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EXHIBIT 10.10
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 C. Douglas Cross (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
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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
over-
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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 Jeff L. Hull.
"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, including without limitation for
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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 o
