercise Price" means for a particular exercise of the B Warrant, a
per share price of $1.00, as such per share price may be adjusted from time to
time pursuant to Article IV hereof.
"Business Day" shall mean (a) if any class of Common Stock is listed
or admitted to trading on a national securities exchange, a day on which the
principal national securities exchange on which such class of Common Stock is
listed or admitted to trading is open for business or (b) if no class of Common
Stock is so listed or admitted to trading, a day on which the New York Stock
Exchange is open for business.
"Capital Reorganization" shall have the meaning set forth in Section
4.3.
"Closing Price" with respect to any security on any day means (a) if
such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if no such reported
sale occurs on such day, the average of the closing bid and asked prices
regular way on such day, in each case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such class of security is listed or
admitted to trading, or (b) if such security is not listed or admitted to
trading on any national securities exchange, the last quoted sales price, or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market on such day as reported by NASDAQ or any comparable
system then in use or, if not so reported, as reported by any New York Stock
Exchange member firm reasonably selected by the Company for such purpose.
"Common Stock" shall have the meaning set forth in the first paragraph
of this Warrant.
"Common Stock Reorganization" shall have the meaning set forth in
Section 4.2.
"Company" shall have the meaning set forth in the first paragraph of
this Warrant.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
"Exercise Price" shall mean the A Exercise Price and/or the B Exercise
Price, as applicable.
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"Fair Market Value" means the fair market value of the business or
property in question, as determined in good faith by the Board, provided,
however, that the Fair Market Value of any security for which a Closing Price
is available shall be the Market Price of such security.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant. The term Holders shall refer to all Holders of Warrants.
"Initial Investment" means the 32,000,000 shares of Common Stock held
by Buyer immediately following the closing of the transactions contemplated in
the Purchase Agreement.
"Initial Investment Amount" means $32,000,000 paid by Buyer to the
Company in exchange for its Initial Investment.
"Market Price", with respect to any security on any day means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is available; provided, however, that in the event that, in the
case of Common Stock, the Market Price is determined during a period following
the announcement by the Company of any subdivision, combination or
reclassification of Common Stock or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Market Price
shall be appropriately adjusted to reflect the current market price per share
equivalent of Common Stock.
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Person" means an individual, corporation, limited liability company,
partnership, limited partnership, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association or other legal entity or government, political subdivision,
agency or instrumentality of a government.
"Personal Representative" means, with respect to any individual, any
executor, administrator, trustee, guardian or other legal representative of
such individual.
"Purchase Agreement" shall mean that certain Stock Purchase Agreement
dated November 1, 1996 by and among HMTF Acquisition Corp., a Delaware
corporation ("Buyer"), the Company and the Selling Securityholders named
therein.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and any similar or successor federal statute, and the rules and regulations of
the Securities and Exchange Commission (or its successor) thereunder, all as
the same shall be in effect at the time.
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"Stockholders Agreement" shall have the meaning set forth in Section
3.1.
"Target IRR" means an internal rate of return of at least 8%, as
determined in good faith by the Board and calculated in accordance with
generally accepted financial practice, on the Initial Investment Amount
determined commencing as of the date of this Warrant.
"Triggering Event" means a date upon which the Target IRR is achieved.
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrant" shall have the meaning set forth in the first paragraph of
this Warrant. The term "Warrants" shall also refer to the Warrants resulting
in any subdivision of this Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be effective
upon delivery in person, faxed or telecopied, or mailed by certified or
registered mail, return receipt requested, postage pre-paid, to the addresses
specified on the signature pages hereto or, in any case, at such other address
or addresses as shall have been furnished in writing to the Company (in the
case of a Holder) or to the Holder (in the case of the Company) in accordance
with the provisions of this paragraph.
6.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and Holders who collectively hold
Warrants to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding.
Any such amendment, modification or waiver effected pursuant to this
Section 6.2 shall be binding upon the Holders, upon each future Holder thereof
and upon the Company. In the event of any such amendment, modification or
waiver the Company shall give prompt notice thereof to all Holders and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
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6.3 Governing Law. This Warrant shall be construed in accordance
with and governed by the laws of the State of Delaware.
6.4 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
6.5 Section Headings. The sections headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
6.6 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized, all as
of the day and year first above written.
ATRIUM CORPORATION
Address: By:
-------------------------
0000 Xxxx Xxxxxxxxxxx Xxxx Name:
Suite 1200W Title:
Xxxxxx, Xxxxx 00000
Attn: General Counsel
ACCEPTED AND AGREED TO:
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Address: 0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
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ANNEX A
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO ATRIUM CORPORATION:
The undersigned hereby irrevocably elects to exercise the attached
Warrant, and to purchase thereunder, in exercise of the [ ] A Warrant, _____
shares of Common Stock, and/or in exercise of the [ ] B Warrant, ______ shares
of Common Stock in exchange for payment of an Exercise Price in an aggregate
amount equal to $____________. With respect to the exercise of the B Warrant,
if applicable, the undersigned hereby requests that the Board of Directors
determine whether a Triggering Event has occurred.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated: 19
-------------, ---
------------------------------------
Note: The above signature should
correspond exactly with the
name on the face of the
attached Warrant or with the
name of the assignee appearing
in the assignment form below.
A-13
27
ANNEX B
CERTIFICATION
The undersigned hereby certifies to Atrium Corporation that he, she or
it is:
a. an "accredited investor" as that term is defined in
Regulation D promulgated pursuant to the Securities
Act or any successor regulation, as such provisions
may be in effect on the date hereof, and is an
"accredited investor" pursuant to Section of such
provision; and
b. is knowledgeable, sophisticated and experienced in
business and financial matters and in securities
similar to the Common Stock; is aware of the
limitation on the transfer of the Common Stock
imposed by applicable securities laws and any
limitations on transfer imposed by contracts with the
Company or others; and has had access to, or been
furnished with, all information about the Common
Stock and the Company deemed necessary to conclude
that he, she or it has the ability to bear the
economic risk of the investment in the Common Stock
and to afford the complete loss of such investment.
IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATION
this _____ day of ________________, 199___.
For Individuals: For Entities:
-------------- ------------------------------------
Signature Printed Name of Entity
By:
-------------- ------------------------------------
Printed Name Name:
---------------------
Title:
---------------------
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