<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1999
REGISTRATION NO. 333-82921
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
ATRIUM COMPANIES, INC.
(Exact Name of Registrant as Specified in its Charter)
--------------------------
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DELAWARE 3442 75-2642488
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification Number)
Organization)
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1341 W. MOCKINGBIRD LANE, SUITE 1200W
DALLAS, TEXAS 75247
(214) 630-5757
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
--------------------------
JEFF L. HULL
ATRIUM COMPANIES, INC.
1341 W. MOCKINGBIRD LANE, SUITE 1200W
DALLAS, TEXAS 75247
(214) 630-5757
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
COPIES TO:
JOEL M. SIMON, ESQ.
MARIE CENSOPLANO, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
399 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 318-6000
--------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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TABLE OF OTHER REGISTRANTS
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PRIMARY
STATE OR OTHER STANDARD
JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER
EXACT NAME OF REGISTRANT AS INCORPORATION CLASSIFICATION IDENTIFICATION
SPECIFIED IN ITS CHARTER OR ORGANIZATION CODE NUMBER NO.
- --------------------------------------------------------------- --------------- --------------- ----------------
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Atrium Door and Window Company-West Coast...................... Texas 3089 75-2382008
Atrium Door and Window Company of the Northeast................ Connecticut 3089 06-0735384
Atrium Door and Window Company of New York..................... Connecticut 3089 06-1351269
Atrium Door and Window Company of Arizona...................... Delaware 3442 74-2812044
Atrium Door and Window Company of New England, Inc............. Connecticut 3089 06-1251035
Door Holdings, Inc............................................. Delaware 2431 73-3959511
R. G. Darby Company, Inc....................................... Alabama 2431 63-0931046
R. G. Darby Company-South...................................... Delaware 2431 52-2137145
Total Trim, Inc................................................ Alabama 2431 63-1078042
Total Trim, Inc.-South......................................... Delaware 2431 59-3564586
Wing Industries Holdings, Inc.................................. Delaware 2431 13-3965160
Wing Industries, Inc........................................... Texas 2431 75-0664162
Heat, Inc...................................................... Delaware 3089 65-0430120
H.I.G. Vinyl, Inc.............................................. Delaware 3089 65-0917008
Champagne Industries, Inc...................................... Colorado 3089 84-1022004
Thermal Industries, Inc........................................ Delaware 3089 23-2903452
Best Built, Inc................................................ Delaware 3089 91-1813049
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<PAGE>
PRELIMINARY PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION DATED AUGUST 12, 1999
[LOGO]
OFFER TO EXCHANGE
ANY AND ALL OUTSTANDING
10 1/2% SENIOR SUBORDINATED NOTES DUE 2009, SERIES A
FOR
10 1/2% SENIOR SUBORDINATED NOTES DUE 2009, SERIES B
OF
ATRIUM COMPANIES, INC.
TERMS OF EXCHANGE OFFER
- Expires 5:00 p.m., New York City time, September , 1999, unless
extended.
- We will not receive any proceeds from the exchange offer.
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS
THAT INVESTORS SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE EXCHANGE NOTES.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this prospectus is , 1999.
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary......................................................................................... 1
Risk Factors............................................................................................... 15
Forward-looking Statements................................................................................. 21
Use of Proceeds............................................................................................ 21
The Exchange Offer......................................................................................... 22
Capitalization............................................................................................. 33
Selected Consolidated Historical Financial Data of Atrium (after the 1998 recapitalization)................ 34
Selected Consolidated Historical Financial Data of Atrium (previous registrant)............................ 36
Unaudited Pro Forma Consolidated Financial Statements...................................................... 37
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 47
Business................................................................................................... 58
Management................................................................................................. 71
Certain Relationships and Related Transactions............................................................. 78
Beneficial Ownership....................................................................................... 81
Description of Certain Indebtedness........................................................................ 82
Description of the Exchange Notes.......................................................................... 84
Book-Entry; Delivery and Form.............................................................................. 118
Certain United States Federal Income Tax Considerations.................................................... 121
Plan of Distribution....................................................................................... 125
Legal Matters.............................................................................................. 126
Experts.................................................................................................... 126
Available Information...................................................................................... 126
Index to Financial Statements.............................................................................. F-1
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ii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY CONTAINS BASIC INFORMATION ABOUT THIS EXCHANGE OFFER.
IT LIKELY DOES NOT CONTAIN ALL THE INFORMATION THAT IS IMPORTANT TO YOU IN
MAKING A DECISION TO EXCHANGE THE OUTSTANDING NOTES. FOR A MORE COMPLETE
UNDERSTANDING OF THIS EXCHANGE OFFER, WE ENCOURAGE YOU TO READ THIS ENTIRE
DOCUMENT.
THE EXCHANGE OFFER
On May 17, 1999, we completed a private offering of $175,000,000 aggregate
principal amount of our 10 1/2% senior subordinated notes due 2009, or the
outstanding notes. On the same day, we entered into a registration rights
agreement with the initial purchaser of the outstanding notes agreeing, among
other things, to deliver to you this prospectus and to use our best efforts to
complete this exchange offer within 210 days of the issuance of the outstanding
notes. You should read the discussion under the headings
"--Summary Description of the Exchange Notes" and "Description of the Exchange
Notes" for further information regarding the registered notes.
THE COMPANY
We are one of the largest manufacturers and distributors of residential
windows and doors in the United States based on 1998 pro forma net sales. We
offer a complete product line including aluminum, vinyl and wood windows and
doors to our customers, which include leading national homebuilders and home
center retailers. We have grown rapidly through a combination of internal growth
and complementary acquisitions. Our acquisitions of Heat, Inc. and Champagne
Industries, Inc. and their subsidiaries are a continuation of our strategy to
become the largest nationwide manufacturer and distributor of residential
windows and doors. The Heat acquisition strengthens our vinyl product offering,
enhances our nationwide presence and provides access to a proprietary
distribution network of 22 distribution centers. The Champagne acquisition
enhances our presence in the vinyl markets of Colorado, Kansas and Nebraska. Pro
forma for the transactions described in "Unaudited Pro Forma Consolidated
Financial Statements", we would have had net sales and adjusted EBITDA of $123.3
million and $10.3 million, respectively, for the three months ended March 31,
1999.
We were founded in 1948 and we believe we are one of the two largest
manufacturers and distributors of residential non-wood windows and the third
largest manufacturer and distributor of residential doors in the United States
based on 1998 pro forma net sales. Our portfolio of products includes some of
the industry's most recognized brand names including ATRIUM-TM- and
WING-Registered Trademark-. Our full product line of aluminum, vinyl and wood
windows and doors enables us to differentiate ourselves from our competition,
leverage our multi-channel distribution system and be well positioned to benefit
from shifts in product preferences. Regional product preferences exist for
aluminum, vinyl and wood windows and doors, and a full product line is important
to serve our national customer base effectively. We pride ourselves on our
ability to provide to our nationwide customers the most suitable material based
on varying regional product preferences.
We have 53 manufacturing facilities and distribution centers strategically
located in 24 states to service customers on a nationwide basis. We distribute
through multiple channels including direct distribution to large homebuilders
and independent contractors, one-step distribution through home centers and
lumberyards and two-step distribution to wholesalers and dealers who
subsequently resell to lumberyards, contractors and retailers. We believe that
our multi-channel distribution network allows us to reach the greatest number of
end customers and provide nationwide service to those customers.
1
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COMPETITIVE STRENGTHS
We believe that we have a competitive advantage in our markets due to our
following competitive strengths:
- our leading market positions;
- our strong brand name recognition;
- our complete, high-quality product offering;
- our multi-channel distribution network;
- our established and diversified customer base; and
- our low cost, vertically integrated manufacturing operations.
BUSINESS STRATEGY
Our goal is to increase revenue growth and profitability and to strengthen
our leadership position in the residential window and door industry through the
following initiatives:
- enhance our nationwide presence;
- extend and cross-sell our product offerings;
- capitalize on the ATRIUM brand name;
- continue to pursue operational efficiencies; and
- make selective strategic acquisitions.
THE ATRIUM TRANSACTIONS
On May 17, 1999, we acquired Heat and its subsidiaries for approximately
$85.0 million, including $0.7 million of assumed indebtedness, and Champagne for
approximately $3.6 million, excluding $0.5 million to be paid upon the
achievement of certain operational targets. Additionally, a post closing
adjustment of $3.5 million was paid on May 17, 1999 related to working capital
delivered in excess of the target defined in the Heat stock purchase agreement.
On March 27, 1998 we purchased substantially all of the assets of Masterview
Window Company, LLC. On January 27, 1999, we purchased substantially all of the
assets of Delta Millwork, Inc. The Heat and Champagne acquisitions, the
transactions described in "--The 1998 Recapitalization," the Delta and
Masterview acquisitions, the offering of the outstanding notes, and the
application of the net proceeds from the offering of the outstanding notes are
referred to in this prospectus as the "Atrium transactions."
THE 1998 RECAPITALIZATION
On October 2, 1998, GE Investment Private Placement Partners II, a Limited
Partnership, or GEIPPPII, which was formed by GE Investment Management
Incorporated, a wholly-owned subsidiary of General Electric Company, and
Ardshiel, Inc., a private equity firm, and certain of its affiliates, acquired
Atrium in a transaction valued at $225.0 million. In connection with the Atrium
acquisition, GEIPPPII and an affiliate of Ardshiel recapitalized Wing and Darby
and combined them with Atrium. As part of the recapitalization, GEIPPPII and
Ardshiel contributed to Atrium $50.0 million from the sale of common stock of
Atrium's ultimate parent and approximately $52.0 million in the implied value of
the Wing and Darby businesses. In addition, the proceeds from the issuance of
$45.0 million of discount debentures of Atrium Corporation to GEIPPPII and an
affiliate of Ardshiel were used to fund in part the acquisition of Atrium and
the repurchase of a portion of our existing senior subordinated notes. The
remaining sources of funds included a $205.0 million senior secured credit
facility consisting of a $30.0 million revolver, of
2
<PAGE>
which $2.0 million was drawn at closing, a $75.0 million term loan B, and a
$100.0 million term loan C, of which approximately $29.1 million was repaid 36
days after closing. The revolving credit facility, term loan B and term loan C
mature in June 2004, June 2005 and June 2006, respectively. The transactions
described in this paragraph are referred to in this prospectus as the "1998
recapitalization."
EXPLANATORY NOTE
The term "Wing" refers to Wing Industries, Inc. and its direct parent, Wing
Industries Holdings, Inc., as a combined entity and the term "Darby" refers to
R.G. Darby Company, Inc., R.G. Darby Company, Inc.-South, Total Trim, Inc.,
Total Trim, Inc.-South and their direct parent, Door Holdings, Inc., as a
combined entity, which entities were either contributed to Atrium and became our
subsidiaries in connection with the 1998 recapitalization or were formed
subsequent to the 1998 recapitalization.
3
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SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
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THE EXCHANGE OFFER................ We are offering to exchange $1,000 principal amount of
exchange notes for each $1,000 principal amount of
outstanding notes. Outstanding notes may only be
exchanged in $1,000 principal amount increments. In
order to be exchanged, an outstanding note must be
properly tendered and accepted. All outstanding notes
that are validly tendered and not validly withdrawn will
be exchanged.
RESALES........................... We believe that you may resell or otherwise transfer
exchange notes issued pursuant to the exchange offer
without compliance with the registration and prospectus
delivery provisions of the Securities Act, however,
there are exceptions to this general statement. You may
not freely transfer the exchange notes if:
- you are an "affiliate" of ours within the meaning
of Rule 405 under the Securities Act;
- you are a broker-dealer who acquired the
outstanding notes directly from us without
compliance with the registration and prospectus
delivery provisions of the Securities Act;
- you did not acquire the exchange notes in the
ordinary course of your business; or
- you have engaged in, intend to engage in, or have
an arrangement or understanding with any person to
participate in the distribution of the exchange
notes.
By tendering your notes you will be making
representations to this effect.
Any recipient of exchange notes that is subject to any
of the exceptions above and each participating
broker-dealer that receives exchange notes for its own
account pursuant to the exchange offer in exchange for
outstanding notes that were acquired as a result of
market-making, must comply with the registration and
prospectus delivery requirements of the Securities Act
in connection with the resale of the exchange notes.
You may incur liability under the Securities Act if our
belief is incorrect and you transfer any exchange note
issued to you in the exchange offer without delivering a
prospectus meeting the requirements of the Securities
Act or without an exemption from registration of your
exchange notes from such requirements. We do not assume
or indemnify you against any such liability.
EXPIRATION OF EXCHANGE OFFER...... 5:00 p.m., New York City time, on September , 1999,
unless we extend the exchange offer, in which case the
term "expiration date" means the latest date and time to
which the exchange offer is extended.
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4
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INTEREST ON THE EXCHANGE NOTES AND
THE OUTSTANDING NOTES........... Each exchange note will bear interest from May 17, 1999.
If your outstanding notes are accepted for exchange, you
will not receive accrued interest on the outstanding
notes, and will be deemed to have waived the right to
receive any interest on the outstanding notes from and
after May 17, 1999.
CONDITIONS TO THE EXCHANGE
OFFER........................... The exchange offer is subject to certain customary
conditions. See "The Exchange Offer--Conditions."
PROCEDURES FOR TENDERING.......... If you wish to accept the exchange offer, you must
complete, sign and date the accompanying letter of
transmittal in accordance with its instructions and
deliver the letter of transmittal, together with the
outstanding notes and any other required documentation,
to the exchange agent at the address set forth in the
letter of transmittal.
If you hold outstanding notes through The Depository
Trust Company and wish to accept the exchange offer, you
must do so pursuant to The Depository Trust Company's
Automated Tender Offer Program, by which you will agree
to be bound by the letter of transmittal.
SPECIAL PROCEDURES FOR BENEFICIAL
OWNERS.......................... If you are a beneficial owner whose outstanding notes
are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and you
wish to tender in the exchange offer, you should contact
the person in whose name your outstanding notes are
registered promptly and instruct the person to tender on
your behalf. If you wish to tender in the exchange offer
on your own behalf, you must, prior to completing and
executing the letter of transmittal and delivering your
outstanding notes, either make appropriate arrangements
to register ownership of the outstanding notes in your
name or obtain a properly completed bond power from the
person in whose name your outstanding notes are
registered. The transfer of registered ownership may
take considerable time.
GUARANTEED DELIVERY PROCEDURES.... If you wish to tender your outstanding notes in the
exchange offer and your outstanding notes are not
immediately available or you cannot deliver your
outstanding notes, the letter of transmittal or any
other required documents or you cannot comply with the
procedures for book-entry transfer prior to the
expiration date, you may tender your outstanding notes
according to the guaranteed delivery procedures.
WITHDRAWAL RIGHTS................. Tenders may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the expiration date.
ACCEPTANCE OF OUTSTANDING NOTES
AND DELIVERY OF EXCHANGE
NOTES........................... We will accept for exchange any and all outstanding
notes that are properly tendered in the exchange offer
prior to the expiration date. The exchange notes issued
pursuant to the exchange offer will be delivered
promptly after the expiration date.
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5
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CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES.................... We believe with respect to the exchange of outstanding
notes for exchange notes:
- the exchange will not constitute a taxable
exchange for U.S. federal income tax purposes;
- you will not recognize gain or loss upon receipt
of the exchange notes; and
- you must include interest on the exchange notes in
gross income to the same extent as the outstanding
notes.
REGISTRATION RIGHTS AGREEMENT..... You have the right to exchange the outstanding notes
that you now hold for exchange notes with substantially
identical terms. This exchange offer is intended to
satisfy that right. If you do not tender your
outstanding notes in the exchange offer, you will not
have any further exchange or registration rights with
respect to your outstanding notes. All untendered
outstanding notes will continue to be subject to
restrictions on transfer under the Securities Act.
EXCHANGE AGENT.................... State Street Bank and Trust Company is serving as our
exchange agent in connection with the exchange offer.
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6
<PAGE>
SUMMARY DESCRIPTION OF THE EXCHANGE NOTES
The form and terms of the exchange notes will be substantially the same as
the form and terms of the outstanding notes except that:
(1) the exchange notes have been registered under the Securities Act and
will not bear legends restricting the transfer of the exchange notes; and
(2) the holders of the exchange notes, except for limited instances,
will not be entitled to further registration rights under the registration
rights agreement.
The exchange notes will evidence the same debt as the outstanding notes and
will be entitled to the benefits of the indenture under which the outstanding
notes were issued.
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EXCHANGE NOTES OFFERED............ $175.0 million aggregate principal amount of 10 1/2%
senior subordinated notes due 2009.
MATURITY DATE..................... The exchange notes will mature on May 1, 2009.
INTEREST.......................... We will pay interest on the exchange notes at the rate
of 10 1/2% per year on May 1 and November 1 of each
year, beginning on November 1, 1999.
GUARANTEES........................ Each of our subsidiaries fully and unconditionally
guarantees the outstanding notes on a senior
subordinated basis. Future subsidiaries also may be
required to guarantee the outstanding notes on a senior
subordinated basis.
RANKING........................... The exchange notes will be unsecured senior subordinated
obligations of Atrium and will be subordinated to all of
our existing and future senior indebtedness. The
exchange notes will rank equally with all our other
existing and future senior subordinated indebtedness and
will rank senior to all our subordinated obligations.
The guarantees will be unsecured senior subordinated
obligations and will be subordinated to all existing and
future senior indebtedness of the guarantors. The
guarantees will rank equally with all of the guarantors'
other existing and future senior subordinated
indebtedness and will rank senior to all of the
guarantors' subordinated obligations.
SINKING FUND...................... None.
OPTIONAL REDEMPTION............... We may not redeem the exchange notes prior to May 1,
2004, except as described below. After May 1, 2004, we
may redeem the exchange notes, in whole or in part, at
any time prior to maturity.
At any time on or prior to May 1, 2002, we may redeem up
to 35% of the exchange notes with the net cash proceeds
of certain equity offerings.
CHANGE OF CONTROL................. If we experience certain change of control events, you
will have the right to require us to repurchase all or a
portion of your exchange notes at a price equal to 101%
of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase.
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CERTAIN COVENANTS................. The indenture governing the exchange notes will limit
our ability and the ability of certain of our
subsidiaries to, among other things,
- incur additional indebtedness,
- pay dividends on, redeem or repurchase our capital
stock,
- make investments,
- sell assets,
- in the case of certain of our subsidiaries,
guarantee indebtedness, without guaranteeing the
exchange notes,
- engage in transactions with affiliates, and
- consolidate, merge or transfer all or
substantially all of our assets or the assets of our
subsidiaries on a consolidated basis.
These covenants are subject to important exceptions and
qualifications.
EXCHANGE OFFER; REGISTRATION
RIGHTS.......................... To remove the transferability restrictions on the
outstanding notes, we and the guarantors have agreed:
- to file the registration statement of which this
prospectus is a part with the Commission to exchange
the outstanding notes for the exchange notes
within 60 days after the original issue date of
the outstanding notes;
- to use our best efforts to cause the registration
statement to be declared effective by the Commission
within 180 days after the original issue date of
the outstanding notes;
- to use our best efforts to commence the exchange
offer and cause such exchange offer to be
consummated within 210 days after the original
issue date of the outstanding notes; and
- to use our best efforts to file a shelf
registration statement for the resale of the
outstanding notes if we cannot effect an exchange
offer within the time periods listed above and in
certain other circumstances.
The interest rate on the outstanding notes will increase
if we do not comply with our obligations under the
registration rights agreement.
USE OF PROCEEDS................... We will not receive any cash proceeds from the exchange
offer.
</TABLE>
8
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RISK FACTORS
You should carefully consider all of the information in this prospectus
before deciding whether to invest in the exchange notes. In particular, you
should evaluate the specific risk factors under "Risk Factors."
9
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SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA
Prior to October 2, 1998, Atrium's consolidated historical financial
statements as filed with the Commission included its operations and the
operations of its subsidiaries. On October 2, 1998, pursuant to the 1998
recapitalization, the stock of Wing and Darby were contributed to Atrium.
As Wing was determined to be the accounting acquiror in a "reverse
acquisition", the consolidated historical financial statements of Atrium, prior
to October 3, 1998, were replaced with the consolidated historical financial
statements of Wing. The summary consolidated historical income statement and
other data for 1998 include the operations of Wing from January 1 through
December 31 and the operations of Atrium and Darby from October 3 through
December 31. The summary consolidated historical income statement and other data
for the three months ended March 31, 1999 include the operations of Atrium, Wing
and Darby. The summary consolidated historical income statement data and other
data for the years ended December 31, 1994, 1995 and 1997, the three months
ended March 31, 1998 and the periods ended October 25, 1996 and December 31,
1996 only include the operations and accounts of Wing and its predecessor.
Wing was acquired by its present controlling shareholders on October 25,
1996. The December 31, 1998 summary consolidated historical balance sheet data
includes the accounts of Atrium, Wing and Darby. The December 31, 1994, 1995,
1996 and 1997 and October 25, 1996 summary consolidated historical balance sheet
data only include the accounts of Wing and its predecessor. The references in
the "Summary Consolidated Historical Financial Data of Atrium (after the 1998
recapitalization)" to the periods ended December 31, 1996 and October 25, 1996,
refer to the periods October 26, 1996 through December 31, 1996 and January 1,
1996 through October 25, 1996, respectively.
The summary consolidated historical financial data of Atrium (previous
registrant) are provided for information purposes only. These include the
summary consolidated historical income statement data and other data for the
years ended December 31, 1994, 1995, 1996 and 1997, the nine months ended
September 30, 1997 and the period from January 1, 1998 to October 2, 1998, and
the summary consolidated historical balance sheet data as of December 31, 1994,
1995, 1996 and 1997, September 30, 1997 and October 2, 1998.
10
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SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA OF ATRIUM
(AFTER THE 1998 RECAPITALIZATION)
The summary consolidated historical income statement and other data set
forth below for the year ended December 31, 1995, the periods ended October 25,
1996 and December 31, 1996 and the years ended December 31, 1997 and 1998, and
the summary consolidated historical balance sheet data at December 31, 1995,
1996, 1997 and 1998 and October 25, 1996 were derived from Atrium's (after the
1998 recapitalization) audited consolidated financial statements. The summary
consolidated historical financial data as of and for the year ended December 31,
1994 and the three months ended March 31, 1998 and 1999, were derived from
Atrium's (after the 1998 recapitalization) unaudited consolidated financial
statements, which in the opinion of management reflect all adjustments necessary
for a fair presentation of results for such periods. The summary consolidated
historical financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements, related notes and other financial information included
elsewhere in this prospectus.
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PREDECESSOR
-----------------------------------
THREE
MONTHS
YEAR ENDED PERIOD YEAR ENDED DECEMBER ENDED
DECEMBER 31, ENDED PERIOD ENDED 31, -----------
---------------------- OCTOBER 25, DECEMBER 31, -------------------- MARCH 31,
1995 1996 1996 1997 1998 1998
--------- ----------- ------------- --------- --------- -----------
1994
-----------
(UNAUDITED) (DOLLARS IN THOUSANDS) (UNAUDITED)
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INCOME STATEMENT DATA:
Net sales........................ $ 72,496 $ 68,481 $ 62,880 $ 13,200 $ 99,059 $ 211,059 $ 39,450
Gross profit..................... 12,945 15,461 15,569 3,273 20,789 51,919 8,986
Selling, delivery, general and
administrative expenses........ 14,032 13,931 13,271 2,242 15,671 39,754 6,606
Interest expense................. 909 1,039 509 374 2,953 9,081 992
Income (loss) before income
taxes.......................... 179 491 1,789 532 1,391 (2,239) 1,242
Net income (loss)................ 35 279 1,119 303 696 (2,819) 686
BALANCE SHEET DATA (END OF
PERIOD):
Total assets..................... $ 20,740 $ 18,515 $ 19,966 $ 36,404 $ 55,383 $ 359,869 $ 57,514
Total debt....................... 10,296 8,522 8,154 20,489 32,238 179,227 33,385
OTHER DATA:
EBITDA(1)........................ $ 1,777 $ 2,374 $ 3,014 $ 1,166 $ 5,836 $ 14,732 $ 2,702
Depreciation and amortization.... 689 844 716 260 1,492 7,950 468
<CAPTION>
MARCH 31,
1999
-----------
<S> <C>
INCOME STATEMENT DATA:
Net sales........................ $ 106,842
Gross profit..................... 32,134
Selling, delivery, general and
administrative expenses........ 23,151
Interest expense................. 4,346
Income (loss) before income
taxes.......................... 1,018
Net income (loss)................ 190
BALANCE SHEET DATA (END OF
PERIOD):
Total assets..................... $ 366,766
Total debt....................... 185,260
OTHER DATA:
EBITDA(1)........................ $ 8,301
Depreciation and amortization.... 2,937
</TABLE>
- ------------------------------
(1) EBITDA represents income before interest, income taxes, extraordinary
charge, depreciation and amortization, special charges, stock option
compensation expense and certain non-recurring expenses related to
acquisitions. While we do not intend for EBITDA to represent cash flow from
operations as defined by GAAP and we do not suggest that you consider it as
an indicator of operating performance or an alternative to cash flow or
operating income (as measured by GAAP) or as a measure of liquidity, we
include it herein to provide additional information with respect to our
ability to meet our future debt service, capital expenditures and working
capital requirements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." We believe EBITDA provides investors
and analysts in the building materials industry the necessary information to
analyze and compare our historical results on a comparable basis with other
companies on the basis of operating performance, leverage and liquidity.
However, as EBITDA is not defined by GAAP, it may not be calculated on the
same basis as other similarly titled measures of other companies within the
building materials industry.
11
<PAGE>
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA OF ATRIUM
(PREVIOUS REGISTRANT)
The summary consolidated historical financial data set forth below as of and
for each of the four years in the four-year period ended December 31, 1997 and
as of and for the period from January 1, 1998 to October 2, 1998 were derived
from Atrium's (previous registrant) audited consolidated financial statements.
The summary consolidated historical financial data as of and for the period
ended September 30, 1997 were derived from Atrium's (previous registrant)
unaudited consolidated financial statements, which in the opinion of management
reflect all the adjustments necessary for fair presentation of results for such
periods. The summary consolidated historical financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements, related notes and other
financial information included elsewhere in this prospectus.
<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED DECEMBER 31, --------------------------
-------------------------------------------- OCTOBER 2,
1994 1995 1996 1997 1998
----------- --------- --------- --------- -----------
SEPTEMBER 30,
1997
-------------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................ $ 123,571 $ 135,478 $ 156,269 $ 186,764 $ 139,793 $ 167,418
Gross profit............................. 37,999 41,503 53,928 65,463 50,137 58,183
Selling, delivery, general and
administrative expenses................ 26,895 29,303 34,815 44,486 33,114 37,704
Interest expense......................... 355 2,753 4,786 11,523 8,542 9,545
Income (loss) before income taxes........ 9,795 3,393 8,078 10,235 9,353 (2,069)
Net income (loss)........................ 9,191 1,849 4,203 6,167 5,868 (4,862)
BALANCE SHEET DATA (END OF PERIOD):
Total assets............................. $ 58,507 $ 48,569 $ 74,750 $ 83,375 $ 91,823 $ 121,703
Total debt............................... 6,786 49,000 100,000 100,000 102,962 118,985
OTHER DATA:
EBITDA(1)................................ $ 16,094 $ 17,070 $ 21,463 $ 25,842 $ 20,279 $ 22,055
Depreciation and amortization............ 1,678 2,087 5,228 3,585 2,384 3,246
</TABLE>
- ------------------------------
(1) EBITDA represents income before interest, income taxes, extraordinary
charge, depreciation and amortization, special charges, stock option
compensation expense and certain non-recurring expenses related to
acquisitions. While we do not intend for EBITDA to represent cash flow from
operations as defined by GAAP and we do not suggest that you consider it as
an indicator of operating performance or an alternative to cash flow or
operating income (as measured by GAAP) or as a measure of liquidity, we
include it herein to provide additional information with respect to our
ability to meet our future debt service, capital expenditures and working
capital requirements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." We believe EBITDA provides investors
and analysts in the building materials industry the necessary information to
analyze and compare our historical results on a comparable basis with other
companies on the basis of operating performance, leverage and liquidity.
However, as EBITDA is not defined by GAAP, it may not be calculated on the
same basis as other similarly titled measures of other companies within the
building materials industry.
12
<PAGE>
UNAUDITED SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA
We present below the unaudited summary pro forma consolidated financial data
for Atrium. The unaudited summary pro forma consolidated financial data are
derived from the audited and unaudited historical financial statements listed in
the Index to Financial Statements on page F-1 and certain unaudited historical
financial statements of other acquired businesses. The unaudited summary pro
forma consolidated income statement and other data for the year ended December
31, 1998 give effect to the Atrium transactions as if they had occurred on
January 1, 1998. The unaudited summary pro forma consolidated income statement
and other data for the three months ended March 31, 1999 gives effect to the
acquisitions of Delta, Heat and Champagne and the offering of the outstanding
notes and our use of the proceeds as if they occurred on January 1, 1999. The
unaudited pro forma consolidated balance sheet data gives effect to the Heat and
Champagne acquisitions and the offering of the outstanding notes and our use of
the proceeds as if they had occurred on March 31, 1999.
The unaudited summary pro forma consolidated financial data is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred if the Atrium
transactions had been consummated on the dates indicated nor are they
necessarily indicative of the results that may be expected or achieved in the
future. See also "Risk Factors-- Substantial Leverage and Debt Service,"
"Unaudited Pro Forma Consolidated Financial Statements," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
the financial statements, related notes and other financial information included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH YEAR ENDED
31, 1999 DECEMBER 31, 1998
-------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
INCOME STATEMENT DATA:
Net sales................................................................... $ 123,287 $ 493,079
Gross profit................................................................ 37,362 156,367
Selling, delivery, general and administrative expenses...................... 29,506 106,445
Income from operations...................................................... 4,065 33,117
Income (loss) before income taxes........................................... (3,736) 983
OTHER DATA:
EBITDA(1)................................................................... $ 9,336 $ 55,214
Adjusted EBITDA(2).......................................................... 10,347 59,255
Depreciation and amortization............................................... 5,202 13,072
Stock option compensation expense........................................... -- 9,257
Cash interest expense....................................................... 7,393 29,894
Capital expenditures........................................................ 1,330 10,283
Ratio of adjusted EBITDA to cash interest expense........................... 1.4x 2.0x
Ratio of total debt to adjusted EBITDA...................................... -- 5.1x
<CAPTION>
AS OF MARCH 31, 1999
---------------------------------
ACTUAL PRO FORMA
-------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital(3).......................................................... $ 67,820 $ 78,628
Total assets................................................................ 366,766 474,372
Total debt.................................................................. 185,260 308,656
Stockholder's equity........................................................ 133,253 110,417
</TABLE>
- ------------------------
(1) EBITDA represents income before interest, income taxes, extraordinary
charge, depreciation and amortization, special charges, stock option
compensation expense and certain non-recurring expenses
13
<PAGE>
related to acquisitions. While we do not intend for EBITDA to represent cash
flow from operations as defined by GAAP and we do not suggest that you
consider it as an indicator of operating performance or an alternative to
cash flow or operating income (as measured by GAAP) or as a measure of
liquidity, we include it herein to provide additional information with
respect to our ability to meet our future debt service, capital expenditures
and working capital requirements. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations." We believe EBITDA
provides investors and analysts in the building materials industry the
necessary information to analyze and compare our results on a comparable
basis with other companies on the basis of operating performance, leverage
and liquidity. However, as EBITDA is not defined by GAAP, it may not be
calculated on the same basis as other similarly titled measures of other
companies within the building materials industry.
(2) Adjusted EBITDA is calculated as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
EBITDA.............................................................. $ 9,336 $ 55,214
Elimination of non-recurring transaction costs and certain general
and administrative expenses of Heat............................... 130 520
Cost savings related to new supply agreements on raw materials of
Heat.............................................................. 298 1,190
Cost savings related to new supply agreements on raw materials of
Champagne......................................................... 85 341
Cost savings related to the consolidation of Atrium's wood
operations, including raw material and logistics savings and the
elimination of certain general and administrative expenses........ 498 1,990
----------- ------------
Adjusted EBITDA..................................................... $ 10,347 $ 59,255
----------- ------------
----------- ------------
</TABLE>
While we do not intend for adjusted EBITDA to represent cash flow from
operations as defined by GAAP and we do not suggest that you consider it as
an indicator of operating performance or an alternative to cash flow or
operating income (as measured by GAAP) or as a measure of liquidity, we
include it herein to provide additional information with respect to our
ability to meet our future debt service, capital expenditures and working
capital requirements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(3) Computed as current assets less current liabilities, excluding current
portion of notes payable.
14
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE EXCHANGE NOTES INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND OTHER INFORMATION IN
THIS PROSPECTUS BEFORE DECIDING TO INVEST IN THE EXCHANGE NOTES.
OUR SUBSTANTIAL LEVERAGE AND DEBT SERVICE COULD ADVERSELY AFFECT OUR FINANCIAL
HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE EXCHANGE NOTES.
We have a significant amount of debt. On a pro forma basis, after giving
effect to the Heat and Champagne acquisitions and the offering of the
outstanding notes and our use of the proceeds, at March 31, 1999, we would have
had approximately $308.7 million of consolidated debt outstanding, of which
approximately $136.3 million would have been senior indebtedness (exclusive of
unused commitments under our revolving credit facility), which includes
approximately $1.3 million of senior indebtedness of our subsidiaries (exclusive
of their guarantee of approximately $135.0 million of our senior indebtedness)
and our total consolidated debt, as a percentage of capitalization, would have
been approximately 74%.
Our high level of indebtedness could have important consequences to you. For
example, it could:
- limit our ability to obtain additional financing to fund our growth
strategy, working capital, capital expenditures, debt service requirements
or other purposes;
- limit our ability to use operating cash flow in other areas of our
business because we must dedicate a substantial portion of these funds to
make principal payments and fund debt service requirements;
- increase our vulnerability to interest fluctuations because, on a pro
forma basis, after giving effect to the Heat and Champagne acquisitions
and the offering of the outstanding notes and our use of the proceeds,
approximately $71.5 million of our debt would have been at variable
interest rates as of March 31, 1999;
- limit our ability to compete with others who are not as highly leveraged
as we are; and
- limit our ability to react to changing market conditions, changes in our
industry and economic downturns.
Our ability to meet our debt service obligations and to satisfy our other
obligations will depend upon our future operating performance. If in the future
we cannot generate sufficient cash from operations to make scheduled payments on
the exchange notes or to meet our other obligations, we will need to refinance
our debt, obtain additional debt or equity financing or sell assets. To the
extent we need to sell significant assets to make scheduled payments on the
exchange notes or meet our other obligations, such sales would have a material
adverse effect on our business, operating results or financial condition.
OUR EXISTING DEBT AGREEMENTS IMPOSE SIGNIFICANT RESTRICTIONS ON US.
The operating and financial restrictions and covenants in our existing debt
agreements, including the indenture governing the exchange notes and our credit
facility, and any future financing agreements may adversely affect our ability
to finance future operations or capital needs or to engage in other business
activities. A breach of any of these restrictions or covenants could cause a
default under our debt, including the exchange notes. Such a default may trigger
defaults under our other debt instruments that contain cross-acceleration or
cross-default provisions. A significant portion of our indebtedness then may
become immediately due and payable. We are not certain whether we would have, or
be able to obtain, sufficient funds to make these accelerated payments,
including payments on the exchange notes.
15
<PAGE>
WE MAY NOT BE ABLE TO INTEGRATE SUCCESSFULLY THE HEAT AND CHAMPAGNE BUSINESSES
AND OTHER BUSINESSES THAT WE MAY ACQUIRE IN THE FUTURE.
Our future performance will depend heavily on our ability to integrate the
Heat and Champagne businesses and other businesses that we may acquire in the
future. In order to integrate the newly acquired businesses into our business,
we must integrate manufacturing facilities, extend our financial and management
controls and operating, administrative and information systems in a timely
manner and on satisfactory terms and conditions. We cannot assure you that we
will be able to integrate the Heat and Champagne businesses or other businesses
that we may acquire in the future or that we will be able to realize projected
cost savings and synergies in connection with such acquisitions on the timetable
contemplated or at all.
Furthermore, the costs of the acquisitions of Heat and Champagne and of
acquisitions of other businesses that we may consummate in the future could have
an adverse effect on short-term operating results. Such costs could include:
- restructuring charges associated with the acquisitions; and
- other expenses associated with a change of control, as well as
non-recurring acquisition costs including accounting and legal fees,
investment banking fees, recognition of transaction-related obligations
and various other acquisition-related costs.
The integration of the Heat and Champagne businesses or other newly acquired
companies may also lead to diversion of management attention from other ongoing
business concerns. In addition, we may need to recruit additional managers to
supplement the incumbent management of newly acquired companies but we may not
have the ability to recruit additional managers with the skills necessary to
enhance the management of the acquired companies.
THE EXCHANGE NOTES WILL BE SUBORDINATE TO ALL OF OUR EXISTING AND FUTURE SENIOR
INDEBTEDNESS AND THE GUARANTEES WILL BE SUBORDINATE TO ALL EXISTING AND FUTURE
SENIOR INDEBTEDNESS OF THE GUARANTORS.
The exchange notes will be subordinate to all of our existing and future
senior indebtedness. The guarantees will be subordinate to all existing and
future senior indebtedness of the guarantors. On a pro forma basis, after giving
effect to the Heat and Champagne acquisitions and the offering of the
outstanding notes and our use of the proceeds, at March 31, 1999, we would have
had approximately $136.3 million of senior indebtedness outstanding, exclusive
of unused commitments under our revolving credit facility, and the guarantors
would have had approximately $1.3 million of senior indebtedness outstanding,
exclusive of their guarantee of approximately $135.0 million of our senior
indebtedness.
In the event of our bankruptcy, liquidation or dissolution, our assets would
be available to pay obligations on the exchange notes only after all payments
had been made on our senior indebtedness. Similarly, in the event of bankruptcy,
liquidation or dissolution of any guarantor, its assets would be available to
pay obligations on the exchange notes only after all payments had been made on
its senior indebtedness. We cannot assure you that sufficient assets will remain
to make any payments on the exchange notes. In addition, certain events of
default under our and the guarantors' senior indebtedness would prohibit us and
the guarantors from making any payments on the exchange notes or the guarantees.
WE MAY BE UNABLE TO PASS ON TO CUSTOMERS FLUCTUATIONS IN RAW MATERIAL COSTS AND
SUPPLY, AND INTERRUPTIONS OF OPERATIONS AT ANY OF OUR MANUFACTURING FACILITIES
OR SUPPLIERS' DELAYS MAY ADVERSELY AFFECT OUR BUSINESS.
We purchase aluminum, vinyl, wood, glass and other raw materials from
various suppliers. While all of these materials are available from numerous
independent suppliers, commodity raw materials are subject to fluctuations in
price. We cannot assure you that severe shortages of such materials will not
occur in the future, which could increase the cost of, or delay the shipment of,
our products and have a material adverse effect on our operating results. In
addition, we may be unable to pass on to customers gradual increases in
16
<PAGE>
raw material prices. Moreover, sharp increases in raw material prices are more
difficult to pass through to the customer in a short period of time and may
negatively impact our short-term financial performance.
In addition, loss of or interruptions of operations at any of our
manufacturing facilities or suppliers experiencing delays or generating higher
costs could have an adverse effect on our business, operating results or
financial condition.
WE OPERATE IN A VERY COMPETITIVE BUSINESS ENVIRONMENT.
We compete with other national and regional manufacturers in our markets,
including Reliant Building Products, Inc., Nortek Inc., Andersen Corporation,
American Architectual Products Company and Pella Corporation in the window
market, and Premdor, Inc. and Jeld-Wen in the door market. Certain of our
principal competitors may be less highly-leveraged than we are and have greater
financial resources than we do. Accordingly, such competitors may be better able
to withstand changes in conditions within the industries in which we operate and
may have significantly greater operating and financial flexibility than we do.
As a result of the competitive environment in the markets in which we
operate, we face and will continue to face pressure on sales prices of our
products from competitors, as well as from large customers. As a result of such
pricing pressures, we may in the future experience reductions in the profit
margins on sales, or may be unable to pass future raw material price or labor
cost increases on to our customers which would also reduce profit margins. We
cannot assure you that we will not encounter increased competition in the future
which could have a material adverse effect on our business, operating results or
financial condition.
WE HAVE BEEN, AND MAY IN THE FUTURE BE, SUBJECT TO CLAIMS AND LIABILITIES UNDER
ENVIRONMENTAL, HEALTH AND SAFETY LAWS AND REGULATIONS.
Our past and present operations and assets are subject to extensive federal,
state, local and foreign environmental laws and regulations pertaining to the
discharge of materials into the environment, the handling and disposal of
wastes, including solid and hazardous wastes, or otherwise relating to health,
safety and protection of the environment. We do not expect to make any
expenditures with respect to ongoing compliance with or remediation under these
environmental laws and regulations that would have a material adverse effect on
our business, operating results or financial condition. However, the applicable
requirements under the law may change at any time.
The nature of our past and present operations and assets expose us to the
risk of claims under these environmental, health and safety laws and
regulations. We cannot assure you that material costs or liabilities will not be
incurred in connection with such claims. We have been subject to such claims in
the course of our operations, and have made expenditures to address these known
conditions in a manner consistent with applicable laws and regulations. Based on
our experience to date, we do not believe that these existing claims will have
any further material adverse effect on our business, operating results or
financial condition. We cannot assure you, however, that the discovery of
presently unknown environmental conditions, changes in environmental, health,
and safety laws and regulations or other unanticipated events will not give rise
to claims that may involve material expenditures or liabilities.
Prior to 1993 we received correspondence in which we were named as
potentially responsible parties at two Superfund sites, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended or comparable state statutes. In one instance, we have entered into a
settlement and in the other instance, the group of potentially responsible
parties has negotiated a proposed remediation plan which has been approved by
the relevant state agency and is being reviewed by the United States
Environmental Protection Agency. Based on the actions taken to date and our
current insurance coverage, we believe that any liability associated with the
Superfund sites does not currently have and will not have a material adverse
effect on our business, operating results or financial condition.
17
<PAGE>
However, because the Comprehensive Environmental Response, Compensation and
Liability Act provides for strict, and sometimes joint and several liability, we
cannot assure you that the liabilities in question will not result in material
expenditures in the future.
TRENDS IN THE HOUSING SECTOR AND IN GENERAL ECONOMIC CONDITIONS DIRECTLY IMPACT
OUR FINANCIAL PERFORMANCE.
Demand in the window and door manufacturing and distribution industry is
influenced by new home construction activity. For the year ended December 31,
1998, we estimate that approximately 42% of our pro forma net sales were related
to new home construction. Trends in the housing sector directly impact our
financial performance. Accordingly, the strength of the U.S. economy, the age of
existing home stock, job growth, interest rates, consumer confidence and the
availability of consumer credit, as well as demographic factors such as the
migration into the United States and migration of the population within the
United States have a direct impact on our business. Cyclical declines in new
housing starts may have a material adverse effect on our business, operating
results or financial condition.
OUR BUSINESS WOULD BE SERIOUSLY IMPAIRED IF WE LOST OUR CURRENT RELATIONSHIP
WITH THE HOME DEPOT.
We have a significant relationship with The Home Depot, one of the largest
home center retailers. The Home Depot accounted for approximately 23% of our pro
forma net sales for the year ended December 31, 1998. Our operating and
financial performance is currently dependent, in part, upon our relationship
with this customer. We cannot assure you that we will be able to maintain such
relationship consistent with historic levels or at all.
OUR BUSINESS IS SUBJECT TO SEASONALITY.
Markets for our building-related products are seasonal. Historically, our
window business has experienced increased sales in the second and third quarters
of the year due to increased construction during those periods. Because interior
construction and repair increase during the winter months, the first and fourth
quarters of the year have historically been peak seasons for our door products,
particularly our interior doors. We cannot assure you that these seasonal trends
will not have a material adverse effect on our business, operating results or
financial condition.
THE LOSS OF CERTAIN KEY OFFICERS OR EMPLOYEES OR INABILITY TO FIND A CHIEF
EXECUTIVE OFFICER COULD ADVERSELY EFFECT US.
The success of our business is materially dependent upon the continued
services of certain of our key officers and employees. The loss of such key
personnel could have a material adverse effect on our business, operating
results or financial condition. While we have non-competition agreements with
certain key officers and employees, we cannot assure you that a court will find
such agreements enforceable under applicable state law.
In addition, we are currently engaged in a search for a chief executive
officer. We cannot assure you that we will find a suitable candidate in the near
future or that such candidate will be able to manage our business effectively,
but we believe that our current management structure is sufficient to operate
our business.
OUR BUSINESS MAY BE ADVERSELY AFFECTED BY POTENTIAL LABOR DISPUTES.
Approximately 36% of our hourly employees are covered by three-year
collective bargaining agreements which expire in 2001. We cannot assure you that
we will not experience work stoppages or slowdowns in the future. In addition,
we cannot assure you that our non-union facilities will not become subject to
labor union organizing efforts or that labor costs will not materially increase.
18
<PAGE>
WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS OR REGISTER OUR SIGNIFICANT
MARKS.
We rely on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality and non-disclosure agreements and other contractual
provisions to protect our proprietary rights, measures that provide only limited
protection. We cannot assure you that our means of protecting our proprietary
rights will be adequate or that competitors will not independently develop
similar technologies.
We have applied to register certain of our trademarks. We cannot assure you
that we will obtain registrations of principal marks in key markets. Failure to
obtain registrations could compromise our ability to protect our trademarks and
brands and could increase the risk of challenge from third parties to our use of
our trademarks and brands. Our failure to enforce and protect our intellectual
property rights or obtain from third parties the right to use necessary
intellectual property could have a material adverse effect on our business,
operating results or financial condition.
THE YEAR 2000 PROBLEM WILL REQUIRE SIGNIFICANT EXPENDITURES AND COULD DISRUPT
OUR OPERATIONS, IMPACTING OUR REVENUES.
We are assessing the impact of the Year 2000 problem and have or intend to
modify portions of our hardware and software so that our computer systems will
function properly with respect to dates in the Year 2000 and thereafter. Much of
our assessment efforts have involved and depends on inquiries with our major
suppliers and customers as to their Year 2000 compliance. Substantially all of
our major suppliers and customers have indicated that their Year 2000 testing
and remediation programs are complete or will be complete by the end of the
third quarter of 1999. We have not, however, tested or independently verified
the Year 2000 compliance of our major suppliers and customers.
We face certain risks related to the Year 2000 problem including potential
disruptions in our operations due to Year 2000 problems with our systems,
potential disruptions in material supply due to Year 2000 problems with our
suppliers' systems and potential loss of sales or delayed cash collections in
the event of Year 2000 problems with our customers' systems. Although we have
not formalized a contingency plan to address the problems associated with these
risks, there are several factors that we believe may mitigate potential Year
2000 problems. Because our business has only recently been computerized, we
believe we can run our business without significant interruptions using manual
labor and "paper" systems in the event of a Year 2000 problem with our systems.
In addition, because we source our materials from several suppliers, we believe
we have decreased the likelihood that a Year 2000 disruption at one of our
suppliers will materially interrupt our material supply. Although we believe
these factors mitigate our Year 2000 risks, we cannot assure you that problems
arising from these risks will not have a material adverse effect on our
business, operating results or financial condition.
Although we believe that the Year 2000 problem will not pose significant
operational problems for us, we cannot assure you that our computer systems or
the computer systems of companies we acquire or the computer systems of other
companies with whom we conduct business will be Year 2000 compliant prior to
December 31, 1999. Furthermore, we cannot assure you that the inability of any
such systems to process accurately Year 2000 data will not have a material
adverse effect on our business, operating results or financial condition.
WE MAY NOT HAVE SUFFICIENT FUNDS TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED
BY THE INDENTURE OR OTHER AMOUNTS PAYABLE UPON A CHANGE OF CONTROL.
Upon the occurrence of a change of control, we will be required to offer to
purchase all of the outstanding exchange notes. Furthermore, a change of control
will result in an event of default under our credit facility, permitting the
lenders to accelerate all unpaid amounts, in which case such indebtedness would
be required to be repaid in full before repurchase of the exchange notes. We
cannot assure you we will have funds available to pay the accelerated amounts
and to repurchase the exchange notes.
19
<PAGE>
In addition, a change of control under our indenture will also constitute a
change of control for purposes of the indenture governing the discount
debentures issued by our parent, Atrium Corporation. In such case, Atrium
Corporation will be required to repurchase the discount debentures.
GEIPPPII AND ARDSHIEL, OUR CONTROLLING STOCKHOLDERS, HAVE A SIGNIFICANT
INFLUENCE OVER OUR MANAGEMENT AND POLICIES AND THEIR INTERESTS MAY DIFFER FROM
THE INTERESTS OF HOLDERS OF THE EXCHANGE NOTES.
GEIPPPII and Ardshiel own approximately 97% of the outstanding shares of
common stock of our ultimate parent, D and W Holdings, Inc. As a result of this
ownership and the provisions of the stockholders agreement executed by the
stockholders of D and W Holdings, GEIPPPII and Ardshiel are able to direct the
election of 8 of the 9 members of the Board of Directors of D and W Holdings and
therefore direct our management and policies. The interests of GEIPPPII and
Ardshiel may differ from the interests of holders of the exchange notes. The
stockholders agreement also provides that we cannot take certain actions without
obtaining the prior written consent of GEIPPPII and that D and W Holdings will
cause us to make dividend payments to make interest and principal payments on,
or to repurchase, redeem or repay, the discount debentures.
AN ACTIVE TRADING PUBLIC MARKET MAY NOT DEVELOP FOR THE EXCHANGE NOTES CAUSING
DIFFICULTIES FOR YOU IF YOU TRY TO RESELL THE EXCHANGE NOTES.
There is no established trading market for the exchange notes or the
outstanding notes. Although the initial purchaser of the outstanding notes has
informed us that it intends to make a market in the outstanding notes and the
exchange notes, it has no obligation to do so and may discontinue making a
market at any time without notice. Furthermore, we do not intend to apply for
listing of the exchange notes on any securities exchange or for quotation
through the National Association of Securities Dealers Automated Quotation
System.
The liquidity of and trading market for the exchange notes depends upon the
number of holders of the exchange notes, our performance, the market for similar
securities, the interest of securities dealers in making a market in the
exchange notes, and other factors. As a result, we cannot assure you as to the
development of a liquid trading market for the exchange notes.
UNDER CERTAIN CIRCUMSTANCES, A COURT COULD SUBORDINATE OR AVOID ANY OF THE
GUARANTEES.
Although laws differ among various jurisdictions, in general, under federal
bankruptcy laws and comparable provisions of state fraudulent conveyance laws,
under certain circumstances a court could subordinate or avoid any of the
guarantees.
If a court avoided a guarantee as a result of fraudulent conveyance, or held
it unenforceable for any other reason, holders of the exchange notes would cease
to have a claim against the relevant guarantor and would be solely creditors of
Atrium and the other guarantors.
We believe that the guarantees are being incurred for proper purposes and in
good faith. This belief is based on our analysis of internal cash flow
projections and estimated values of assets and liabilities of the guarantors at
the time of this offering. We cannot assure you, however, that a court passing
on these issues would make the same determination.
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FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. We caution prospective investors that forward-looking statements
are not guarantees of future performance. These forward-looking statements are
subject to risks, uncertainties, and assumptions about us, including, among
other things:
- our anticipated growth strategies;
- our ability to integrate acquired businesses, including, but not limited
to, Heat and Champagne;
- our intention to introduce new products;
- anticipated trends in our businesses and the economy, including trends in
the markets for windows and doors, the availability of consumer credit,
interest rates, employment, levels of consumer confidence, consumer
preferences, new housing starts, raw material costs and pricing pressures;
- our future capital expenditures; and
- our ability to continue to control costs and maintain quality.
Many of these factors are beyond our control, and our actual results could
differ materially from those discussed in these statements. In light of these
risks, uncertainties and assumptions, you should not place undue reliance on
these forward-looking statements. We undertake no obligation to update or revise
any forward-looking statements or the reasons why actual results may differ,
whether as a result of new information, future events or otherwise.
USE OF PROCEEDS
This exchange offer is intended to satisfy certain of our obligations under
the registration rights agreement entered in connection with the offering of the
outstanding notes. We will not receive any cash proceeds from the exchange
offer. In consideration for issuing the exchange notes, we will receive
outstanding notes in like principal amount. We will cancel all outstanding notes
surrendered in exchange for the exchange notes. Accordingly, issuance of the
exchange notes will not result in any change in our indebtedness.
In addition to financing the acquisitions of Heat and Champagne, we used the
$172.4 million of proceeds from the offering of the outstanding notes to:
- repay certain of our borrowings under our credit facility, including
accrued interest through date of repayment,
- retire our remaining existing senior subordinated notes including accrued
interest through the date of repayment and repurchase premium,
- fund a distribution to Atrium Corporation to repurchase a portion of the
discount debentures, including accreted discount through the date of
repurchase, held by GEIPPPII and an affiliate of Ardshiel, and
- pay transaction fees and expenses.
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THE EXCHANGE OFFER
The following discussion summarizes the material terms of the exchange
offer, including those set forth in the letter of transmittal distributed with
this prospectus. This summary is qualified, in its entirety by reference to the
full text of the documents underlying the exchange offer, including the
indenture and the registration rights agreement governing the exchange notes,
which are exhibits to the exchange offer registration statement of which this
prospectus is a part.
GENERAL
In connection with the sale of the outstanding notes to the initial
purchaser, we entered into a registration rights agreement, dated May 17, 1999,
with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated as
initial purchaser.
The registration rights agreement requires among other things that we:
- file with the Commission within 60 days after the original issue date of
the outstanding notes a registration statement under the Securities Act in
connection with the issue of the exchange notes;
- use our best efforts to cause the registration statement relating to such
registered exchange offer to become effective under the Securities Act
within 180 days after the original issue date of the outstanding notes;
- use our best efforts to have the registration statement relating to the
exchange offer to remain effective until the closing of the exchange
offer;
- use our best efforts to commence the exchange offer and cause such
exchange offer to be consummated within 210 days after the original issue
date of the outstanding notes; and
- upon the effectiveness of the exchange offer registration statement,
commence the exchange offer and keep the exchange offer open for not less
than 20 business days, or longer if required by applicable law.
If we consummate this exchange offer within the required time periods, we
will satisfy certain of our obligations under the registration rights agreement.
This prospectus, together with the letter of transmittal, is being sent to all
beneficial holders of the outstanding notes known to us.
In addition, we agreed, under the registration rights agreement, to file a
shelf registration statement pursuant to Rule 415 under the Securities Act, if:
- applicable law or the Commission's policy do not permit us to effect the
exchange offer;
- for any other reason the exchange offer is not consummated within 210 days
after the original issuance date of the outstanding notes;
- any holder of outstanding notes notifies us within 20 business days after
the commencement of the exchange offer that (1) due to a change in
applicable law or the Commission's policy it is not entitled to
participate in the exchange offer or it may not resell the exchange notes
without delivering a prospectus and the appropriate prospectus is not
available or (2) is a broker-dealer and owns outstanding notes acquired
directly from us or one of our affiliates; or
- the holders of a majority of outstanding notes may not resell the exchange
notes without restriction under the Securities Act and under applicable
blue sky or state securities law.
We have agreed to use our best efforts to cause such shelf registration
statement to become effective under the Securities Act as soon as practicable
but in no event later than 60 days after the filing of the shelf registration
statement. In addition, we agreed to use our best efforts to keep such shelf
registration
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statement continually effective, supplemented and amended for a period of at
least two years following the effective date of the shelf registration
statement, or such shorter period as will terminate when all outstanding notes
covered by such shelf registration statement have been sold.
Except as we have described, this prospectus may not be used for any offer
to resell, resale or other transfer of exchange notes.
Except as described above, after consummation of the exchange offer, holders
of outstanding notes will have no registration or exchange rights under the
registration rights agreement.
REGISTRATION DEFAULTS; LIQUIDATED DAMAGES
If either of the following registration defaults occur, we have agreed to
pay liquidated damages to each affected holder of outstanding notes:
- the registration statement related to the exchange offer or shelf
registration statement is not timely filed or declared effective or ceases
to be effective or fails to be usable for its intended purpose without
being succeeded immediately by an additional registration statement
covering all outstanding notes that is filed and is declared effective, or
- if the exchange offer has not been consummated on or prior to the 210th
day after the original issuance date of the outstanding notes.
Liquidated damages will accrue and become payable on the outstanding notes
as follows:
- with respect to the first 90-day period while a registration default is
continuing immediately following the occurrence of such registration
default, in an amount equal to 0.25% per annum of the principal amount of
the outstanding notes; and
- the amount of liquidated damages will increase by an additional 0.25% per
annum of the principal amount of the outstanding notes for each subsequent
90-day period while a registration default is continuing until all
registration defaults have been cured, up to an aggregate maximum amount
of 1.00% per annum of the principal amount of the outstanding notes.
Liquidated damages shall be computed based on the actual number of days
elapsed during which any such registration default exists. Following the cure of
a registration default, the accrual of liquidated damages with respect to such
registration default will cease.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date shall mean 5:00 p.m., New York City time, on September
, 1999, unless we, in our sole discretion, extend the exchange offer, in which
case the expiration date will be the latest date and time to which the exchange
offer is extended.
To extend the exchange offer, we will notify the exchange agent of any
extension by oral or written notice, followed by a public announcement thereof
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date. In no event will the expiration date be
extended to a date more than 30 days after effectiveness of the registration
statement.
We reserve the right, in our reasonable judgment:
(1) to delay accepting any outstanding notes, to extend the exchange
offer or to terminate the exchange offer if any of the conditions described
below have not been satisfied, by giving oral or written notice of such
delay, extension or termination to the exchange agent, or
(2) to amend the terms of the exchange offer in any manner.
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Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by a public announcement.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all outstanding notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time on the
expiration date. We will issue $1,000 principal amount of exchange notes in
exchange for each $1,000 principal amount of outstanding notes accepted in the
exchange offer. Holders of the outstanding notes may tender some or all of their
outstanding notes pursuant to the exchange offer.
The exchange notes will evidence the same debt as the outstanding notes and
will be entitled to the benefits of the indenture. The form and terms of the
exchange notes are substantially the same as the form and terms of the
outstanding notes, except that:
- the exchange notes have been registered under the Securities Act and thus
will not bear legends restricting their transfer; and
- holders of the exchange notes generally will not be entitled to certain
rights under the registration rights agreement or liquidated damages,
which rights generally will terminate after consummation of the exchange
offer.
Holders of outstanding notes do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law or the indenture in connection with
the exchange offer. We intend to conduct the exchange offer in accordance with
the applicable requirements of the Securities Exchange Act, as amended and the
rules and regulations of the Commission thereunder, including Rule 14e-1.
We shall be deemed to have accepted validly tendered outstanding notes when,
as and if we have given oral or written notice thereof to the exchange agent.
The exchange agent will act as agent for the tendering holders pursuant to the
exchange agent agreement for the purpose of receiving the exchange notes from
us.
If any tendered outstanding notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events described in this
prospectus or otherwise, the certificates for any such unaccepted outstanding
notes will be returned, without expense, to the tendering holder as promptly as
practicable after the expiration date.
Holders who tender their outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes in connection with the exchange of
outstanding notes in the exchange offer. We will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
exchange offer. See "--Fees and Expenses."
INTEREST ON EXCHANGE NOTES
Each exchange note will bear interest from May 17, 1999. Holders of the
outstanding notes whose outstanding notes are accepted for exchange will not
receive:
- accrued interest on such outstanding notes for any period from and after
the last interest payment date to which interest has been paid for on such
outstanding notes prior to the original issue date of the exchange notes,
or
- if no such interest has been paid, will not receive any accrued interest
on such outstanding notes, and will be deemed to have waived the right to
receive any interest on such outstanding notes accrued from and after such
interest payment date, or if no such interest has been paid or duly
provided for, from and after May 17, 1999.
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Interest on the exchange notes will be payable semi-annually on May 1 and
November 1 of each year, commencing November 1, 1999.
PROCEDURES FOR TENDERING OUTSTANDING NOTES
Only holders of outstanding notes may tender such outstanding notes in the
exchange offer. To tender in the exchange offer, a holder must:
- complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal,
- have the signatures guaranteed if required by the letter of transmittal,
and
- mail or otherwise deliver such letter of transmittal or such facsimile,
together with the outstanding notes and any other required documents, to
the exchange agent so as to be received by the exchange agent at the
address set forth below prior to 5:00 p.m., New York City time, on the
expiration date.
Delivery of the outstanding notes may be made by book-entry transfer of such
outstanding notes into the exchange agent's account at The Depository Trust
Company in accordance with the procedures described below. Confirmation of such
book-entry transfer must be received by the exchange agent prior to the
expiration date.
By executing the letter of transmittal, each holder will make to us the
representation described below in the first paragraph under the heading
"--Resale of Exchange Notes."
The tender by a holder and our acceptance will constitute an agreement
between the holder and us in accordance with the terms and subject to the
conditions set forth herein and in the letter of transmittal.
The method of delivery of outstanding notes and the letter of transmittal
and all other required documents to the exchange agent is at the election and
risk of the holder. Instead of delivery by mail, it is recommended that holders
use an overnight or hand delivery service. In all cases, sufficient time should
be allowed to assure delivery to the exchange agent before the expiration date.
No letter of transmittal or outstanding notes should be sent to us. Holders may
request their respective brokers, dealers, commercial banks, trust companies or
nominees to effect the above transactions on their behalf.
Any beneficial owner whose outstanding notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf.
Signatures on the letter of transmittal or a notice of withdrawal must be
guaranteed by an "eligible institution", which is defined below, unless the
outstanding notes tendered:
- are signed by the registered holder, unless such holder has completed the
box entitled "Special Exchange Instructions" or "Special Delivery
Instructions" on the letter of transmittal, or
- are tendered for the account of an eligible institution.
In the event that signatures on a letter of transmittal or a notice of
withdrawal are required to be guaranteed, such guarantee must be by a member
firm of a registered national securities exchange or of the National Association
of Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States, or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Securities Exchange Act. Any of the
entities described in the prior sentence is an eligible institution.
If the letter of transmittal is signed by a person other than the registered
holder of any outstanding notes listed in that letter, the outstanding notes
must be endorsed or accompanied by a properly completed bond power, signed by
such registered holder as such registered holder's name appears on such
outstanding notes, with the signature guaranteed by an eligible institution.
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If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by us,
evidence satisfactory to us of its authority to so act must be submitted with
the letter of transmittal.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance of tendered outstanding notes and withdrawal of tendered
outstanding notes will be determined by us in our sole discretion, which
determination will be final and binding. We reserve the absolute right to reject
any and all outstanding notes not properly tendered or any outstanding notes our
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserve the right to waive any defects, irregularities or conditions of tender
as to particular outstanding notes. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in the letter of
transmittal, will be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
outstanding notes must be cured within such time as we shall determine. Although
we intend to notify holders of outstanding notes of defects or irregularities
with respect to tenders of outstanding notes, neither we nor the exchange agent
or any other person shall incur any liability for failure to give such
notification. Tenders of outstanding notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any outstanding
notes received by the exchange agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the exchange agent to the tendering holders, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
BOOK-ENTRY DELIVERY PROCEDURES
Promptly after the date of this prospectus, the exchange agent will
establish accounts with respect to the outstanding notes at The Depository Trust
Company, which will be the book-entry transfer facility for purposes of the
exchange offer. Any financial institution that is a participant in the
book-entry transfer facility systems may make book-entry delivery of the
outstanding notes by causing The Depository Trust Company to transfer such
outstanding notes into the exchange agent's account at such book-entry transfer
facility in accordance with such book-entry transfer facility's procedures for
such transfer. Timely book-entry delivery of outstanding notes pursuant to the
exchange offer, however, requires receipt of a confirmation of a book-entry
transfer prior to the expiration date. In addition, although delivery of
outstanding notes may be effected through book-entry transfer into the exchange
agent's account at the book-entry transfer facility, the letter of transmittal
or a manually signed facsimile of the letter of transmittal, together with any
required signature guarantees and any other required documents, or an agent's
message, which is defined below, in connection with a book-entry transfer, must
be delivered or transmitted to and received by the exchange agent at its address
set forth on the cover page of the letter of transmittal prior to the expiration
date to receive exchange notes for tendered outstanding notes, or the guaranteed
delivery procedure described below must be complied with. Tender will not be
deemed made until such documents are received by the exchange agent. Delivery of
documents to the book-entry transfer facility does not constitute delivery to
the exchange agent.
TENDER OF OUTSTANDING NOTES HELD THROUGH THE DEPOSITORY TRUST COMPANY
The exchange agent and The Depository Trust Company have confirmed that the
exchange offer is eligible for The Depository Trust Company's Automated Tender
Offer Program. Accordingly, participants in The Depository Trust Company's
Automated Tender Offer Program may, instead of physically completing and signing
the applicable letter of transmittal and delivering it to the exchange agent,
electronically transmit their acceptance of the exchange offer by causing The
Depository Trust Company to transfer outstanding notes to the exchange agent in
accordance with The Depository Trust Company's Automated
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Tender Offer Program procedures for transfer. The Depository Trust Company will
then send an agent's message to the exchange agent.
The term agent's message means a message transmitted by The Depository Trust
Company, received by the exchange agent and forming part of the book-entry
confirmation, which states that The Depository Trust Company has received an
expressed acknowledgment from a participant in The Depository Trust Company's
Automated Tender Offer Program that is tendering outstanding notes which are the
subject of such book-entry confirmation, that such participant has received and
agrees to be bound by the terms of the applicable letter of transmittal or, in
the case of an agent's message relating to guaranteed delivery, that such
participant has received and agrees to be bound by the applicable notice of
guaranteed delivery, and that we may enforce such agreement against such
participant.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their outstanding notes and:
(1) whose outstanding notes are not immediately available;
(2) who cannot deliver their outstanding notes, the letter of
transmittal or any other required documents to the exchange agent; or
(3) who cannot complete the procedures for book-entry transfer, prior to
the expiration date, may effect a tender if:
(a) the tender is made through an eligible institution;
(b) prior to the expiration date, the exchange agent receives from
such eligible institution a properly completed and duly executed notice
of guaranteed delivery by facsimile transmission, mail or hand delivery
setting forth the name and address of the holder, the certificate
number(s) of such outstanding notes and the principal amount of
outstanding notes tendered, stating that the tender is being made and
guaranteeing that, within three (3) New York Stock Exchange trading days
after the expiration date, the letter of transmittal or facsimile of the
letter of transmittal, together with the certificate(s) representing the
outstanding notes or a book-entry confirmation transfer of such
outstanding notes into the exchange agent's account at The Depository
Trust Company and all other documents required by the letter of
transmittal, will be deposited by the eligible institution with the
exchange agent; and
(c) such properly completed and executed letter of transmittal or
facsimile thereof, as well as the certificate(s) representing all
tendered outstanding notes in proper form for transfer or a book-entry
confirmation transfer of such outstanding notes into the exchange agent's
account at The Depository Trust Company and all other documents required
by the letter of transmittal, are received by the exchange agent within
three (3) New York Stock Exchange trading days after the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of outstanding
notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the expiration date.
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To withdraw a tender of outstanding notes in the exchange offer, a written
or facsimile transmission notice of withdrawal must be received by the exchange
agent at the address set forth herein prior to 5:00 p.m., New York City time, on
the expiration date. Any such notice of withdrawal must:
- specify the name of the person having deposited the outstanding notes to
be withdrawn;
- identify the outstanding notes to be withdrawn, including the certificate
number(s) and principal amount of such outstanding notes, or, in the case
of outstanding notes transferred by book-entry transfer, the name and
number of the account at The Depository Trust Company to be credited;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such outstanding notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee under the indenture
register the transfer of such outstanding notes into the name of the
person withdrawing the tender; and
- specify the name in which any such outstanding notes are to be registered,
if different from that of the depositor.
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of such notices. Our determination shall be final and
binding on all parties. Any outstanding notes so withdrawn will be deemed not to
have been validly tendered for purposes of the exchange offer and no exchange
notes will be issued unless the outstanding notes so withdrawn are validly
retendered. Any outstanding notes which have been tendered but which are not
accepted for exchange will be returned to such holder without cost as soon as
practicable after withdrawal, rejection of tender or termination of the exchange
offer. Properly withdrawn outstanding notes may be retendered by following one
of the procedures described above at any time prior to the expiration date.
CONDITIONS
Despite any other term of the exchange offer, we shall not be required to
accept for exchange any outstanding notes, and may terminate or amend the
exchange offer as provided herein before the acceptance of such outstanding
notes, if:
(a) in the reasonable opinion of our counsel, the exchange offer or any
of its parts violates any applicable law or any applicable policy of the
Commission;
(b) any action or proceeding has been instituted or threatened in any
court or by any governmental agency which might materially impair our
ability to proceed with the exchange offer or any material adverse
development has occurred in any such action or proceeding with respect to
us;
(c) any governmental approval has not been obtained, which approval we
shall deem necessary for the consummation of the exchange offer as
contemplated hereby; or
(d) none of the outstanding notes have been duly tendered in accordance
with the terms of the exchange offer.
EXCHANGE AGENT
State Street Bank and Trust Company will act as exchange agent for the
exchange offer with respect to the outstanding notes.
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Questions and requests for assistance, requests for additional copies of
this prospectus or of the letter of transmittal for the outstanding notes and
requests for copies of the notice of guaranteed delivery should be directed to
the exchange agent, addressed as follows:
By registered or certified mail or overnight courier:
State Street Bank and Trust Company
Corporate Trust Division
P.O. Box 778
Boston, MA 02102-0778
Attn: Kellie Mullen
By facsimile (for eligible institutions only): (617) 664-5290
Confirm by telephone: (617) 664-5587
Kellie Mullen
FEES AND EXPENSES
We will pay the expenses of soliciting outstanding notes for exchange. The
principal solicitation is being made by mail by the exchange agent. However,
additional solicitations may be made by telephone, facsimile or in person by our
officers and regular employees and our affiliates and by persons so engaged by
the exchange agent.
We will pay the exchange agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses and pay
other registration expenses, including fees and expenses of the trustee under
the indenture, filing fees, blue sky fees and printing and distribution
expenses.
We will pay all transfer taxes applicable to the exchange of the outstanding
notes pursuant to the exchange offer. If, however, certificates representing the
exchange notes or the outstanding notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the outstanding notes
tendered, or if tendered outstanding notes are registered in the name of any
person other than the person signing the letter of transmittal, or if a transfer
tax is imposed for any reason other than the exchange of the outstanding notes
pursuant to the exchange offer, then the amount of any such transfer taxes,
whether imposed on the registered holder or any other person, will be payable by
the tendering holder.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
outstanding notes, which is the aggregate principal amount or accrued value, as
applicable, of the outstanding notes, as reflected in our accounting records on
the date of exchange. Accordingly, no gain or loss for accounting purposes will
be recognized in connection with the exchange offer. The expenses of the
outstanding notes offering and the exchange offer will be amortized over the
term of the exchange notes.
RESALE OF EXCHANGE NOTES
Based on no-action letters issued by the staff of the Commission, we believe
that holders of the exchange notes issued pursuant to this exchange offer in
exchange for outstanding notes may offer for resale, resell and otherwise
transfer the exchange notes, other than such a holder who is a broker-dealer,
without further compliance with the registration and prospectus delivery
requirements of the Securities Act. This is true as long as such exchange notes
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
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person to participate in a distribution within the meaning of the Securities Act
of such exchange notes. Despite the above, any holder of outstanding notes may
be subject to separate restrictions if it:
- is our "affiliate" within the meaning of Rule 405 under the Securities
Act;
- does not acquire such exchange notes in the ordinary course of its
business;
- intends to participate in the exchange offer for the purpose of
distributing exchange notes; or
- is a broker-dealer who purchased such outstanding notes directly from us.
Holders of outstanding notes falling into any of the categories above:
- will not be able to rely on the no-action letters of the staff of the
Commission referred to above;
- will not be permitted or entitled to tender such outstanding notes in the
exchange offer; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or other transfer of such
outstanding notes unless such sale is made pursuant to an exemption from
such requirements.
Each broker-dealer that receives exchange notes for its own account in
exchange for outstanding notes, where those outstanding notes were acquired by
such broker-dealer as a result of market-making or other trading activities,
must acknowledge that it will deliver a prospectus in connection with any resale
of such exchange notes. The Commission has taken the position that
broker-dealers may fulfill their prospectus delivery requirements with respect
to exchange notes, other than a resale of an unsold allotment from the original
sale of the outstanding notes, with this prospectus. Under the registration
rights agreement, we are required during the period required by the Securities
Act to allow broker-dealers and other persons with similar prospectus delivery
requirements to use this prospectus in connection with the resale of such
exchange notes.
In addition, as described below, if any broker-dealer holds outstanding
notes acquired for its own account, then such broker-dealer may be deemed a
statutory "underwriter" within the meaning of the Securities Act and must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such exchange notes.
Each holder of outstanding notes and each initial purchaser who is required
to deliver a prospectus in connection with sales or market making activities, by
acquisition of outstanding notes, agrees that, upon a receipt of notice from us
that:
(1) the issuance by the Commission of any stop order suspending the
effectiveness of the exchange offer registration statement under the
Securities Act or of the suspension by any state securities commission of
the qualification of the outstanding notes from offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, or
(2) the existence of any fact or the happening of any event that makes
any statement of a material fact made in the registration statement or this
prospectus, or any amendment or supplement to it or any document
incorporated by reference herein untrue, or that requires the making of any
additions or changes in the registration statement or this prospectus in
order to make the statements in this prospectus, in light of the
circumstances under which they were made, not misleading,
such holder or person shall discontinue disposition of the outstanding notes
pursuant to this prospectus until such holder or person has received copies of
the supplemented or amended prospectus or such holder or person is advised in
writing by us that use of the prospectus may be resumed and has received copies
of any additional or supplemental filings that are incorporated by reference in
the prospectus.
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In addition, each holder or person will be deemed to have agreed that it
will either:
(1) destroy any prospectuses, other than permanent file copies, then in
such holder or person's possession which have been replaced by us with more
recently dated prospectuses; or
(2) deliver to us, at our expense, all copies, other than permanent file
copies, then in such holder's or person's possession of the prospectus
covering such outstanding notes that was current at the time of receipt of
the suspension notice regarding the happening of any event described in part
(2) of the prior paragraph.
We shall extend the time period regarding the effectiveness of the registration
statement by a number of days equal to the number of days in the period from and
including the date of delivery of the suspension notice regarding the happening
of any event described in part (2) of the prior paragraph to the date of
delivery of the supplement or amendment.
CONSEQUENCES OF FAILURE TO EXCHANGE
Any outstanding notes tendered and exchanged in the exchange offer will
reduce the aggregate principal amount of outstanding notes. Following the
consummation of the exchange offer, holders who did not tender their outstanding
notes generally will not have any further registration rights under the
registration rights agreement, and such outstanding notes will continue to be
subject to certain restrictions on transfer. Accordingly, the liquidity of the
market for such outstanding notes could be adversely affected.
The outstanding notes are currently eligible for sale pursuant to Rule 144A
through Private Offerings, Resales and Trading through Automated Linkages
(PORTAL). Because we anticipate that most holders will elect to exchange such
outstanding notes for exchange notes in the exchange offer due to the absence of
restrictions on the resale of exchange notes, except for applicable restrictions
on any holder of exchange notes who is our affiliate or is a broker-dealer which
acquired the outstanding notes directly from us, under the Securities Act, we
anticipate that the liquidity of the market for any outstanding notes remaining
after the consummation of the exchange offer may be substantially limited.
As a result of the making of this exchange offer, we will have fulfilled
certain of our obligations under the registration rights agreement, and holders
who do not tender their outstanding notes, with certain exceptions, will not
have any further registration rights under the registration rights agreement or
rights to receive liquidated damages for failure to register. Accordingly, any
holder that does not exchange its outstanding notes for exchange notes will
continue to hold the untendered outstanding notes and will be entitled to all
the rights and subject to all the applicable limitations under the indenture.
The outstanding notes that are not exchanged for exchange notes pursuant to
the exchange offer will remain restricted securities within the meaning of the
Securities Act. Accordingly, such outstanding notes may be resold only:
- to us or any of our subsidiaries;
- inside the United States to a qualified institutional buyer in compliance
with Rule 144A under the Securities Act;
- inside the United States to an institutional "accredited investor", which
term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act, an "accredited investor" that, prior to such transfer, furnishes or
has furnished on its behalf by a U.S. broker-dealer to the trustee under
the indenture a signed letter containing certain representations and
agreements relating to the restrictions on transfer, the form of which
letter can be obtained from such trustee;
- outside the United States in compliance with Rule 904 under the Securities
Act;
- pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, if available; or
- pursuant to an effective registration statement under the Securities Act.
31
<PAGE>
Each accredited investor that is not a qualified institutional buyer and
that is an original purchaser of any of the outstanding notes from the initial
purchaser will be required to sign a letter confirming that such person is an
accredited investor under the Securities Act and that such person acknowledges
the transfer restrictions summarized in this prospectus.
OTHER
Participation in the exchange offer is voluntary and holders of outstanding
notes should carefully consider whether to accept the offer to exchange their
outstanding notes. Holders of outstanding notes are urged to consult their
financial and tax advisors in making their own decision on what action to take
with respect to the exchange offer. We may in the future seek to acquire
untendered outstanding notes in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. We have no
present plans to acquire any outstanding notes that are not tendered in the
exchange offer or to file a registration statement to permit resales of any
untendered outstanding notes.
32
<PAGE>
CAPITALIZATION
The following table sets forth our consolidated capitalization as of March
31, 1999 on an actual and a pro forma basis. You should refer to our unaudited
pro forma consolidated financial statements and the financial statements,
related notes and other financial information included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1999
-----------------------
ACTUAL PRO FORMA
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt......................................................... $ 2,206 $ 2,206
Long-term debt, excluding current maturities:
Revolving credit facility............................................................... 10,700 5,098
Term loans.............................................................................. 142,930 127,930
Existing senior subordinated notes...................................................... 29,070 --
Other................................................................................... 354 1,054
Outstanding notes (net of unamortized debt discount of $2,632).......................... -- 172,368
---------- -----------
Total long-term debt.................................................................. $ 185,260 $ 308,656
---------- -----------
Stockholder's equity:
Common stock, par value $.01 per share; 3,000 shares authorized; 100 shares
outstanding........................................................................... $ -- $ --
Additional paid-in capital.............................................................. 134,852 134,852
Accumulated deficit..................................................................... (1,630) (24,466)
Accumulated other comprehensive income.................................................. 31 31
---------- -----------
Total stockholder's equity............................................................ 133,253 110,417
---------- -----------
Total capitalization................................................................ $ 318,513 $ 419,073
---------- -----------
---------- -----------
</TABLE>
33
<PAGE>
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF ATRIUM
(AFTER THE 1998 RECAPITALIZATION)
The selected consolidated historical income statement and other data set
forth below for the year ended December 31, 1995, the periods ended October 25,
1996 and December 31, 1996 and the years ended December 31, 1997 and 1998, and
the selected consolidated historical balance sheet data at December 31, 1995,
1996, 1997 and 1998 and October 25, 1996 were derived from the audited
consolidated financial statements described below. The selected consolidated
historical financial data as of and for the year ended December 31, 1994 and the
three months ended March 31, 1998 and 1999, were derived from Atrium's (after
the 1998 recapitalization) unaudited consolidated financial statements, which in
the opinion of management reflect all adjustments necessary for a fair
presentation of results for such periods. The selected consolidated historical
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements, related notes and other financial information included elsewhere in
this prospectus.
Prior to October 2, 1998, Atrium's consolidated historical financial
statements as filed with the Commission included its operations and the
operations of its subsidiaries. On October 2, 1998, pursuant to the 1998
recapitalization, the stock of Wing and Darby were contributed to Atrium.
As Wing was determined to be the accounting acquiror in a "reverse
acquisition," the consolidated historical financial statements of Atrium, prior
to October 3, 1998, were replaced with the consolidated historical financial
statements of Wing. As a result, the selected consolidated historical income
statement and other data for 1998 includes the operations of Wing from January 1
through December 31 and the operations of Atrium and Darby from October 3
through December 31. The selected consolidated historical income statement and
other data for the three months ended March 31, 1999 include the operations of
Atrium, Wing and Darby for the three months ended March 31, 1999 and Delta since
January 27, 1999. Wing was acquired by its present controlling shareholders on
October 25, 1996. The selected consolidated historical income statement and
other data for the years ended December 31, 1994, 1995 and 1997, the three
months ended March 31, 1998 and the periods ended October 25, 1996 and December
31, 1996 only include the operations and accounts of Wing and its predecessor.
The December 31, 1998 selected consolidated historical balance sheet data
includes the accounts of Atrium, Wing and Darby. The December 31, 1994, 1995,
1996 and 1997, and October 25, 1996 selected consolidated historical balance
sheet data only include the accounts of Wing and its predecessor.
The references in the selected consolidated historical financial data to the
periods ended December 31, 1996 and October 25, 1996, refer to the periods
October 26, 1996 through December 31, 1996 and January 1, 1996 through October
25, 1996, respectively.
<TABLE>
<CAPTION>
PREDECESSOR
-----------------------------------
YEAR ENDED DECEMBER
PERIOD PERIOD YEAR ENDED DECEMBER THREE MONTHS ENDED
31, ENDED ENDED 31, ------------------------
---------------------- OCTOBER 25, DECEMBER 31, -------------------- MARCH 31, MARCH 31,
1995 1996 1996 1997 1998 1998 1999
--------- ----------- ------------- --------- --------- ----------- -----------
1994
-----------
(UNAUDITED)
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.................... $ 72,496 $ 68,481 $ 62,880 $ 13,200 $ 99,059 $ 211,059 $ 39,450 $ 106,842
Gross profit................. 12,945 15,461 15,569 3,273 20,789 51,919 8,986 32,134
Selling, delivery, general
and administrative
expenses................... 14,032 13,931 13,271 2,242 15,671 39,754 6,606 23,151
Interest expense............. 909 1,039 509 374 2,953 9,081 992 4,346
Income (loss) before income
taxes...................... 179 491 1,789 532 1,391 (2,329) 1,242 1,018
Net income (loss)............ 35 279 1,119 303 696 (2,819) 686 190
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR
-----------------------------------
YEAR ENDED DECEMBER
PERIOD PERIOD YEAR ENDED DECEMBER THREE MONTHS ENDED
31, ENDED ENDED 31, ------------------------
---------------------- OCTOBER 25, DECEMBER 31, -------------------- MARCH 31, MARCH 31,
1995 1996 1996 1997 1998 1998 1999
--------- ----------- ------------- --------- --------- ----------- -----------
1994
-----------
(UNAUDITED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (END OF
PERIOD):
Total assets................. $ 20,740 $ 18,515 $ 19,966 $ 36,404 $ 55,383 $ 359,869 $ 57,514 $ 366,766
Total debt................... 10,296 8,522 8,154 20,489 32,238 179,227 33,385 185,260
OTHER DATA:
EBITDA(1).................... $ 1,777 $ 2,374 $ 3,014 $ 1,166 $ 5,836 $ 14,732 $ 2,702 $ 8,301
Depreciation and
amortization............... 689 844 716 260 1,492 7,980 468 2,937
Ratio of earnings to fixed
charges(2)(3).............. 1.16x 1.37x 3.32x 2.23x 1.36x -- N/A 1.21x
</TABLE>
- ------------------------
(1) EBITDA represents income before interest, income taxes, extraordinary
charge, depreciation and amortization, special charges, stock option
compensation expense and certain non-recurring expenses related to
acquisitions. While we do not intend for EBITDA to represent cash flow from
operations as defined by GAAP and we do not suggest that you consider it as
an indicator of operating performance or an alternative to cash flow or
operating income (as measured by GAAP) or as a measure of liquidity, we
include it herein to provide additional information with respect to our
ability to meet our future debt service, capital expenditures and working
capital requirements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." We believe EBITDA provides investors
and analysts in the building materials industry the necessary information to
analyze and compare our historical results on a comparable basis with other
companies on the basis of operating performance, leverage and liquidity.
However, as EBITDA is not defined by GAAP, it may not be calculated on the
same basis as other similarly titled measures of other companies within the
building materials industry.
(2) For the purpose of calculating the ratio of earnings to fixed charges,
earnings represent income (loss) before income taxes, extraordinary charge
and fixed charges. Fixed charges consist of (1) interest, whether expensed
or capitalized; (2) amortization of debt expense and discount or premium
relating to any indebtedness, whether expensed or capitalized; and (3) that
portion of rental expense considered to represent interest cost (assumed to
be one-third). For the year ended December 31, 1998, earnings were
insufficient to cover fixed charges by $2,329 which includes the effects of
$3,851 of non-cash stock option compensation expense.
(3) On a pro forma basis, for the year ended December 31, 1998, earnings were
insufficient to cover fixed charges by $166 and for the period ended March
31, 1999 the ratio of earnings to fixed charges was 1.35x.
35
<PAGE>
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF ATRIUM
(PREVIOUS REGISTRANT)
The selected consolidated historical financial data set forth below for each
of the four years in the four-year period ended December 31, 1997 and as of and
for the period from January 1, 1998 to October 2, 1998, were derived from
Atrium's (previous registrant) audited consolidated financial statements. The
selected consolidated historical financial data as of and for the period ended
September 30, 1997 were derived from Atrium's (previous registrant) unaudited
consolidated financial statements, which in the opinion of the management affect
all the adjustments necessary for the fair presentation of results for such
period. The selected consolidated historical financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements, related notes and other
financial information included elsewhere in this prospectus.
Prior to October 2, 1998, Atrium's historical financial statements as filed
with the Commission, included its operations and the operations of its
subsidiaries. On October 2, 1998, pursuant to the 1998 recapitalization, the
stock of Wing and Darby were contributed to Atrium.
As Wing was determined to be the accounting acquiror in a "reverse
acquisition," the historical financial statements of Atrium (prior to October 3,
1998) were replaced with the historical financial statements of Wing. Therefore,
the selected consolidated historical financial data of Atrium (the previous
registrant) are provided for information purposes only.
<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED DECEMBER 31, --------------------------
------------------------------------------ SEPTEMBER 30, OCTOBER 2,
1994 1995 1996 1997 1997 1998
--------- --------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS) (UNAUDITED)
INCOME STATEMENT DATA:
Net sales.................................... $ 123,571 $ 135,478 $ 156,269 $ 186,764 $ 139,793 $ 167,418
Gross profit................................. 37,999 41,503 53,928 65,463 50,137 58,183
Selling, delivery, general and administrative
expenses................................... 26,895 29,303 34,815 44,486 33,114 37,704
Interest expense............................. 355 2,753 4,786 11,523 8,542 9,545
Income (loss) before income taxes............ 9,795 3,393 8,078 10,235 9,353 (2,069 )
Net income (loss)............................ 9,191 1,849 4,203 6,167 5,868 (4,862 )
BALANCE SHEET DATA (END OF PERIOD):
Total assets................................. $ 58,507 $ 48,569 $ 74,750 $ 83,375 $ 91,823 $ 121,703
Total debt................................... 6,786 49,000 100,000 100,000 102,962 118,985
OTHER DATA:
EBITDA(1).................................... $ 16,094 $ 17,070 $ 21,463 $ 25,842 $ 20,279 $ 22,055
Depreciation and amortization................ 1,678 2,087 5,228 3,585 2,384 3,246
</TABLE>
- ------------------------------
(1) EBITDA represents income before interest, income taxes, extraordinary
charge, depreciation and amortization, stock option compensation expense,
special charges and certain non-recurring expenses related to acquisitions.
While we do not intend for EBITDA to represent cash flow from operations as
defined by GAAP and we do not suggest that you consider it as an indicator
of operating performance or an alternative to cash flow or operating income
(as measured by GAAP) or as a measure of liquidity, we include it herein to
provide additional information with respect to our ability to meet our
future debt service, capital expenditures and working capital requirements.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations." We believe EBITDA provides investors and analysts in the
building materials industry the necessary information to analyze and compare
our historical results on a comparable basis with other companies on the
basis of operating performance, leverage and liquidity. However, as EBITDA
is not defined by GAAP, it may not be calculated on the same basis as other
similarly titled measures of other companies within the building materials
industry.
36
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Our unaudited pro forma consolidated financial statements are derived from
the audited and unaudited historical financial statements listed in the Index to
Financial Statements on page F-1 and certain unaudited financial statements of
other acquired businesses.
Our unaudited pro forma consolidated financial statements have been prepared
to give effect to the transactions described below. As a result of the 1998
recapitalization, Wing is deemed to be the "accounting acquiror" in a reverse
acquisition transaction for financial statement purposes. As a result, our
historical consolidated statement of operations for the year ended December 31,
1998 includes Wing's operations for the entire year and only includes operations
for Atrium (previous registrant) and Darby from October 3, 1998 through December
31, 1998. The historical consolidated financial statements of operations for the
period ended March 31, 1999 includes the operations of Atrium for the three
months ended March 31, 1999, and the operations of Delta since it was acquired
on January 27, 1999.
Our unaudited pro forma consolidated balance sheet as of March 31, 1999 has
been prepared to give effect to the Heat and Champagne acquisitions and the
offering of the outstanding notes and our use of the proceeds as if they
occurred on March 31, 1999. The assets and liabilities acquired have been
recorded at their estimated fair market values. Our unaudited pro forma
consolidated statement of operations for the year ended December 31, 1998 gives
effect to the Atrium transactions as if they occurred on January 1, 1998. Our
unaudited pro forma consolidated statement of operations for the three months
ended March 31, 1999 gives effect to the acquisitions of Delta, Heat and
Champagne and the offering of the outstanding notes and our use of the proceeds
as if they occurred on January 1, 1999.
The unaudited pro forma adjustments are based upon available information and
certain assumptions that we believe are reasonable. Our unaudited pro forma
consolidated financial statements and the accompanying notes should be read in
conjunction with the historical financial statements listed in the Index to
Financial Statements on page F-1 and other financial information contained in
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this prospectus. Our
unaudited pro forma consolidated financial statements are not indicative of
either future results of operations or the results that might have occurred if
the Atrium transactions had been consummated on the indicated dates.
37
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------------------------------- -------------------------
ATRIUM HEAT CHAMPAGNE ADJUSTMENTS CONSOLIDATED
---------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents...................... $ -- $ 1,143 $ 25 $ (1,168)(a) $ --
Equity securities-available for sale........... 144 144
Accounts receivable, net....................... 50,718 5,227 1,505 -- 57,450
Inventories.................................... 49,973 6,710 1,108 -- 57,791
Prepaid expenses and other current
assets....................................... 8,020 966 146 -- 9,132
Deferred tax asset............................. 1,249 915 -- -- 2,164
---------- --------- ----------- ----------- ------------
Total current assets......................... 110,104 14,961 2,784 (1,168) 126,681
Property, plant and equipment, net............... 26,907 8,339 338 35,584
Goodwill, net.................................... 213,902 16,563 -- 57,244(b) 287,709
Deferred financing costs, net.................... 10,740 1,427 -- 4,673(c) 16,840
Other assets..................................... 5,113 673 33 1,739(d) 7,558
---------- --------- ----------- ----------- ------------
Total assets................................. $ 366,766 $ 41,963 $ 3,155 $ 62,488 $ 474,372
---------- --------- ----------- ----------- ------------
---------- --------- ----------- ----------- ------------
Current liabilities:
Current portion of notes payable............... $ 2,206 $ 3,568 $ 450 $ (4,018)(c) $ 2,206
Accounts payable............................... 23,703 1,775 941 -- 26,419
Accrued liabilities............................ 18,581 3,975 365 (1,287)(e) 21,634
---------- --------- ----------- ----------- ------------
Total current liabilities.................... 44,490 9,318 1,756 (5,305) 50,259
Long-term liabilities:
Notes payable.................................. 183,054 20,468 194 102,734(c) 306,450
Deferred tax liability......................... 1 468 -- -- 469
Other liabilities.............................. 5,968 309 -- 500(f) 6,777
---------- --------- ----------- ----------- ------------
Total long-term liabilities.................. 189,023 21,245 194 103,234 313,696
---------- --------- ----------- ----------- ------------
Total liabilities............................ 233,513 30,563 1,950 97,929 363,955
Stockholder's equity:
Common stock................................... -- 13 125 (138)(g) --
Paid-in-capital................................ 134,852 5,239 -- (5,239)(h) 134,852
Retained earnings (accumulated deficit)........ (1,630) 6,002 1,080 (29,918)(i) (24,466)
Accumulated other comprehensive income......... 31 -- -- -- 31
Outstanding warrants........................... -- 146 -- (146)(j) --
---------- --------- ----------- ----------- ------------
Total stockholder's equity................... 133,253 11,400 1,205 (35,441) 110,417
---------- --------- ----------- ----------- ------------
Total liabilities and stockholder's
equity..................................... $ 366,766 $ 41,963 $ 3,155 $ 62,488 $ 474,372
---------- --------- ----------- ----------- ------------
---------- --------- ----------- ----------- ------------
</TABLE>
38
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C> <C>
(a) Represents adjustments to cash of $1,168 in connection with the acquisitions of Heat and
Champagne.
Cash not purchased in the acquisition of Champagne................. $ (25)
Cash purchased in the acquisition of Heat utilized to pay down a
portion of the revolving credit facility borrowed to purchase
such cash........................................................ (1,143)
---------
Net eliminated cash................................................ $ (1,168)
---------
---------
Represents the excess of cost over the fair value of the net assets in the acquisitions
(b) of Heat and Champagne.
Purchase price for Heat acquisition................................ $ 85,000
Book value of the net assets of Heat, which approximates fair value
(net assets excludes cash and deferred financing fees to be
retired and all current and long-term notes payable)............. 15,603
---------
Excess of cost over fair value of assets acquired.................. $ 69,397
Purchase price for Champagne acquisition (includes $0.5 million to
be paid upon achievement of certain operational targets)......... 4,144
Book value of the net assets of Champagne, which approximates fair
value (net assets excludes cash and all current and long-term
notes payable)................................................... 1,824
---------
Excess of cost over fair value of assets acquired.................. 2,320
Fees and expenses related to the Heat and Champagne acquisitions... 2,090
---------
Total excess of cost over fair value of assets acquired in the
acquisitions of Heat and Champagne............................... 73,807
Elimination of existing goodwill at Heat........................... (16,563)
---------
Net increase to goodwill........................................... $ 57,244
---------
---------
Represents the issuance of the outstanding notes, including related deferred financing
(c) costs, repayment of existing debt and the write-off of deferred financing costs.
Issuance of the outstanding notes, net of unamortized debt discount
of $2,632........................................................ $ 172,368
---------
LESS: EXISTING DEBT REPAYMENTS
Atrium's revolving credit facility................................. $ 5,602
Atrium's term loan B............................................... 15,000
Atrium's existing senior subordinated notes........................ 29,070
---------
(49,672)
</TABLE>
39
<PAGE>
<TABLE>
<S> <C> <C> <C>
ELIMINATION OF EXISTING INDEBTEDNESS OF ACQUIRED COMPANIES
(LONG-TERM PORTION ONLY)
Heat............................................................... 19,768
Champagne.......................................................... 194
---------
(19,962)
---------
Net increase to notes payable...................................... $ 102,734
---------
---------
ELIMINATION OF CURRENT PORTION OF INDEBTEDNESS OF ACQUIRED
COMPANIES
Heat............................................................... 3,568
Champagne.......................................................... 450
---------
Net decrease in current portion of notes payable................... $ 4,018
---------
---------
DEFERRED FINANCING COSTS
Financing cost related to this offering............................ $ 6,995
Write-off of financing costs and expenses related to debt to be
retired:
Atrium's pro rata portion of term loan B........................... (895)
Heat notes payable................................................. (1,427)
---------
(2,322)
---------
Net increase in deferred financing costs........................... $ 4,673
---------
---------
Represents the tax benefit of $1,739 resulting from (1) the accreted discount paid on the
Atrium Corporation discount debentures of $570, (2) the extraordinary charge related to
the repurchase premium on the existing senior subordinated notes of $828 and (3) the
(d) extraordinary charge related to the write-off of deferred financing costs of $341.
Represents the elimination of accrued interest related to the retirement of a portion of
(e) Atrium's term loan B and retirement of Atrium's existing senior subordinated notes.
Term loan B accrued interest....................................... $ 134
Existing senior subordinated notes accrued interest................ 1,153
---------
Net decrease to accrued interest................................... $ 1,287
---------
---------
Represents contingent portion of Champagne purchase price of $500, to be paid in 1999
(f) related to the achievement of certain operational targets.
(g) Represents the elimination of the historical common stock of Heat and Champagne of $138.
(h) Represents the elimination of the historical additional paid-in capital of Heat of
$5,239.
Represents the elimination of the historical retained earnings of Heat and Champagne, a
distribution to Atrium Corporation to repurchase $20,000 of the discount debentures,
elimination of deferred finance charges related to the repayment of existing debt and an
(i) extraordinary charge related to a repurchase premium on the retirement of existing senior
subordinated notes.
Heat retained earnings............................................. 6,002
Champagne retained earnings........................................ 1,080
---------
Total eliminated historical retained earnings...................... 7,082
</TABLE>
40
<PAGE>
<TABLE>
<S> <C> <C> <C>
Distribution to Atrium Corporation to repurchase a portion of
discount debentures.............................................. 20,000
Distribution to Atrium Corporation to pay accreted discount on
discount debentures (net of tax)................................. 930
Extraordinary charge related to a tender premium on retirement of
existing senior subordinated notes (net of tax).................. 1,352
---------
22,282
Write-off of financing costs and expenses related to a pro rata
portion of Atrium's term loan B (net of tax)..................... 554
---------
Net decrease to retained earnings.................................. $ 29,918
---------
---------
Represents the elimination of outstanding warrants at Heat retired in connection with the
(j)
acquisition of Heat.
</TABLE>
41
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREVIOUS
ATRIUM AS REGISTRANT
REPORTED ATRIUM MASTERVIEW DARBY
JAN. 1, JAN. 1, JAN. 1, 1998 JAN. 1, DELTA
1998 TO 1998 TO TO 1998 TO YEAR ENDED
DEC. 31, OCT. 2, MARCH 27, OCT. 2, DECEMBER 31, PRO FORMA PRO FORMA
1998 1998 1998 1998 1998 ADJUSTMENTS(1) ATRIUM(1)
----------- ----------- ------------- ----------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales.................... $ 211,059 $ 167,418 $ 6,219 $ 16,081 $ 8,832 -- $ 409,609
Cost of goods sold........... 159,140 109,235 4,687 9,679 6,039 -- 288,780
----------- ----------- ------ ----------- ------ ------- -----------
Gross profit............... 51,919 58,183 1,532 6,402 2,793 -- 120,829
Operating expenses:
Selling, delivery, general
and administrative
expenses................. 39,754 36,310 646 2,430 2,539 (409)(a) 81,270
Amortization expense....... 2,133 1,394 188 586 -- 1,068(c) 5,369
Special charges............ -- 7,452 -- -- -- (7,452)(e) --
Stock option compensation
expense.................. 3,851 5,265 -- 141 -- -- 9,257
----------- ----------- ------ ----------- ------ ------- -----------
45,738 50,421 834 3,157 2,539 (6,793) 95,896
----------- ----------- ------ ----------- ------ ------- -----------
Income (loss) from
operations............. 6,181 7,762 698 3,245 254 6,793 24,933
Interest expense............. 9,081 9,545 158 1,277 155 (4,222)(f) 15,994
Other income (expense),
net........................ 571 (286) (173) 8 (108) 171(i) 183
----------- ----------- ------ ----------- ------ ------- -----------
Income before income
taxes.................. (2,329) (2,069) 367 1,976 (9) 11,186 9,122
Provision (benefit) for
income taxes............... (149) (732) -- 995 -- 4,529(j) 4,643
Extraordinary items.......... 639 3,525 -- 116 -- (4,280)(k) --
----------- ----------- ------ ----------- ------ ------- -----------
Net income (loss)............ $ (2,819) $ (4,862) $ 367 $ 865 $ (9) $ 10,937 $ 4,479
----------- ----------- ------ ----------- ------ ------- -----------
----------- ----------- ------ ----------- ------ ------- -----------
<CAPTION>
HEAT CHAMPAGNE
YEAR ENDED YEAR ENDED ATRIUM AFTER
DECEMBER 31, DECEMBER 31, PRO FORMA ATRIUM
1998 1998 ADJUSTMENTS TRANSACTIONS
------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales.................... $ 73,458 10,012 -- $ 493,079
Cost of goods sold........... 41,780 6,152 -- 336,712
------------- ------------- ----------- ------------
Gross profit............... 31,678 3,860 -- 156,367
Operating expenses:
Selling, delivery, general
and administrative
expenses................. 21,680 3,295 200(b) 106,445
Amortization expense....... 685 -- 1,494(d) 7,548
Special charges............ -- -- -- --
Stock option compensation
expense.................. -- -- -- 9,257
------------- ------------- ----------- ------------
22,365 3,295 1,694 123,250
------------- ------------- ----------- ------------
Income (loss) from
operations............. 9,313 565 (1,694) 33,117
Interest expense............. 2,330 59 11,787(g) 31,902
1,732(h)
Other income (expense),
net........................ (415) -- -- (232)
------------- ------------- ----------- ------------
Income before income
taxes.................. 6,568 506 (15,213) 983
Provision (benefit) for
income taxes............... 2,519 173 (5,213)(j) 2,122
Extraordinary items.......... -- -- -- --
------------- ------------- ----------- ------------
Net income (loss)............ $ 4,049 $ 333 $ (10,000) $ (1,139)
------------- ------------- ----------- ------------
------------- ------------- ----------- ------------
</TABLE>
- ------------------------------
(1) Prior to the Heat and Champagne acquisitions and the offering of the
outstanding notes.
42
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ATRIUM HEAT
THREE THREE CHAMPAGNE
MONTHS DELTA MONTHS THREE MONTHS
ENDED FROM JANUARY 1, ENDED ENDED ATRIUM AFTER
MARCH 31, 1999 TO JANUARY MARCH 31, MARCH 31, PRO FORMA ATRIUM
1999(1) 27, 1999 1999 1999 ADJUSTMENTS TRANSACTIONS
----------- --------------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales........................... $ 106,842 $ 508 $ 13,642 $ 2,295 $ -- $ 123,287
Cost of goods sold.................. 74,708 417 8,970 1,830 -- 85,925
----------- ----- ----------- ------ ------------- ------------
Gross profit...................... 32,134 91 4,672 465 -- 37,362
Operating expenses:
Selling, delivery, general and
administrative expenses......... 23,151 118 5,769 484 (16)(b) 29,506
Amortization expense.............. 1,889 -- 182 12 1,708(d) 3,791
Special charges................... 1,762 -- -- -- (1,762)(e) --
----------- ----- ----------- ------ ------------- ------------
26,802 118 5,951 496 (70) 33,297
----------- ----- ----------- ------ ------------- ------------
Income (loss) from operations... 5,332 (27) (1,279) (31) 70 4,065
Interest expense.................... 4,346 12 530 16 2,489(g) 7,870
477(h) --
Other income (expense), net......... 32 -- 29 8 -- 69
----------- ----- ----------- ------ ------------- ------------
Income before income taxes...... 1,018 (39) (1,780) (39) (2,896) (3,736)
Provision (benefit) for income
taxes............................. 828 -- (660) -- (451)(j) (283)
----------- ----- ----------- ------ ------------- ------------
Net income (loss)................... $ 190 $ (39) $ (1,120) $ (39) $ (2,445) $ (3,453)
----------- ----- ----------- ------ ------------- ------------
----------- ----- ----------- ------ ------------- ------------
</TABLE>
- ------------------------------
(1) Prior to the Heat and Champagne acquisitions and the offering of the
outstanding notes.
43
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998
AND THE THREE MONTHS ENDED MARCH 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C> <C>
Represents the adjustment of $409 of certain general and administrative expenses that
were eliminated in connection with the 1998 recapitalization related to insurance,
(a) professional fees and transportation costs.
Represents the net change in management fees payable by Atrium as a result of the
(b) acquisition of Heat and Champagne.
Represents the net increase in amortization expense relating to goodwill for Atrium as
(c) a result of the 1998 recapitalization:
Amortization of $214,749 of goodwill being amortized over
40 years............................................... $ 5,369
Elimination of historical goodwill amortization:
Atrium................................................... $ 2,133
Atrium (previous registrant)............................. 1,394
Masterview............................................... 188
Darby.................................................... 586
-------
Total.................................................... (4,301)
-----------
Net increase in goodwill amortization expense as a result
of the 1998 recapitalization........................... $ 1,068
-----------
-----------
Represents increase in amortization expense on goodwill associated with the acquisition
(d) of Delta, Heat and Champagne.
THREE
YEAR ENDED MONTHS
DECEMBER 31, ENDED MARCH
1998 31, 1999
--------------- -----------
Amortization over 40 years of goodwill associated with
the Delta, Heat and Champagne acquisitions............. $ 1,903 $ 1,845
Elimination of historical goodwill amortization of
Heat................................................... (409) (137)
------- -----------
Net increase in amortization of goodwill................. $ 1,494 $ 1,708
------- -----------
------- -----------
Represents decrease in special charges from one-time expenses for management bonuses,
(e)
transaction expenses and non-compete fees as a result of the 1998 recapitalization, as
follows:
THREE
YEAR ENDED MONTHS
DECEMBER 31, ENDED MARCH
1998 31, 1999
--------------- -----------
Management bonuses....................................... $ 3,885 $ --
Transaction expenses..................................... 2,780 --
Write-off of non-compete fees............................ 787 --
Severance benefits....................................... -- 1,762
------- -----------
Net decrease in special charges.......................... $ 7,452 $ 1,762
------- -----------
------- -----------
</TABLE>
44
<PAGE>
<TABLE>
<S> <C> <C> <C>
Represents the adjustment to interest expense had Atrium's December 31, 1998 capital
structure been in place as of January 1, 1998, and the elimination of Darby, Delta and
(f) Masterview historical interest expense.
Interest expense resulting from the borrowing of $29,070
at 10.500% on Atrium's existing senior subordinated
notes.................................................. $ 3,052
Interest expense resulting from the borrowing of $4,118
at 9.125% on Atrium's revolving credit facility........ 376
Interest expense resulting from the borrowing of $74,750
at 8.499% on Atrium's term loan B...................... 6,353
Interest expense resulting from the borrowing of $70,680
at 8.708% on Atrium's term loan C...................... 6,155
Interest expense resulting from the borrowing of $609 at
9.500% on other notes payable.......................... 58
-------
Total pro forma interest expense on capital structure as
of December 31, 1998................................... $ 15,994
Elimination of historic interest expense of Atrium,
Darby, Delta and Masterview............................ (20,216)
-----------
Net decrease to interest expense as a result of the 1998
Recapitalization....................................... $ (4,222)
-----------
-----------
Represents net increase in interest expense resulting from the offering of the
(g) outstanding notes and the repayment of existing debt.
<CAPTION>
THREE
MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1998 1999
--------------- -----------
<S> <C> <C> <C>
Interest expense resulting from the borrowing of $175,000
at 10.500% on the outstanding notes.................... $ 18,375 $ 4,594
Interest expense resulting from the borrowing of $59,750
and $59,500 at 8.624% and 8.085%, respectively, on
Atrium's term loan B................................... 5,152 1,202
Interest expense resulting from the borrowing of $70,680
and $70,430 at 8.833% and 8.345%, respectively, on
Atrium's term loan C................................... 6,243 1,469
Interest expense resulting from the borrowing of $1,309
and $6,358 at 9.500% and 8.053%, respectively, on other
notes payable.......................................... 124 128
------- -----------
Total pro forma interest expense......................... 29,894 7,393
Elimination of Atrium pro forma interest expense before
Atrium transactions.................................... (15,994) (4,346)
Elimination of historic interest expense of Delta, Heat
and Champagne.......................................... (2,113) (558)
------- -----------
Net increase in interest expense as a result of the
Atrium transactions.................................... $ 11,787 $ 2,489
------- -----------
------- -----------
</TABLE>
45
<PAGE>
<TABLE>
<S> <C> <C> <C>
Represents increase in amortization expense on deferred finance costs associated with
the acquisition of Heat and Champagne and the retirement of the existing senior
(h) subordinated notes and a portion of the term loan B.
<CAPTION>
THREE
YEAR ENDED MONTHS
DECEMBER 31, ENDED MARCH
1998 31, 1999
--------------- -----------
<S> <C> <C> <C>
Amortization of deferred finance costs associated with
the Heat and Champagne acquisitions.................... $ 700 $ 175
Amortization of unamortized debt discount on the
outstanding notes...................................... 157 39
Amortization of historical deferred finance costs not
written off............................................ 1,151 308
Amortization of historical Heat deferred finance costs... (276) (45)
------- -----------
Net increase in amortization expense of deferred finance
costs.................................................. $ 1,732 $ 477
------- -----------
------- -----------
Represents decrease in other expense through the elimination of one-time bonuses and
associated payroll taxes, totaling $171, paid to certain members of senior management
(i) of Masterview in connection with the Masterview acquisition on March 27, 1998.
Represents the income tax effect of the pro forma adjustments reflected above assuming
an effective income tax rate of 38%, adjusting for additional goodwill which is not
(j) deductible for tax purposes.
Represents the decrease in extraordinary credit charges incurred in connection with the
write-off of deferred finance costs on the retirement of certain credit facilities in
(k) the 1998 recapitalization as follows:
ATRIUM (PREVIOUS REGISTRANT)
Revolving credit facility and certain term loans
deferred finance costs............................... $ 955
Existing senior subordinated notes deferred finance
costs.................................................. 4,022
Repurchase premium on existing senior subordinated
notes.................................................. 709
Tax effect at 38%........................................ (2,161)
-------
$ 3,525
WING
Existing notes payable-deferred finance costs............ 1,031
Tax effect at 38%........................................ (392)
-------
639
DARBY
Existing notes payable deferred finance costs............ 190
Tax effect at 38%........................................ (74)
-------
116
-----------
Net decrease to extraordinary charges.................... $ 4,280
-----------
-----------
</TABLE>
46
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
The following discussion and analysis should be read in conjunction with the
consolidated financial statements of Atrium (after the 1998 recapitalization)
and Atrium (previous registrant) which appear elsewhere in this prospectus.
OVERVIEW
GENERAL
Atrium's (after the 1998 recapitalization) results are generally impacted by
the level of activity in the residential new construction and repair and
remodeling market segments throughout the United States. This activity is
influenced by regional and national economic trends, such as availability of
consumer credit, interest rates, job formation, age of housing stock,
inter/intra U.S. migration and consumer confidence.
BACKGROUND
Atrium was formed through a series of transactions and acquisitions. The
following summary should be considered in conjunction with reading the
information presented below:
September 1, 1996--Atrium purchased certain assets of Keller Aluminum
Products of Texas, a division of Keller Building Products, which was owned by
Keller Industries, Inc. The assets were recorded at cost.
September 30, 1996--Atrium Corporation acquired Atrium Door and Window
Company of the Northeast, formerly known as Bishop Manufacturing Company,
Incorporated, a manufacturer of vinyl replacement windows and doors for the
residential market in the northeast region of the United States. Atrium
Corporation contributed the capital stock of Atrium Door and Window Company of
the Northeast to Atrium. The transaction was recorded under the purchase method
of accounting.
October 25, 1996--Wing Industries Holdings, Inc. acquired 100% of the
outstanding common stock of Wing Industries, Inc. and Wing Acquisition
Corporation, a Delaware corporation and a wholly owned subsidiary of Wing
Industries Holdings, was merged with and into Wing Industries, Inc. with Wing
Industries, Inc. being the surviving corporation. Wings Industries Holdings did
not have any significant activity prior to the acquisition of Wing. Wing
Industries, Inc. was founded in 1924 and incorporated in 1941. The acquisition
was accounted for under the purchase method of accounting.
November 27, 1996--Atrium was effectively recapitalized in a transaction in
which affiliates of Hicks Muse Tate & Furst Incorporated purchased approximately
82% of Atrium Corporation's newly issued common stock and redeemed the equity
interests of selling security holders of Atrium. The redemption payments were
funded through the issuance of the existing senior subordinated notes and the
other outstanding debt of Atrium was refinanced. The transaction was accounted
for as a recapitalization.
July 1, 1997--Atrium purchased the assets of the Western Window Division of
Gentek Building Products, Inc. Gentek, located in Anaheim, California is engaged
in the manufacture and sale of vinyl replacement windows to independent
remodelers and contractors. The acquisition was accounted for under the purchase
method of accounting.
November 10, 1997--Wing Industries Holdings purchased certain assets of the
Door Division of Super Millwork, Inc. in a transaction accounted for under the
purchase method of accounting. The Door Division of Super Millwork, located in
Melville, New York, is engaged in the distribution, manufacture and sale of
doors and other millwork.
47
<PAGE>
January 8, 1998--Door acquired all of the outstanding common stock of R.G.
Darby Company, Inc. in a transaction accounted for under the purchase method of
accounting.
March 27, 1998--Atrium purchased substantially all of the assets of
Masterview, a privately held window and door company located in Phoenix, Arizona
in a transaction accounted for under the purchase method of accounting.
October 2, 1998--GEIPPPII, which was formed by GE Investment Management
Incorporated, a wholly-owned subsidiary of General Electric Company, and
Ardshiel, a private equity firm, and certain of its affiliates, acquired Atrium
in a transaction valued at $225,000. In connection with the Atrium acquisition,
GEIPPPII and an affiliate of Ardshiel recapitalized Wing and Darby and combined
them with Atrium.
Prior to October 2, 1998, Atrium's historical financial statements as filed
with the Commission included its operations and the operations of its
subsidiaries. On October 2, 1998, pursuant to the 1998 recapitalization, the
stock of Wing and Darby were contributed to Atrium.
As Wing was determined to be the accounting acquiror in a "reverse
acquisition," the historical financial statements of Atrium, prior to October 3,
1998, were replaced with the historical financial statements of Wing. As a
result, the statement of operations for 1998 includes the operations of Wing
from January 1 through December 31 and the operations of Atrium and Darby from
October 3 through December 31. The statements of operations for the years ended
December 31, 1994, 1995 and 1997 and the periods ended October 25, 1996 and
December 31, 1996 only include the operations and accounts of Wing and its
predecessor. Wing was acquired by its present controlling shareholders on
October 25, 1996.
January 27, 1999--Atrium acquired certain assets of Delta, a privately held
door manufacturing and installation business located in Orlando, Florida. The
acquisition was accounted for under the purchase method of accounting.
May 17, 1999--Atrium acquired Heat for approximately $85,000, including $700
of assumed indebtedness and Champagne for approximately $3,500, excluding $500
to be paid upon the achievement of certain operational results. The acquisition
was accounted for under the purchase method of accounting. Additionally, a post
closing adjustment of $3.5 million was paid on May 17, 1999 related to working
capital delivered in excess of the target defined in the Heat stock purchase
agreement.
INFLATION AND RAW MATERIALS
During the past several years, the rate of general inflation has been
relatively low and has not had a significant impact on our results of
operations. We purchase raw materials, including aluminum, glass, wood and
vinyl, that are subject to fluctuations in price that may not reflect the rate
of general inflation. These materials fluctuate in price based on supply and
demand. Historically, there have been periods of significant and rapid aluminum
and wood price changes, both upward and downward, with a concurrent short-term
impact on our operating margins. We historically mitigated the effects of these
fluctuations over the long-term by passing through price increases to our
customers and through other means. For example, we enter into forward
commitments for aluminum billet to hedge against price changes. See the
footnotes to our consolidated financial statements for the year ended December
31, 1998. The primary raw materials used in the production of our windows and
doors are readily available and are procured from numerous suppliers. Currently,
wood is purchased through multiple sources from around the world, with little
dependence on one company or one country. See "Risk Factors--Fluctuations in Raw
Materials Costs and Supply; Reliance on Manufacturing Facilities and Suppliers."
48
<PAGE>
ATRIUM (AFTER THE 1998 RECAPITALIZATION)
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, information
derived from Atrium's consolidated statements of operations expressed as a
percentage of net sales.
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS YEAR ENDED DECEMBER 31
ENDED MARCH 31, ENDED MARCH 31, -------------------------------
1999 1998 1998 1997 1996
----------------- ----------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales....................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold.............................. 69.9 77.2 75.4 79.0 75.2
----- ----- --------- --------- ---------
Gross profit.................................... 30.1 22.8 24.6 21.0 24.8
Selling, delivery, general and administrative
expenses...................................... 21.7 16.7 18.8 15.8 20.4
Amortization expense............................ 1.8 0.4 1.0 0.8 0.2
Stock option compensation expense............... -- -- 1.8 -- --
Special charges................................. 1.6 -- -- -- --
----- ----- --------- --------- ---------
Income from operations.......................... 5.0 5.6 2.9 4.4 4.2
Interest expense................................ 4.1 2.5 4.3 3.0 1.2
Other income, net............................... 0.1 -- 0.3 -- --
----- ----- --------- --------- ---------
Income (loss) before income taxes and
extraordinary charge.......................... 1.0 3.1 (1.1) 1.4 3.1
Provision (benefit) for income taxes............ 0.8 1.4 (0.1) 0.7 1.2
----- ----- --------- --------- ---------
Income (loss) before extraordinary charge....... 0.2 1.7 (1.0) 0.7 1.9
Extraordinary charge, net of income tax
benefit....................................... -- -- 0.3 -- --
----- ----- --------- --------- ---------
Net income (loss)............................... 0.2% 1.7% (1.3)% 0.7% 1.9%
----- ----- --------- --------- ---------
----- ----- --------- --------- ---------
</TABLE>
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
NET SALES. Net sales increased by $67,392 from $39,450 during the first
quarter of 1998 to $106,842 during the first quarter of 1999. The increase was
primarily due to a combined increase in net sales of $65,400 from the addition
of Atrium and Darby in connection with the 1998 recapitalization and the
acquisition of Delta Millwork, Inc.
COST OF GOODS SOLD. Cost of goods sold decreased from 77.2% of net sales
during the first quarter of 1998 to 69.9% of net sales during the first quarter
of 1999. The decrease was due largely to the addition of Atrium and Darby, as
these divisions operate at higher gross profit margins than Wing.
SELLING, DELIVERY, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, delivery,
general and administrative expenses increased $16,545 from $6,606 (16.7% of net
sales during the first quarter of 1998) to $23,151 (21.7% of net sales during
the first quarter of 1999). The increase was primarily due to the inclusion of
selling, delivery, general and administrative expenses of Atrium and Darby.
Additionally, delivery and selling expenses increased due to the increase in
sales.
SPECIAL CHARGE. We recorded a one-time charge of $1,762 for severance
benefits incurred in connection with the separation agreement entered into by
Atrium and the former President and Chief Executive Officer.
INTEREST EXPENSE. Interest expense increased $3,354 from $992 during the
first quarter of 1998 to $4,346 during the first quarter of 1999. The increase
in interest expense was due primarily to an increase in
49
<PAGE>
average outstanding debt related to the issuance of term loan B and term loan C,
and the outstanding notes assumed in connection with the 1998 recapitalization.
In addition, interest expense included the amortization of deferred financing
costs recorded in connection with the 1998 recapitalization.
INCOME TAXES. Our 1998 effective tax rate increased from 44.8% to 81.3% due
largely to non-deductible goodwill amortization expense of approximately $1,150.
Excluding non-deductible amortization expense, our effective tax rate would have
been approximately 38.2%.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
NET SALES. Net sales increased by $112,000 from $99,059 in 1997 to $211,059
in 1998. The increase was due primarily to a combined increase in net sales of
$87,909 from the addition of Atrium and Darby in connection with the 1998
recapitalization in October 1998 and the acquisition of Super Millwork in
November 1997. Additionally, net sales at Wing increased 24.3% due to an
increase in sales to home center retail chains.
COST OF GOODS SOLD. Cost of goods sold decreased from 79.0% of net sales
during 1997 to 75.4% of net sales during 1998. The decrease was due largely to
the addition of Atrium and Darby in the fourth quarter of 1998, as these
divisions operate at higher margins than Wing.
SELLING, DELIVERY, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, delivery,
general and administrative expenses increased $24,083 from $15,671 (15.8% of net
sales during 1997) to $39,754 (18.8% of net sales during 1998). The increase was
primarily due to the inclusion of selling, delivery, general and administrative
expenses of Super Millwork for twelve months and Atrium and Darby for three
months. Additionally, selling and delivery expenses increased due to the
increase in net sales.
AMORTIZATION EXPENSE. Amortization expense increased $1,359 from $774
during 1997 to $2,133 during 1998. The increase was largely due to the
amortization of goodwill recorded in connection with the 1998 recapitalization.
STOCK OPTION COMPENSATION EXPENSE. Stock option compensation expense
increased $3,851 from $0 during 1997 to $3,851 during 1998. Stock option
compensation expense consisted of $2,813 representing the difference between the
fair market value of common stock of D and W Holdings and the exercise price
associated with a warrant granted to our executive in connection with the 1998
recapitalization, charges associated with previously issued stock options at
exercise prices below the fair value of the underlying common stock and charges
associated with certain variable options.
INTEREST EXPENSE. Interest expense increased $6,128 from $2,953 during 1997
to $9,081 during 1998. The increase in interest expense was due primarily to an
increase in average outstanding debt related to the loans issued and senior
subordinated notes assumed in connection with the 1998 recapitalization. In
addition, interest expense included the amortization of deferred financing costs
recorded in connection with the 1998 recapitalization.
EXTRAORDINARY CHARGE. Extraordinary charge increased $639 from $0 during
1997 to $639 during 1998. Extraordinary charge represents the write-off of
certain deferred financing costs incurred in the placement of Wing's debt, which
was repaid in connection with the 1998 recapitalization. This amount is net of
income tax benefit of $392.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
NET SALES. Net sales increased by $22,979 from $76,080 in 1996 to $99,059
in 1997. The increase was primarily due to the increase in sales to the large
home center retail chains. The two largest home center retailers, which are
Wing's top two customers, have experienced sales growth in excess of 25%.
Additionally, the increase included $4,140 from the Super Millwork acquisition
in November 1997.
50
<PAGE>
COST OF GOODS SOLD. Cost of goods sold increased from 75.2% of net sales
during 1996 to 79.0% of net sales during 1997. The increase is largely the
result of significant start-up costs incurred at the Cleveland prehanging
facility, the Allentown, Pennsylvania prehanging and hollow core manufacturing
facility and transition costs associated with moving a portion of the sales
volume attributable to the Super Millwork acquisition to the Allentown facility.
SELLING, DELIVERY, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, delivery,
general and administrative expenses increased $158 from $15,513 (20.4% of sales
during 1996) to $15,671 (15.8% of sales during 1997). The decrease as a
percentage of sales is primarily attributable to lower freight costs per unit as
additional prehanging/distribution facilities are opened. Additionally, retail
store display expenses were reduced as a result of the implementation of a lower
cost display program.
AMORTIZATION EXPENSE. Amortization expense increased $649 from $125 during
1996 to $774 during 1997. The increase was due primarily to the amortization of
goodwill recorded in connection with the October 1996 acquisition of Wing.
INTEREST EXPENSE. Interest expense increased $2,070 from $883 during 1996
to $2,953 during 1997. The increase was due largely to an increase in average
outstanding debt which resulted from the incurrence of additional debt related
to the Wing acquisition in October 1996 and the Super Millwork acquisition in
November 1997, as well as borrowings under the Wing credit facility. Interest
expense during 1996 and 1997 includes amortization of related deferred financing
costs.
LIQUIDITY AND CAPITAL RESOURCES
Cash generated from operations and availability under the revolving facility
are our principal sources of liquidity. During 1998, cash was primarily used in
connection with the 1998 recapitalization and for capital expenditures. Net cash
used in operating activities was $8,024 during 1998 compared to cash provided by
operations of $1,148 during 1997. The increase in cash used in operations was
primarily attributable to a decrease in net income and an increase in
inventories. Cash used for investing activities increased from $11,763 in 1997
to $125,184 in 1998. This increase was primarily the result of $120,977 for the
acquisition of Atrium. Cash flows from financing activities increased from cash
provided of $10,609 during 1997 to $133,174 during 1998. The increase was due
primarily to borrowings and contributions from Atrium Corporation made in
connection with the 1998 recapitalization.
During the first quarter of 1999, cash was primarily used for increases in
working capital, capital expenditures and scheduled principal payments. Net cash
provided by operating activities was $680 during first quarter of 1999 compared
to cash used in operating activities of $486 during the first quarter of 1998.
The increase in cash provided by operating activities is largely due to an
increase in income before depreciation and amortization. Net cash used in
investing activities during the first quarter of 1999 was $3,363 compared to
$630 during the first quarter of 1998. The increase in cash used in investing
activities was due primarily to the acquisition of Delta and increased capital
expenditures. Cash provided by financing activities during the first quarter of
1999 and $2,683 compared to $1,363 during the first quarter of 1998, primarily
due to increased borrowings under the revolving credit facility.
OTHER CAPITAL RESOURCES
In connection with the 1998 recapitalization, we entered into a credit
facility providing for a revolving credit facility in the amount of $30,000, of
which $5,000 is available under a letter of credit sub-facility. The revolving
credit facility has a maturity date of June 30, 2004. At March 31, 1999, we had
$16,691 of availability under the revolving credit facility, net of borrowings
of $10,700 and outstanding letters of credit totaling $2,609. We used a portion
of the net proceeds of the offering of the outstanding notes to repay
approximately $8,100 outstanding under our revolving credit facility. In
connection with this offering, we increased the size of our revolving credit
facility from $30,000 to up to $40,000.
51
<PAGE>
CAPITAL EXPENDITURES
We had cash capital expenditures, exclusive of the 1998 recapitalization, of
$2,221 during 1998, compared to $1,355 and $1,083 during 1997 and 1996,
respectively. The increase is largely due to the addition of Atrium and Darby
for the last three months of 1998. We expect capital expenditures, exclusive of
acquisitions, in 1999 to be approximately $9,500, however, actual capital
requirements may change, particularly as a result of acquisitions we may make.
Capital expenditures exclude costs related to the implementation of our new
management information system which include internally capitalized costs.
We had cash capital expenditures of $1,059 during the first quarter of 1999
compared to $287 during the first quarter of 1998. The increase is largely due
to capital expenditures at Atrium and Darby. Actual capital expenditures during
the first quarter of 1999 exclude $158 in capitalized costs related to the
implementation of our new management information system.
Our ability to meet our debt service and working capital obligations and
capital expenditure requirements is dependent, however, upon our and our
subsidiaries' future performance which, in turn, will be subject to general
economic conditions and to financial, business and other factors, including
factors beyond our control. As of March 31, 1999, we had $16,691 available for
borrowings under the revolving facility, net of borrowings of $10,700 and
outstanding and undrawn letters of credit totaling $2,609.
AFTER THE ATRIUM TRANSACTIONS
Historically, we have utilized internally generated funds and borrowings
under credit facilities to meet ongoing working capital and capital expenditure
requirements. In connection with the offering of the outstanding notes, we
incurred new indebtedness aggregating $172,368, net of $2,632 of unamortized
debt discount. The net proceeds of such indebtedness were used to finance the
acquisitions of Heat and Champagne, repay certain of our borrowings under our
credit facility (including accrued interest through date of payment), retire our
remaining existing senior subordinated notes (including accrued interest through
the date of repayment and repurchase premium), fund a distribution to Atrium
Corporation to repurchase a portion of the discount debentures (including
accreted discount through the date of repurchase) held by GEIPPPII and an
affiliate of Ardshiel and pay transaction fees and expenses.
As a result of the Atrium transactions, we have significantly increased cash
requirements for debt service. We will rely on internally generated funds and,
to the extent necessary, on borrowings under our revolving credit facility to
meet our liquidity needs.
Management believes that based on the current level of operations and
anticipated internal growth, cash flow from operations, together with
availability under our revolving credit facility, will be adequate to make
required payments of principal and interest on our indebtedness and to fund
anticipated capital expenditures and working capital requirements. However,
actual capital requirements may change. We may in the future seek additional
financing through the issuance of debt or equity. We cannot assure you that
additional financing, if needed, will be available to us on favorable terms, if
at all. Our ability to meet our debt service obligations and reduce our total
debt will be dependent on our future performance, which in turn, will be subject
to general economic conditions and to financial, business, and other factors,
including factors beyond our control. A portion of our debt bears interest at
floating rates; therefore, our financial condition is and will continue to be
affected by changes in prevailing interest rates. See "Risk Factors--Substantial
Leverage and Debt Service."
YEAR 2000
Many existing computer systems and applications and other control devices
are coded to use only two digits, rather than four, to identify a year in the
date code field. These date code fields will need to accept four digit entries
to distinguish 21st century dates from 20th century dates. Many computer
programs and systems, including certain programs and systems utilized by us, are
highly dependent upon financial and
52
<PAGE>
other data that, based on the program's or system's inability to distinguish
between the Year 2000 and other century-end dates, could be misreported or
misinterpreted and cause significant errors. If not corrected, many computer
applications could fail when processing data related to the Year 2000. In
addition, two interacting systems, applications or devices, each of which has
individually been fixed so that it will individually handle the Year 2000 issue,
could nonetheless suffer integration failure because their method of dealing
with the problem is not compatible.
This Year 2000 issue impacts our owned or licensed computer systems and
equipment and the computer systems and equipment of third parties upon which we
rely. The Year 2000 problem could cause these systems to fail, err, and, in the
case of third party systems, become incompatible with our systems. Therefore, if
we, or a significant third party fail to become Year 2000 ready, or if the Year
2000 problem causes our systems to become internally incompatible or
incompatible with any key third party systems, our business could suffer
material disruptions.
We are assessing the impact of the Year 2000 problem and have or intend to
modify portions of our hardware and software so that our computer systems will
function properly with respect to date in the Year 2000 and thereafter. We have
reviewed and continue to review each operating unit for the appropriate
information system enhancements, with respect to both Year 2000 problem as well
as strategic system upgrade.
To achieve our overall operating strategy, we are enhancing our information
technology by installing new software to implement a fully integrated
manufacturing system for our operating units. This system has been certified by
the manufacturer as being Year 2000 compliant. Each operating unit was
prioritized for installation of the system based on any Year 2000 issues, with
the final phase of implementation and installation of this system scheduled to
be completed by the third quarter of 1999.
We have inquired of our major suppliers and customers as to their Year 2000
compliance. Substantially all of our major suppliers and customers have
indicated that their Year 2000 testing and remediation programs are complete or
will be complete by the end of the third quarter. We have not, however, tested
or independently verified the Year 2000 compliance of our major suppliers and
customers.
We face certain risks related to the Year 2000 problem including potential
disruptions in our operations due to Year 2000 problems with our systems,
potential disruptions in material supply due to Year 2000 problems with our
suppliers' systems and potential loss of sales or delayed cash collections in
the event of Year 2000 problems with our customers' systems. Although we have
not formalized a contingency plan to address the problems associated with these
risks, there are several factors that we believe may mitigate potential Year
2000 problems. Because our business has only recently been computerized, we
believe we can run our business without significant interruptions using manual
labor and "paper" systems in the event of a Year 2000 problem with our systems.
In addition, because we source our materials from several suppliers, we believe
we have decreased the likelihood that a Year 2000 disruption at one of our
suppliers will materially interrupt our material supply. Finally, because many
of our customers use "paper" systems, we believe a Year 2000 problem with a
customer's system would not materially impact our sales. Although we believe
these factors mitigate our Year 2000 risks, we cannot assure you that problems
arising from these risks will not have a material adverse effect on our
business, operating results or financial condition.
We believe that with our strategy and completed installations, the Year 2000
problem will not pose significant operational problems for us. We cannot assure
you, however, that our computer systems or the computer systems of companies we
acquire or the computer systems of other companies with whom we conduct business
will be Year 2000 compliant prior to December 31, 1999 or that the inability of
any such systems to process accurately Year 2000 data will not have a material
adverse effect on our business, operating results or financial condition.
53
<PAGE>
The total amount of costs to be incurred by us to address these system
enhancements is estimated at $1,500. We have expensed approximately $1,100
through March 31, 1999.
FINANCIAL ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 ("FAS 130") "Reporting Comprehensive
Income." FAS 130 requires that all items that are required to be recognized
under accounting standards as components of comprehensive income be reported in
a financial statement that is displayed with the same prominence as other
financial statements. FAS 130 is effective for financial statement periods
beginning after December 15, 1997. We adopted FAS 130 beginning January 1, 1998.
We had no comprehensive income for all periods presented prior to January 1,
1998.
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants Issued Statement of Position 98-1
("SOP 98-1") "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" that is effective for reporting periods beginning
after December 15, 1998, but provides for earlier application if certain
conditions are met. We have applied the provisions of SOP 98-1 in our financial
statements for the year ended December 31, 1998 and its adoption had no material
effect on our consolidated financial position or results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("FAS 133") "Accounting for Derivative
Instruments and Hedging Activities" that is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. We will implement the provisions of
FAS 133 as required. The future adoption of FAS 133 in not expected to have a
material effect on our consolidated financial position or results of operations.
54
<PAGE>
ATRIUM (PREVIOUS REGISTRANT)
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, information
derived from Atrium's consolidated statements of operations expressed as
percentage of net sales.
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED DECEMBER
-------------------------- 31
OCTOBER 2, SEPTEMBER 30, --------------------
1998 1997 1997 1996
----------- ------------- --------- ---------
<S> <C> <C> <C> <C>
Net sales................................................. 100.0% 100.0% 100.0% 100.0%
Cost of goods sold........................................ 65.2 64.1 65.0 65.5
----- ------ --------- ---------
Gross profit.............................................. 34.8 35.9 35.0 34.5
Selling, delivery, general and administrative expenses.... 22.5 23.7 23.8 22.3
Special charges........................................... 4.5 -- -- 1.9
Stock option compensation expense......................... 3.1 0.2 0.2 1.9
----- ------ --------- ---------
Income from operations.................................... 4.7 12.0 11.1 8.3
Interest expense.......................................... 5.7 6.1 6.2 3.1
Other income (expense), net............................... (0.2) 0.8 0.6 (0.1)
----- ------ --------- ---------
Income before income taxes and extraordinary charge....... (1.2) 6.7 5.5 5.2
Provision for income taxes................................ (0.4) 2.5 2.2 1.7
----- ------ --------- ---------
Income before extraordinary charge........................ (0.8) 4.2 3.3 3.4
Extraordinary charge, net of income tax benefit........... 2.1 -- -- 0.8
----- ------ --------- ---------
Net income................................................ (2.9)% 4.2% 3.3% 2.7%
----- ------ --------- ---------
----- ------ --------- ---------
</TABLE>
PERIOD ENDED OCTOBER 2, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1997
NET SALES. Net sales increased by $27,625 from $139,793 during the first
nine months of 1997 to $167,418 during the period ended October 2, 1998. The
increase was primarily due to sales from Atrium Door and Window Company-West
Coast and Atrium Door and Window Company of Arizona (Masterview), acquired in
July of 1997 and March of 1998, respectively. Additionally, Atrium (1)
experienced growth at the Atrium Wood division, which was selected to be the
supplier in a national patio door sales program beginning the third quarter of
1997, (2) the addition of a significant customer at our Atrium Wood division,
and (3) continued growth at Kel-Star Building Products.
COST OF GOODS SOLD. Cost of goods sold increased from 64.1% of net sales
during the first nine months of 1997 to 65.2% during the period ended October 2,
1998. The increase in cost of goods sold as a percentage of net sales during the
period ended October 2, 1998 was primarily due to an increase in raw material
and direct labor costs, which offset material usage improvements at Atrium Wood.
SELLING, DELIVERY, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, delivery,
general and administrative expenses increased $4,590 from $33,114 (23.7% of net
sales) during the first nine months of 1997 to $37,704 (22.5% of net sales)
during the period ended October 2, 1998. The increase was primarily due to the
inclusion of selling, delivery, general and administrative expenses of Atrium
Door and Window Company of Arizona and Atrium Door and Window Company-West
Coast, as well as an increase in amortization expense related to software
implementation costs, resulting from additional amounts capitalized during 1997.
Additionally, selling and delivery expenses increased due to the increase in
sales.
55
<PAGE>
SPECIAL CHARGES. Special charges of $7,452 during the period ended October
2, 1998 consisted of management bonuses, the write-off of certain covenants not
to compete and transaction expenses related to the 1998 recapitalization. There
were no special charges during the first nine months of 1997.
STOCK OPTION COMPENSATION EXPENSE. Stock option compensation expense
increased $5,010 from $255 during the first nine months of 1997 to $5,265 during
the period ended October 2, 1998. In 1998, stock option compensation expense
consisted of the amortization of deferred compensation charges related to
previously issued options, charges representing the increase in the underlying
stock value associated with certain variable options and the expense associated
with cash redemption of certain options resulting from the 1998
recapitalization. In 1997, stock option compensation expense related to
amortization of deferred compensation charges related to previously issued
options and the cash redemption of certain options issued to a former executive
of Atrium.
INTEREST EXPENSE. Interest expense increased $1,003 from $8,542 during the
first nine months of 1997 to $9,545 during the period ended October 2, 1998. The
increase was due to an increase in average outstanding debt related to the
$17,500 senior term loan issued in connection with the Masterview acquisition,
which took place on March 27, 1998.
OTHER INCOME (EXPENSE). Other income decreased $1,413 from other income of
$1,127 during the first nine months of 1997 to other expense of $286 during the
period ended October 2, 1998. The first nine months of 1997 includes an
insurance settlement of $1,193 from the business interruption portion of the
Company's insurance claim filed as a result of the January 1997 fire at the
Extruders facility.
EXTRAORDINARY CHARGES. Extraordinary charges of $3,525 during the period
ended October 2, 1998 represented the write-off of certain deferred financing
charges incurred in connection with the 1998 recapitalization. This amount is
net of income tax benefit of $2,164. There were no extraordinary charges during
the first nine months of 1997.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
NET SALES. Net sales increased by $30,495 from $156,269 in 1996 to $186,764
in 1997. The increase was primarily due to the increase in sales of $19,708 at
our Atrium Door and Window of the Northeast, Kel-Star and Woodville Extruders
businesses, all of which were acquired during the second half of 1996, and
Atrium Door and Window-West Coast, acquired from Gentek, effective July 1, 1997.
Additionally, Atrium experienced slight growth at its distribution centers and
within its core manufacturing divisions, including significant growth at the
Atrium Wood division, which was awarded a national patio door sales contract
during the second quarter of 1997.
COST OF GOODS SOLD. Cost of goods sold decreased from 65.5% of net sales
during 1996 to 65.0% of net sales during 1997. The decrease was due largely to
on-going cost reductions at Atrium Wood, which were offset by start-up
inefficiencies at Kel-Star.
SELLING, DELIVERY, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, delivery,
general and administrative expenses increased $9,671 from $34,815 (22.3% of
sales during 1996) to $44,486 (23.8% of sales during 1997). The increase was
largely due to the inclusion of twelve months of selling, delivery, general and
administrative expenses at the Atrium Door and Window Company of the Northeast,
Kel-Star, Woodville Extruders and Atrium Door and Window-West Coast businesses,
as well as amortization expense related to software implementation costs.
Additionally, delivery expenses were negatively affected during 1997 as a result
of a fire at the Woodville Extruders division in January.
SPECIAL CHARGES. Special charges during 1996 consisted of $3,044 in
management bonuses which were the result of the Hicks Muse transaction. There
were no special charges in 1997.
56
<PAGE>
STOCK OPTION COMPENSATION EXPENSE. Stock option compensation expense
decreased $2,716 from $3,023 during 1996 to $307 during 1997. In 1997, stock
option compensation expense related to amortization of deferred compensation
charges related to previously issued options and the cash redemption of certain
options issued to a former executive of Atrium. In 1996, stock option
compensation expense consisted of charges associated with the granting of new
stock options at exercise prices below the fair value of the underlying common
stock and the expense associated with the cash redemption of certain options,
both resulting from the Hicks Muse transaction, and amortization of deferred
compensation charges related to previously issued options. Included in stock
option compensation expense during 1996 is $1,320 representing the difference
between the fair market value of common stock of Atrium Corporation and the
exercise price associated with a warrant granted to an executive of Atrium in
connection with the Hicks Muse transaction.
INTEREST EXPENSE. Interest expense increased $6,736 from $4,786 during 1996
to $11,522 during 1997. The increase was due largely to an increase in average
outstanding debt which resulted from the issuance of our existing senior
subordinated notes, which were issued in connection with the Hicks Muse
transaction, as well as borrowing under our previous credit facility. Interest
expense during 1997 includes amortization of the related deferred financing
costs.
OTHER INCOME (EXPENSE), NET. Other income (expense), net increased $1,270
from other expense of $182 in 1996 to other income of $1,088 in 1997. Other
income in 1997 includes an insurance settlement of $1,193. This settlement with
Atrium's insurance carrier resulted from the business interruption portion of
Atrium's insurance claim filed as a result of a fire at the Woodville Extruders
division in January 1997.
EXTRAORDINARY CHARGE. Extraordinary charge of $1,176 during 1996 represents
the write-off of certain deferred financing charges incurred in connection with
the Hicks Muse transaction, as all then outstanding debt was retired with a
portion of the proceeds from the issuance of our existing senior subordinated
notes. This amount is net of income tax benefit of $720.
57
<PAGE>
BUSINESS
THE COMPANY
We are one of the largest manufacturers and distributors of residential
windows and doors in the United States based on 1998 pro forma net sales. We
offer a complete product line including aluminum, vinyl and wood windows and
doors to our customers, which include leading national homebuilders and home
center retailers. We have grown rapidly through a combination of internal growth
and complementary acquisitions. Pro forma for the transactions described in
"Unaudited Pro Forma Consolidated Financial Statements", we would have had net
sales and adjusted EBITDA of $123.3 million and $10.3 million, respectively, for
the three months ended March 31, 1999.
Our acquisitions of Heat and Champagne are a continuation of our strategy to
become the largest nationwide manufacturer and distributor of residential
windows and doors. Heat is a leading regional manufacturer of residential vinyl
windows and patio doors, with a strong presence in the eastern and midwestern
repair and remodeling market segments and the northwestern new construction
market segment. The Heat acquisition strengthens our vinyl product offering,
enhances our nationwide presence and provides access to a proprietary
distribution network of 22 distribution centers. Champagne is a regional vinyl
window manufacturer located in Denver, Colorado. The Champagne acquisition
enhances our presence in the vinyl markets of Colorado, Kansas and Nebraska.
We have a balanced business mix, as measured by management's estimates of
the percentage of pro forma net sales derived from the different products we
sell, market segments we serve and the material types we use in our products:
<TABLE>
<CAPTION>
1998 PRO FORMA NET SALES
------------------------
(%)
($) ---
-------------
(IN
THOUSANDS)
<S> <C> <C>
Product Line
Windows............................................................... $ 271,899 55%
Doors................................................................. 194,892 40
Other................................................................. 26,288 5
---
100%
---
---
Market Segment
Repair and remodeling................................................. $ 285,798 58%
New construction...................................................... 207,281 42
---
100%
---
---
Material Type
Aluminum.............................................................. $ 178,806 36%
Wood.................................................................. 194,693 39
Vinyl................................................................. 119,580 25
---
100%
---
---
</TABLE>
Our balance between the repair and remodeling and new construction market
segments is particularly important as we estimate that sales to the repair and
remodeling market segment represented approximately 64% of window and door
industry dollar sales in 1998.
We were founded in 1948 and we believe we are one of the two largest
manufacturers and distributors of residential non-wood windows and the third
largest manufacturer and distributor of residential doors in the United States
based on 1998 pro forma net sales. Our portfolio of products includes some of
the
58
<PAGE>
industry's most recognized brand names including ATRIUM and WING. Our full
product line of aluminum, vinyl and wood windows and doors enables us to
differentiate ourselves from our competition, leverage our multi-channel
distribution system and be well positioned to benefit from shifts in product
preferences. Regional product preferences exist for aluminum, vinyl and wood
windows and doors, and a full product line is important to serve our national
customer base effectively. We pride ourselves on our ability to provide to our
nationwide customers the most suitable material based on varying regional
product preferences.
We have 53 manufacturing facilities and distribution centers strategically
located in 24 states to service customers on a nationwide basis. We distribute
through multiple channels including direct distribution to large homebuilders
and independent contractors, one-step distribution through home centers and
lumberyards and two-step distribution to wholesalers and dealers who
subsequently resell to lumberyards, contractors and retailers. We believe that
our multi-channel distribution network allows us to reach the greatest number of
end customers and provide nationwide service to those customers.
Our company is vertically integrated with operations that include:
- The extrusion of aluminum and vinyl, which is utilized internally in our
fabrication operations, or sold to third parties;
- The manufacture and assembly of window and door units, including
pre-hanging of doors, and the sale of such units to wholesalers,
lumberyards, dealers, home centers and homebuilders;
- A turn-key installation program for builders in which we supply and
install many of our products, including windows and interior and exterior
doors; and
- The sale of finished products to homebuilders, remodelers and contractors
through company-owned distribution centers located across the country.
Our organic growth has exceeded growth rates for the window and door
industry by more than two times over the last three years in large part as a
result of our strategic positioning in such high growth markets as the southern
and western United States and our significant presence in the fast-growing home
center category. We have completed seven acquisitions since 1996 and we believe
that we are well-positioned to be a leader in the consolidation of the
residential window and door industry because of our size, rapid organic growth
and our ability to integrate acquisitions successfully.
COMPETITIVE STRENGTHS
We believe that we have a competitive advantage in our markets due to our
following competitive strengths:
- LEADING MARKET POSITIONS. We are one of the largest suppliers of
residential windows and doors in the United States with a domestic market
share of approximately 5%. We believe that we have a leading market
position in the following key products based on management estimates:
<TABLE>
<CAPTION>
RANK BASED ON
1998 PRO FORMA NATIONAL MARKET
PRODUCT NET SALES SHARE
- ---------------------------------------------- 1998 ATRIUM --------------- -----------------
PRO FORMA
NET SALES
-------------
(IN
THOUSANDS)
<S> <C> <C> <C>
Non-wood windows.............................. $ 271,000 1 or 2 9%
Interior pre-hung doors....................... 75,000 1 5%
Solid wood bifold doors....................... 30,000 1 40%
Solid wood interior passage doors............. 60,000 2 20%
</TABLE>
- STRONG BRAND NAME RECOGNITION. Our brands are well recognized in the
building trade and are a distinguishing factor in customer selection. The
ATRIUM brand of windows and patio doors has been in existence for over 20
years and is recognized for its quality and value. In addition, we believe
59
<PAGE>
ATRIUM is among the most-recognized brand names in the aluminum and vinyl
window market segments. Our WING brand of wood passage and bi-fold doors
is highly recognized according to surveys of our home center customers. We
believe there are significant opportunities to leverage our existing
brands by targeting cross-selling opportunities and by re-branding certain
products.
- COMPLETE, HIGH-QUALITY PRODUCT OFFERING. We are one of the few suppliers
with a complete line of residential windows and doors in the United
States. The ability to source windows and doors from a single supplier is
a cost-saving opportunity for national homebuilders and home centers. This
distribution flexibility and nationwide presence distinguishes as a
"one-stop" solution for customers' window and door needs. Examples of our
high quality and customer service standards include our approximately 99%
order fill rate and the recognition of our WING product line by Lowe's as
Millwork Supplier of the Year for 1997.
- MULTI-CHANNEL DISTRIBUTION NETWORK. We have a multi-channel distribution
network that includes direct, one-step and two-step distribution as well
as 30 company-owned distribution centers. Our distribution strategy
maximizes our market penetration and reduces reliance upon any one
distribution channel for the sale of our products. Furthermore, as a
manufacturer and distributor of windows and doors for more than four
decades, Atrium has developed long-standing relationships with key
distributors in its markets. In each instance, we seek to secure a leading
distributor in each of our markets. If we cannot secure a top-tier
distributor in a desired geographic market, we will consider the
acquisition or start up of our own distribution center.
- ESTABLISHED AND DIVERSIFIED CUSTOMER BASE. We have developed strong
relationships with our current customer base, which includes over 5,000
active accounts. We have strong relationships with some of the leading
companies in homebuilding, including D.R. Horton, Del Webb and Centex, and
home center retailing, including The Home Depot and Lowe's. Our customers
are geographically diversified and our sales are balanced between the
repair and remodeling (approximately 58%) and new construction
(approximately 42%) market segments, which provides increased stability to
our business.
- LOW COST, VERTICALLY INTEGRATED MANUFACTURER. We believe that we are one
of the industry's lowest cost providers based on our strong operating
margins relative to our competitors. Our vertically integrated structure
enables us to control all facets of the production and sale of windows and
doors, eliminating incremental outsourcing costs. For our window and patio
door products, our integrated operations, including extrusion, fabrication
and distribution enable us to reduce inventory, improve production
scheduling and optimize quality control. For our wood door products, our
expertise in fabricating, pre-hanging and distributing wood doors provides
similar cost saving advantages and operating efficiencies.
BUSINESS STRATEGY
Our goal is to increase revenue growth and profitability and to strengthen
our leadership position in the residential window and door industry through the
following initiatives:
- ENHANCE NATIONWIDE PRESENCE. We will continue to focus our core efforts on
maintaining and developing our nationwide market share, including
enhancing our strong presence in our existing high growth markets such as
the southern and western United States. Our recent acquisitions have
helped to further our geographic coverage and, we believe, combined with
the implementation of cross-selling initiatives, will continue to
facilitate our growth. We will also seek to enhance our nationwide
capabilities by selectively starting or acquiring operations that
complement our geographic coverage and product offerings.
60
<PAGE>
- EXTEND AND CROSS-SELL PRODUCT OFFERINGS. We plan to take advantage of
cross-selling opportunities by marketing doors to our traditional window
customers and windows to our traditional door customers and adding
additional styles and designs to address specific regional product
preferences. In addition, we believe there are significant opportunities
to cross-sell products, such as our expanded vinyl and millwork offerings,
through our existing distribution channels. We also maintain training and
incentive programs in order to ensure that our divisional sales forces
market our complete product line of windows and doors.
- CAPITALIZE ON ATRIUM BRAND NAME. We will seek to continue to leverage the
strength of our nationally recognized ATRIUM brand name that has been in
existence for over 20 years. We believe that leveraging the ATRIUM name
across our products and on a nationwide scale will enhance our brand name
recognition. For example, we see a significant opportunity in transferring
the ATRIUM brand to recently acquired product lines. Further, we will
continue trade advertising initiatives to maintain Atrium's high brand
awareness in the industry.
- CONTINUE TO PURSUE OPERATIONAL EFFICIENCIES. Our team of highly
experienced managers seeks to achieve improvements by closely scrutinizing
our operations and applying best practices and continuous improvement
programs across all of our divisions. We have been successful in improving
the efficiency and productivity of our operations by automating
manufacturing processes, improving logistics, implementing a company-wide
information system, successfully integrating acquisitions and leveraging
working capital requirements. We plan to analyze additional opportunities
to improve operational efficiencies, including integrating our wood
products manufacturing facilities and aluminum extrusion operations,
increasing capacity utilization at all our manufacturing facilities and
leveraging our size to realize purchasing savings.
- MAKE SELECTIVE STRATEGIC ACQUISITIONS. We have successfully consummated
and integrated seven acquisitions since 1996, in each case lowering
operating costs. We intend to take advantage of the fragmented market for
window and door manufacturers by acquiring companies that present
identifiable cost savings opportunities and add to our existing product
lines, market share and geographic coverage. As we continue our
acquisition program, we believe we can leverage our proven expertise in
integrating acquisitions and maximizing cost savings and productivity
enhancements. Additionally, we believe our size and national presence will
be attractive to companies looking to combine with an industry leader.
INDUSTRY OVERVIEW
In 1998, new construction spending in the United States totaled over $657.0
billion. Of the total new construction spending amount, residential new housing
spending totaled approximately $212.0 billion. Additionally, residential repair
and remodeling expenditures approximated $140.0 billion in 1998. In 1998, new
housing starts in the United States ranged from approximately 1.0 million to
approximately 1.5 million, of which approximately 1.2 million were single-family
homes and approximately 0.3 million were multi-family homes. Historical
residential repair and remodeling expenditures have demonstrated consistent
growth dynamics increasing from approximately $15.0 billion to approximately
$125.3 billion during the period from 1970 to 1997 and averaging a compound
annual growth rate of 8.2%.
61
<PAGE>
HISTORICAL RESIDENTIAL REPAIR AND REMODEL EXPENDITURES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
($ IN
BILLIONS)
<S> <C>
1970 15
17
1972 19
21
1974 24
26
1976 30
33
1978 36
39
1980 42
41.5
1982 45.3
49
1984 69.8
78
1986 91.3
92
1988 91
95
1990 97
97
1992 100
105
1994 110
115
1996 120
125.3
CAGR=8.2%
</TABLE>
- --------------------------------------------------------------------------------
Source: Census Bureau--Department of Commerce
We believe that, in 1998, United States residential window and door
expenditures were approximately $10.0 billion, of which we estimate new
construction and remodel and replacement expenditures represented approximately
$3.6 billion and $6.4 billion, respectively. The individual market segments for
windows and doors are as follows:
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1998 NATIONAL WINDOW MARKET
<S> <C>
$6.5 BILLION MARKET(1)
New Construction 32%
Repair & Remodeling 68%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1998 NATIONAL DOOR MARKET
<S> <C>
$3.5 BILLION MARKET(1)
New Construction 55%
Repair & Remodeling 45%
</TABLE>
- --------------------------------------------------------------------------------
(1) Based on management estimates.
WINDOWS. The domestic window market has grown to approximately 58.2 million
in unit sales in 1998, and has outpaced the growth in the domestic building
materials industry generally. The $6.5 billion residential window industry can
be divided into two end-use segments: new construction, an estimated 18.7
million windows shipped in 1998, and repair and remodeling, approximately 39.5
million windows sold in 1998. We believe that the repair and remodeling segment
will continue to experience strong growth due to the strength of sales of
existing homes and the increase in the average age of homes from 23 years to 28
years in the last decade.
62
<PAGE>
DOORS. According to F.W. Dodge, the U.S. residential exterior and interior
door market, which we estimate to be $3.5 billion, represents more than 58.0
million units annually. The residential door industry can be divided into two
principal market segments: new construction and repair and remodeling. We
estimate that interior doors sold to the repair and remodeling segment
constitute at least one-third of all interior door units sold in the United
States in 1998.
We believe that we and four other market leaders represent approximately 44%
of window and door industry sales, while the remaining approximately 56% of
industry sales is comprised of over 600 smaller regional companies with average
annual sales of approximately $10.0 million to approximately $20.0 million. The
door and window industry has experienced significant consolidation in the last
24 months. We believe this consolidation trend favors companies like ours, with
nationwide capabilities to service large home centers and home builders, strong
brand names, the ability to provide a complete product line and economies of
scale in manufacturing, distributing and marketing. In addition to opportunities
presented by consolidation of the industry, industry growth has been driven by
the growth in the home center retailer category. The home center industry is one
of the fastest growing retail sectors in the United States. According to
National Home Center News, the U.S. retail home improvement market is expected
to grow from over $140.0 billion in 1998 to approximately $170.0 billion by the
year 2002.
PRODUCTS
We are one of a few window and door manufacturers that offer a complete
product line that consists of a full range of aluminum, vinyl and wood windows
and doors. Our complete product line allows us to differentiate ourselves from
our competition, leverage our multi-channel distribution system and be
well-positioned to benefit from shifts in product preference. As significant
regional product preferences exist among aluminum, vinyl and wood, a full
product line is important to serve a national customer base effectively. We
estimate that approximately 55% of our 1998 pro forma net sales were derived
from the sale of windows, approximately 40% from the sale of doors, and
approximately 5% from the sale of other products and services.
WINDOWS. We had $271.9 million in pro forma net sales from the sale of
windows in 1998, representing approximately 4% of the total U.S. window market.
We estimate that our pro forma net sales from the sales of windows in 1998 were
comprised of approximately 55% from the sale of aluminum products, approximately
44% from vinyl products and approximately 1% from wood products. Our window
products include sliders, double hung, and casement products and are sold under
the ATRIUM and HR WINDOWS-TM- brand names. We sell our windows primarily to
building contractors and lumberyards through direct and one-step distribution.
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The demand for our aluminum, vinyl and wood products vary by region:
- ALUMINUM--Aluminum windows are the product of choice in the southern
United States due to the region's warmer weather and more value-conscious
customers. Aluminum is the most appropriate fenestration material for the
region because thermal efficiency is less important and the product is
sold at a lower cost than either vinyl or wood.
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- VINYL--Demand for vinyl windows, particularly in colder climates, has
significantly increased over the last five years as vinyl windows have
gained acceptance as a substitute for wood windows. This trend has been
strengthened as prices for vinyl windows have become more competitive with
wood products and durability and energy efficiency have improved. We
entered the vinyl window market in mid-1995 and have increased sales of
vinyl windows by leveraging the ATRIUM brand name, leveraging our
distribution channels and through acquisitions. The Heat acquisition
increased our presence in the vinyl window business from approximately 9%
to 24% of our 1998 pro forma sales.
- WOOD--Wood windows have the highest thermal efficiency and highest cost
compared to aluminum and vinyl. Accordingly, wood windows are in demand in
colder regions and in higher end homes. The ATRIUM name gained wide
recognition in the 1970s and 1980s through the success of our line of wood
patio doors. In order to capitalize on this success, we added a wood
window line in 1991 including aluminum-clad and primed wood windows and
patio doors. We have made the strategic decision to minimize our
participation in the wood window business as it is concentrated on the
higher end of the wood window market which is not part of our core focus.
DOORS. We had $194.9 million in pro forma net sales from the sale of doors
in 1998, representing approximately 6% of the total U.S. door market. We
estimate that approximately 85% of our 1998 pro forma door sales were generated
from interior doors and 15% from exterior doors. Our door products are sold
under the ATRIUM, WING and SUPER MILLWORK-REGISTERED TRADEMARK- brand names. We
sell our doors primarily to home center retailers through one-step distribution.
- INTERIOR DOORS--There are two broad categories of interior doors: bi-fold
doors and passage doors. Bi-fold doors are hinged folding doors and
passage doors are the traditional doors used to connect rooms. There are
also two types of interior wood bi-fold doors and passage doors: solid
wood doors and hollow core doors. Solid doors are made completely of wood
while hollow core doors consist of two door facings glued to a wood frame
and are hollow on the inside. Both solid wood and hollow core passage
doors are sold one of two ways, either as slabs or as pre-hung units.
Slabs refer to the door itself and pre-hung units refer to slab doors
already hinged to a door frame at the factory.
- EXTERIOR DOORS--Our exterior door product offering consists primarily of
patio doors and pre-hung steel entry doors.
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We estimate that approximately 45% of our 1998 door pro forma sales were
generated from the sale of pre-hung doors, 30% from solid wood doors, 10% from
hollow core doors and 15% from patio doors. We estimate that approximately 60%
of all passage doors sold through home center retailers in 1998 were sold as
pre-hung units, mainly because of the ease of installation for the
do-it-yourself consumer. We are one of the few vertically-integrated companies
that both manufactures and pre-hangs doors. We believe that sales of our
pre-hung door line will continue to grow and will represent a larger portion of
our total door sales in the future due to the increased demand from
do-it-yourself consumers.
OTHER PRODUCTS AND SERVICES. We had $26.3 million in pro forma net sales
from the sale of other products and services in 1998. Our other products include
cafe doors, columns and shutters. We manufacture two types of cafe doors as well
as louvered shutters. The shutters can be used both for interior and exterior
applications. Columns come in many styles and are purchased from domestic
suppliers.
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We also offer a turn-key total installation program for builders in which we
supply and install interior doors, exterior doors, mouldings, locks, hardware
and other products. This concept allows a developer to transfer the risk
associated with retaining reliable work crews and provides protection from cost
overruns. We believe that developers view this as a value added service and are
willing to pay a premium price for it.
As a part of the Heat operations, we began selling vinyl decking and patio
enclosures sun rooms. These products are sold through our existing distribution
channels and are manufactured similarly to our existing products. Demand for
both products is growing and we expect to expand the product line in the future.
SALES, MARKETING AND DISTRIBUTION
One of the key components of our marketing strategy is to capitalize on the
complementary nature of our distribution channels. Historically, the majority of
our window production has been sold to remodelers, homebuilders, lumberyards and
wholesalers, while home center retailers represented the primary distribution
channel for doors. We plan to broaden our product offerings principally by
marketing doors to our traditional window customers and windows to our
traditional door customers.
We have a multi-channel distribution network that includes direct, one-step
and two-step distribution as well as 30 company-owned distribution centers. Our
distribution strategy maximizes our market penetration and reduces reliance upon
any one distribution channel for the sale of our products. Furthermore, as a
manufacturer and distributor of windows and doors for more than four decades, we
have developed long-standing relationships with key distributors in each of our
markets. In each instance, we seek to secure the leading distributors in each
market. If we cannot secure a top-tier distributor in a desired geographic
market, we will consider the acquisition or start up of our own distribution
center.
We also sell windows to major home center retailers and smaller
regional-based retail centers. Although home centers have become more important
to us because they target the repair and remodeling market segment, they still
accounted for less than 20% of our total window pro forma net sales in 1998.
We utilize the following distribution channels:
- DIRECT DISTRIBUTION (34% OF OUR PRO FORMA NET SALES IN 1998). We sell our
windows and doors directly to contractors, remodelers and other
homebuilders without the use of an intermediary. By selling directly to
builders, we are able to increase our gross profits while at the same time
offering builders more favorable pricing.
- ONE-STEP DISTRIBUTION (61% OF OUR PRO FORMA NET SALES IN 1998). We sell
our finished windows to lumberyards, building products distributors, home
centers, and company-owned distribution centers, which will then sell to
contractors, homebuilders or remodelers. While it is not required that
lumberyards or building products distributors carry our products on an
exclusive basis, it is not unusual for them to do so. In addition, they
generally purchase based on orders, keeping little or no inventory.
One-step distribution tends to be used most often in metropolitan areas.
We maintain company-owned distribution centers in key markets where
available independent distributors are weak or where we have been unable to
make adequate arrangements with existing distributors. Company-owned
distribution centers essentially act as one-step distributors.
- TWO-STEP DISTRIBUTION (5% OF OUR PRO FORMA NET SALES IN 1998). Two-step
distribution is the selling of completed doors and windows to a wholesaler
or distributor who then sells the products to lumberyards, building
products retailers and home centers. These intermediaries will in turn
sell the windows and doors to the homebuilders, homeowners or remodelers.
The wholesalers and distributors tend to maintain product inventory in
order to service the needs of their client base for small quantities.
Essentially, these middlemen are more common in rural areas where
customers generally do not represent sufficient volume to purchase from us
directly.
To enhance our market coverage and leverage our brand equity, we currently
market our windows and patio doors under primarily two brand names, ATRIUM and
H-R WINDOWS. Due to the fact that we enjoy such significant national name
recognition at both the building trade and consumer levels, we have chosen
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to consolidate a significant portion of our product line under the ATRIUM name.
We have completed a phase out of our SKOTTY, BISHOP and GENTEK brands. We expect
to extend the ATRIUM brand to other products, as well as to appropriate product
lines acquired in the future.
Our promotional efforts to our door and window customers are focused on
cooperative advertising programs which are offered to certain of our major
customers. This gives us exposure in our customers' local media, including
newspaper, radio and television, in order to generate sales at individual
locations. We also invest in in-store displays showing operating door units and
photographs of in-room settings in order to generate sales once customers are in
the stores. Product knowledge classes are held to inform store employees about
the features and benefits of each product. Award winning packaging and in-store
signage are used to further general awareness within the stores. We also offer
retailers a video showing how quickly a homeowner can install a bi-fold door
using only basic hand tools.
WINDOWS. We market our window products through a sales force consisting of
approximately 75 company salaried and commissioned sales representatives and
approximately 100 independent commissioned sales representatives. Each of our
divisions is supported by a sales manager, direct sales representatives and
independent representatives. The sales managers coordinate marketing activities
among both company and independent representatives. Our sales representatives
focus primarily on direct sales to homebuilders, remodelers and contractors,
while independent sales representatives sell to home centers, lumberyards and
wholesalers. In general, independent sales representatives carry our window and
door products on an exclusive basis, although they may carry other building
products from other manufacturers.
DOORS. Our ability to supply home center retailers with a complete line of
wood doors positions us to provide superior service and convenience to our
customers. The "one-stop shopping" we provide enables retailers to reduce their
transaction costs, as they have to pay only one invoice, work with one sales
representative, and schedule the receipt of goods with only one company. Our
goal is to be the "preferred supplier" for the door aisle of home center
retailers.
For door sales we use an internal sales force. In addition, senior
executives are actively involved with both sales and customer service. This
group is segregated between national and regional accounts. Approximately 80% of
our 1998 pro forma net sales of doors are made to national retail home center
chains. The internal sales force was realigned in early 1995 reducing the sales
staff from 18 to 7 while increasing the number of merchandise managers. As a
result, we have a smaller, more focused sales force which is better structured
to give the home centers the attention required at the store level.
To assist our internal sales force of seven individuals and provide better
service to our customers, we have over 20 merchandising managers. The
merchandising managers provide home center retailers with in-store services such
as product knowledge seminars, store product resets to straighten stock and fix
displays, sales analysis and in-store merchandising. They also work with the
retailers to resolve claims issues and to handle product returns. This is a
significant advantage to us as it is a level of service that few suppliers can
offer.
OPERATIONS
We manufacture and sell our windows through a vertically integrated process
that includes:
- The extrusion of aluminum and vinyl, which is utilized internally in our
fabrication operations, or sold to third parties;
- The manufacture and assembly of window and door units, including
pre-hanging of doors, and the sale of such units to wholesalers,
lumberyards, dealers, home centers and homebuilders;
- A turn-key installation program for builders in which we supply and
install many of our products, including windows and interior and exterior
doors; and
- The sale of finished products to homebuilders, remodelers and contractors
through company-owned distribution centers located across the country.
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We realize many operational and cost benefits from our vertically integrated
window operations. By extruding aluminum and vinyl components in-house, we are
able to secure a low-cost, reliable source of extrusions, control product
quality and reduce inventory levels. The integration of extrusion and
fabrication operations gives us more control over our manufacturing costs. We
continually work to achieve cost savings through increased capacity utilization
at our efficient facilities, adoption of best practices, reduction of cost of
materials, rationalization of product lines and reduction of inventory.
We continue to build on what we believe is our position as one of the
industry's lowest cost manufacturers. Because of the scale of our operations, we
are able to negotiate price concessions for our raw materials, including glass
and vinyl. This is an important consideration because, historically, total cost
of new materials typically comprises approximately 50% of our net sales.
We have been manufacturing wood products in Texas since 1953 and today have
three primary manufacturing facilities in the state. As home centers such as The
Home Depot and Lowe's have expanded throughout the country, we have
strategically established eight manufacturing operations nationwide in order to
serve these customers more efficiently. We believe we are one of the only door
suppliers which can service the home centers on a national basis. As the home
centers continue to expand into new markets, we will consider opening new
facilities to serve these regions.
As part of the integration of Wing and Atrium, the Atrium Wood patio door
division is merging its manufacturing, distribution and sales functions with
Wing. We are currently fitting a facility to locate all of Atrium Wood's and a
portion of Wing's manufacturing operations. Due to the fact that both divisions
sell over 80% of their products to the home centers, we believe significant
benefits can be realized from the synergies between the sales and distribution
functions of Atrium Wood and Wing. Both service the same customers and
distribute to the same retail locations. This integration is expected to be
completed during the fourth quarter of 1999.
COMPETITION
The residential window and door industry is highly fragmented. With few
exceptions, competitors are privately-owned, regional companies with sales under
$100.0 million. On a national basis we compete with a few national companies in
different regions, products, distribution channels and price points, but do not
compete against any single company across all of these areas. We compete with
various other companies in specific regions within each market.
- WINDOWS--ALUMINUM AND VINYL. Our major competitors for the sale of
aluminum windows are Reliant Building Products, Inc. and Metal Industries,
Inc. The market for vinyl windows and doors is comprised primarily of
local and regional manufacturers as no dominant manufacturer operates on a
national basis. Historically, demand for vinyl windows and doors has been
concentrated in the colder regions of the United States. Our major
competitors for the sale of vinyl windows are SilverLine Building Products
and Nortek, Inc. in the Northeast, Simonton Windows in the Mid Atlantic
and Southeast and Milgard Manufacturing Inc. in the Pacific Northwest. In
addition, we compete with a number of regional manufacturers that sell
directly to repair and remodeling contractors.
- WINDOWS AND PATIO DOORS--WOOD. In the wood window and door market segment
of the industry, two large manufacturers, Andersen Corporation and Pella
Corporation, sell premium products on a national basis. Our wood windows
and doors are sold at a medium price point and primarily through home
centers throughout the United States and direct to builders. We have many
competitors at our price point in the wood window and door market segment,
including Kolbe & Kolbe Millwork Co. Inc. and Hurd Millwork Co. Inc.
- DOORS. We estimate that approximately 60% of all interior passage doors
sold through home centers are pre-hung. We expect this percentage to grow
due to the convenience and ease of installation of pre-hung doors. The
pre-hung door industry is very fragmented and consists primarily of
hundreds of small companies that engage primarily in the assembly of doors
and who have
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annual sales of $10.0 million to $30.0 million each. We believe that these
companies are finding it increasingly difficult to compete due to their
lack of manufacturing capability. Our key competitors are Premdor, Inc.
and Jeld Wen, both of which manufacture and pre-hang doors. Other
competitors include Steves and Sons and Haley Bros.
SEASONALITY
The new home construction market and the market for external repairs and
remodeling in northern climates are seasonal, with increased related product
sales in the second and third quarters. The market for interior repairs and
remodeling in northern climates tends to grow in the first and fourth quarters.
Although this results in seasonal fluctuations in the sales of certain of our
products, the complementary nature of our window and door business' selling
seasons helps mitigate this seasonality. See "Risk Factors--Seasonality."
CYCLICALITY
Demand in the window and door manufacturing and distribution industry is
influenced by new home construction activity. For the three months ended March
31, 1999, we estimate that approximately 42% of our pro forma net sales were
related to new home construction. Trends in the housing sector directly impact
our financial performance. Accordingly, the strength of the U.S. economy, the
age of existing home stock, job growth, interest rates, consumer confidence and
the availability of consumer credit, as well as demographic factors, such as the
migration of the population within the United States, have a direct impact on
our business. Cyclical declines in new housing starts may adversely impact our
business and we cannot assure you that any such adverse effects would not be
material. See "Risk Factors--Cyclicality."
EMPLOYEES
We employ approximately 4,350 people, of whom approximately 4,300 are
employed at our manufacturing facilities and distribution centers and
approximately 50 are employed at corporate headquarters. Approximately 1,580 of
our hourly employees are covered by collective bargaining agreements. We entered
into collective bargaining agreements in 1998 with the United Needle and
Industrial Trade Employee Union, SWRJB, ACTWU, AFL-CIO-CLC, covering certain
employees at the Atrium Aluminum, H-R Windows, Atrium Wood and Extruders
manufacturing facilities. All of these collective bargaining agreements expire
in May, 2001. In addition, we have collective bargaining agreements with The
Sheet Metal International Association Local Union No. 54, due to expire on
September 30, 2001, for our Kel-Star operations and Local Union 2743, Southern
Council of Industrial Workers, Chartered By United Brotherhood of Carpenters and
Joiners of America, AFL/CIO, due to expire on October 6, 2001, for our Woodville
Extruders operations. There are no union affiliations in connection with any of
our other divisions or subsidiaries. We believe that our relationship with our
employees is good.
PROPERTIES
Our operations are conducted at the owned or leased facilities described
below:
<TABLE>
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CAPACITY
LOCATION PRINCIPAL USE (SQUARE) FEET OWN/LEASE
- ---------------------------------- --------------------------------------------------- ------------- ----------
<S> <C> <C> <C>
Dallas, Texas*.................... Fabrication of aluminum windows 186,000 Lease
Fabrication of wood patio doors 266,000 Lease
Fabrication of vinyl windows 90,000 Lease
Irving, Texas..................... Fabrication of aluminum windows 147,218 Own
Extrusion die manufacturing 1,400 Own
Irving, Texas..................... Distribution of all window types 22,000 Own
Fabrication of aluminum patio doors 98,000 Own
Wylie, Texas...................... Extrusion of aluminum 100,000 Own
Carrollton, Texas................. Extrusion of vinyl 25,200 Lease
Phoenix, Arizona.................. Fabrication of aluminum windows 60,000 Own
</TABLE>
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<TABLE>
<CAPTION>
CAPACITY
LOCATION PRINCIPAL USE (SQUARE) FEET OWN/LEASE
- ---------------------------------- --------------------------------------------------- ------------- ----------
<S> <C> <C> <C>
Phoenix, Arizona.................. Distribution of aluminum windows 44,743 Lease
Las Vegas, Nevada................. Distribution of aluminum windows 30,400 Lease
Woodville, Texas.................. Fabrication of aluminum windows and storm doors 180,000 Lease
Extrusion of aluminum 120,000 Lease
San Antonio, Texas................ Distribution of aluminum windows 10,000 Lease
Anaheim, California............... Fabrication of vinyl windows 80,000 Lease
Union City, California............ Distribution of vinyl windows 10,000 Lease
Portland, Oregon.................. Distribution of vinyl windows 10,000 Lease
Salt Lake City, Utah.............. Distribution of vinyl windows 10,000 Lease
Clinton, Massachusetts............ Fabrication of vinyl windows 31,000 Own
Bridgeport, Connecticut........... Fabrication of vinyl windows 75,000 Lease
Farmingdale, New York............. Distribution of vinyl windows 6,000 Lease
Greenville, Texas................. Manufacture of solid wood and hollow core bi-fold
and passage doors; pre-hanging 180,000 Own
Greenville, Texas................. Door finishing operation; custom door manufacture 30,000 Lease
Greenville, Texas................. Fabrication of wood patio doors 300,000 Own
Hanover Park, Illinois............ Manufacture of hollow core bi-fold and passage
doors; pre-hanging; warehouse 73,000 Lease
Allentown, Pennsylvania........... Manufacture of hollow core bi-fold and passage
doors; door pre-hanging; warehouse 105,000 Lease
Mt. Pleasant, Texas............... Door manufacturing 110,000 Lease
Orlando, Florida.................. Door pre-hanging, warehouse 50,000 Lease
Denver, Colorado.................. Fabrication of vinyl windows 108,000 Lease
Cleveland, Ohio................... Door pre-hanging; warehouse 30,000 Lease
Charlotte, North Carolina......... Door pre-hanging; warehouse 40,000 Lease
Florence, Alabama*................ Door pre-hanging; warehouse 60,000 Lease
Murrysville, Pennsylvania......... Fabrication of vinyl windows 166,000 Own
Pittsburgh, Pennsylvania.......... Extrusion of vinyl 65,000 Lease
Yakima, Washington................ Fabrication of vinyl windows 58,000 Lease
</TABLE>
- ------------------------------
* Leased from affiliates of certain stockholders. See "Certain Relationships
and Related Transactions--Facility Leases."
Additionally, we lease 22 distribution warehouses in 14 states for vinyl
window distribution with sites averaging 8,000 square feet.
We maintain our corporate headquarters in Dallas, Texas. The facilities
provide approximately 11,000 square feet and are leased for a seven-year term
expiring in 2004.
We believe that our manufacturing plants are generally in good operating
condition and are adequate to meet future anticipated requirements.
BACKLOG AND MATERIAL CUSTOMERS
We have no material long-term contracts. Orders are generally filled within
5 to 7 days of receipt. Our backlog is subject to fluctuation due to various
factors, including the size and timing of orders for our products and is not
necessarily indicative of the level of future sales.
Our sales are concentrated with one of the leading home center retailers,
The Home Depot. For the year ended December 31, 1998, The Home Depot accounted
for approximately 23% of our pro forma net sales. No other customer accounted
for more than 10% of our net sales.
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS
Our past and present operations and our assets are subject to extensive
federal, state, local and foreign environmental laws and regulations pertaining
to the discharge of materials into the environment, the handling and disposal of
wastes including solid and hazardous wastes, or otherwise relating to health,
safety and protection of the environment. We do not expect to make any
expenditures with respect to
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ongoing compliance with these environmental laws and regulations that would have
a material adverse effect on our capital expenditures, results of operations, or
competitive position. However, the applicable requirements under the law may
change at any time.
The nature of our operations and assets expose us to the risk of claims
under environmental, health and safety laws and regulations. We cannot assure
you that material costs or liabilities will not be incurred in connection with
such claims. We have been subject to such claims in the course of our
operations, and have made expenditures to address these known conditions in a
manner consistent with applicable laws and regulations. Based on our experience
to date, we do not believe that these existing claims will have any further
material adverse effect on our capital expenditures, earnings or competitive
position. We cannot assure you that the discovery of presently unknown
environmental conditions, changes in environmental claims that may involve
material, health, and safety laws and regulations or other unanticipated events
will not give rise to expenditures or liabilities.
Prior to 1993 we received correspondence in which we were named as
potentially responsible parties at two Superfund sites, pursuant to
Comprehensive Environmental Response, Compensation and Liability Act or
comparable state statutes. In one instance, we have entered into a settlement
and in the other instance, the group of potentially responsible parties has
negotiated a proposed redemption plan which has been approved by the relevant
state agency and is being reviewed by the United States Environmental Protection
Agency. Based on the actions taken to date, and our current insurance coverage,
we believe that any liability associated with the Superfund sites does not
currently have or will not have a material adverse effect on our financial
condition or the results of operations. However, because Comprehensive
Environmental Response, Compensation and Liability Act provides for strict and
sometimes joint and several liability, we cannot assure you that the liabilities
in question will not result in material expenditures in the future.
LEGAL PROCEEDINGS
We are involved from time to time in litigation arising in the ordinary
course of our business, none of which is expected, individually or in the
aggregate, to have a material adverse effect on us.
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table provides information concerning our directors, executive
officers and certain key employees.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- -----------------------------------------------------------------------
<S> <C> <C>
Jeff L. Hull....................... 33 Executive Vice President, Chief Financial Officer, Treasurer, Secretary
and Director
R.L. Gilmer........................ 45 Executive Vice President, Chief Operating Officer and Director
Louis W. Simi, Jr.................. 58 Executive Vice President of Operations
Michael Quadhamer.................. 35 President of Wing
Cliff Darby........................ 34 President of Darby
Eric W. Long....................... 31 Vice President, Corporate Controller and Assistant Secretary
Sam A. Wing, Jr.................... 75 Chairman Emeritus and Director
Daniel T. Morley................... 46 Chairman of the Board of Directors
James G. Turner.................... 30 Vice President and Director
Roger A. Knight.................... 39 Director
Andreas Hildebrand................. 31 Director
John Deterding..................... 67 Director
Nimrod Natan....................... 36 Director
</TABLE>
JEFF L. HULL has served as Executive Vice President of Atrium since April
1999 and as a Director of Atrium since October 1998. Mr. Hull has served as
Atrium's Chief Financial Officer since April 1996 and Secretary and Treasurer
since December 1996. Prior to that, Mr. Hull was Director of Asset/Liability
Management of AmVestors Financial Corporation (NYSE:AMV). From 1990 to 1995, he
was an audit manager with the accounting firm of Deloitte & Touche. Mr. Hull is
a certified public accountant.
R.L. GILMER has served as Executive Vice President of Atrium since April
1999 and as the Chief Operating Officer and Director of Atrium since October
1998. Prior to that, Mr. Gilmer served as President and Chief Executive Officer
of Wing from October 1996. From June 1993 to October 1996 he was Vice President
of Wing. Mr. Gilmer has served Wing in various capacities since 1986 including
as Controller and Manufacturing Manager. Prior to joining Wing, Mr. Gilmer was a
certified public accountant with the accounting firm of Arthur Andersen & Co.
LOUIS W. SIMI, JR. has served as Executive Vice President of Atrium since
1993 and prior thereto he served as the General Manager of the Atrium Aluminum
division. Mr. Simi also served as Director of Atrium from July 1995 to November
1996. He has served Atrium in other capacities since 1966.
MICHAEL QUADHAMER has served as President of Wing since October 1998. Prior
to that, he served as Vice President and Chief Financial Officer of Wing from
October 1996 until October 1998. Mr. Quadhamer has served Wing in various
capacities since 1991, including as Controller and as Director of Global
Operations. Prior to joining Wing, he worked for the accounting firm of Arthur
Andersen & Co. Mr. Quadhamer is a certified public accountant.
CLIFF DARBY has served as President of Darby since 1997. Mr. Darby has
worked for Darby since 1988. Mr. Darby has held numerous roles with Darby,
including managerial, sales and administrative positions.
ERIC W. LONG has served as Vice President of Atrium since April 1999 and as
Corporate Controller and Assistant Secretary of Atrium since April 1996. From
April 1995 to April 1996, Mr. Long was a financial
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analyst with Applebee's International, Inc. From 1991 to 1995, he was with the
accounting firm of Deloitte & Touche L.L.P. Mr. Long is a certified public
accountant.
SAM A. WING, JR. has served as Chairman Emeritus and Director of Atrium
since October 1998. Mr. Wing has served Wing in various capacities since 1946,
including as Chairman Emeritus from 1996 until October 1998, as Chairman and
Chief Executive Officer of Wing from 1995 until 1996 and as Chairman of Wing
from 1994 until 1995. Prior to that, Mr. Wing was Chairman and Chief Executive
Officer of Wing from 1969 to 1994.
DANIEL T. MORLEY has served as Chairman of the Board of Directors of Atrium
since October 1998. Mr. Morley has been a Managing Partner of Ardshiel since
1994. Mr. Morley has served as President of Ardshiel since 1997 and Chairman of
Wing since 1996 and Door since January 1998. Mr. Morley also serves as Chairman
of Astro Textiles, Inc. and a Director of Protein Genetics, Inc. and Avanti
Petroleum, Inc., and holds positions with several other privately held
companies.
JAMES G. TURNER has served as Vice President and Director of Atrium since
October 1998. Mr. Turner has been a principal of Ardshiel since June 1997. Mr.
Turner has also served as a Director of Wing since October 1997 and Door since
December 1997. From March 1994 until June 1997, Mr. Turner worked as an
associate for Ardshiel. Prior to joining Ardshiel, Mr. Turner worked as an
associate for Chemical Banking Corp. from 1991 to March 1994. Mr. Turner is also
a Director of Avanti Petroleum, Inc. and Protein Genetics, Inc., and serves as a
director of several other privately held companies.
ROGER A. KNIGHT has served as a Director of Atrium since October 1998. Mr.
Knight has been a principal of Ardshiel since May 1998. Prior to joining
Ardshiel, he was Managing Director and a member of the Management Committee of
Coopers & Lybrand Securities, Inc., the wholly-owned investment banking
subsidiary of Coopers & Lybrand L.L.P. (now known as PricewaterhouseCoopers
LLP).
ANDREAS HILDEBRAND has served as a Director of Atrium since October 1998.
Mr. Hildebrand is Vice President of GE Investments. Mr. Hildebrand also served
as a Director of Wing since October 1997 and of Door since January 1998. He has
served in other capacities with GE Investments during the past five years. Mr.
Hildebrand is also a Director of Eagle Family Foods Holdings, Inc. and several
other privately held companies.
JOHN C. DETERDING has served as Director of Atrium since November 1998. Mr.
Deterding has been the owner of Deterding Associates, a real estate consulting
company, since June 1993. From 1975 until June 1993, he served as Senior Vice
President and General Manager of the Commercial Real Estate division of General
Electric Capital Corporation. From November 1989 to June 1993, Mr. Deterding
served as Chairman of the General Electric Real Estate Investment Company, a
privately held REIT. He served as Director of GECC Financial Corporation from
1986 to 1993. Mr. Deterding is also a Director of Patriot American Hospitality,
BlackRock Asset Investors and AMRESCO Capital Trust and a former member and
trustee of the Urban Land Institute.
NIMROD NATAN has served as a Director of Atrium since October 1998. Mr.
Natan has been a principal of Ardshiel since 1997. Mr. Natan also serves as a
director of Wing, Astro Holdings, Inc. and Protein Genetics, Inc., privately
held companies. Prior to joining Ardshiel in 1997, Mr. Natan was a management
consultant with Gemini Consulting for four years.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION OF NAMED EXECUTIVE OFFICERS. The following table provides
certain summary information for each of the years ended December 31, 1996, 1997
and 1998 concerning compensation paid or accrued by us to or on behalf of our
Chief Executive Officer and the four other most highly compensated
72
<PAGE>
persons, or the named executive officers, functioning effectively as our
executive officers whose individual combined salary and bonus exceeded $100,000
during such period:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION SECURITIES
--------------------------------- OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION(1) YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION($)
- ------------------------------------ --------- ----------- --------- ------------------ ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
*Randall S. Fojtasek................ 1998 $ 350,000 $3,140,000 $ -- 5,735,369(2) $2,542,570(5)
President and Chief Executive 1997 350,000 125,000 -- -- 308,928(6)
Officer 1996 303,865 3,075,000 -- 2,195,222(3) 221,500(5)(7)
Jeff L. Hull........................ 1998 155,000 175,000 -- 1,308,842(2) --
Executive Vice President, Chief 1997 120,000 20,000 -- 5,000(3) 15,146(6)
Financial Officer, Secretary and 1996 100,000 -- -- 100,000(3) --
Treasurer
R.L. Gilmer......................... 1998 215,000 56,250 -- 1,723,524(2) --
Executive Vice President, Chief 1997 138,679 70,000 -- -- --
Operating Officer 1996 106,113 286,889 -- 2,957(4) --
Louis W. Simi, Jr................... 1998 170,000 185,000 -- 500,000(2) 662,923(5)
Executive Vice President of 1997 125,000 250,690 -- -- 106,025(6)
Operations 1996 125,000 270,681 -- 511,237(3) 282,886(5)(7)
Cliff Darby......................... 1998 150,000 76,450 -- 1,298,415(2) --
President, R.G. Darby Company, 1997 150,000 66,000 -- -- --
Inc. and Total Trim, Inc. 1996 150,000 66,000 -- -- --
</TABLE>
- ------------------------------
* Resigned effective March 31, 1999.
(1) Perquisites related to automobile and expense allowances are excluded since
the aggregated amounts are the lesser of $50,000 or 10% of the total annual
salary.
(2) Securities underlying options to purchase the common stock of D and W.
Holdings, Messrs. Hull's and Simi's amounts include 125,000 and 250,000
options, respectively, issued under the D and W Holdings Replacement Stock
Option Plan, and Mr. Gilmer's amount includes 539,682 options in replacement
of his options to purchase common stock of Wing.
(3) Securities underlying options to purchase common stock of Atrium
Corporation.
(4) Securities underlying options to purchase common stock of Wing.
(5) In connection with a change of control transaction, certain members of
management were granted options at below fair market prices. Accordingly,
compensation expense is being recognized for financial statement purposes.
(6) Amounts represent fees received in connection with the termination of the
purchase and sale agreement to acquire PlyGem Industries, Inc.
(7) Upon completion of the 1998 recapitalization and the exercise of these
options, the compensatory portion of the options were reflected in the
individual's wages and in our financial statements.
MANAGEMENT CHANGE. On April 9, 1999, we entered into a separation agreement
with Randall S. Fojtasek, President and Chief Executive Officer. Pursuant to the
separation agreement, Mr. Fojtasek resigned effective March 31, 1999. The Board
of Directors has appointed Jeff L. Hull, Executive Vice President and Chief
Financial Officer, and Ken L. Gilmer, Executive Vice President and Chief
Operating Officer, to oversee day-to-day operations and report directly to the
Executive Committee of the Board of Directors while we search for a new chief
executive officer. We have retained a nationally recognized executive search
firm to assist us in this process. We took a charge of approximately $1.8
million in the first quarter of fiscal year 1999 for severance benefits related
to this management change.
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<PAGE>
OPTION GRANTS DURING 1998. The following table sets forth option grants to
the named executive officers during the year ended December 31, 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(2) POTENTIAL REALIZABLE VALUE
NUMBER OF ---------------------------------- AT ASSUMED ANNUAL RATES OF
SECURITIES % OF TOTAL OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN FISCAL BASE PRICE EXPIRATION --------------------------
NAME GRANTED(#)(1) YEAR ($/SH) DATE 5%($) 10%($)
- ---------------------------- ------------- ------------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Randall S. Fojtasek......... 1,894,148 10 $ 1.00 10/02/08 $ 1,191,419 $ 3,019,272
2,841,221 15 .01 10/02/08 4,599,937 7,341,715
1,000,000 5 .01 10/02/18 2,643,298 6,717,500
Jeff L. Hull................ 1,183,842 6 1.00 10/02/08 744,637 1,887,044
125,000 * .01 10/02/08 202,362 322,968
R.L. Gilmer................. 1,183,842 6 1.00 10/02/08 744,637 1,887,044
231,136 * .01 10/02/08 374,209 597,255
154,273 * .72 10/02/08 140,234 289,108
154,273 * .82 10/02/08 124,807 273,680
Louis W. Simi, Jr........... 250,000 1 1.00 10/02/08 157,250 398,500
250,000 1 .01 10/02/08 404,750 646,000
Cliff Darby................. 466,101 2 1.00 10/02/08 293,178 742,965
832,314 4 .83 1/09/08 434,416 1,101,019
</TABLE>
- ------------------------
* Less than 1%
(1) All options are for the common stock of D and W Holdings.
(2) Options vest ratably over the life of the respective employment contract,
except for Mr. Fojtasek, whose options are fully vested, and Messrs. Simi
and Darby, whose options vest ratably over five years.
(3) The assumed rates are compounded annually for the full terms of the options.
AGGREGATED OPTION EXERCISES AND FISCAL-YEAR-END OPTION VALUES. The
following table sets forth option exercises by the named executive officers and
value of in-the-money unexercised options held at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT FY-END (#) (3) MONEY OPTIONS AT FY-END
SHARES ACQUIRED ON VALUE -------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE(4) UNEXERCISABLE
- --------------------------------- ------------------ ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Randall S. Fojtasek.............. -- $4,096,156(2) 3,841,221 1,894,148 $ 3,802,808 $ --
Jeff L. Hull..................... -- 12,305(2) 125,000 1,183,842 123,750 --
R.L. Gilmer...................... 883(1) 108,167 231,136 1,183,842 228,825 --
Louis W. Simi, Jr................ -- 779,770(2) 250,000 250,000 247,500 --
Cliff Darby...................... -- -- 231,136 466,101 228,824 --
</TABLE>
- ------------------------------
(1) Represents options exercised to purchase common stock of Wing Industries
Holdings, Inc.
(2) Represents net cash proceeds received in connection with the 1998
recapitalization in respect of options to purchase common stock of Atrium
Corporation.
(3) Represents options held by the named individual to purchase common stock of
D and W Holdings.
(4) Based on the fair market value of the option shares at fiscal year end of
$1.00 per share less the exercise price per share payable for such shares.
74
<PAGE>
1998 STOCK OPTION PLAN
The D and W Holdings, Inc. 1998 Stock Option Plan, or the 1998 plan, which
provides for the grant of options to purchase common stock of D and W Holdings
to key employees and eligible non-employees of D and W Holdings and its
subsidiaries, was adopted by D and W Holdings in connection with the 1998
recapitalization. The 1998 plan provides for the grant of options to purchase up
to 11,991,142 shares of D and W Holdings common stock. In connection with the
1998 recapitalization, D and W Holdings granted options to purchase 3,582,353
shares of its common stock to management of Darby and Wing in exchange for
outstanding options to purchase Darby and Wing stock. Options to purchase an
additional 8,153,588 shares of D and W Holdings common stock were granted to
management of D and W Holdings and its subsidiaries contemporaneously with the
1998 recapitalization. The 1998 plan was amended, among other things, in
connection with the consummation of the Heat and Champagne acquisitions to
increase the number of shares of D and W Holdings common stock issuable upon the
exercise of options under the 1998 plan by up to an additional 3,000,000 shares.
Options to purchase 1,790,000 shares of D and W Holdings common stock have been
issued in connection with this amendment.
All options granted thus far are non-qualified options, which do not qualify
under Section 422. Options granted under the 1998 plan generally have a term of
ten years from the date of grant and vest in equal installments annually over
three to five years dependent on continued employment. No option is exercisable
until it has vested. Options granted upon consummation of the 1998
recapitalization in exchange for outstanding options of Darby and Wing continue
to vest on the schedule applicable to the exchanged options. Of the options
granted in connection with the 1998 recapitalization, options to purchase
993,115 shares of D and W Holdings common stock will vest only in connection
with a value event, which is defined in the 1998 plan.
Options are not transferable other than in accordance with the laws of
descent and distribution. Upon termination for cause or voluntary termination by
the optionee without good reason all vested options will automatically expire.
Upon termination of employment for any other reason, the optionee will have the
right to exercise the vested portion of any option. Also, upon termination of an
optionee's employment for any reason, D and W Holdings will have the right to
purchase outstanding options and any shares of D and W Holdings common stock
held by the optionee as a result of the exercise of an option.
REPLACEMENT STOCK OPTION PLAN
In addition to the 1998 plan, D and W Holdings adopted the D and W Holdings,
Inc. Replacement Stock Option Plan, or replacement plan, relating to certain
options to purchase D and W Holdings common stock which were granted in
replacement of outstanding options of Atrium Corporation in connection with the
1998 recapitalization. Under the replacement plan, options to purchase an
aggregate of 1,575,000 shares of D and W Holdings common stock were granted in
exchange for outstanding options of Atrium Corporation which were not cashed out
in the 1998 recapitalization. These options vest ratably over a period of five
years on each anniversary date of the grant and have an exercise price of $0.01
per share. The replacement plan was amended in connection with the consummation
of the Heat and Champagne acquisitions to increase the number of shares of D and
W Holdings common stock issuable upon the exercise of options under the
replacement plan by up to an additional 1,000,000 shares. Options to purchase
675,531 shares of D and W Holdings common stock were issued under the
replacement plan in exchange for outstanding options of Heat which were not
cashed out.
Upon termination of an optionee's employment, D and W Holdings shall have
the right to repurchase from the optionee all or any portion of their
replacement options. Upon exercise of any vested portion of a replacement
option, D and W Holdings may require the optionee to execute a buy-sell
agreement containing provisions similar to the repurchase provisions described
above, as a condition to such option exercise.
The replacement plan provides that all options granted are in the form of
nonqualified options, which are options that do not qualify for favored tax
treatment under Section 422 of the Internal Revenue Code.
75
<PAGE>
The replacement options have a term of 20 years from the date of grant subject
to early termination in connection with termination of employment. No option is
exercisable until it is vested. Replacement options are not transferable other
than in accordance with the laws of descent and distribution by an optionee,
except that options may be transferred to an optionee's family members or
personal representative.
BONUS PLAN
We maintain a bonus plan providing for annual bonus awards to certain key
employees. Such bonus amounts are based on Atrium and its divisions meeting
certain performance goals established by our board of directors.
OTHER BENEFIT PROGRAMS
Our executive officers also participate in other employee benefit programs
including health insurance, group life insurance, and a savings and supplemental
retirement plan or the 401(k) Plan on the same basis as our other employees.
EMPLOYMENT AGREEMENTS
MR. HULL
Mr. Hull entered into an employment agreement with D and W Holdings pursuant
to which he serves as Chief Financial Officer of D and W Holdings. Mr. Hull's
employment agreement has a four year term, which commenced in October 1998.
Under the terms of Mr. Hull's employment agreement, he is entitled to receive an
annual base salary, as adjusted, of $225,000, subject to increase at the
discretion of the board of directors. The agreement provides that Mr. Hull may
receive an annual bonus of up to approximately $125,000, as adjusted, based on
achieving certain performance targets.
Under the agreement, Mr. Hull received options to purchase 1,183,842 shares
of D and W Holdings common stock pursuant to the new plan. The options will vest
in equal installments over four years from the date of grant. The agreement also
provides that D and W Holdings will make certain payments to Mr. Hull in the
event
- Mr. Hull is terminated by D and W Holdings without cause,
- of a change of control of D and W Holdings, or
- Mr. Hull terminates his employment for good reason.
Under the agreement, Mr. Hull agrees not to compete with D and W Holdings
and its subsidiaries for certain specified periods.
MR. GILMER
Mr. Gilmer entered into an employment agreement with D and W Holdings
pursuant to which he serves as Chief Operating Officer of D and W Holdings. Mr.
Gilmer's employment agreement has a four year term, which commenced in October
1998. Under the terms of Mr. Gilmer's employment agreement, he is entitled to
receive an annual base salary of $225,000, as adjusted, subject to increase at
the discretion of the board of directors. The agreement provides that Mr. Gilmer
may receive an annual bonus of up to approximately $125,000, based on achieving
certain performance targets.
Under the agreement, Mr. Gilmer received options to purchase 1,183,842
shares of D and W Holdings common stock upon the same terms as the options
received by Mr. Hull. The agreement also provides that, D and W Holdings will
make certain payments to Mr. Gilmer in the event
- Mr. Gilmer is terminated by D and W Holdings without cause,
- of a change of control of D and W Holdings, or
76
<PAGE>
- Mr. Gilmer terminates his employment for good reason.
Mr. Gilmer agrees not to compete with D and W Holdings and its subsidiaries
for certain specified periods.
MR. SIMI
We entered into an employment agreement with Mr. Simi on January 1, 1998.
The compensation provided to Mr. Simi includes an annual base salary of
$170,000, subject to increases at the discretion of the board of directors.
Additionally, Mr. Simi is eligible for an incentive bonus based on certain
performance targets.
Mr. Simi's employment agreement terminates on December 31, 2000. If Mr.
Simi's employment is terminated by us for any reason other than for cause, we
will continue to pay his salary for 12 months, together with the annual
incentive bonus. Mr. Simi has agreed not to compete with us in certain
geographic areas for so long as we pay salary to him.
MR. DARBY
On January 9, 1998, Mr. Cliff Darby entered into an employment agreement
with Darby for a term which commenced in January, 1998. Under the terms of Mr.
Darby's employment agreement, he is entitled to receive an annual base salary of
$156,000, as adjusted, subject to increase at the discretion of the Board of
Directors of Darby. Mr. Darby is entitled to annual performance bonus payable
upon the achievement of Darby's EBITDA plan. The agreement also provides that
Darby will make certain payments to Mr. Darby in the event Mr. Darby is
terminated without cause.
Under the agreement, Mr. Darby has agreed not to compete with the business
of Darby for a period of five years from the date of the agreement. The
non-competition covenant shall apply for one year following termination without
cause by Darby regardless of the date of termination.
Upon consummation of the 1998 recapitalization, Mr. Darby received options
to purchase 466,101 shares of D and W Holdings common stock. Such options vest
over a five year period from the date of grant.
BOARD OF DIRECTORS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Daniel T. Morley and Andreas Hildebrand serve as our compensation committee.
AUDIT COMMITTEE
James G. Turner and Roger A. Knight serve as our audit committee.
EXECUTIVE COMMITTEE
James G. Turner, Roger A. Knight, Andreas Hildebrand, R.L. Gilmer and Jeff
L. Hull serve as our executive committee.
NON-EMPLOYEE DIRECTOR COMPENSATION
Any member of our board of directors who is not an officer or employee does
not receive compensation for serving on our board of directors. We anticipate
compensating non-employee directors not affiliated with GEIPPPII or Ardshiel in
the future for their service on our board.
77
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE STOCKHOLDERS AGREEMENT
GEIPPPII, Ardshiel, and certain major stockholders of D and W Holdings, have
entered into a stockholders agreement, dated as of October 2, 1998, which
affects their relative rights as stockholders of D and W Holdings.
Under the stockholders agreement, GEIPPPII has the right to designate one
director in the event there are less then seven directors, and two directors in
the event the board of directors consists of seven or more members. Ardshiel and
its affiliates, shall be entitled to designate up to six directors.
Subject to certain exceptions, each of the major stockholders, except for
GEIPPPII has agreed not to sell, transfer or otherwise dispose of such
stockholder's equity securities of D and W Holdings and an affiliate of Ardshiel
has agreed not to sell, transfer or otherwise dispose of its discount
debentures. In the event that GEIPPPII intends to transfer its equity securities
or discount debentures, each of the other major stockholders or holders of
discount debentures will be entitled to purchase a pro rata portion of the
equity securities or discount debentures held by such major stockholder or
holder of discount debentures. However, in the event such sale, transfer or
disposition by GEIPPPII occurs within four years of the date of stockholders
agreement, the other major stockholders or holders of discount debentures, will
be obligated to sell all of their equity securities and/or all of their discount
debentures to the proposed transferee.
Subject to certain conditions, Ardshiel and its affiliates may require that
GEIPPPII (1) sell or otherwise dispose of its equity securities and discount
debentures to any person who is not an affiliate of Ardshiel or (2) purchase all
of the other major stockholders' equity securities and discount debentures. In
addition, subject to certain exceptions, GEIPPPII and/or D and W Holdings have
the right to purchase from any selling major stockholder any or all equity
securities proposed to be sold to a third party by such selling major
stockholder.
Pursuant to the terms of the stockholders agreement, D and W Holdings has
granted the major stockholders certain registration rights relating to any or
all shares of D and W Holdings common stock held by such major stockholder.
The stockholders agreement provides that the prior written consent of
GEIPPPII is required for D and W Holdings to take certain enumerated actions.
MANAGEMENT AGREEMENT
We are a party to a management agreement dated October 2, 1998, which was
amended on May 17, 1999 with D and W Holdings, Atrium Corporation and Ardshiel.
Under the management agreement, Ardshiel provides advisory services to D and W
Holdings and its subsidiaries with respect to business strategy, operations and
budgeting and financial controls in exchange for an annual fee of $1.9 million
plus expenses. Additionally, the management agreement provides that D and W
Holdings or its subsidiary must offer Ardshiel the opportunity to perform
investment banking services in connection with a sale or purchase of a business
or any financing prior to engaging another financial advisor. Ardshiel has the
right to receive a closing fee for its services in an amount not be greater than
2% of the total purchase or sale price for such business. The consent of
GEIPPPII is required prior to the payment by D and W Holdings or any of its
subsidiaries of any closing fees to Ardshiel where D and W Holdings or any of
its subsidiaries is paying similar fees to other entities for similar services.
D and W Holdings paid a closing fee of approximately $3.4 million, plus fees
and expenses, after the consummation of the 1998 Recapitalization in connection
therewith. In addition, Ardshiel received an aggregate of approximately $1.3
million in fees in connection with the Heat and Champagne acquisitions.
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<PAGE>
The management agreement will remain in effect until October 2, 2008. The
agreement will be automatically renewed for one-year periods unless either party
gives written termination notice prior to the expiration of the initial or any
extended term.
BUY-SELL AGREEMENTS
D and W Holdings entered into buy-sell agreements with certain members of
its management under which D and W Holdings may repurchase from those persons
all or any portion of their shares of D and W Holdings common stock for a
purchase price specified in these agreements after the termination of their
employment. Each agreement also provides for certain restrictions on transfer.
In addition, the buy-sell agreements entered into with Messrs. Gilmer and
Darby provide that they will have the right to require D and W Holdings to
repurchase their shares if they are terminated for any reason other than for
cause and D and W Holdings does not exercise its right to purchase the shares.
THE DISCOUNT DEBENTURES
In 1998, Atrium Corporation issued $80.6 million aggregate principal amount
at maturity of its discount debentures to GEIPPPII and an affiliate of Ardshiel
to fund a portion of the 1998 recapitalization. The issuance represented $45.0
million in gross proceeds to Atrium Corporation, See "Description of Certain
Indebtedness--Discount Debentures." We used a portion of the net proceeds of the
offering of the outstanding notes to fund a distribution of $20.6 million to
Atrium Corporation to repurchase a portion of the discount debentures, including
accreted discount, from GEIPPPII and an affiliate of Ardshiel.
D and W Holdings has agreed to cause
- us to make dividend payments to Atrium Corporation to enable it to make
interest and principal payments on, or to repurchase, redeem or prepay the
discount debentures, as long as we have funds legally available for the
payment of such dividends and we are not prohibited from making such
dividend payments by the terms of any contract to which we are a party,
- Atrium Corporation, as long as Atrium Corporation is not prohibited from
doing so by the terms of any contract to which it or D and W Holdings is a
party, to pay interest and principal on, or to repurchase, redeem or
repay, the discount debentures from the proceeds of any such dividend
payment.
GEIPPPII and an affiliate of Ardshiel that owns discount debentures may in
the future transfer discount debentures to third parties not affiliated with
Atrium Corporation.
INTERCOMPANY LOAN
In connection with the 1998 recapitalization, Atrium Corporation issued to
us a $24.0 million subordinated intercompany note and we, in turn, used a
portion of the proceeds from our term loan under our credit facility to fund the
intercompany loan to Atrium Corporation. The intercompany loan to Atrium
Corporation bore interest at a rate of 5.66% per annum computed semiannually.
The intercompany loan was repaid in November 1998 with proceeds from the
issuance of discount debentures.
INDEMNIFICATION AGREEMENTS
We entered into indemnification agreements with Jeff L. Hull and Louis W.
Simi, Jr. under which we agreed to indemnify them, if either of them becomes a
party to or other participant in any threatened, pending or completed action,
suit or proceeding relating to the fact that the person is or was our director,
officer, employee, agent or fiduciary. We expect to enter into similar
indemnification agreements with each of the remaining directors and executive
officers.
79
<PAGE>
FACILITY LEASES
On July 3, 1995, Fojtasek Industrial Properties, Ltd., a limited partnership
in which Randall S. Fojtasek owns an equity interest of approximately 10.2%,
executed leases with us with respect to our Atrium Wood's and Atrium Vinyl's
facility and our H-R Windows division's facility. Both leases are absolute net
leases. These leases were extended on October 1, 1997 for a period of ten years,
expiring on July 1, 2008. The amounts paid under these two leases totaled
$1,245,281, $753,000 and $605,338 in 1998, 1997 and 1996, respectively.
Additionally, Fojtasek Interests, a Texas corporation, in which Mr. Fojtasek
owns an interest, subleases approximately 1,500 square feet of office space at
our corporate headquarters. Amounts paid to us under this lease in 1998 were
$19,588.
Darby is a party to a facilities lease agreement with R.G. Darby, a former
stockholder of Darby and the father of Cliff Darby, President of Darby. Pursuant
to the terms of the lease, Darby pays rent to Mr. Darby of approximately $15,400
per month, adjusted annually for inflation. The term of the lease is fifteen
years with three extension terms of five years each. Rent expense paid to Mr.
Darby in 1998 was approximately $165,000.
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<PAGE>
BENEFICIAL OWNERSHIP
We are a wholly-owned subsidiary of Atrium Corporation, which in turn is a
wholly-owned subsidiary of D and W Holdings. The following table sets forth
certain information regarding the beneficial ownership of D and W Holdings
common stock as of June 30, 1999, by each person who beneficially owns more than
5% of the outstanding common stock of D and W Holdings and by the directors and
certain executive officers of D and W Holdings. Unless otherwise indicated
below, to our knowledge, all persons listed below have sole voting and
investment power with respect to their shares of common stock of D and W
Holdings.
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES PERCENTAGE
- ---------------------------------------------------------------------------------- -------------- -----------
<S> <C> <C>
GE Investment Private Placement Partners II, a Limited Partnership................ 92,970,561 94.8%
3003 Summer Street
Stamford, CT 06984-7900
Ardshiel, Inc..................................................................... 6,643,600(1) 6.7%
230 Park Avenue, Suite 2527
New York, NY 10169
Jeff L. Hull...................................................................... -- --
R.L. Gilmer....................................................................... 490,159(2) *
Louis W. Simi, Jr................................................................. -- --
Sam A. Wing, Jr................................................................... -- --
Daniel T. Morley.................................................................. 6,643,600(3) 6.7%
James G. Turner................................................................... -- --
Roger A. Knight................................................................... -- --
Andreas Hildebrand................................................................ -- --
John Deterding.................................................................... -- --
Nimrod Natan...................................................................... -- --
All directors and executive officers as a group (11 persons)(4)................... 7,133,759 7.1%
</TABLE>
- --------------------------
* Less than 1%.
(1) Includes (1) 1,040,748 shares of D and W Holdings common stock issuable upon
exercise of warrants that are currently exercisable; (2) 1,819,033 shares of
D and W Holdings common stock held by Ardatrium L.L.C., Arddoor L.L.C.,
Ardwing L.L.C. and Wing Partners, L.P. which are under common control with
Ardshiel, and (3) 3,783,819 shares of Holdings common stock held by certain
other stockholders of D and W Holdings who have granted proxies to Ardshiel
or its affiliates to vote their shares.
(2) Includes 154,193 shares of D and W Holdings common stock issuable upon
exercise of options granted to Mr. Gilmer under the new plan. Such options
are currently exercisable.
(3) Represents shares beneficially owned by Ardshiel and its affiliates. Mr.
Morley is the President and a stockholder of Ardshiel and a managing member
of Arddoor L.L.C., Ardatrium L.L.C. and Ardwing L.L.C., the general partner
of Wing Partners, L.P. Accordingly, Mr. Morley may be deemed to be the
beneficial owner of these shares. Mr. Morley disclaims beneficial ownership
of these shares.
(4) The business address for these individuals is 1341 West Mockingbird Lane,
Suite 1200W, Dallas, Texas 75247.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
CREDIT FACILITY, AS AMENDED
The following is a description of the general terms of the credit facility
that are included in the credit agreement, dated as of October 2, 1998 as
amended as of May 5, 1999 and as further amended as of June 11, 1999, among
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as lead
arranger, syndication agent and documentation agent, BankBoston, N.A., as
administrative agent, Atrium Corporation, Atrium, the lenders, D and W Holdings
and the subsidiaries of Atrium, as guarantors. The following description does
not purport to be complete and is subject to the credit agreement and the other
documents entered into in connection with the credit agreement.
The credit agreement provides for three separate facilities consisting of
two term loans referred to as term loan B and term loan C, and a revolving
credit facility with a letter of credit sub-facility. The revolving facility
together with the term loans are referred to in this prospectus as the credit
facility loans. Term loan B and term loan C are in the amount of $75.0 million
and $100.0 million, respectively, and have maturity dates of June 30, 2005 and
June 30, 2006, respectively. We used the term loans to finance the 1998
recapitalization. We repaid $29.1 million of the term loan C after the closing
of our credit facility and approximately $15.2 million of term loan B with a
portion of the net proceeds of the offering of the outstanding notes. Principal
payments of the term loans amortize on a quarterly basis, beginning in December
1998. The revolving facility is in the amount of $40.0 million, of which $7.5
million is available under a letter of credit sub-facility. The revolving
facility has a maturity date of June 30, 2004 and is available for working
capital purposes and permitted acquisitions.
The loans bear interest at either (a) a "base rate" equal to the higher of
(i) the federal funds rate plus 0.500% per annum or (ii) the administrative
agent's prime rate, plus (A) in the case of the term loan B, 2.00%, (B) in the
case of the term loan C, 2.250% and (C) in the case of the revolving facility
1.625%, or (b) LIBOR plus (A) in the case of the term loan B, 3.00%, (B) in the
case of the term loan C, 3.250% and (C) in the case of the revolving facility,
2.625%. Beginning June 30, 1999, the revolving facility bears interest at a
variable leverage-based rate ranging from the "base rate" plus 0.375% to 1.625%
or LIBOR plus 1.375% to 2.625%.
We pay a per annum commitment fee of 0.500% of the available unused
commitment under the revolving facility. Beginning June 30, 1999, the commitment
fee is calculated at a variable leveraged-based rate ranging from 0.250% to
0.500%. Such fees are payable quarterly in arrears and upon termination of the
revolving facility.
All amounts outstanding under the credit facility are secured by (1) a
pledge of all of our and our subsidiaries' capital stock and intercompany notes
and (2) a security interest in substantially all of our, Atrium Corporation's
and our subsidiaries' properties and assets. Atrium Corporation and each of our
subsidiaries have unconditionally guaranteed all of our obligations under the
credit agreement.
We are required to make a mandatory prepayment of the credit facility loans
in an amount equal to 75% of annual excess cash flow, which percentage may,
under certain circumstances, be reduced to 50%. In addition, subject to certain
exceptions, we are required to make a mandatory prepayment of the credit
facility loans in an amount equal to (1) 100% of the net proceeds of asset sales
and other asset dispositions, (2) 100% of the net proceeds of the issuance or
incurrence of debt or of any sale and leaseback for proceeds in excess of a
certain threshold, and (3) 50% of the net proceeds from any issuance of equity
securities in any public offering or private placement or from any capital
contribution. We are also required to make a mandatory prepayment of outstanding
amounts under the revolving facility when amounts exceed the commitment for the
revolving facility. We are permitted to make voluntary prepayments of all or any
portion of the credit facility loans in accordance with the terms of the credit
agreement, without penalty or premium. In addition, we may reduce the unutilized
portion of the commitments under the revolving facility in accordance with the
terms of the credit agreement, without penalty or premium.
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The credit agreement requires us to comply with certain covenants, which
include limitations on indebtedness, liens and further negative pledges,
investments, contingent obligations, dividends, redemptions and repurchases of
equity interests, mergers, acquisitions and asset sales, capital expenditures,
sale leaseback transactions, transactions with affiliates, dividend and other
payment restrictions affecting subsidiaries, changes in business, amendment of
documents relating to other indebtedness and other material documents, creation
of subsidiaries, designation of designated senior indebtedness in respect of the
outstanding notes and the exchange notes, and prepayment or repurchase of other
indebtedness. The credit agreement requires us to meet certain financial tests
pertaining to interest coverage, fixed charge coverage and leverage.
DISCOUNT DEBENTURES
In 1998, Atrium Corporation issued approximately $80.6 million aggregate
principal amount at maturity of the discount debentures to GEIPPPII and an
affiliate of Ardshiel to finance in part the 1998 recapitalization. The issuance
represented $45.0 million in gross proceeds to Atrium Corporation. The following
is a summary of the principal terms of the discount debentures.
The discount debentures were issued under an indenture, dated as of October
2, 1998 between Atrium Corporation and United States Trust Company of New York,
as Trustee.
TERMS OF THE DISCOUNT DEBENTURES. The discount debentures were issued at an
original issue discount and are unsecured senior obligations of Atrium
Corporation limited to approximately $80.6 million aggregate principal amount at
maturity. The discount debentures rank equal in right of payment with other
senior unsecured indebtedness of Atrium Corporation and senior to any
subordinated obligations of Atrium Corporation. The discount debentures will
mature on October 1, 2010. No cash interest will accrue on the discount
debentures prior to October 1, 2003. After that date, cash interest will accrue
on the discount debentures at an annual rate of 12%, payable semiannually on
April 1 and October 1 of each year. Prior to October 1, 2003, Atrium Corporation
may elect to commence the accrual of cash interest from any interest payment
date. In such case, the principal amount at maturity will be reduced to the
accreted value of the discount debentures on such date, and cash interest will
then accrue and be payable.
REDEMPTION. The discount debentures will not be redeemable at the option of
Atrium Corporation prior to October 1, 2003. After that date, the discount
debentures will be redeemable, at Atrium Corporation's option, in whole or in
part, at 106% of the accreted value of the discount debentures so redeemed,
together with accrued and unpaid interest to the redemption date. In addition,
before October 1, 2001, Atrium Corporation may redeem all of the discount
debentures at 112% of accreted value plus accrued and unpaid interest to the
redemption date, with the net proceeds of one or more equity offerings.
CHANGE OF CONTROL. Upon the occurrence of a change of control each holder
of the discount debentures will have the right to require that Atrium
Corporation repurchase such holder's discount debentures at a purchase price in
cash equal to 101% of the accreted value plus accrued and unpaid interest to the
date of repurchase. In addition, at any time prior to October 2, 2003, Atrium
Corporation may redeem the discount debentures as a whole following a change of
control at a redemption price equal to 100% of the accreted value plus the
applicable premium and accrued and unpaid interest to the redemption date.
A portion of net proceeds of the offering of the outstanding notes was used
to distribute $20.6 million, including accreted discount, to Atrium Corporation
to repurchase a portion of the discount debentures.
GEIPPPII and an affiliate of Ardshiel that owns discount debentures may in
the future transfer discount debentures to third parties not affiliated with
Atrium Corporation.
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DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
The outstanding notes were issued and the exchange notes will be issued
under an indenture, dated as of May 17, 1999, among Atrium, the subsidiaries of
Atrium, as guarantors and State Street Bank and Trust Company, as trustee. Upon
the issuance of the exchange notes, the indenture will be governed by the Trust
Indenture Act of 1939, as amended.
The following summary of certain provisions of the indenture and the
exchange notes is not complete and is subject to all the provisions of the
indenture and the exchange notes.
You can find the definition of certain terms used in the following summary
under the subheading "--Certain Definitions."
In this description of the exchange notes, references to Atrium refer to
Atrium Companies, Inc. and not to any of its subsidiaries.
Principal, premium, and interest on the exchange notes will be payable, and
the exchange notes may be exchanged or transferred, at the office or agency of
Atrium in the Borough of Manhattan, The City of New York, which initially shall
be the corporate trust office of the trustee in New York, New York. Payment of
interest may be made by check. Initially, the trustee will act as paying agent
and registrar for the exchange notes. The exchange notes may be presented for
registration of transfer and exchange at the offices of the registrar.
The exchange notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. No
service charge will be made for any registration of transfer or exchange of
exchange notes, but Atrium may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection with
such transfer or exchange.
TERMS OF EXCHANGE NOTES
The exchange notes will be unsecured, senior subordinated obligations of
Atrium, which are limited to $175,000,000 aggregate principal amount. The
exchange notes will mature on May 1, 2009. Each exchange note will bear interest
at the rate of 10 1/2% per annum from May 17, 1999, and will be payable
semiannually on May 1 and November 1 of each year, commencing on November 1,
1999. The exchange notes will not be entitled to the benefit of any mandatory
sinking fund.
OPTIONAL REDEMPTION
OPTIONAL REDEMPTION. The exchange notes are not redeemable prior to May 1,
2004.
The exchange notes will be redeemable at the option of Atrium, in whole or
in part, at any time on or after May 1, 2004, at the redemption prices,
expressed as percentages of the principal amount set forth below, plus accrued
and unpaid interest thereon, if any, to the date of redemption, if redeemed
during the 12-month period beginning on May 1 of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ----------------------------------------------------------------------- -----------
<S> <C>
2004................................................................... 105.250%
2005................................................................... 103.500%
2006................................................................... 101.750%
2007 and following years............................................... 100.000%
</TABLE>
OPTIONAL REDEMPTION UPON EQUITY OFFERING. On or prior to May 1, 2002,
Atrium may, at its option, use the net proceeds of one or more Equity Offerings
following which there is a Public Market to redeem up to
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35% of the originally issued aggregate principal amount of the exchange notes,
at a redemption price in cash equal to 110.5% of the principal amount thereof,
plus accrued and unpaid interest thereon, if any, to the date of redemption;
PROVIDED that
- at least 65% of the originally issued aggregate principal amount of
exchange notes is outstanding following such redemption; and
- notice of such redemption must be given not later than 60 days after the
consummation of any such Equity Offering.
OPTIONAL REDEMPTION UPON CHANGE OF CONTROL. At any time on or prior to May
1, 2004, the exchange notes may be redeemed as a whole and not in part at the
option of Atrium upon the occurrence of a Change of Control, at a redemption
price equal to 100% of the principal amount thereof plus the Applicable Premium
and accrued and unpaid interest, if any, to, the date of redemption. Notice of
such redemption must be given not later than 90 days after the occurrence of
such Change of Control.
SELECTION AND NOTICE. In the event that less than all of the exchange notes
are to be redeemed selection of exchange notes for redemption will be made by
the trustee in compliance with the requirements of the principal national
securities exchange on which the exchange notes as follows are listed; or if the
exchange notes are not listed on a national securities exchange, selection will
be made on a PRO RATA basis or by such method as the trustee will deem fair and
appropriate.
No exchange notes of a principal amount of $1,000 or less shall be redeemed
in part. Any redemption made with the net proceeds of an Equity Offering will be
made on a PRO RATA basis or on as nearly a PRO RATA basis as practicable.
Notice of redemption shall be mailed by first class mail at least 30 but not
more than 60 days before the redemption date to each holder of exchange notes to
be redeemed at its registered address.
If any exchange note is to be redeemed in part only, the notice of
redemption that relates to that exchange note will state the portion of the
principal amount to be redeemed. A new exchange note in a principal amount equal
to the unredeemed portion of the original exchange note will be issued in the
name of the holder thereof upon cancellation of their original exchange note. On
and after the redemption date, interest will cease to accrue on exchange notes
or portions called for redemption.
RANKING AND SUBORDINATION
The payment of the principal, premium and interest on the exchange notes is
subordinated in right of payment to the payment of all Senior Indebtedness of
Atrium. However, payment of Permitted Junior Securities and payment from the
money or the proceeds of U.S. Government Obligations held in any defeasance
trust described under "--Defeasance" below is not subordinate to any Senior
Indebtedness. Assuming that the Atrium transactions occurred on March 31, 1999,
Atrium would have had approximately $136.6 million of Senior Indebtedness
outstanding, exclusive of unused commitments under our revolving credit
facility, and the Guarantors would have had approximately $1.3 million of Senior
Indebtedness outstanding, exclusive of their guarantee of approximately $135.3
million of our Senior Indebtedness.
Only Indebtedness of Atrium that is Senior Indebtedness will rank senior to
the exchange notes in accordance with the provisions of the indenture. The
exchange notes will in all respects rank equally with all other Senior
Subordinated Indebtedness of Atrium. The exchange notes will rank senior to all
Subordinated Obligations of Atrium.
Atrium may not pay principal, premium or interest on the exchange notes or
make any deposit pursuant to the provisions described under "--Defeasance" and
may not otherwise purchase or retire any exchange notes (collectively, "pay the
exchange notes") if
(1) any Designated Senior Indebtedness is not paid when due or
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(2) any other default on Designated Senior Indebtedness occurs and the
maturity of such Designated Senior Indebtedness is accelerated, unless the
default has been cured or waived and/or any such acceleration has been
rescinded or such Designated Senior Indebtedness has been paid in full;
PROVIDED, HOWEVER, Atrium may pay the exchange notes if Atrium and the
trustee receive written notice approving such payment from the Representative of
such Designated Senior Indebtedness.
During the continuance of any default, with the exception of a default
described in clause (1) or (2) of the preceding sentence, with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated immediately or the expiration of any applicable grace periods,
Atrium may not pay the exchange notes for a period (a "Payment Blockage Period")
commencing upon the receipt by the trustee of written notice (a "Blockage
Notice") of such default from the Representative of the holders of such
Designated Senior Indebtedness. Such Blockage Notice should specify an election
to effect a Payment Blockage Period and ending 179 days thereafter or earlier if
such Payment Blockage Period is terminated;
(1) by written notice to the trustee and Atrium from the Person or
Persons who gave such Blockage Notice,
(2) because the default giving rise to such Blockage Notice is no longer
continuing, or
(3) because such Designated Senior Indebtedness has been repaid in full.
Atrium may resume payments on the exchange notes after the end of such
Payment Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day period and there shall be a period of at least 180
consecutive days in each 360-day period when no Payment Blockage Period is in
effect.
Upon a total or partial liquidation or dissolution or reorganization or
bankruptcy of or similar proceeding relating to Atrium or its property, the
holders of Senior Indebtedness will be entitled to receive payment in full of
the Senior Indebtedness before the holders of the exchange notes. If a
distribution is made to holders of the exchange notes that, due to the
subordination provisions, should not have been made to them, such holders are
required to hold it in trust for the holders of Senior Indebtedness and pay it
over to them as their interests may appear. In the event of insolvency,
creditors of Atrium who are holders of Senior Indebtedness may recover more,
ratably, than the holders of exchange notes, and creditors of Atrium who are not
holders of Senior Indebtedness, including holders of the exchange notes.
GUARANTEES
Each Guarantor fully and unconditionally guarantees, jointly and severally,
to each holder and the trustee, on a senior subordinated basis, the full and
prompt payment of principal of, premium, if any, and interest on the exchange
notes, and of all other obligations of Atrium under the indenture.
The Indebtedness evidenced by each Guarantee, including the payment of
principal of, premium, if any, and interest on the exchange notes, will be
subordinated to Senior Indebtedness of each such Guarantor on substantially the
same basis as the exchange notes are subordinated to Senior Indebtedness of the
Guarantor. As of March 31, 1999, on a pro forma basis after giving effect to the
Atrium transactions, the Guarantors would have had approximately $135.3 million
of Senior Indebtedness outstanding exclusive of the guarantees of the Guarantors
under the Credit Facility.
The obligations of each Guarantor are limited to the maximum amount as will
result in the obligations of such Guarantor under the Guarantee not constituting
a fraudulent conveyance or fraudulent transfer under federal or state law. Each
Guarantor that makes a payment or distribution under a Guarantee shall be
entitled to contribution from each other Guarantor in a PRO RATA amount based on
the Adjusted Net Assets of each Guarantor.
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Subject to the requirements described under "--Certain
Covenants--Consolidation, Merger, Sale of Assets, Etc.," any Guarantee by a
Restricted Subsidiary of the exchange notes shall provide by its terms that it
shall be automatically and unconditionally released and discharged upon any
sale, exchange or transfer to any Person not an Affiliate of Atrium of all of
Atrium's Capital Stock or all or substantially all the assets of such Restricted
Subsidiary, which transaction is in compliance with the terms of the indenture.
Such Guarantee will be released and discharged so long as such Restricted
Subsidiary has been or simultaneous with its release under the Guarantee will be
unconditionally released from all guarantees by it of other Indebtedness of
Atrium or any Restricted Subsidiary. Atrium may, at any time, cause a Subsidiary
to become a Guarantor by executing and delivering a supplemental indenture
providing for the guarantee of payment of the exchange notes by such Subsidiary.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder will have the right
to require Atrium to repurchase all or any part of such holder's exchange notes
at a purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase.
Within 30 days following any Change of Control Atrium shall mail a notice
(the "Change of Control Offer") to each holder with a copy to the trustee
stating:
(1) that a Change of Control has occurred and that such holder has the
right to require Atrium to purchase such holder's exchange notes at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase;
(2) the repurchase date, which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed; and
(3) the procedures determined by Atrium, consistent with the indenture,
that a holder must follow in order to have its exchange notes purchased. The
Change of Control Offer needs not to be mailed if Atrium has mailed a
redemption notice with respect to all the outstanding exchange notes in
connection with such Change of Control,
Atrium will comply to the extent with the applicable requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the repurchase of exchange notes pursuant to this covenant.
The definition of "Change of Control" includes, among other transactions, a
disposition of all or substantially all of the property and assets of Atrium and
its Subsidiaries. In certain circumstances there may be a degree of uncertainty
in ascertaining whether a particular transaction would involve a disposition of
"all or substantially all" of the property or assets of a Person, and it may be
unclear as to whether a Change of Control has occurred and whether Atrium is
required to make an offer to repurchase the exchange notes.
The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the credit facility. Future Senior
Indebtedness of Atrium and its Subsidiaries may also contain prohibitions of
certain events that would constitute a Change of Control or require such Senior
Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise
by the holders of their right to require Atrium to repurchase the exchange notes
could cause a default under such Senior Indebtedness. Furthermore, Atrium's
ability to pay cash to the holders upon a repurchase may be limited by Atrium's
then existing financial resources. Finally, if Atrium is not able to prepay the
Indebtedness under the Credit Facility and any other Senior Indebtedness
containing similar restrictions or obtain requisite consents Atrium will be
unable to fulfill its repurchase obligations if holders of exchange notes
exercise their repurchase rights following a Change of Control, thereby
resulting in a default under the indenture.
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CERTAIN COVENANTS
The indenture contains, among others, the following covenants:
LIMITATION ON INDEBTEDNESS. Atrium will not, and will not permit any of the
Restricted Subsidiaries to incur any Indebtedness or issue Disqualified Stock
and will not permit any of the Restricted Subsidiaries to issue Preferred Stock
to a Person other than Atrium or a Wholly-Owned Subsidiary; PROVIDED, HOWEVER,
that Atrium and a Guarantor may Incur Indebtedness and Atrium may issue
Disqualified Stock after giving PRO FORMA effect thereto and the use of the
proceeds thereof, the Consolidated Coverage Ratio is at least equal to (1)
2.00:1.00 on or prior to May 1, 2001 and (2) 2.25:1.00 after May 1, 2001.
Notwithstanding the foregoing, each and all of the following shall be
permitted:
(1) Indebtedness Incurred by Atrium or any Guarantor pursuant to the
credit facility, so long as the aggregate principal amount of all
Indebtedness Incurred does not exceed $175.0 million at any time
outstanding, less the aggregate principal amount required to be repaid with
the net proceeds of Asset Dispositions;
(2) Indebtedness in the amount of up to $10.0 million Incurred by Atrium
or any Guarantor represented by Capitalized Lease Obligations, mortgage
financing or purchase money obligations, in each case Incurred
-for the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property used in a Related
Business or Incurred to refinance any such purchase price or cost of
construction or improvement,
-no later than 365 days after the date of such acquisition or the date of
completion of such construction or improvement;
(3) Permitted Indebtedness;
(4) Indebtedness Incurred by Atrium or any Guarantor in a principal
amount outstanding which, when taken together with the principal amount of
all other Indebtedness Incurred pursuant to this clause (4) and then
outstanding, will not exceed $20.0 million.
Atrium will not permit any Unrestricted Subsidiary to Incur any Indebtedness
other than Non-Recourse Debt.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the types of
Indebtedness permitted by this covenant, Atrium in its sole discretion shall
classify, such item of Indebtedness.
LIMITATION ON INCURRENCE OF SENIOR SUBORDINATED INDEBTEDNESS. Atrium will
not Incur any Indebtedness if such Indebtedness is subordinate or junior in
ranking to any Senior Indebtedness unless
-such Indebtedness is Senior Subordinated Indebtedness, or
-is contractually subordinated in right of payment to all Senior
Subordinated Indebtedness, including the exchange notes, to the same
extent as the exchange notes are subordinated in right of payment to
Senior Indebtedness.
No Guarantor shall Incur any Indebtedness if such Indebtedness is
contractually subordinate or junior in ranking in any respect to any Senior
Indebtedness of such Guarantor unless
-such Indebtedness is Senior Subordinated Indebtedness of such Guarantor,
-or is contractually subordinated in right of payment to all Senior
Subordinated Indebtedness of such Guarantor, including its Guarantee of
the exchange notes, to the same extent as its Guarantee is subordinated
in right of payment to Senior Indebtedness of such Guarantor.
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LIMITATION ON RESTRICTED PAYMENTS. Atrium will not, and will not permit any
of the Restricted Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock, except
(A) dividends or distributions payable in its Capital Stock or in
options, warrants or other rights to purchase such Capital Stock, and
(B) dividends or distributions by a Restricted Subsidiary paid (i)
to Atrium or a Restricted Subsidiary of Atrium and (ii) if such
Restricted Subsidiary paying the dividend or making the distribution is
not a Wholly-Owned Subsidiary, to its other holders of Capital Stock on a
PRO RATA basis; or
(2) purchase, redeem, retire or otherwise acquire for value any Capital
Stock of Atrium held by Persons other than a Restricted Subsidiary of Atrium
or any Capital Stock of a Restricted Subsidiary of Atrium held by Persons
other than Atrium or another Restricted Subsidiary; or
(3) purchase, repurchase, redeem, defease or otherwise acquire or retire
for value, prior to any scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Obligations; or
(4) make any Investment, other than a Permitted Investment, in any
Person
(any of the actions described in clauses (1) through (4) are collectively
referred to as, "Restricted Payments"), unless at the time Atrium or such
Restricted Subsidiary makes such Restricted Payment:
(1) no Default shall have occurred and be continuing, or would result
from such Restricted Payment;
(2) immediately after giving PRO FORMA effect to such Restricted
Payment, Atrium would have been able to Incur an additional $1.00 of
Indebtedness pursuant to the covenant described in under "--Limitation on
Indebtedness"; and
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made subsequent to the Issue Date would not
exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period from
the first day of the fiscal quarter beginning on or after the Issue Date
to the end of the most recent fiscal quarter ending prior to the date of
such Restricted Payment as to which financial results are available; plus
(B) the aggregate net cash proceeds received by Atrium from the
issue or sale of its Capital Stock or other common equity capital
contributions on and subsequent to the Recapitalization Date, less all
Restricted Payments made on the Recapitalization Date; plus
(C) the amount by which Indebtedness of Atrium or a Restricted
Subsidiary that is a Guarantor is reduced on Atrium's balance sheet upon
the conversion or exchange subsequent to the Issue Date of any
Indebtedness of Atrium or a Restricted Subsidiary that is a Guarantor
into or for Capital Stock of Atrium, less the amount of any cash, or
other property, distributed by Atrium or such Restricted Subsidiary that
is a Guarantor upon such conversion or exchange to the holders of such
Indebtedness on account of such Indebtedness; plus
(D) the amount equal to the net reduction in Investments, other than
Permitted Investments or Investments made pursuant to clause (9) of the
following paragraph, made after the Issue Date by Atrium or any of its
Restricted Subsidiaries in any Person resulting from
(1) repurchases or redemptions of such Investments by such Person,
proceeds realized upon the sale of such Investment to a purchaser who is not
an Affiliate of Atrium and repayments of loans or
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advances or other transfers of assets by such Person to Atrium or any
Restricted Subsidiary of Atrium or
(2) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously included in the calculation of the amount
of Restricted Payments; PROVIDED, HOWEVER, that no amount shall be included
under this clause (D) to the extent it is already included in Consolidated
Net Income.
The foregoing provisions shall not prohibit the following actions:
(1) dividends paid within 60 days after the date of declaration if at
such date of declaration such dividend would have complied with this
covenant;
(2) any purchase or redemption of Capital Stock or Subordinated
Obligations of Atrium made in exchange for or out of the proceeds of the
substantially concurrent sale of Capital Stock of Atrium with the exception
of Capital Stock issued or sold to a Subsidiary or an employee stock
ownership plan; PROVIDED, HOWEVER, that the net cash proceeds from such sale
shall be excluded from clause (3)(B) of the preceding paragraph;
(3) any purchase or redemption of Subordinated Obligations of Atrium
made in exchange for or out of the proceeds of the substantially concurrent
sale of Subordinated Obligations of Atrium; PROVIDED, HOWEVER, that such new
Subordinated Obligations
-do not have a Stated Maturity earlier than the earlier of (x) the Stated
Maturity for the exchange notes and (y) the Stated Maturity for the
Subordinated Obligations being purchased or redeemed, and
-are expressly subordinated in right of payment to the exchange notes at
least to the same extent as the Subordinated Obligations being purchased
or redeemed;
(4) dividends, distributions or loans by Atrium to Atrium Holdings
-to fund the payment of audit, accounting, legal or other similar
expenses of Atrium Holdings and Parent,
-to pay franchise or other similar taxes of Atrium Holdings and Parent
and
-to pay other corporate overhead expenses of Atrium Holdings and Parent,
so long as such dividends, distributions or loans are paid when needed by
Atrium Holdings or Parent and so long as the aggregate amount of payments
pursuant to this clause (4) does not in any calendar year exceed $1.0 million;
(5) payments to Parent pursuant to the Tax Sharing Agreement;
(6) payments of dividends on Atrium's common stock after an initial
public offering of common stock of Atrium, Atrium Holdings or Parent in an
annual amount not to exceed 6.0% of the gross proceeds (before deducting
underwriting discounts and commissions and other fees and expenses of the
offering) received by Atrium from shares of common stock sold for the
account of Atrium, Atrium Holdings or Parent as the case may be (and not for
the account of any stockholder), in such initial public offering, so long as
no Default has occurred and is continuing or would result therefrom,
(7) in any fiscal year and $10.0 million in the aggregate after the
Issue Date, the payment of dividends or distributions to Atrium Holdings in
the amount not to exceed $5.0 million (A) necessary to permit Parent to
purchase, redeem, acquire, cancel or otherwise retire for value Capital
Stock of Parent, in each case held by officers, directors or employees of
Parent, Atrium Holdings, Atrium or any of Atrium's Subsidiaries in
connection with death, disability, retirement, severance or termination of
employment or service or pursuant to any agreement under which such Capital
Stock was issued, (B) to enable Parent to redeem or repurchase stock
purchase or similar rights in respect of its Capital
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Stock or (C) to enable Parent to make cash payments to holders of its
Capital Stock in lieu of the issuance of fractional shares of its Capital
Stock so long as no Default has occurred and is continuing or would result
therefrom;
(8) the payment of dividends to Atrium Holdings after September 30, 2003
in an amount not to exceed the interest then unpaid and accrued on the
Atrium Holdings Discount exchange notes and, so long as (A) no Default has
occurred and is continuing or would result therefrom and (B) Atrium is able
to Incur an additional $1.00 of Indebtedness pursuant to the first paragraph
under "--Limitation on Indebtedness",
(9) Restricted Payments, in addition to those otherwise permitted in
clauses (1) through (8) above, in an aggregate amount not to exceed $5.0
million so long as no Default has occurred and is continuing or would result
therefrom, so long as no Default has occurred and is continuing or would
result therefrom,
In determining the aggregate amount of Restricted Payments made subsequent
to the Issue Date in accordance with clause (3) of the first paragraph of this
covenant, amounts expended pursuant to clauses (6), (7) and (8) of the
immediately preceding paragraph shall be included in such calculation, and
amounts expended pursuant to clauses (1), (2), (3), (4), (5) and (9) of the
immediately preceding paragraph shall be excluded in such calculation.
The amount of any non-cash Restricted Payment shall be the fair market
value, as determined in good faith by the board of directors, of the assets or
securities proposed to be transferred or issued by Atrium or such Restricted
Subsidiary, pursuant to such Restricted Payment.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. Atrium will not, and will not
permit any of the Restricted Subsidiaries to, directly or indirectly, enter into
or conduct any transaction or series of related transactions with or for the
benefit of any Affiliate of Atrium or of a Restricted Subsidiary (an "Affiliate
Transaction") unless
(a) the terms of such Affiliate Transaction are no less favorable to
Atrium or such Restricted Subsidiary, than those that could be obtained in
arm's-length dealings with a Person who is not such an Affiliate,
(b) in the event such Affiliate Transaction involves an aggregate amount
in excess of $2.5 million, the terms of such transaction have been approved
by at least a majority of the members of the board of directors of Atrium,
(c) in the event such Affiliate Transaction or series of related
Affiliate Transactions involves an aggregate amount in excess of $7.5
million, Atrium has received a written opinion from an independent
investment banking firm of nationally recognized standing that such
Affiliate Transaction is fair to Atrium or such Restricted Subsidiary from a
financial point of view.
The requirements of this covenant shall not apply to
(1) any Restricted Payment or other payment or Investment permitted to
be made pursuant to the covenant described under "--Limitation on Restricted
Payments,"
(2) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to employment arrangements, or any
stock options and stock ownership plans for the benefit of employees,
officers and directors, consultants and advisors approved by the board of
directors of Atrium,
(3) loans or advances to employees in the ordinary course of business of
Atrium or any of the Restricted Subsidiaries,
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(4) any transaction between or among Atrium and any Restricted
Subsidiary or between Restricted Subsidiaries, so long as no Person, other
than a Restricted Subsidiary, that is an Affiliate of Atrium has any direct
or indirect interest in such Restricted Subsidiary.
(5) indemnification agreements with, and the payment of fees and
indemnities to, directors, officers and employees of Atrium and its
Restricted Subsidiaries, in each case in the ordinary course of business,
(6) transactions pursuant to agreements as in existence on the Issue
Date,
(7) any employment, noncompetition or confidentiality agreements entered
into by Atrium or any of the Restricted Subsidiaries with its employees in
the ordinary course of business,
(8) the issuance of Capital Stock of Atrium,
(9) amounts paid by Atrium to Ardshiel on the Issue Date in connection
with the Atrium transactions and
(10) any obligations of Atrium in respect of management fees payable to
Ardshiel pursuant to agreements as in effect on the Issue Date.
LIMITATION ON CAPITAL STOCK OF RESTRICTED SUBSIDIARIES. Atrium will not
permit any of the Restricted Subsidiaries to issue any Capital Stock to any
Person, or permit any Person, except for Atrium to own any Capital Stock of a
Restricted Subsidiary of Atrium except for Atrium or a Wholly-Owned Subsidiary
of Atrium, if in either case as a result thereof such Restricted Subsidiary
would no longer be a Restricted Subsidiary of Atrium. This provision does not
prohibit (1) Atrium or any of the Restricted Subsidiaries from selling,
transferring or otherwise disposing of all of the Capital Stock of any
Restricted Subsidiary or (2) the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary in compliance with the indenture.
LIMITATION ON LIENS. Atrium will not, and will not cause or permit the
Restricted Subsidiaries to, directly or indirectly, Incur any Liens of any kind
securing any Senior Subordinated Indebtedness or Subordinated Obligations
against any of their respective properties or assets now owned or hereafter
acquired, or any proceeds income or profits therefrom, unless the exchange notes
are, or in the case of a Restricted Subsidiary that is a Guarantor, the
Guarantee of such Guarantor is, equally and ratably secured with such Senior
Subordinated Indebtedness or, in the case of Subordinated Obligations, prior to
such Subordinated Obligations, with a Lien on the same properties and assets
securing such Senior Subordinated Indebtedness or Subordinated Obligations, for
so long as such Senior Subordinated Indebtedness or Subordinated Obligations are
secured by such Lien, except for Permitted Liens.
LIMITATION ON SALE OF ASSETS. Atrium will not, and will not cause or permit
any of the Restricted Subsidiaries to, directly or indirectly, make any Asset
Disposition, unless (1) Atrium or such Restricted Subsidiary, receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by Atrium's board of directors, of the
assets sold or otherwise disposed of and (2) at least 75% of such consideration
consists of cash or Cash Equivalents.
Atrium or Restricted Subsidiary may apply the Net Available Cash of any
Asset Disposition to acquire Additional Assets within 360 days after the receipt
thereof,
-if the Net Available Cash is not required to be applied to repay
permanently any Senior Indebtedness outstanding as required by the terms
thereof,
-or Atrium determines not to apply such Net Available Cash to the
permanent repayment of the Senior Indebtedness,
-or if no Senior Indebtedness is outstanding,
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If the Net Available Cash of any Asset Disposition is not applied within 360
days of the applicable Asset Disposition (such Net Available Cash, the
"Unutilized Net Available Cash"), Atrium will, within 20 days after the date
that is 360 days from the receipt of such Net Available Cash, make an offer to
purchase (the "Net Available Cash Offer") all outstanding exchange notes up to a
maximum principal amount of exchange notes equal to the exchange notes Portion
of Unutilized Net Available Cash, at a purchase price in cash equal to 100%
thereof, plus accrued and unpaid interest thereon, if any, to the purchase date.
The Net Available Cash Offer may be deferred until there is aggregate Unutilized
Net Available Cash equal to or in excess of $10.0 million, at which time the
entire amount of such Unutilized Net Available Cash, shall be applied.
Atrium may apply the Unutilized Net Available Cash otherwise required to be
applied to a Net Available Cash Offer to offer to purchase
-and any other Indebtedness of Atrium which ranks equally with the
exchange notes (the "Other Indebtedness") requiring that an offer to
repurchase such Indebtedness be made upon the consummation of any Asset
Disposition,
-to a Net Available Cash Offer,
so long as the amount of such Unutilized Net Available Cash applied to
repurchase the exchange notes is not less than the exchange notes Portion of
Unutilized Net Available Cash. Atrium shall make the Net Available Cash Offer in
respect to any Unutilized Net Available Cash, at the same time as the analogous
offer to purchase is made under any Other Indebtedness and the purchase date
shall be the same under the Net Available Cash Offer as the purchase date
pursuant to any Other Indebtedness.
For purposes of this covenant, "Exchange Notes Portion of Unutilized Net
Available Cash" in respect of a Net Available Cash Offer means (a) if no Other
Indebtedness is concurrently being offered to be purchased, the amount of the
Unutilized Net Available Cash in respect of such Net Available Cash Offer and
(b) if Other Indebtedness is concurrently being offered to be purchased, an
amount equal to the product of (x) the Unutilized Net Available Cash in respect
of such Net Available Cash Offer and (y) a fraction the numerator of which is
the principal amount of all exchange notes tendered pursuant to the Net
Available Cash Offer related to such Unutilized Net Available Cash (the
"Exchange Notes Amount") and the denominator of which is the sum of the Exchange
Notes Amount and the lesser of the aggregate principal face amount or accreted
value as of the relevant purchase date of all Other Indebtedness tendered
pursuant to a concurrent offer to purchase such Other Indebtedness made at the
time of such Net Available Cash Offer.
With respect to any Net Available Cash Offer effected pursuant to this
covenant, to the extent that the principal amount of the exchange notes tendered
pursuant to such Net Available Cash Offer exceeds the Exchange Notes Portion of
Unutilized Net Available Cash with respect thereto, the exchange notes shall be
purchased PRO RATA based on the principal amount of the exchange notes tendered
by each Holder. Holders whose exchange notes are purchased only in part will be
issued new exchange notes equal in principal amount to the unpurchased portion
of the exchange notes surrendered.
To the extent the Exchange Notes Portion of Unutilized Net Available Cash
available for any Net Available Cash Offer effected pursuant to this covenant
exceeds the aggregate purchase price for the exchange notes validly tendered and
purchased by Atrium pursuant thereto, such excess shall no longer be deemed
Unutilized Net Available Cash and shall be available to Atrium and its
Restricted Subsidiaries for any purpose not prohibited under the indenture.
For the purposes of this covenant, the following will be deemed to be cash,
but not Net Available Cash: (x) the assumption by the transferee of
Indebtedness, other than Subordinated Obligations, of Atrium or any Guarantor
and the release of Atrium or such Guarantor from all liability on such
Indebtedness in connection with such Asset Disposition, in which case Atrium
shall, without further action, be deemed to have applied such assumed
Indebtedness in accordance with the second paragraph under
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this covenant, and (y) securities received by Atrium or any Restricted
Subsidiary of Atrium from the transferee that are promptly converted, but in no
event later than 30 days after the relevant Asset Disposition, by Atrium or such
Restricted Subsidiary into cash.
Atrium will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other applicable securities laws or
regulations in connection with the repurchase of exchange notes pursuant to a
Net Available Cash Offer, and any violation of the provisions of the Indenture
relating to such Net Available Cash Offer occurring as a result of such
compliance shall not be deemed a Default.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The indenture will provide that Atrium will not, and will not
cause or permit any of the Restricted Subsidiaries to, directly or indirectly,
create or permit to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to (1) pay dividends or
make any other distributions on its Capital Stock to Atrium or any other
Restricted Subsidiary or pay any Indebtedness or other obligation owed to Atrium
or any other Restricted Subsidiary, (2) make any loans or advances to Atrium or
to any other Restricted Subsidiary which directly or indirectly owns the Capital
Stock of such Restricted Subsidiary or (3) transfer any of its property or
assets to Atrium or to any other Restricted Subsidiary which directly or
indirectly owns the Capital Stock of such Restricted Subsidiary, except for:
(a) any encumbrance or restriction pursuant to an agreement in effect at
or entered into on the Issue Date, including, without limitation, the Credit
Facility and the indenture;
(b) any encumbrance or restriction with respect to such a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness issued by
such Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by Atrium and outstanding on such date, other than
Indebtedness issued as consideration in, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary of Atrium or was acquired by Atrium;
(c) any encumbrance or restriction with respect to such a Restricted
Subsidiary (A) pursuant to an agreement evidencing Indebtedness Incurred
without violation of the Indenture or (B) effecting a refinancing of
Indebtedness issued pursuant to an agreement referred to in clause (a) or
(b) above or this clause (c) or contained in any amendment to an agreement
referred to in clause (a) or (b) above or this clause (c); PROVIDED,
HOWEVER, that the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in any of such agreement, refinancing
agreement or amendment, taken as a whole, are no less favorable to the
holders of the exchange notes in any material respect, as determined in good
faith by the board of directors of Atrium, than encumbrances and
restrictions with respect to such Restricted Subsidiary contained in, in the
case of (A) above, the Credit Facility, and in the case of (B) above, the
agreement being refinanced or amended;
(d) in the case of clause (iii) above, any encumbrance or restriction
(A) that restricts in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset, (B) by virtue of any transfer of,
agreement to transfer, option or right with respect to, or Lien on, any
property or assets of Atrium or any Restricted Subsidiary not otherwise
prohibited by the Indenture, (C) that is included in a licensing agreement
to the extent such restrictions limit the transfer of the property subject
to such licensing agreement or (D) arising or agreed to in the ordinary
course of business and that does not, individually or in the aggregate,
detract from the value of property or assets of Atrium or any of its
Subsidiaries in any manner material to Atrium or any such Restricted
Subsidiary;
(e) in the case of clause (iii) above, restrictions contained in
security agreements, mortgages or similar documents securing Indebtedness of
a Restricted Subsidiary to the extent such restrictions restrict the
transfer of the property subject to such security agreements; PROVIDED, that
such Indebtedness and such Lien is permitted by the Indenture;
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(f) any restriction with respect to such a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition; and
(g) encumbrances or restrictions arising or existing by reason of
applicable law.
LIMITATIONS ON GUARANTEES BY RESTRICTED SUBSIDIARIES. Atrium will permit
any of the Restricted Subsidiaries, directly or indirectly, to guarantee the
payment of any Indebtedness of Atrium ("Other Guaranteed Indebtedness") unless
such Restricted Subsidiary
(A) is a Guarantor, or
(B) simultaneously executes and delivers a supplemental indenture pursuant
to which it will become a Guarantor.
However, if such Other Guaranteed Indebtedness is (A) Senior Subordinated
Indebtedness, the Guarantee of such Restricted Subsidiary shall be rank equally
in right of payment with the guarantee of the Other Guaranteed Indebtedness; or
(B) Subordinated Obligations, the Guarantee of such Restricted Subsidiary shall
be senior in right of payment to the guarantee of the Other Guaranteed
Indebtedness, which guarantee of such Subordinated Obligations shall provide
that such guarantee is subordinated to the Guarantee of such Restricted
Subsidiary to the same extent and in the same manner as the Other Guaranteed
Indebtedness is subordinated to the exchange notes.
Furthermore, each Restricted Subsidiary issuing a Guarantee will be
automatically and unconditionally released and discharged from its obligations
under such Guarantee upon the release or discharge of the guarantee of the Other
Guaranteed Indebtedness that resulted in the creation of such Guarantee, except
a discharge or release by, or as a result of, any payment under the guarantee of
such Other Guaranteed Indebtedness by such Restricted Subsidiary. In addition,
Atrium may, at any time, cause a Restricted Subsidiary to become a Guarantor by
executing and delivering a supplemental indenture providing for the guarantee of
payments of the exchange notes by such Restricted Subsidiary on the basis
provided in the Indenture.
PROVISION OF FINANCIAL STATEMENTS. For so long as the exchange notes are
outstanding, Atrium will, to the extent permitted by SEC practice and applicable
law and regulations, file with the SEC the annual reports, quarterly reports and
other documents which Atrium would have been required to file with the SEC
pursuant to such Section 13(a) or 15(d), if Atrium was so subject, such
documents to be filed with the SEC on or prior to the date (the "Required Filing
Dates") by which Atrium would have been required so to file such documents if
Atrium was so subject.
Atrium will also in any event within 15 days of each Required Filing Date,
whether or not permitted or required to be filed with the SEC, (1) transmit or
cause to be transmitted by mail to all holders of exchange notes, as their names
and addresses appear in the security register, without cost to such holders and
(2) file with the Trustee, copies of the annual reports, quarterly reports and
other documents which Atrium would have been required to file with the SEC
pursuant to Section 13(a) or 15(d) of the Exchange Act, or any successor
provision thereto, if Atrium were subject to either of such Sections.
In addition, for so long as any exchange notes remain outstanding, Atrium
will furnish
- to the holders of exchange notes and prospective investors, at their
request, the information required to be delivered pursuant to Rule
144(d)(4) under the Securities Act, and,
- to any beneficial holder of exchange notes known to Atrium, information of
the type that would be filed with the SEC pursuant to the provisions
described above if not obtainable from the SEC.
CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. Atrium will not
- consolidate with or merge with or into, or
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- sell, convey, transfer or lease all or substantially all its assets to,
any Person,
- or permit any of its Restricted Subsidiaries to enter into any such
transaction if such transaction would result in the sale, conveyance,
transfer or lease of all or substantially all of the assets of Atrium and
the Restricted Subsidiaries on a consolidated basis, unless:
(1) the Surviving Person shall be a corporation organized and existing
under the laws of the United States of America, any State thereof or the
District of Columbia and the Surviving Person shall expressly assume by a
supplemental indenture executed and delivered to the trustee, in form
satisfactory to the trustee, all the obligations of Atrium under the
exchange notes and the indenture and the registration rights agreement;
(2) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing; and
(3) immediately after giving effect to such transaction, the Surviving
Person would be able to Incur an additional $1.00 of Indebtedness pursuant
to the first paragraph under the covenant described under "--Certain
Covenants--Limitation on Indebtedness."
Notwithstanding clauses (2) and (3) above:
(1) any Restricted Subsidiary of Atrium may consolidate with, merge into
or transfer all or part of its properties and assets to Atrium or any
Wholly Owned Subsidiary that is a Guarantor; and
(2) Atrium may merge with an Affiliate incorporated solely for the
purpose of reincorporating Atrium in another jurisdiction to realize
tax or other benefits.
No Guarantor will in any transaction or series of related transactions,
consolidate with or merge with or into another Person, whether or not such
Person is affiliated with such Guarantor and whether or not such Guarantor is
the Surviving Person, unless
(1) the Surviving Person shall be a corporation organized and existing
under the laws of the United States of America, any State thereof or the
District of Columbia;
(2) the Surviving Person expressly assumes by a supplemental indenture
all the obligations of such Guarantor under its Guarantee and the
performance and observance of every covenant of the indenture and the
registration rights agreement to be performed or observed by such Guarantor;
and
(3) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing.
After any consolidation or merger of Atrium or any Guarantor or any transfer
of all or substantially all of the assets of Atrium in which Atrium or a
Guarantor is not the Surviving Person, the Surviving Person shall succeed to,
every right and power of Atrium under the indenture, the exchange notes and the
registration rights agreement or such Guarantor under the indenture, the
Guarantee of such Guarantor and the registration rights agreement as the case
may be, with the same effect as if such successor corporation had been named as
Atrium or such, except in the case of
(a) a lease, or
(b) any sale, assignment, conveyance, transfer or other disposition to a
Restricted Subsidiary of Atrium or such Guarantor,
Atrium shall be discharged from all obligations and covenants under the
indenture, the exchange notes and the registration rights agreement and such
Guarantor shall be discharged from all obligations and covenants under the
indenture, the registration rights agreement and the Guarantee of such
Guarantor.
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For all purposes of the indenture and the exchange notes, Subsidiaries of
any Surviving Person shall upon such transaction or series of related
transactions become Restricted Subsidiaries unless designated as Unrestricted
Subsidiaries pursuant to and in accordance with the terms of the indenture. All
Indebtedness and all Liens on property or assets of Atrium and the Restricted
Subsidiaries in existence immediately prior to such transaction or series of
related transactions will be deemed to have been incurred upon such transaction
or series of related transactions.
EVENTS OF DEFAULT
The following will be "Events of Default" under the indenture:
(1) default in any payment of interest on any note when the same becomes
due and payable, and such default continues for a period of 30 days; or
(2) default in the payment of the principal of any note when the same
becomes due and payable; or
(3) Atrium or any Guarantor fails to comply with any of its obligations
described under the option "--Certain Covenants--Consolidation, Merger, Sale
of Assets, Etc."; or
(4) Atrium or any Guarantor fails to comply with any of its obligations
described under the option "Change of Control" and "Certain Covenants" and
such failure continues for 30 days after written notice of such failure
requiring Atrium to remedy the failure shall have been given
(x) to Atrium by the trustee, or
(y) to Atrium and the trustee by the holders of at least 25% in aggregate
principal amount of the exchange notes then outstanding; or
(5) Atrium or any Guarantor fails to comply with any of its obligations
in the exchange notes, the Guarantees or the indenture and such failure
continues for 60 days after written notice of such failure requiring Atrium
to remedy the failure shall have been given
(x) to Atrium by the trustee or
(y) to Atrium and the trustee by the holders of at least 25% in aggregate
principal amount of the exchange notes then outstanding; or
(6) Indebtedness of Atrium or any Restricted Subsidiary is not paid
within any applicable grace period after final maturity or is accelerated by
its holders because of a default and the total amount of such Indebtedness
in the aggregate exceeds $10.0 million at the time and such default have not
been cured or acceleration rescinded within a 30 day period; or
(7) one or more judgments or decrees for the payment of money in excess
of $10.0 million in the aggregate is entered against Atrium or any
Significant Subsidiary and such judgment or decree remains undischarged or
unstayed for a period of 60 days after it becomes final and non-appealable;
or
(8) (a) any Guarantee of a Significant Subsidiary ceases to be in full
force and effect or is declared null and void or (b) any Guarantor that is a
Significant Subsidiary denies that it has any further liability under any
Guarantee, or gives notice to such effect; or
(9) certain events of bankruptcy, insolvency or reorganization with
respect to Atrium or any Significant Subsidiary shall have occurred.
If an Event of Default, other than as specified in clause (g) with respect
to Atrium, occurs and is continuing, the trustee or the holders of at least 25%
in principal amount of the outstanding exchange notes by notice to Atrium may
declare the principal of and accrued and unpaid interest, if any, on all the
exchange notes to be due and payable.
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Upon such a declaration, such principal and accrued and unpaid interest
shall be due and payable immediately. However, so long as the Credit Facility
shall be in force and effect, if an Event of Default have occurred and is
continuing, any such acceleration shall not be effective until the earlier to
occur of
(x) five business days following delivery of a notice of such
acceleration to the Representative under the Credit Facility and
(y) the acceleration of any Indebtedness under the Credit Facility.
If an Event of Default under clause (g) relating to certain events of
bankruptcy, insolvency or reorganization of Atrium occurs, the principal of and
accrued and unpaid interest on all the exchange notes will become and be
immediately due and payable without any declaration or other act on the part of
the trustee or any holders. Under certain circumstances, the holders of a
majority in principal amount of the outstanding exchange notes may rescind any
such acceleration with respect to the exchange notes and its consequences.
If an Event of Default occurs and is continuing, the Trustee will be under
no obligation to exercise any of the rights or powers under the indenture at the
request or direction of any of the holders unless such holders have offered to
the trustee reasonable indemnity or security against any loss, liability or
expense. Except to enforce the right to receive payment of principal, premium,
if any, or interest when due, no holder may pursue any remedy with respect to
the indenture or the exchange notes unless
(1) such holder has previously given the trustee notice that an Event
of Default is continuing,
(2) holders of at least 25% in principal amount of the outstanding
exchange notes have requested the trustee to pursue the remedy,
(3) such holders have offered the trustee reasonable security or
indemnity against any loss, liability or expense,
(4) the trustee has not complied with such request within 60 days
after the receipt of the request and the offer of security or
indemnity and
(5) the holders of a majority in principal amount of the outstanding
exchange notes have not given the trustee a direction that, in
the opinion of the trustee, is inconsistent with such request
within such 60-day period.
The holders of a majority in principal amount of the outstanding exchange
notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or of exercising any trust or
power conferred on the trustee. The trustee, however, may refuse to follow any
direction that conflicts with law or the indenture or that the trustee
determines is unduly prejudicial to the rights of any other holder or that would
involve the trustee in personal liability. Prior to taking any action under the
Indenture, the trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.
If a Default occurs and is continuing and is known to the Trustee, the
Trustee must mail to each holder notice of the Default within 90 days after it
occurs. Except in the case of a Default in the payment of principal of, premium,
if any, or interest on any note, the trustee may withhold notice if and so long
as its board of directors, a committee of its board of directors or a committee
of its trust officers in good faith determines that withholding notice is in the
interests of the holders of exchange notes. In addition, Atrium is required to
deliver to the trustee, written notice of any events which would constitute
certain Defaults within 30 days after the occurrence of such events.
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AMENDMENTS AND WAIVERS
The Indenture may be amended with the consent of the holders of a majority
in principal amount of the exchange notes then outstanding and any past default
or compliance with any provisions may be waived with the consent of the holders
of a majority in principal amount of the exchange notes then outstanding.
However, without the consent of each holder of an outstanding note affected, no
amendment may, among other things:
(1) reduce the amount of exchange notes whose holders must consent to an
amendment;
(2) reduce the stated rate of or extend the stated time for payment of
interest on any note;
(3) reduce the principal of or change the stated maturity of any note;
(4) reduce the premium payable upon the redemption or repurchase of any
note or change the time at which any note may be redeemed;
(5) make any note payable in money other than that stated in the note;
(6) impair the right of any holder to receive payment of principal of
and interest on such holder's exchange notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such holder's exchange notes;
(7) modify the ranking or priority of any note or the Guarantee of any
Guarantor in any adverse manner;
(8) following the occurrence of a Change of Control or an Asset
Disposition, modify in a manner materially adverse to the holders of
exchange notes affected thereby the provisions of any covenant in the
indenture requiring Atrium to make and consummate an offer to purchase with
respect to such Change of Control or a Net Available Cash Offer with respect
to such Asset Disposition;
(9) release any Guarantor that is a Significant Subsidiary from any of
its obligations under its Guarantee or the Indenture otherwise than in
accordance with the indenture; or
(10) make any change in the amendment or waiver provisions which require
each affected holder's consent.
Without the consent of any holder, Atrium, the Guarantors and the Trustee
may amend the Indenture to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of Atrium under the Indenture, to add further Guarantees with
respect to the exchange notes, to secure the exchange notes, to add to the
covenants of Atrium for the benefit of the holders, to make any change that does
not adversely affect the rights of any holder or to comply with any requirement
of the SEC in connection with the qualification of the Indenture under the Trust
Indenture Act. However, any amendment made to the subordination provisions of
the Indenture that adversely affects the rights of any holder of Senior
Indebtedness then outstanding shall not be effective as to the holders of such
outstanding Senior Indebtedness unless the holders of such Senior Indebtedness
(or any group or representative thereof authorized to give a consent) consent to
such change.
The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, Atrium is required
to mail to the holders a notice briefly describing such amendment. However, the
failure to give such notice to all the holders or any defect therein will not
impair or affect the validity of the amendment.
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DEFEASANCE
Atrium at any time may terminate all its and the Guarantors' obligations
under the exchange notes and the Indenture ("legal defeasance"), except for
certain obligations, including those respecting the defeasance trust and
obligations to register the transfer or exchange of the exchange notes, to
replace mutilated, destroyed, lost or stolen exchange notes and to maintain a
registrar and paying agent in respect of the exchange notes. Atrium at any time
may terminate its and the Guarantors' obligations under covenants described
under "Certain Covenants" (other than clause (i) of the first and second
paragraphs under "Certain Covenants--Consolidation, Merger, Sale of Assets,
etc."), the operation of the cross acceleration provision, the bankruptcy
provisions with respect to Significant Subsidiaries, the judgment default
provision and the Guarantee provision described under "Events of Default"
("covenant defeasance").
Atrium may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If Atrium exercises its legal
defeasance option, payment of the exchange notes may not be accelerated because
of an Event of Default with respect thereto. If Atrium exercises its covenant
defeasance option, payment of the exchange notes may not be accelerated because
of an Event of Default specified in clause (iv), (vi), (vii), (viii) or (ix)
(with respect only to Significant Subsidiaries) under "Events of Default" above
or because of the failure of Atrium to comply with clause (ii) or (iii) in the
first paragraph and clause (iii) in the second paragraph under "Certain
Covenants--Consolidation, Merger, Sale of Assets, etc." above.
In order to exercise either defeasance option, Atrium must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the exchange notes to redemption or maturity, as the case may be,
and must comply with certain other conditions, including delivery to the Trustee
of an Opinion of Counsel to the effect that holders of the exchange notes will
not recognize income, gain or loss for Federal income tax purposes as a result
of such deposit and defeasance and will be subject to Federal income tax on the
same amount and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred (and, in the case of legal
defeasance only, such Opinion of Counsel must be based on a ruling of the
Internal Revenue Service or other change in applicable Federal income tax law).
CONCERNING THE TRUSTEE
State Street Bank and Trust Company is to be the Trustee under the Indenture
and has been appointed by Atrium as Registrar and Paying Agent with regard to
the exchange notes.
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of Atrium, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest (as defined) it
must eliminate such conflict or resign.
The holders of a majority in aggregate principal amount of the then
outstanding exchange notes issued under the Indenture will have the right to
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee. The Indenture provides that in case an
Event of Default shall occur (which shall not be cured) the Trustee will be
required, in the exercise of its power, to use the degree of care of a prudent
man in the conduct of his own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any of the holders of the exchange notes issued
thereunder, unless they shall have offered to the Trustee security and indemnity
satisfactory to it.
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GOVERNING LAW
The Indenture provides that it, the exchange notes and the Guarantees will
be governed by, and construed in accordance with, the laws of the State of New
York without giving effect to applicable principles of conflict of laws to the
extent that the application of the law of another jurisdiction would be required
thereby.
CERTAIN DEFINITIONS
"Additional Assets" means (1) any property or assets, other than
Indebtedness and Capital Stock, in a Related Business; (2) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by Atrium or a Restricted Subsidiary of Atrium; (3) Capital
Stock constituting a minority interest in any Person that at such time is a
Restricted Subsidiary of Atrium; or (4) Permitted Investments described in
clause (8) of the definition thereof; PROVIDED, HOWEVER, that, in the case of
clauses (2) and (3), such Restricted Subsidiary is primarily engaged in a
Related Business.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
the amount by which
(x) the fair value of the property of such Guarantor exceeds the total
amount of liabilities, including the probable liability of such Guarantor with
respect to its contingent liabilities, but excluding liabilities under the
Guarantee of such Guarantor at such date, and
(y) the present fair salable value of the assets of such Guarantor at such
date exceeds the amount that will be required to pay the probable liability of
such Guarantor on its debts, excluding debt in respect of the Guarantee, as they
become absolute and matured.
"Affiliate" of any specified Person means
(1) any other Person, directly or indirectly, controlling or controlled by
or under direct or indirect common control with such specified Person, or
(2) any other Person that owns 10.0% or more of any class of Capital Stock
of the specified Person.
For the purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Ardshiel is an "Affiliate" of Atrium on the Issue Date based on its
contractual rights to direct the management and policies of Atrium.
"Affiliate Transaction" has the meaning set forth under subheading
"--Certain Covenants-- Limitation on Transactions with Affiliates."
"Ardshiel" means Ardshiel, Inc.
"Asset Acquisition" means (1) an Investment by Atrium or any Restricted
Subsidiary in any other Person pursuant to which such Person will become a
Restricted Subsidiary or will be merged or consolidated with or into Atrium or
any Restricted Subsidiary or (2) the acquisition by Atrium or any Restricted
Subsidiary of the assets of any Person which constitute substantially all of the
assets of such Person or any division or line of business of such Person.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition of shares of Capital Stock of, or other equity interests in, a
Restricted Subsidiary, other than directors' qualifying shares, or of any other
property or other assets (each referred to for the purposes of this definition
as a "disposition") by Atrium or any of its Restricted Subsidiaries other than
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(1) a disposition by a Restricted Subsidiary to Atrium or by Atrium or a
Restricted Subsidiary to a Restricted Subsidiary,
(2) a disposition of inventory in the ordinary course of business,
(3) a disposition of obsolete or worn out equipment or equipment that is no
longer used or useful in the conduct of the business of Atrium and its
Restricted Subsidiaries and that is disposed of in each case in the ordinary
course of business,
(4) dispositions of property for net proceeds which, when taken collectively
with the net proceeds of any other such dispositions under this clause (4) that
were consummated since the beginning of the fiscal year in which such
disposition is consummated, do not exceed $1.0 million, and
(5) transactions permitted by the covenant described under subheading
"--Certain Covenants-- Consolidation, Merger, Sale of Assets, Etc." and the
creation of any Lien not prohibited by the covenant described under "--Certain
Covenants--Limitation on Liens."
A Restricted Payment or other payment or Investment made in compliance with
the covenant described under subheading "--Certain Covenants--Limitation on
Restricted Payments" shall not constitute an Asset Disposition except for
purposes of determination of the Consolidated Coverage Ratio.
"Atrium Holdings" means Atrium Corporation, a Delaware corporation and the
owner on the date hereof of all the outstanding capital stock of Atrium, and its
successors.
"Atrium Holdings Discount Exchange Notes" means the 12% senior discount
debentures due 2010 of Atrium Holdings, having an aggregate principal amount at
maturity of $80,562,000 as of the Issue Date.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value, discounted at the
interest rate borne by the exchange notes, compounded annually, of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction, including any period for
which such lease has been extended.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing
(1) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption multiplied by the amount of such payment by
(2) the sum of all such payments.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in equity of such Person, including any Preferred Stock, but excluding any debt
securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty.
"Cash Equivalents" means any of the following:
(1) any Investment in direct obligations of the United States of America or
any agency thereof or obligations guaranteed by the United States of America or
any agency thereof,
(2) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized
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under the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital surplus and
undivided profits aggregating in excess of $250 million, or the foreign currency
equivalent thereof, and whose long-term debt, or whose parent holding company's
long term debt, is rated "A", or such similar equivalent rating, or higher by at
least one nationally recognized statistical rating organization, as defined in
Rule 436 under the Securities Act,
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered into
with a bank meeting the qualifications described in clause (2) above,
(4) Investments in commercial paper, maturing not more than 180 days after
the date of acquisition, issued by a corporation, other than an Affiliate of
Atrium, organized and in existence under the laws of the United States of
America or any foreign country recognized by the United States of America with a
rating at the time as of which any investment therein is made of "P-1", or
higher, according to Moody's Investors Service, Inc. or "A-1", or higher,
according to Standard and Poor's Ratings Group,
(5) Investments in securities with maturities of six months or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A-2" by Standard & Poor's Ratings
Group or "A" by Moody's Investors Service, Inc., and
(6) Investments in mutual funds whose investment guidelines restrict such
funds' investments to those satisfying the provisions of any or all of clauses
(1) through (5) above.
"Change of Control"means the occurrence of any of the following events:
(1) Atrium consolidates with, or merges with or into, another Person or
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person, in any such event pursuant to
a transaction in which the outstanding Voting Stock of Atrium is converted
into or exchanged for cash, securities or other property, other than any
such transaction where
(a) the outstanding Voting Stock of Atrium is converted into or exchanged
for (1) Voting Stock of the surviving or transferee corporation or its parent
corporation and/or (2) cash, securities and other property in an amount which
could be paid by Atrium as a Restricted Payment under the applicable indenture,
and
(b) immediately after such transaction no "person" or "group", as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act, excluding Permitted
Holders, is the "beneficial owner", as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, directly or indirectly, of more than 50% of the total voting
power of the then outstanding Voting Stock of the surviving or transferee
corporation, as applicable;
(2) a majority of the board of directors of Atrium shall consist of
Persons who are not Continuing Directors of Atrium; or
(3)
(a) prior to the consummation of an Initial Public Offering, the Permitted
Holders fail to collectively beneficially own, within the meaning of Rules 13d-3
and 13d-5 under the Exchange Act, directly or indirectly, at least a majority of
the total voting power of then outstanding Voting Stock of Atrium or fail to
have the ability to appoint a majority of the board of directors of Atrium, or
(b) at or after the consummation of an Initial Public Offering, (1) any
Person or Group, other than the Permitted Holders, shall (A) beneficially own,
within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act, directly or
indirectly, more than 50% of the total voting power of the then outstanding
Voting Stock of Atrium or (B) have the right or power to appoint, directly or
indirectly, a majority of the board of directors of Atrium.
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PROVIDED that any Person or group shall be deemed to beneficially own any
Voting Stock beneficially owned by any other Person (the "parent entity") so
long as such Person or group beneficially owns, directly or indirectly, a
majority of the then outstanding Voting Stock of the parent entity and no other
Person or group has the right to designate or appoint a majority of the
directors of such parent entity.
"Commodity Agreement"means any commodity future contract, commodity option
or other similar agreement or arrangement entered into by Atrium or any
Restricted Subsidiary that is designed to protect Atrium or any Restricted
Subsidiary against fluctuations in the price of commodities used by Atrium or a
Restricted Subsidiary as raw materials in the ordinary course of business.
"Consolidated Cash Flow"for any period means the Consolidated Net Income for
such period, plus the following to the extent deducted in calculating such
Consolidated Net Income:
(1) income tax expense,
(2) Consolidated Interest Expense,
(3) depreciation expense,
(4) amortization expense,
(5) exchange or translation losses on foreign currencies, and
(6) all other noncash items reducing Consolidated Net Income, excluding any
noncash item to the extent it represents an accrual of or reserve for cash
disbursements for any subsequent period prior to the Stated Maturity of the
exchange notes, and less, to the extent added in calculating Consolidated Net
Income, (x) exchange or translation gains on foreign currencies, (y) noncash
items, excluding such noncash items to the extent they represent an accrual for
cash receipts reasonably expected to be received prior to the Stated Maturity of
the exchange notes, and (z) dividends or distributions paid pursuant to clause
(4) under the second paragraph in the covenant described under "--Certain
Covenants--Limitation on Restricted Payments," in each case for such period.
Notwithstanding the foregoing, the income tax expense, depreciation expense
and amortization expense of a Subsidiary of Atrium shall be included in
Consolidated Cash Flow only to the extent, and in the same proportion, that the
net income of such Subsidiary was included in calculating Consolidated Net
Income. For any period for which Consolidated Cash Flow is being measured that
includes the fiscal quarter ended March 31, 1999, severance payments made during
such fiscal quarter in an amount not to exceed $1.8 million shall be added back
to Consolidated Cash Flow to the extent deducted in the calculation thereof.
"Consolidated Coverage Ratio"as of any date of determination means the ratio of
(i) the aggregate amount of Consolidated Cash Flow for the period of the most
recent four consecutive fiscal quarters ending prior to the date of such
determination and as to which financial statements are available to (ii)
Consolidated Interest Expense for such four fiscal quarters; PROVIDED, HOWEVER,
that
(1) if Atrium or any of the Restricted Subsidiaries has Incurred any
Indebtedness since the beginning of such period through the date of
determination of the Consolidated Coverage Ratio that remains outstanding or if
the transaction giving rise to the need to calculate Consolidated Coverage Ratio
is an incurrence of Indebtedness, or both, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a PRO FORMA basis to
(A) such Indebtedness, other than Indebtedness incurred pursuant to the
second paragraph under the covenant described under subheading "--Certain
Covenants--Limitation on Indebtedness" on the date of determination, as if such
Indebtedness had been Incurred on the first day of such period, PROVIDED that,
if such Indebtedness is Incurred under a revolving credit facility or similar
arrangement or under any predecessor revolving credit or similar arrangement,
only that portion of such Indebtedness that constitutes the one year projected
average balance of such Indebtedness shall be deemed outstanding for purposes of
this calculation, and
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(B) the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period,
(2) if since the beginning of such period any Indebtedness of Atrium or any
of the Restricted Subsidiaries has been repaid, repurchased, defeased or
otherwise discharged, other than Indebtedness under a revolving credit or
similar arrangement unless such revolving credit Indebtedness has been
permanently repaid and has not been replaced, Consolidated Interest Expense for
such period shall be calculated after giving PRO FORMA effect thereto as if such
Indebtedness had been repaid, repurchased, defeased or otherwise discharged on
the first day of such period,
(3) if since the beginning of such period Atrium or any of its Restricted
Subsidiaries shall have made any Asset Disposition or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an Asset
Disposition, Consolidated Cash Flow for such period shall be reduced by an
amount equal to the Consolidated Cash Flow, if positive, attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow, if negative,
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be
(a) reduced by an amount equal to the Consolidated Interest Expense
attributable to any Indebtedness of Atrium or any of the Restricted Subsidiaries
repaid, repurchased, defeased or otherwise discharged with respect to Atrium and
its continuing Restricted Subsidiaries in connection with such Asset Disposition
for such period or, if the Capital Stock of any Restricted Subsidiary of Atrium
is sold, transferred or otherwise disposed of, the Consolidated Interest Expense
for such period directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent Atrium and the continuing Restricted Subsidiaries are
no longer liable for such Indebtedness after such sale, transfer or other
disposition, and
(b) increased by interest income attributable to the assets which are the
subject of such Asset Disposition for such period,
(4) if since the beginning of such period Atrium or any of its Restricted
Subsidiaries shall have made an Asset Acquisition, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
PRO FORMA effect thereto, including the incurrence of any Indebtedness, as if
such Asset Acquisition occurred on the first day of such period, and (5) if
since the beginning of such period any Person that subsequently became a
Restricted Subsidiary of Atrium or was merged with or into Atrium or any
Restricted Subsidiary of Atrium since the beginning of such period shall have
made any Asset Disposition or Asset Acquisition that would have required an
adjustment pursuant to clause (3) or (4) above if made by Atrium or a Restricted
Subsidiary of Atrium during such period, Consolidated Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving PRO FORMA
effect thereto as if such Asset Disposition or Asset Acquisition occurred on the
first day of such period.
For purposes of this definition, whenever PRO FORMA effect is to be given to
an Asset Acquisition, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the PRO FORMA calculations shall be determined
in accordance with GAAP and Regulation S-X under the Securities Act, to the
extent applicable, in good faith by a responsible financial or accounting
officer of Atrium. If any Indebtedness bears a floating rate of interest and is
being given PRO FORMA effect, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period, taking into account any Interest Rate
Agreement applicable to such Indebtedness if such Interest Rate Agreement has a
remaining term that extends at least until the end of such period.
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"Consolidated Interest Expense"means, for any period, the total interest
expense of Atrium and the Restricted Subsidiaries for such period as determined
on a consolidated basis in accordance with GAAP, plus, to the extent not
included in such interest expense,
(1) interest expense attributable to capital leases,
(2) amortization of debt discount,
(3) capitalized interest,
(4) noncash interest expense,
(5) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers acceptance financing,
(6) interest actually paid by Atrium or any such Restricted Subsidiary under
any guarantee of Indebtedness or other obligation of any other Person,
(7) net payments pursuant to Interest Rate Agreements, and
(8) the product of (x) all cash and Disqualified Stock dividends in respect
of all Preferred Stock of Subsidiaries and Disqualified Stock of Atrium held by
Persons other than Atrium or a Wholly-Owned Subsidiary times (y) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal, and less, to the extent included in such interest
expense, the amortization of capitalized debt issuance costs.
"Consolidated Net Income" means, for any period, the net income (loss) of
Atrium and the consolidated Restricted Subsidiaries for such period determined
in accordance with GAAP; PROVIDED, HOWEVER, that there shall not be included in
such Consolidated Net Income:
(1) any net income (loss) of any person acquired by Atrium or any of its
Restricted Subsidiaries in a pooling of interests transaction for any period
prior to the date of such acquisition,
(2) any net income of any Restricted Subsidiary of Atrium to the extent
that the payment of dividends or the making of distributions by such
Restricted Subsidiary is prohibited, directly or indirectly, by contract,
operation of law or otherwise,
(3) any gain or loss realized upon the sale or other disposition of any
assets of Atrium or its consolidated Restricted Subsidiaries which are not
sold or otherwise disposed of in the ordinary course of business and any
gain or loss realized upon the sale or other disposition of any Capital
Stock of any Person,
(4) any extraordinary gain or loss, including non-recurring expenses
related to the Atrium transactions,
(5) the cumulative effect of a change in accounting principles,
(6) noncash restructuring charges or writeoffs in connection with or
related to the Atrium transactions recorded before or within the one year
period following the Issue Date,
(7) the net income of any Person, other than a Restricted Subsidiary,
except to the extent of the lesser of (A) dividends or distributions paid to
Atrium or any of its Restricted Subsidiaries, unless and to the extent such
Restricted Subsidiary is subject to clause (2) above, by such Person and (B)
the net income of such Person, but in no event less than zero, and the net
loss of such Person, other than an Unrestricted Subsidiary, the net income
and net loss of which will not be included, shall be included only to the
extent of the aggregate Investment of Atrium or any of its Restricted
Subsidiaries in such Person, and
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(8) any noncash expenses attributable to grants or exercises of employee
stock options.
Notwithstanding the foregoing, for the purpose of the covenant described
under subheading "--Certain Covenants--Limitation on Restricted Payments" only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted Subsidiaries
to Atrium or to a Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (3)(D) under the first paragraph thereof.
"Continuing Director" means, as of the date of determination, any Person who
(1) was a member of the board of directors of such Person on the date of
the Indenture,
(2) was nominated for election or elected to the board of directors of
such Person with the affirmative vote of a majority of the Continuing
Directors who were members of such board of directors at the time of such
nomination or election, or
(3) is a representative of a Permitted Holder. "covenant defeasance"has
the meaning set forth under "--Defeasance."
"Credit Facility" means the Credit Agreement, dated as of October 2, 1998,
as amended, among Atrium, Atrium Holdings, Parent, the guarantors named therein,
Merrill Lynch Capital Corporation, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as Lead Arranger, Syndication Agent and Documentation Agent, and
BankBoston, N.A., as Administrative Agent, and any other financial institutions
from time to time party thereto, together with the related documents thereto, in
each case as such agreements may be amended, supplemented or otherwise modified
from time to time, including any agreement extending the maturity of,
refinancing, replacing, increasing the total commitment of, or otherwise
restructuring all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Defeasance" has the meaning set forth under "--Defeasance."
"Designated Senior Indebtedness" means
(a) all Senior Indebtedness, liquidated or contingent, outstanding under
the Credit Facility, and
(b) any other Senior Indebtedness of Atrium which, at the time of
determination, is in an aggregate principal amount outstanding or committed
for of at least $30.0 million and is specifically designated in the
instrument governing such Senior Indebtedness as "Designated Senior
Indebtedness" by Atrium.
"Disqualified Stock" means any Capital Stock which, by its terms, or by the
terms of any security into which it is convertible or for which it is
exchangeable, or upon the happening of any event
(1) matures, excluding any maturity as the result of an optional
redemption by the issuer thereof, or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise or is redeemable at the option of the
holder thereof, except upon the occurrence of a Change of Control or Asset
Disposition if such Capital Stock requires that the Change of Control Offer
or Net Available Cash Offer, with respect to the exchange notes be completed
prior to any similar offer being made with respect to such Capital Stock, in
whole or in part, on or prior to the final stated maturity of the exchange
notes, or
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(2) is convertible into or exchangeable, unless at the sole option of
the issuer thereof, for (a) debt securities or (b) any Capital Stock
referred to in (1) above, in each case at any time prior to the final stated
maturity of the exchange notes.
"Event of Default" has the meaning set forth under "--Events of Default."
"Fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length transaction, for cash, between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. Fair market value shall be determined
by the board of directors of Atrium acting in good faith evidenced by a board
resolution thereof delivered to the trustee.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date hereof, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
All ratios and computations contained in the indenture shall be computed in
conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person
(1) to purchase or pay, or advance or supply funds for the purchase or
payment of, such Indebtedness of such other Person, whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise, or
(2) entered into for purposes of assuring in any other manner the
obligee to such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof, in whole or in part,
PROVIDED, HOWEVER, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "guarantee" used as a verb has a corresponding meaning.
"Guarantee" means the guarantee by any Guarantor of Atrium's obligations
under the indenture and the exchange notes pursuant to a guarantee given in
accordance with the indenture.
"Guarantor" means the Subsidiaries listed as guarantors in the indenture and
any other Subsidiary which is a guarantor of the exchange notes, including any
Person that executes or is required after the date of the indenture to execute a
guarantee of the exchange notes as described in "--Guarantees" and "--Certain
Covenants--Limitation on Guarantees by Restricted Subsidiaries," until a
successor replaces such party pursuant to the applicable provisions of the
indenture and, thereafter, shall mean such successor; PROVIDED, that for
purposes hereof the term "Guarantor" shall not include any Unrestricted
Subsidiary unless specifically provided otherwise or any Person that has been
released from its Guarantee in accordance with the terms of the Indenture. As of
the Issue Date, all of Atrium's Restricted Subsidiaries will be Guarantors.
"Incur" means issue, assume, guarantee, incur or otherwise become liable
for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Restricted Subsidiary shall be deemed
to be incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary.
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"Indebtedness" means, with respect to any Person on any date of
determination,
(1) the principal of and premium, if any, in respect of indebtedness of
such Person for borrowed money,
(2) the principal of and premium, if any, in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments,
(3) all obligations of such Person in respect of letters of credit or
other similar instruments, including reimbursement obligations with respect
thereto, other than obligations with respect to letters of credit securing
obligations, entered into in the ordinary course of business of such Person
to the extent that such letters of credit are not drawn upon or, if and to
the extent drawn upon, such drawing is reimbursed no later than the third
business day following receipt by such Person of a demand for reimbursement
following payment on the letter of credit,
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except trade payables and accrued
expenses incurred in the ordinary course of business payable in accordance
with industry practices,
(5) all Capitalized Lease Obligations and all Attributable Indebtedness
of such Person,
(6) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
PROVIDED, HOWEVER, that the amount of such Indebtedness shall be the lesser
of the fair market value of such asset at such date of determination and the
amount of such Indebtedness of such other Person,
(7) all Indebtedness of other Persons to the extent guaranteed by such
Person,
(8) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or, with
respect to any Restricted Subsidiary of Atrium, any Preferred Stock of such
Restricted Subsidiary to the extent such obligation arises on or before the
Stated Maturity of the exchange notes, but excluding any accrued dividends,
and
(9) to the extent not otherwise included in this definition, net
obligations under Currency Agreements, Interest Rate Agreements and
Commodity Agreements.
"Initial Public Offering" means a primary underwritten public offering of
the common stock of Parent, Atrium Holdings or Atrium or any other direct or
indirect holding company thereof, other than any public offering or sale
pursuant to a registration statement on Form S-8 or a comparable form.
"Interest Rate Agreement" means with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan, other
than advances to customers in the ordinary course of business that are recorded
as accounts payable on the balance sheet of such Person, or other extension of
credit, including by way of guarantee or similar arrangement, but excluding any
debt or extension of credit represented by a bank deposit other than a time
deposit, or capital contribution to, by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others, or any purchase or acquisition of Capital Stock, Indebtedness or
other similar instruments issued by such Person. For purposes of the covenant
described under subheading "--Certain Covenants--Limitation on Restricted
Payments,"
(1) "Investment" shall include the portion, proportionate to Atrium
equity interest in a Restricted Subsidiary to be designated as an
Unrestricted Subsidiary, of the fair market value of the net assets of such
Restricted Subsidiary of Atrium at the time that such Restricted Subsidiary
is
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designated an Unrestricted Subsidiary and shall exclude the portion,
proportionate to Atrium's equity interest in an Unrestricted Subsidiary to
be redesignated as a Restricted Subsidiary, of the fair market value of the
net assets of such Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is redesignated as a Restricted Subsidiary,
(2) any property transferred to or from an Unrestricted Subsidiary shall
be valued at its fair market value at the time of such transfer, and
(3) the amount of any Investment shall be the original cost of such
Investment plus the cost of all additional Investments by Atrium or any of
its Restricted Subsidiaries, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to
such Investment.
"Issue Date" means the original issue date of the exchange notes under the
indenture.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including any conditional sale or other title retention
agreement or lease in the nature thereof,
"Net Available Cash"from an Asset Disposition means cash payments received,
including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets subject to such Asset Disposition, therefrom, in
each case net of
(1) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, foreign and local taxes
required to be paid or accrued as a liability under GAAP, as a consequence
of such Asset Disposition,
(2) all payments made on any Indebtedness that is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any Lien
upon such assets, or which must by its terms, or in order to obtain a
necessary consent to such Asset Disposition or by applicable law, be repaid
out of the proceeds from such Asset Disposition,
(3) all distributions and other payments required to be made to any
Person owning a beneficial interest in assets subject to sale or minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition,
(4) the deduction of appropriate amounts to be provided by the seller as
a reserve, in accordance with GAAP, against any liabilities associated with
the assets disposed of in such Asset Disposition; PROVIDED, HOWEVER, that
upon any reduction in such reserves, other than to the extent resulting from
payments of the respective reserved liabilities, Net Available Cash shall be
increased by the amount of such reduction to reserves and retained by Atrium
or any Restricted Subsidiary of Atrium after such Asset Disposition, and
(5) any portion of the purchase price from an Asset Disposition placed
in escrow, whether as a reserve for adjustment of the purchase price, for
satisfaction of indemnities in respect of such Asset Disposition or
otherwise in connection with such Asset Disposition; PROVIDED, HOWEVER, that
upon the termination of such escrow, Net Available Cash shall be increased
by any portion of funds therein released to Atrium or any Restricted
Subsidiary. "Net Available Cash Offer"has the meaning set forth under
"--Certain Covenants--Limitation on Sale of Assets." "Non-Recourse
Debt"means Indebtedness as to which neither Atrium nor any Restricted
Subsidiary
(a) provides any guarantee or credit support of any kind, including
any undertaking, guarantee, indemnity, agreement or instrument that would
constitute Indebtedness, other than a non-recourse pledge of the Capital
Stock of an Unrestricted Subsidiary securing Indebtedness of such
Unrestricted Subsidiary or
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(b) is directly or indirectly liable as a guarantor or otherwise.
"Exchange Notes Amount" has the meaning set forth under "--Certain
Covenants--Limitation on Sale of Assets."
"Exchange Notes Portion of Unutilized Net Available Cash" has the meaning
set forth under subheading "--Certain Covenants--Limitation on Sale of Assets."
"Other Guaranteed Indebtedness"has the meaning set forth under subheading
"--Certain Covenants--Limitation on Guarantees by Restricted Subsidiaries."
"Other Indebtedness" has the meaning set forth under subheading "--Certain
Covenants--Limitation on Sale of Assets."
"Parent" means D and W Holdings, Inc., a Delaware corporation and the owner
on the date hereof of all the outstanding capital stock of Atrium Holdings, and
its successors.
"Permitted Holder"means (1) GE Investment Private Placement Partners II, a
Limited Partnership, (2) Ardshiel, or (3) any of their Affiliates.
"PERMITTED INDEBTEDNESS" means
(1) (A) Indebtedness of Atrium owing to and held by any Restricted
Subsidiary so long as such Indebtedness is subordinated to the
exchange notes to the same extent that the exchange notes are
subordinated to Senior Indebtedness or
(B) Indebtedness of a Restricted Subsidiary owing to and held by
Atrium or any Restricted Subsidiary;
PROVIDED, HOWEVER, that any subsequent issuance or transfer of any Capital
Stock or any other event which results in any such Restricted Subsidiary ceasing
to be a Restricted Subsidiary or any subsequent transfer of any such
Indebtedness, except, in the case of subclause (A), to a Restricted Subsidiary
or, in the case of subclause (B), to Atrium or a Restricted Subsidiary), shall
be deemed, in each case to constitute the Incurrence of such Indebtedness by the
issuer thereof;
(2) Indebtedness represented by (x) the exchange notes, (y) any
Indebtedness, other than the Indebtedness described in subclauses (1), (2)
and (4) of the second paragraph under subheading "--Certain
Covenants--Limitation on Indebtedness" and other than Indebtedness Incurred
pursuant to clause (1) above or clauses (4), (5), (6) or (7) below)
outstanding on the Issue Date and (z) any Refinancing Indebtedness Incurred
in respect of any Indebtedness described in this clause (2) or Incurred as
described in the first paragraph under subheading "--Certain
Covenants--Limitation on Indebtedness";
(3) (A) Indebtedness of a Restricted Subsidiary Incurred and outstanding
on the date on which such Restricted Subsidiary was acquired by Atrium,
other than Indebtedness Incurred as consideration in, or to provide all or
any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Subsidiary or was otherwise acquired by
Atrium; PROVIDED, HOWEVER, that at the time such Restricted Subsidiary is
acquired by Atrium, Atrium would have been able to Incur $1.00 of additional
Indebtedness as described in the first paragraph under subheading "--Certain
Covenants--Limitation on Indebtedness" after giving effect to the Incurrence
of such Indebtedness pursuant to this clause (3) and (B) Refinancing
Indebtedness Incurred by a Restricted Subsidiary in respect of Indebtedness
Incurred by such Restricted Subsidiary pursuant to this clause (3);
(4) Indebtedness of Atrium or any Restricted Subsidiary's
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(A) in respect of performance bonds, bankers' acceptances and surety
or appeal bonds provided by Atrium or any of the Restricted Subsidiaries
to their customers in the ordinary course of their business and not for
money borrowed,
(B) in respect of performance bonds or similar obligations of Atrium
or any of the Restricted Subsidiaries for or in connection with pledges,
deposits or payments made or given in the ordinary course of business and
not for money borrowed in connection with or to secure statutory,
regulatory or similar obligations, including obligations under health,
safety or environmental obligations,
(C) arising from guarantees to suppliers, lessors, licensees,
contractors, franchises or customers of obligations, other than
Indebtedness, incurred in the ordinary course of business and not for
money borrowed, and
(D) under Currency Agreements, Interest Rate Agreements and Commodity
Agreements;
PROVIDED, HOWEVER, that in the case of subclause (D), such agreements are
entered into for bona fide hedging purposes of Atrium or its Restricted
Subsidiaries and, in the case of Currency Agreements and Interest Rate
Agreements, such Currency Agreements and Interest Rate Agreements correspond in
terms of notional amount, duration, currencies and interest rates, as
applicable, to Indebtedness of Atrium or its Restricted Subsidiaries Incurred
without violation of the indenture or the business transactions of Atrium or the
Restricted Subsidiaries on customary terms entered into in the ordinary course
of business and otherwise in compliance with the indenture, as applicable;
(5) Indebtedness of Atrium or any Restricted Subsidiary's arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from guarantees or letters of credit, surety bonds
or performance bonds securing any obligations of Atrium or any of the
Restricted Subsidiaries pursuant to such agreements, in each case Incurred
in connection with the disposition of any business, assets or Restricted
Subsidiary of Atrium, other than guarantees of Indebtedness or other
obligations Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary of Atrium for the purpose of
financing such acquisition, in a principal amount not to exceed the gross
proceeds actually received by Atrium or any of the Restricted Subsidiaries
in connection with such disposition;
(6) Indebtedness consisting of
(A) guarantees by Atrium or any Restricted Subsidiary of Indebtedness
Incurred by a Restricted Subsidiary that is a Guarantor without violation
of the Indenture, and
(B) guarantees by a Restricted Subsidiary of Indebtedness Incurred by
Atrium without violation of the indenture, so long as such Restricted
Subsidiary could have Incurred such Indebtedness directly without
violation of the indenture; and
(7) Indebtedness of Atrium or any Restricted Subsidiary arising from the
honoring by a bank or other financial institution of a check, draft or
similar instrument drawn against insufficient funds in the ordinary course
of business; PROVIDED that such Indebtedness is extinguished within two
Business Days of its incurrence.
"PERMITTED INVESTMENT" means an Investment by Atrium or any of the
Restricted Subsidiaries in:
(1) Atrium or a Restricted Subsidiary of Atrium; PROVIDED, HOWEVER, that
the primary business of such Restricted Subsidiary is a Related Business;
(2) another Person if as a result of such Investment such other Person
becomes a Restricted Subsidiary of Atrium or is merged or consolidated with
or into, or transfers or conveys all or substantially all its assets to,
Atrium or a Restricted Subsidiary of Atrium; PROVIDED, HOWEVER, that in each
case such Person's primary business is a Related Business;
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(3) Cash Equivalents;
(4) receivables owing to Atrium or any of the Restricted Subsidiaries,
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(6)
(a) loans or advances by Atrium or a Restricted Subsidiary to
employees of Parent, Atrium Corporation, Atrium or any Subsidiary of
Atrium for purposes of purchasing Atrium's, Atrium Corporation's or
Parent's common stock in an aggregate amount outstanding at any one time
not to exceed $5.0 million, and
(b) other loans and advances by Atrium or a Restricted Subsidiary to
employees of Parent, Atrium Corporation, Atrium or any Subsidiary of
Atrium made in the ordinary course of business of Atrium or such
Restricted Subsidiary;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to Atrium or any of the
Restricted Subsidiaries or in satisfaction of judgments or claims;
(8) a Person engaged in a Related Business or a loan or advance to
Atrium the proceeds of which are used solely to make an Investment in a
Person engaged in a Related Business or a guarantee by Atrium of
Indebtedness of any Person in which such Investment has been made; PROVIDED,
HOWEVER, that no Permitted Investments may be made pursuant to this clause
(8) to the extent the amount thereof would, when taken together with all
other Permitted Investments made pursuant to this clause (8), exceed $5.0
million in the aggregate, plus, to the extent not previously reinvested, any
return of capital realized on Permitted Investments made pursuant to this
clause (8), or any release or other cancellation of any guarantee
constituting such Permitted Investment;
(9) Persons to the extent such Investment is received by Atrium or any
Restricted Subsidiary as consideration for asset dispositions effected in
compliance with the covenant described under subheading "--Certain
Covenants--Limitation on Sale of Assets";
(10) prepayments and other credits to suppliers made in the ordinary
course of business of Atrium and the Restricted Subsidiaries; and
(11) Investments in connection with pledges, deposits, payments or
performance bonds made or given in the ordinary course of business and not
for money borrowed in connection with or to secure statutory, regulatory or
similar obligations, including obligations under health, safety or
environmental obligations.
"PERMITTED JUNIOR SECURITIES" means,
(1) Capital Stock, other than Disqualified Stock, issued by Atrium to
pay interest on the exchange notes or issued in exchange for the exchange
notes,
(2) securities substantially identical to the exchange notes issued by
Atrium in payment of interest accrued thereon or
(3) securities issued by Atrium which are subordinated to the Senior
Indebtedness at least to the same extent as the exchange notes and having an
Average Life at least equal to the remaining Average Life of the exchange
notes.
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"PERMITTED LIENS" means:
(1) Liens on property or shares of Capital Stock of a Person existing at
the time such Person is merged into or consolidated with Atrium or any
Restricted Subsidiary; PROVIDED, HOWEVER, that such
Liens were in existence prior to the contemplation of such merger or
consolidation and do not secure any property or assets of Atrium or any
Restricted Subsidiary other than the property or assets subject to the Liens
prior to such merger or consolidation;
(2) Liens on a property existing at the time of acquisition thereof by
Atrium or any Restricted Subsidiary; PROVIDED that such Liens were not
created, incurred or assumed in connection with such acquisition;
(3) Liens existing on the Issue Date;
(4) Liens in favor of Atrium or any Restricted Subsidiary so long as
held by Atrium or any Restricted Subsidiary;
(5) Liens securing Indebtedness consisting of Capitalized Lease
Obligations, purchase money obligations, mortgage financings, industrial
revenue bonds or other monetary obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or installation of assets used in the business of Atrium or the
Restricted Subsidiaries or in a Related Business, or repairs, additions or
improvements to such assets; PROVIDED, HOWEVER, that any such Lien encumbers
only the assets so financed, purchased, constructed or improved;
(6) Liens to secure any refinancings, renewals, extensions,
modifications or replacements (collectively, "refinancing"), in whole or in
part, of any Indebtedness secured by Liens referred to in the clauses above
so long as such Lien does not extend to any other property, other than
improvements thereto;
(7) Liens securing letters of credit or surety bonds entered into in the
ordinary course of business and consistent with past business practice and
not for money borrowed; and
(8) Liens on and pledges of the Capital Stock of any Unrestricted
Subsidiary securing any Indebtedness of such Unrestricted Subsidiary.
"EQUITY OFFERING" means any public offering registered with the SEC for cash
by Atrium Holdings or Parent, to the extent the net cash proceeds thereof are
contributed to the common equity capital of Atrium, or Atrium of its Capital
Stock, other than Disqualified Capital Stock.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"PREFERRED STOCK", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes which is preferred as to the payment of
dividends, or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such corporation, over shares of Capital Stock of
any other class of such corporation.
"APPLICABLE PREMIUM" means, with respect to a note at any redemption date,
the greater of
(a) 1.0% of the principal amount of such note on such redemption date,
and
(b) the excess of (A) the present value at such time of (1) the
redemption price of such Note on May 1, 2004 (as described above under
subheading "--Optional Redemption") plus (2) all required interest payments
due on such note through May 1, 2004, computed using a discount rate equal
to the Treasury Rate plus 50 basis points, over (B) the principal amount of
such note on such redemption date.
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"QUALIFIED CAPITAL STOCK" of any Person shall mean any Capital Stock of such
Person which is not Disqualified Stock.
"RECAPITALIZATION DATE" means October 2, 1998.
"REFINANCING INDEBTEDNESS" means Indebtedness, including Disqualified Stock,
that refunds, refinances, replaces, renews, repays or extends, including
pursuant to any defeasance or discharge mechanism, (collectively, "refinances,"
and "refinanced" shall have a correlative meaning) any Indebtedness existing on
the date of the Indenture or Incurred in compliance with the indenture,
including Indebtedness of Atrium that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary, including Indebtedness that
refinances Refinancing Indebtedness; PROVIDED, HOWEVER, that
(1) the Refinancing Indebtedness has a Stated Maturity no earlier than
the earlier of (A) the Stated Maturity of the exchange notes and (B) the
Stated Maturity of the Indebtedness being refinanced,
(2) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than the
lesser of (A) the Average Life of the exchange notes and (B) the Average
Life of the Indebtedness being refinanced, and
(3) such Refinancing Indebtedness is Incurred in an aggregate principal
amount, or if issued with original issue discount, an aggregate issue price,
that is equal to or less than the sum of the aggregate principal amount, or
if issued with original issue discount, the aggregate accreted value, then
outstanding of the Indebtedness being refinanced, plus the amount of any
accrued or unpaid interest thereon, plus the amount of any stated or
reasonably determined prepayment premium paid in connection with such
refinancing, plus the amount of expenses of Atrium or a Restricted
Subsidiary incurred in connection with such refinancing.
"RELATED BUSINESS" means any business which is the same as or related,
ancillary or complementary to any of the businesses of Atrium and its Restricted
Subsidiaries on the Issue Date, as reasonably determined by Atrium's board of
directors.
"REPRESENTATIVE" means any trustee, agent or representative of an issue of
Senior Indebtedness.
"RESTRICTED PAYMENTS" has the meaning set forth under subheading "--Certain
Covenants--Limitation on Restricted Payments."
"RESTRICTED SUBSIDIARY" means any Subsidiary of Atrium other than an
Unrestricted Subsidiary.
"SALE/LEASEBACK TRANSACTION" means an arrangement relating to property now
owned or hereafter acquired whereby Atrium or a Restricted Subsidiary transfers
such property to a Person and Atrium or a Subsidiary leases it from such Person.
"SENIOR INDEBTEDNESS" means, with respect to Atrium or any Guarantor, as
applicable, the principal of, premium, if any, and interest, including interest
that would accrue but for the filing of a petition initiating any proceeding
under any state or federal bankruptcy laws, whether or not such claim is
allowable in such proceeding, on any Indebtedness of Atrium or such Guarantor
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to any Indebtedness of Atrium or such Guarantor,
"Senior Indebtedness" will include the principal of, premium, if any, and
interest, including interest that would accrue but for the filing of a petition
initiating any proceeding under any state or federal bankruptcy laws, whether or
not such claim is allowable in such proceeding, and all indemnity, fees,
expenses and other payment obligations from time to time owed to the lenders
under the Credit Facility.
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"Senior Indebtedness" shall not include, to the extent constituting
Indebtedness,
(1) Indebtedness evidenced by the exchange notes or the Guarantees,
(2) Indebtedness that is expressly subordinate or junior in right of
payment to any Indebtedness of Atrium or any Guarantor,
(3) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is without
recourse to Atrium or any Guarantor,
(4) Indebtedness which is represented by Disqualified Capital Stock,
(5) Indebtedness for goods, materials or services purchased in the
ordinary course of business or Indebtedness consisting of trade payables or
other current liabilities, other than any current liabilities owing under
the Credit Facility or the current portion of any long-term Indebtedness
which would constitute Senior Indebtedness but for the operation of this
clause (5),
(6) Indebtedness or other obligations of or amounts owed by Atrium or
any Guarantor for compensation to employees or for services rendered to
Atrium or such Guarantor,
(7) any liability for federal, state, local or other taxes owed or owing
by Atrium or any Guarantor,
(8) Indebtedness of Atrium or any Guarantor to a Subsidiary of Atrium
and
(9) that portion of any Indebtedness which at the time of issuance is
issued in violation of the Indenture, but, as to any such Indebtedness, no
such violation shall be deemed to exist for purposes of this clause (9) if
the holder(s) of such Indebtedness or their representative and the trustee
shall have received an Officers' Certificate of Atrium to the effect that
the incurrence of such Indebtedness does not violate the indenture.
"SENIOR SUBORDINATED INDEBTEDNESS" means the exchange notes, the Guarantees
and any other Indebtedness of Atrium or a Guarantor that either (x) specifically
provides that such Indebtedness ranks equally with the exchange notes or the
Guarantee of such Guarantor, in right of payment and is not subordinated by its
terms in right of payment to any Indebtedness or other obligation of Atrium or a
Guarantor, which is not Senior Indebtedness or (y) is otherwise deemed not to be
Senior Indebtedness pursuant to the definition thereof unless it meets the
definition of Subordinated Obligations.
"SIGNIFICANT SUBSIDIARY" means
(1) any Restricted Subsidiary that, together with its Restricted
Subsidiaries, would be a "Significant Subsidiary" of Atrium within the
meaning of Rule 1-02 under Regulation S-X promulgated by the SEC, and
(2) for purposes of "Events of Default," any other Restricted Subsidiary
that when aggregated with all other Restricted Subsidiaries that are not
Significant Subsidiaries as to which an event described under clauses (8) or
(9) under "Events of Default" has occurred, together with their Restricted
Subsidiaries, would constitute a Significant Subsidiary pursuant to clause
(1) above.
"STATED MATURITY" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.
"SUBORDINATED OBLIGATION" means any Indebtedness of Atrium or a Guarantor,
whether outstanding on the Issue Date or thereafter Incurred, which is
subordinate or junior in right of payment to the exchange notes or the Guarantee
of such Guarantor, as applicable, pursuant to a written agreement or by law,
including, without limitation, Disqualified Capital Stock.
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"SUBSIDIARY" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests, including partnership interests,
entitled to vote in the election of directors, managers or trustees thereof is
at the time owned or controlled, directly or indirectly, by
(1) such Person,
(2) such Person and one or more Subsidiaries of such Person or
(3) one or more Subsidiaries of such Person. Unless otherwise specified
herein, each reference to a Subsidiary shall refer to a Subsidiary of Atrium.
"SURVIVING PERSON" means, with respect to any Person involved in any
consolidation or merger, or any sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of its properties and assets as an
entirety, the Person formed by or surviving such merger or consolidation or the
Person to which such sale, assignment, conveyance, transfer or lease is made.
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of October
2, 1998, as amended on the Issue Date, by and among Parent and its subsidiaries
named therein, as the same may be amended from time to time in accordance with
its terms and the terms of the Credit Facility after the Issue Date so long as
such agreement as so amended is no less favorable to Atrium or the holders of
the exchange notes in any material respect than the Tax Sharing Agreement as
amended and in effect on the Issue Date.
"ATRIUM TRANSACTIONS" means (1) the recapitalization of Atrium that occurred
on the Recapitalization Date and (2) the acquisition by Atrium of all the
outstanding Capital Stock of Heat, Inc., H.I.G. Vinyl, Inc. and Champagne
Industries, Inc. on the Issue Date.
"UNRESTRICTED SUBSIDIARY" means
(1) any Subsidiary of Atrium that at the time of determination shall be
designated an Unrestricted Subsidiary by the board of directors in the manner
provided below and
(2) any Subsidiary of an Unrestricted Subsidiary.
The board of directors may designate any Subsidiary of Atrium to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or owns or holds any Lien on any property
of, Atrium or any Restricted Subsidiary of Atrium that is not a Subsidiary of
the Subsidiary to be so designated; PROVIDED, HOWEVER, that either
(A) the Subsidiary to be so designated has consolidated total assets of
$10,000 or less, or
(B) if such Subsidiary has consolidated total assets greater than $10,000,
then such designation would be permitted under the covenant described under
subheading "--Certain Covenants--Limitation on Restricted Payments."
The board of directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; PROVIDED, HOWEVER, that
(x) immediately after giving effect to such designation no Default shall
have occurred and be continuing and
(y) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately following such designation, if incurred at such time, would have
been permitted to be incurred for all purposes of the Indenture.
Any such designation by the board of directors shall be evidenced to the
holders of the exchange notes by promptly delivering to the Trustee a copy of
the board resolution giving effect to such designation and an officers'
certificate certifying that such designation complied with the foregoing
provisions.
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"UNUTILIZED NET AVAILABLE CASH" has the meaning set forth under subheading
"--Certain Covenants-- Limitation on Sale of Assets."
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged and which are not callable or redeemable at the
issuer's option.
"VOTING STOCK" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
"WHOLLY-OWNED SUBSIDIARY" means a Restricted Subsidiary of Atrium, at least
99% of the Capital Stock of which, other than directors' qualifying shares, is
owned by Atrium or another Wholly-Owned Subsidiary.
A "Public Market" exists at any time with respect to the common stock of
Atrium Holdings, Parent or Atrium if
(a) the common stock of Atrium Holdings, Parent or Atrium, as applicable, is
then registered with the SEC pursuant to Section 12(b) or 12(g) of the Exchange
Act and traded either on a national securities exchange or in the National
Association of Securities Dealers Automated Quotation System, and
(b) at least $50.0 million in gross proceeds from the sale of common stock
of Atrium Holdings, Parent or Atrium, as applicable, by means of an effective
registration statement under the Securities Act has been raised prior to such
time.
BOOK-ENTRY; DELIVERY AND FORM
The exchange notes will be represented by one or more, permanent global
notes in definitive, fully registered book-entry form of the global securities,
which will be registered in the name of a nominee of The Depositary Trust
Company and deposited on behalf of purchasers of the exchange notes represented
thereby with a custodian for DTC for credit to the respective accounts of the
purchasers, or to such other accounts as they may direct, at DTC.
THE GLOBAL SECURITIES. Atrium expects that pursuant to procedures
established by DTC
(a) upon deposit of the Global Securities, DTC or its custodian will credit
on its internal system portions of the Global Securities which shall be
comprised of the corresponding respective amount of the Global Securities to the
respective accounts of persons who have accounts with such depositary; and
(b) ownership of the exchange notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by DTC or
its nominee, with respect to interests of participants, as defined below, and
the records of participants, with respect to interests of persons other than
Participants.
Such accounts initially will be designated by or on behalf of the initial
purchaser and ownership of beneficial interests in the global securities will be
limited to persons who have accounts with DTC or participants or persons who
hold interests through participants. Noteholders may hold their interests in a
global security directly through DTC if they are participants in such system, or
indirectly through organizations which are participants in such system.
So long as DTC or its nominee is the registered owner or holder of any of
the exchange notes, DTC or such nominee will be considered the sole owner or
holder of such exchange notes represented by such global securities for all
purposes under the indenture and under the exchange notes represented thereby.
No beneficial owner of an interest in the global securities will be able to
transfer such interest except in accordance with the applicable procedures of
DTC in addition to those provided for under the indenture.
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Payments of the principal, premium, interest and other amounts on the
exchange notes represented by the global securities will be made to DTC or its
nominee as the registered owner thereof. None of Atrium, the trustee or any
paying agent under the indenture will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the global securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
Atrium expects that DTC or its nominee, upon receipt of any payment of the
principal, premium, interest or other amounts on the exchange notes represented
by the global securities, will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the global
securities as shown on the records of DTC or its nominee. Atrium also expects
that payments by participants to owners of beneficial interests in the global
securities held through such Participants will be governed by standing
instructions and customary practice as is now the case with securities held for
the accounts of customers registered in the names of nominees for such
customers. Such payment will be the responsibility of such participants.
Transfers between participants in DTC will be effected in accordance with DTC
rules and will be settled in immediately available funds.
DTC has advised Atrium that DTC will take any action permitted to be taken
by a holder of exchange notes, including the presentation of exchange notes for
exchange as described below, only at the direction of one or more participants
to whose account the DTC interests in the Global Securities are credited and
only in respect of the aggregate principal amount of as to which such
Participant or participants has or have given such direction.
DTC has advised Atrium as follows:
- DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a
clearing agency registered pursuant to the provisions of Section 17A of
the Exchange Act.
- DTC was created to hold securities for its Participants and facilitate the
clearance and settlement of securities transactions between Participants
through electronic book-entry changes in accounts of its Participants,
thereby eliminating the need for physical movement of certificates.
Participants include securities brokers and dealers, banks, trust companies
and clearing corporations and certain other organizations. Indirect access to
the DTC system is available to others such as banks, brokers, dealers and trust
companies or indirect participants that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the global securities among participants of
DTC, DTC is under no obligation to perform such procedures, and such procedures
may be discontinued at any time. None of Atrium, the trustee or the paying agent
will have any responsibility for the performance by DTC or its direct or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
CERTIFICATED SECURITIES. Interests in the global securities will be
exchanged for physical delivery of certificates or Certificated Securities only
if
(1) DTC is at any time unwilling or unable to continue as depositary for the
Global Securities, or DTC ceases to be a clearing agency registered under the
Exchange Act, and a successor depositary is not appointed by Atrium within 90
days, or
(2) an event of default under the Indenture has occurred and is continuing
with respect to the exchange notes.
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"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity, as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
applicable redemption date (or, if such Statistical Release is no longer
published, any publicly available source of similar market data), most nearly
equal to the period from such redemption date to May 1, 2004; PROVIDED, HOWEVER,
that if the period from such redemption date to May 1, 2004 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from such redemption date to May 1, 2004 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the material United States federal
income tax consequences of the exchange offer and the acquisition, ownership and
disposition of the notes and exchange notes to U.S. Holders and non-U.S.
Holders, as defined below. This discussion is based on currently existing
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all as in effect on the date hereof and all of which
are subject to change, possibly on a retroactive basis.
This discussion applies only to initial beneficial owners that purchased the
notes upon original issuance at the initial offering price thereof, and is
limited to initial beneficial owners that hold the outstanding notes and
exchange notes as capital assets. Moreover, this discussion does not address all
of the United States federal income tax consequences that may be relevant to
particular beneficial owners in light of their personal circumstances, or to
certain types of beneficial owners. Such beneficial owners may include, for
example, pass-through entities (E.G., partnerships) or persons who hold the
outstanding notes or exchange notes through pass-through entities, banks and
other financial institutions, insurance companies, tax-exempt entities, dealers
in securities, certain former citizens or former long-term residents of the
United States, hybrid entities, persons holding the exchange notes or Exchange
exchange notes as part of a hedging or conversion transaction or a straddle or
U.S. Holders that have a functional currency other than the U.S. dollar.
This discussion does not address the tax consequences to Non-U.S. Holders
that are subject to U.S. federal income tax on a net basis on income realized
with respect to a note or exchange note because such income is effectively
connected with the conduct of a U.S. trade or business. Such holders are
generally taxed in a similar manner to U.S. Holders; however, certain special
rules apply. In addition, this discussion does not include any description of
the tax laws of any state, local or foreign government that may be applicable to
a particular beneficial owner.
As used herein, the term "U.S. Holder" means a beneficial owner of a note or
exchange note that is, for U.S. federal income tax purposes,
(1) a citizen or resident of the United States,
(2) a corporation (including an entity treated a corporation for United
States federal income tax purposes) or partnership created or organized in
or under the laws of the United States or any political subdivision thereof,
(3) an estate, the income of which is subject to United States federal
income tax regardless of its source, or
(4) a trust if a United States court can exercise primary supervision
over the administration of the trust and one or more United States persons
have the authority to control all substantial decisions of the trust, or if
the trust was in existence on August 20, 1996 and has properly elected to
continue to be treated as a United States person.
The term "Non-U.S. Holder" means a beneficial owner of a note or exchange
Note that is not a U.S. Holder.
Prospective purchasers are urged to consult their own tax advisors as to the
particular United States federal income and other tax consequences to them of
the acquisition, ownership and disposition of the notes and exchange notes, as
well as the tax consequences under state, local and foreign tax laws, and the
possible effects of changes in tax laws.
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UNITED STATES FEDERAL INCOME TAXATION OF U.S. HOLDERS
PAYMENTS OF INTEREST.
In general, interest on a note or exchange note will be taxable to a U.S.
Holder as ordinary income at the time it accrues, or is actually or
constructively received, in accordance with the U.S. Holder's method of
accounting for United States federal income tax purposes. The Company
anticipates that the exchange notes will be issued without original issue
discount within the meaning of Section 1273 of the Internal Revenue Code and the
following discussion so assumes.
SALE, EXCHANGE OR RETIREMENT OF THE EXCHANGE NOTES OR EXCHANGE EXCHANGE
NOTES.
Upon the sale, exchange, redemption, retirement at maturity or other taxable
disposition of a note or exchange note, a U.S. Holder generally will recognize
taxable gain or loss equal to the difference between
(1) the sum of cash plus the fair market value of all other property
received on such disposition, except to the extent such cash or property is
attributable to accrued but unpaid interest which will be taxable as
ordinary income, and
(2) such U.S. Holder's adjusted tax basis in the note or exchange note.
Gain or loss recognized on the disposition of a note or exchange note generally
will be capital gain or loss. Capital gains of individuals derived in respect of
capital assets held for more than one year are eligible for reduced rates of
taxation. The deductibility of capital losses is subject to limitations.
EXCHANGE OFFER.
The exchange of notes for the exchange notes pursuant to the exchange offer
will not constitute a taxable exchange for U.S. federal income tax purposes. As
a result,
(1) a U.S. Holder will not recognize taxable gain or loss as a result of
exchanging notes for exchange notes pursuant to the exchange offer,
(2) the holding period of the exchange notes will include the holding
period of the notes exchanged therefor, and
(3) the adjusted tax basis of the exchange notes will be the same as the
adjusted tax basis of the notes exchanged therefor immediately before such
exchange.
The filing of a shelf registration statement should not result in a taxable
exchange to us or any holder of a note.
BACKUP WITHHOLDING AND INFORMATION REPORTING.
In general, a U.S. Holder will be subject to backup withholding at the rate
of 31.0% with respect to interest, principal and premium, if any, paid on a note
or exchange note, and the proceeds of a sale of a note or exchange note, unless
the U.S. Holder
(1) is an entity that is exempt from withholding, including corporations
and tax-exempt organizations, and, when required, demonstrates this fact, or
(2) provides the payor with its taxpayer identification number ("TIN")
which for an individual would be the holder's social security number,
certifies that the TIN provided to the payor is correct and that the holder
has not been notified by the IRS that it is subject to backup withholding
due to underreporting of interest or dividends, and otherwise complies with
applicable requirements of the backup withholding rules.
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In addition, such payments of principal, premium and interest to, and the
proceeds of a sale of a note or exchange note by, U.S. Holders that are not
exempt entities will generally be subject to information reporting requirements.
The amount of any backup withholding from a payment to a U.S. Holder will be
allowed as a credit against such U.S. Holder's United States federal income tax
liability and may entitle such U.S. Holder to a refund, provided that the
required information is furnished to the IRS.
UNITED STATES FEDERAL INCOME TAXATION OF NON-U.S. HOLDERS
PAYMENTS OF INTEREST.
In general, payments of interest on the notes or exchange notes by us or our
agent to a Non-U.S. Holder will not be subject to United States federal income
tax, or any withholding thereof except as described below under "--Backup
Withholding and Information Reporting," provided that either,
(1) (a) the Non-U.S. Holder does not actually or constructively own
10.0% or more of the total combined voting power of all classes of our stock
entitled to vote,
(b) the Non-U.S. Holder is not a controlled foreign corporation that
is related to us, actually or constructively, through stock ownership,
(c) the Non-U.S. Holder is not a bank described in Section
881(c)(3)(A) of the Code, and
(d) either
(x) the Non-U.S. Holder certifies to us or our agent on IRS Form
W-8 or a suitable substitute form, under penalties of perjury, that
it is not a "United States person," as defined in the Internal
Revenue Code, and provides its name and address, or
(y) a financial institution such as a securities clearing
organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business
and holds the notes or exchange notes on behalf of the Non-U.S.
Holder certifies to us or our agent under penalties of perjury that
such statement has been received from the Non-U.S. Holder by it or by
a financial institution between it and the Non-U.S. Holder and
furnishes us or our agent with a copy thereof, or
(2) (a) the Non-U.S. Holder is entitled to the benefits of an income tax
treaty under which interest on the notes or exchange notes is exempt from
United States federal withholding tax and provides us or our paying agent
with a properly executed IRS Form 1001 or successor form claiming the
exemption, or
(b) the interest paid on the note is not subject to withholding tax
because it is effectively connected with the beneficial owner's conduct of a
trade or business in the United States and the beneficial owner provides us
or our paying agent with a properly executed IRS Form 4224, or successor
form.
Treasury regulations issued on October 6, 1997 and revised on December 31,
1998 (the "New Withholding Regulations") alter the rules described above in
certain respects. The New Withholding Regulations generally will be effective
with respect to payments made after December 31, 2000, regardless of the issue
date of the instrument with respect to which such payments are made. The New
Withholding Regulations generally will not materially alter the certification
rules described in (1)(d) of the preceding paragraph, but will provide
alternative methods for satisfying such requirements.
In addition, the New Withholding Regulations may require that a Non-U.S.
Holder obtain a United States taxpayer identification number and make certain
certifications if the Non-U.S. Holder wishes to claim exemption from, or a
reduced rate of, withholding under an income tax treaty. Each Non-U.S. Holder
should consult its own tax advisor regarding the application to such holder of
the New Withholding Regulations.
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SALE, EXCHANGE OR RETIREMENT OF THE EXCHANGE NOTES OR EXCHANGE EXCHANGE
NOTES.
A Non-U.S. Holder generally will not be subject to United States federal
income tax, or any withholding thereof except as described below under "--Backup
Withholding and Information Reporting," on gain realized on the sale, exchange,
redemption, retirement at maturity or other disposition of a note or exchange
note unless
(1) such gain is effectively connected with the conduct by such holder
of a trade or business in the United States,
(2) in the case of gains derived by an individual, such individual is
present in the United States for 183 days or more in the taxable year of the
disposition and certain other conditions are met and
(3) the Non-U.S. Holder is subject to tax according to the provisions of
United States federal income tax law applicable to certain expatriates.
EXCHANGE OFFER.
The exchange of notes for the exchange notes pursuant to the exchange offer
will not be treated as a taxable exchange for United States federal income tax
purposes. As a result, there will be no U.S. federal income tax consequences to
Non-U.S. Holders exchanging the notes for the exchange notes pursuant to the
exchange offer.
BACKUP WITHHOLDING AND INFORMATION REPORTING.
Under current Treasury regulations, backup withholding and information
reporting do not apply to payments made by us or our paying agent to Non- U.S.
Holders if the certification described in (1)(d) under "--Payments of Interest"
above is received, provided that the payor does not have actual knowledge that
the holder is a United States person.
In addition, backup withholding and information reporting generally will not
apply if payments on a note or exchange note are made to a Non-U.S. Holder by or
through
(1) the foreign office of a custodian, nominee or other agent of such
Non-U.S. Holder, or
(2) if the foreign office of a "broker," as defined in applicable
Treasury regulations, pays the proceeds of the sale of a note or exchange
note to the seller thereof.
Information reporting requirements, but, currently, not backup withholding,
will apply, however, to a payment by or through a foreign office of a custodian,
nominee, agent or broker that is, for United States federal income tax purposes:
(1) a United States person;
(2) a controlled foreign corporation; or
(3) a foreign person that derives 50.0% or more of its gross income for
certain periods from the conduct of a trade or business in the United
States, unless such custodian, nominee, agent or broker has documentary
evidence in its records that the holder is a non-U.S. person and certain
other conditions are met, or the holder otherwise establishes an exemption.
Payment by a U.S. office of a custodian, nominee, agent or broker is subject
to both backup withholding at a rate of 31.0% and information reporting
unless the holder certifies, under penalties of perjury, that it is not a
United States person and the payor does not have actual knowledge to the
contrary, or the holder otherwise establishes an exemption. A Non-U.S.
Holder may obtain a refund or a credit against such Non-U.S. Holder's United
States federal income tax liability of any amounts withheld under the backup
withholding rules, provided the required information is furnished to the
IRS.
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The New Withholding Regulations revise, substantially in certain respects,
the procedures that withholding agents and payees must follow to comply with, or
to establish an exemption from, the information reporting and backup withholding
provisions for payments after December 31, 2000. Each Non-U.S. Holder should
consult its own tax advisor regarding the application to such holder of the New
Withholding Regulations.
ESTATE TAX.
Notes or exchange notes held at the time of death, or theretofore
transferred subject to certain retained rights or powers, by an individual who
at the time of death is a Non-U.S. Holder will not be included in such holder's
gross estate for U.S. federal estate tax purposes, provided that,
(1) the individual does not actually or constructively own 10% or more
of the total combined voting power of all classes of our stock entitled to
vote, and
(2) the income on the exchange notes or exchange notes is not
effectively connected with the conduct of a United States trade or business
by the individual.
PLAN OF DISTRIBUTION
Any broker-dealer that acquired outstanding notes for its own account as a
result of market-making activities or other trading activities may be deemed to
be an "underwriter" under the Securities Act. Each broker-dealer that receives
exchange notes for its own account in exchange for outstanding notes, where such
outstanding notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such outstanding notes. The letter of transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with any resale of
the exchange notes received in exchange for outstanding notes where such
outstanding notes were acquired by such broker-dealer as a result of
market-making or other trading activities. We agreed that, for a period of 180
days after the expiration date, we will make this prospectus available to any
broker-dealer for use in connection with any such resale. A broker-dealer which
delivers such a prospectus to purchasers in connection with such resales will be
subject to certain of the civil liability provisions under the Securities Act
and will be bound by the provisions of the registration rights agreement
(including certain indemnification rights and obligations).
We will not receive any proceeds from any sale of exchange notes by
broker-dealers or others. Exchange notes received by broker-dealers for their
own account pursuant to the exchange offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the exchange notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through broker-dealers and/ or
purchasers of any such exchange notes. Any broker-dealer that resells exchange
notes that were received by it for its own account pursuant to the exchange
offer and any broker or dealer that participates in a distribution of such
exchange notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of exchange notes and any
commission or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver, and by delivering, a
prospectus as required, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 180 days from the expiration date, we will send a reasonable
number of additional copies of this prospectus and any amendment or supplement
to this prospectus to any broker-dealer that
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requests such documents in the letter of transmittal. We will pay all the
expenses incident to the exchange offer (which shall not include the expenses of
any holder in connection with resales of the exchange notes). We have agreed to
indemnify the initial purchasers and any broker-dealers participating in the
exchange offer against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters relating to the validity of the exchange notes offered
hereby will be passed upon on behalf of the Company by Paul, Hastings, Janofsky
& Walker LLP, New York, New York.
EXPERTS
The consolidated financial statements of Atrium and subsidiaries (after the
1998 recapitalization), Atrium Companies, Inc. and subsidiaries (previous
registrant), the combined financial statements of R.G. Darby Company, Inc. and
Total Trim, Inc. and the consolidated financial statements of Heat, Inc.
included in this registration statement have been so included in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, to the extent
and for the periods indicated in their reports thereon, given on the authority
of said firm as experts in auditing and accounting.
AVAILABLE INFORMATION
We are subject to the information requirements of the Securities Exchange
Act and in accordance with the Securities Exchange Act we file reports, proxy
statements and other information with the Commission. You may read and copy any
of such information on file with the Commission at the Commission's public
reference facilities at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at its regional offices located at Seven World Trade
Center, New York, New York 10048 and at Northwestern Atrium Center, 500 West
Madison Street, Suite 140, Chicago, Illinois 60661-2511. Copies of filed
documents can be obtained, at prescribed rates, by mail from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by telephone at 1-800-SEC-0330, or electronically
through the Commission's Electronic Data Gathering, Analysis and Retrieval
system at the Commission's Web site (http://www.sec.gov).
We have filed with the Commission a registration statement on Form S-4 under
the Securities Act, with respect to the exchange notes offered by this
prospectus. As permitted by the rules and regulations of the Commission, this
prospectus omits certain information contained in the registration statement.
For further information with respect to Atrium and the exchange notes, reference
is made to the registration statement, including its exhibits and the financial
statements, notes and schedules filed as a part of it, which you may read and
copy at the public reference facilities of the Commission referred to above.
Statements contained in this prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the full text of such contract or document filed as an exhibit to the
registration statement, each such statement being qualified in all respects by
such reference.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ATRIUM COMPANIES, INC.
Report of Independent Accountants........................................................................ F-3
Consolidated Balance Sheets as of December 31, 1998 and 1997........................................... F-4
Consolidated Statements of Operations for the years ended December 31, 1998, 1997 and the periods ended
December 31, 1996 and October 25, 1996............................................................... F-5
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1998, 1997 and the
periods ended December 31, 1996 and October 25, 1996................................................. F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and the periods ended
December 31, 1996 and October 25, 1996............................................................... F-7
Notes to Consolidated Financial Statements............................................................... F-8
Consolidated Financial Statements:
Consolidated Balance Sheets as of March 31, 1999 (unaudited) and December 31, 1998..................... F-30
Consolidated Statements of Income (unaudited) for the Quarters Ended March 31, 1999 and 1998........... F-31
Consolidated Statements of Comprehensive Income (unaudited) for the Quarters Ended March 31, 1999 and
1998................................................................................................. F-32
Consolidated Statement of Stockholder's Equity (unaudited) for the Quarter Ended March 31, 1999........ F-33
Consolidated Statements of Cash Flows (unaudited) for the Quarters Ended March 31, 1999 and 1998....... F-34
Notes to Consolidated Financial Statements (unaudited)................................................... F-35
ATRIUM COMPANIES, INC. (PREVIOUS REGISTRANT)
Report of Independent Accountants........................................................................ F-41
Consolidated Balance Sheets as of December 31, 1997 and 1996........................................... F-42
Consolidated Statements of Income for the periods ended October 2, 1998 and September 30, 1997
(Unaudited) and for the years ended December 31, 1997 and 1996....................................... F-43
Consolidated Statements of Stockholders' Equity (Deficit) for the periods ended October 2, 1998 and
September 30, 1997 (Unaudited) and for the years ended December 31, 1997 and 1996.................... F-44
Consolidated Statements of Cash Flows for the periods ended October 2, 1998 and September 30, 1997
(Unaudited) and for the years ended December 31, 1997 and 1996....................................... F-45
Notes to Consolidated Financial Statements............................................................... F-46
R.G. DARBY COMPANY, INC. AND TOTAL TRIM, INC.
Report of Independent Accountants........................................................................ F-65
Combined Financial Statements:
Combined Balance Sheets as of December 31, 1997 and 1996............................................... F-66
Combined Statements of Income for the years ended December 31, 1997 and 1996........................... F-67
Combined Statements of Stockholder's Equity for the years ended
December 31, 1997 and 1996........................................................................... F-68
Combined Statements of Cash Flows for the years ended December 31, 1997 and 1996....................... F-69
Notes to Combined Financial Statements................................................................... F-70
DOOR HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Financial Statements (Unaudited):
Consolidated Balance Sheet as of September 30, 1998.................................................... F-74
Consolidated Statements of Income for the nine months ended September 30, 1998 and 1997................ F-75
Consolidated Statement of Stockholders' Equity for the nine months ended September 30, 1998............ F-76
Consolidated Statements of Cash Flows for the nine months ended September 30, 1998 and 1997............ F-77
Notes to Consolidated Financial Statements............................................................... F-78
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
HEAT, INC.
Report of Independent Public Accountants................................................................. F-82
Consolidated Balance Sheet as of March 31, 1999 (unaudited) and as of December 31, 1998
and 1997............................................................................................. F-83
Consolidated Statements of Operations for the periods ended March 31, 1999 and 1998 (unaudited) and the
year ended December 31, 1998, the seven month period ended December 31, 1997, the five month period
ended May 30, 1997 and the year ended December 31, 1996.............................................. F-84
Consolidated Statements of Shareholders' Equity for the period ended March 31, 1999 (unaudited) and the
year ended December 31, 1998, the seven month period ended December 31, 1997, the five month period
ended May 30, 1997, and the year ended December 31, 1996............................................. F-85
Consolidated Statements of Cash Flows for the periods ended March 31, 1999 and 1998 (unaudited) and the
year ended December 31, 1998, the seven month period ended December 31, 1997, the five month period
ended May 30, 1997, and the year ended December 31, 1996............................................. F-86
Notes to Consolidated Financial Statements............................................................. F-87
INDEX TO FINANCIAL STATEMENT SCHEDULES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
Report of Independent Accountants........................................................................ F-98
Atrium Companies, Inc.................................................................................. F-99
Atrium Companies, Inc. (previous registrant)........................................................... F-100
R.G. Darby Company, Inc. and Total Trim, Inc........................................................... F-101
Door Holdings, Inc. and Subsidiaries................................................................... F-101
Heat, Inc.............................................................................................. F-102
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Atrium Companies, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholder's equity and of cash flows
present fairly, in all material respects, the financial position of Atrium
Companies, Inc. and its subsidiaries at December 31, 1998 and 1997, and the
results of their operations and their cash flows for the years then ended and
each of the two periods ended December 31, 1996 and October 25, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Dallas, Texas
April 4, 1999, except for Note 18, which is as of May 17, 1999.
F-3
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents....................................................................... $ -- $ 34
Equity securities--available for sale........................................................... 137 --
Accounts receivable, net of allowance of $778 and $725, respectively............................ 46,466 9,187
Inventories..................................................................................... 46,289 13,557
Prepaid expenses and other current assets....................................................... 7,756 832
Deferred tax asset.............................................................................. 1,249 --
--------- ---------
Total current assets............................................................................ 101,897 23,610
PROPERTY, PLANT AND EQUIPMENT, net................................................................ 26,760 7,553
GOODWILL, net of amortization of $2,354 and $471, respectively.................................... 214,749 22,394
DEFERRED FINANCING COSTS, net of amortization of $379 and $420, respectively...................... 11,058 1,374
OTHER ASSETS...................................................................................... 5,405 452
--------- ---------
Total assets.................................................................................... $ 359,869 $ 55,383
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of notes payable................................................................ $ 2,209 $ 3,364
Accounts payable................................................................................ 25,353 6,438
Accrued liabilities............................................................................. 15,432 2,517
Deferred tax liability.......................................................................... -- 566
--------- ---------
Total current liabilities....................................................................... 42,994 12,885
LONG-TERM LIABILITIES:
Notes payable................................................................................... 177,018 28,874
Deferred tax liability.......................................................................... 1 449
Other long-term liabilities..................................................................... 6,800 2,500
--------- ---------
Total long-term liabilities..................................................................... 183,819 31,823
--------- ---------
Total liabilities............................................................................... 226,813 44,708
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock $.01 par value, 3,000 shares authorized, 100 shares issued and outstanding......... -- --
Class A voting common stock $.01 par value, 225,000 authorized; 25,501 issued and retired....... -- --
Class B nonvoting common stock $.01 par value, 100,000 authorized; 54,500 issued and retired.... -- 1
Paid-in capital................................................................................. 134,852 9,675
Retained earnings (accumulated deficit)......................................................... (1,820) 999
Accumulated other comprehensive income.......................................................... 24 --
--------- ---------
Total stockholder's equity...................................................................... 133,056 10,675
--------- ---------
Total liabilities and stockholder's equity.................................................... $ 359,869 $ 55,383
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
F-4
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
THE PERIODS ENDED DECEMBER 31, 1996 AND OCTOBER 25, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
---------------------------------------- ------------
YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, OCTOBER 25,
1998 1997 1996 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES.............................................. $ 211,059 $ 99,059 $ 13,200 $ 62,880
COST OF GOODS SOLD..................................... 159,140 78,270 9,927 47,311
------------ ------------ ------------ ------------
Gross profit......................................... 51,919 20,789 3,273 15,569
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Selling, delivery, general and administrative
expenses............................................. 39,754 15,671 2,242 13,271
Amortization expense................................. 2,133 774 125 --
Stock option compensation expense.................... 3,851 -- -- --
------------ ------------ ------------ ------------
45,738 16,445 2,367 13,271
------------ ------------ ------------ ------------
Income from operations............................. 6,181 4,344 906 2,298
INTEREST EXPENSE....................................... 9,081 2,953 374 509
OTHER INCOME, net...................................... 571 -- -- --
------------ ------------ ------------ ------------
Income (loss) before income taxes and extraordinary
charge............................................... (2,329) 1,391 532 1,789
PROVISION (BENEFIT) FOR INCOME TAXES................... (149) 695 229 670
------------ ------------ ------------ ------------
Income (loss) before extraordinary charge............ (2,180) 696 303 1,119
EXTRAORDINARY CHARGE ON EARLY RETIREMENT OF DEBT (net
of income tax benefit of $392)....................... 639 -- -- --
------------ ------------ ------------ ------------
NET INCOME (LOSS)...................................... $ (2,819) $ 696 $ 303 $ 1,119
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
F-5
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND THE PERIODS ENDED DECEMBER
31, 1996 AND OCTOBER 25, 1996
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK CLASS A CLASS B
-------------------------- ------------------------ -------------------------- TREASURY
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT STOCK
----------- ------------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR
Balance, December 31, 1995....... -- $ -- 512 $ 263 -- $ -- $ (156)
Net income....................... -- -- -- -- -- -- --
Exercise of stock options........ -- -- 59 30 -- -- --
Tax benefit related to option
exercises...................... -- -- -- -- -- -- --
--- --- --- ----- --- --- -----------
Balance, October 25, 1996........ -- $ -- 571 $ 293 -- $ -- $ (156)
--- --- --- ----- --- --- -----------
--- --- --- ----- --- --- -----------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
THE COMPANY
Balance, October 26, 1996........ -- $ -- -- $ -- -- $ -- $ --
Net income....................... -- -- -- -- -- -- --
Initial issuance of common
stock.......................... -- -- 26 -- 55 1 --
Issuance of warrants............. -- -- -- -- -- -- --
--- --- --- ----- --- --- -----------
Balance, December 31, 1996....... -- -- 26 -- 55 1 --
Net income....................... -- -- -- -- -- -- --
Issuance of warrants............. -- -- -- -- -- -- --
--- --- --- ----- --- --- -----------
Balance, December 31, 1997....... -- -- 26 -- 55 1 --
Conversion of Wing's common stock
to Atrium's common stock....... 100 -- (26) -- (55) (1) --
Conversion of exchangeable
subordinated note payable...... -- -- -- -- -- -- --
Step-up of Wing's assets due to
purchase of minority
interest....................... -- -- -- -- -- -- --
Contribution of assets of Darby.. -- -- -- -- -- -- --
Capital contribution from Atrium
Corp........................... -- -- -- -- -- -- --
Stock option compensation
expense........................ -- -- -- -- -- -- --
Exercise of stock options........ -- -- -- -- -- -- --
Comprehensive loss:
Net loss....................... -- -- -- -- -- -- --
Unrealized gain on equity
securities................... -- -- -- -- -- -- --
--- --- --- ----- --- --- -----------
Total comprehensive loss.........
--- --- --- ----- --- --- -----------
Balance, December 31, 1998....... 100 $ -- -- $ -- -- $ -- $ --
--- --- --- ----- --- --- -----------
--- --- --- ----- --- --- -----------
<CAPTION>
RETAINED
EARNINGS TOTAL
ACCUMULATED OTHER PAID-IN (ACCUMULATED STOCKHOLDER'S
COMPREHENSIVE INCOME CAPITAL DEFICIT) EQUITY
------------------------- --------- --------------- -------------
<S> <C> <C> <C> <C>
PREDECESSOR
Balance, December 31, 1995....... $ -- $ 233 $ 4,171 $ 4,511
Net income....................... -- -- 1,119 1,119
Exercise of stock options........ -- 409 -- 439
Tax benefit related to option
exercises...................... -- 253 -- 253
--- --------- ------- -------------
Balance, October 25, 1996........ $ $ 895 $ 5,290 $ 6,322
--- --------- ------- -------------
--- --------- ------- -------------
THE COMPANY
Balance, October 26, 1996........ $ -- $ -- $ -- $ --
Net income....................... -- -- 303 303
Initial issuance of common
stock.......................... -- 7,999 -- 8,000
Issuance of warrants............. -- 1,327 -- 1,327
--- --------- ------- -------------
Balance, December 31, 1996....... -- 9,326 303 9,630
Net income....................... -- -- 696 696
Issuance of warrants............. -- 349 -- 349
--- --------- ------- -------------
Balance, December 31, 1997....... -- 9,675 999 10,675
Conversion of Wing's common stock
to Atrium's common stock....... -- 1 -- --
Conversion of exchangeable
subordinated note payable...... -- 11,375 -- 11,375
Step-up of Wing's assets due to
purchase of minority
interest....................... -- 1,247 -- 1,247
Contribution of assets of Darby.. -- 13,147 -- 13,147
Capital contribution from Atrium
Corp........................... -- 95,340 -- 95,340
Stock option compensation
expense........................ -- 3,851 -- 3,851
Exercise of stock options........ -- 216 -- 216
Comprehensive loss:
Net loss....................... -- -- (2,819) (2,819)
Unrealized gain on equity
securities................... 24 -- -- 24
--- --------- ------- -------------
Total comprehensive loss......... 24 (2,819) (2,795)
--- --------- ------- -------------
Balance, December 31, 1998....... $ 24 $ 134,852 $ (1,820) $ 133,056
--- --------- ------- -------------
--- --------- ------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND
THE PERIODS ENDED DECEMBER 31, 1996 AND OCTOBER 25, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
-------------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................................ $ (2,819) $ 696 $ 303
Adjustments to reconcile net income (loss) to net cash flows from
operating activities:
Extraordinary charge, net of income tax benefit.......................... 639 -- --
Depreciation and amortization............................................ 4,158 1,492 260
Stock option compensation expense........................................ 3,851 -- --
Amortization of deferred financing costs................................. 732 390 30
Accretion of discount on exchangeable subordinated notes payable......... 105 113 33
Provision for bad debts.................................................. 227 1,791 287
Gain on sale of assets................................................... (12) -- --
Deferred tax provision (benefit)......................................... 358 184 60
Changes in assets and liabilities, net of acquisitions:
Accounts receivable.................................................... (1,751) (1,949) 582
Inventories............................................................ (12,297) (2,990) (229)
Prepaid expenses and other current assets.............................. (2,142) (166) 93
Accounts payable....................................................... 4,859 354 (462)
Accrued liabilities.................................................... (3,932) 1,233 155
------------- ------------- -------------
Net cash provided by (used in) operating activities.................. (8,024) 1,148 1,112
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment............................... (2,221) (1,355) (122)
Proceeds from sales of assets............................................ 12 -- --
Acquisition of Atrium, net of cash acquired and debt and accrued interest
assumed................................................................ (120,977) -- --
Acquisition of the Door Division of Super Millwork....................... -- (10,408) --
Acquisition of Wing, net of cash acquired................................ -- -- (29,143)
Other assets............................................................. (1,998) -- --
------------- ------------- -------------
Net cash used in investing activities................................ (125,184) (11,763) (29,265)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under term notes................................ 145,930 -- --
Payment of notes payable................................................. (29,563) (1,032) --
Payment of senior subordinated notes..................................... (70,930) (70) --
Net borrowings under revolving credit facility........................... 4,118 1,497 2,951
Proceeds from issuance of exchangeable subordinated notes................ -- 3,960 --
Proceeds from issuance of notes payable.................................. -- 6,790 18,500
Deferred financing costs................................................. (11,437) (536) (1,258)
Capital contributions.................................................... -- -- 8,000
Scheduled principal payments on term notes............................... (500) -- --
Contributions from Atrium Corp........................................... 95,340 -- --
Exercise of stock options................................................ 216 -- --
------------- ------------- -------------
Net cash provided by financing activities............................ 133,174 10,609 28,193
------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................... (34) (6) 40
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................. 34 40 --
------------- ------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................... $ -- $ 34 $ 40
------------- ------------- -------------
------------- ------------- -------------
SUPPLEMENTAL DISCLOSURE:
Cash paid during the period for:
Interest............................................................... $ 11,765 $ 2,620 $ 167
Income taxes, net of refunds........................................... 536 550 --
Noncash investing and financing activities:
Conversion of exchangeable subordinated notes payable.................. 11,375 -- --
Contribution of Darby's assets......................................... 13,147 -- --
Step-up of Wing's assets due to purchase of minority interest.......... 1,247 -- --
Purchase of equipment under capital leases............................. 20 840 --
Payable to seller...................................................... -- 2,500 --
Issuance of common stock warrants...................................... -- -- 332
Tax benefit related to option exercises................................ -- -- --
<CAPTION>
PREDECESSOR
-------------
PERIOD ENDED
OCTOBER 25,
1996
-------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................................ $ 1,119
Adjustments to reconcile net income (loss) to net cash flows from
operating activities:
Extraordinary charge, net of income tax benefit.......................... --
Depreciation and amortization............................................ 716
Stock option compensation expense........................................ --
Amortization of deferred financing costs................................. --
Accretion of discount on exchangeable subordinated notes payable......... --
Provision for bad debts.................................................. 1,274
Gain on sale of assets................................................... --
Deferred tax provision (benefit)......................................... (71)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable.................................................... (2,116)
Inventories............................................................ (621)
Prepaid expenses and other current assets.............................. 219
Accounts payable....................................................... 253
Accrued liabilities.................................................... (69)
-------------
Net cash provided by (used in) operating activities.................. 704
-------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment............................... (962)
Proceeds from sales of assets............................................ --
Acquisition of Atrium, net of cash acquired and debt and accrued interest
assumed................................................................ --
Acquisition of the Door Division of Super Millwork....................... --
Acquisition of Wing, net of cash acquired................................ --
Other assets............................................................. 28
-------------
Net cash used in investing activities................................ (934)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under term notes................................ --
Payment of notes payable................................................. (2,492)
Payment of senior subordinated notes..................................... --
Net borrowings under revolving credit facility........................... 2,122
Proceeds from issuance of exchangeable subordinated notes................ --
Proceeds from issuance of notes payable.................................. --
Deferred financing costs................................................. --
Capital contributions.................................................... 439
Scheduled principal payments on term notes............................... --
Contributions from Atrium Corp........................................... --
Exercise of stock options................................................ --
-------------
Net cash provided by financing activities............................ 69
-------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................... (161)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................. 161
-------------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................... $ --
-------------
-------------
SUPPLEMENTAL DISCLOSURE:
Cash paid during the period for:
Interest............................................................... $ 510
Income taxes, net of refunds........................................... 927
Noncash investing and financing activities:
Conversion of exchangeable subordinated notes payable.................. --
Contribution of Darby's assets......................................... --
Step-up of Wing's assets due to purchase of minority interest.......... --
Purchase of equipment under capital leases............................. --
Payable to seller...................................................... --
Issuance of common stock warrants...................................... --
Tax benefit related to option exercises................................ 253
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
F-7
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION:
Atrium Companies, Inc. (the "Company") is engaged in the manufacture and
sale of doors, windows and various building materials throughout the United
States.
Prior to October 2, 1998, the Company's historical financial statements as
previously filed with the Securities and Exchange Commission included its
operations and the operations of its wholly-owned subsidiaries, Atrium Door and
Window Company of the Northeast, Atrium Door and Window Company of New England,
Atrium Door and Window Company of New York (collectively "ADW--Northeast"),
Atrium Door and Window Company--West Coast ("ADW--West Coast") and Atrium Door
and Window Company of Arizona ("ADW--Arizona"). On October 2, 1998, pursuant to
an acquisition and merger (the "Recapitalization" or "reverse acquisition") as
more fully described in Note 3, the Company's indirect Parent (D and W)
contributed the assets of Wing Industries Holdings, Inc. and its subsidiary Wing
Industries, Inc. (collectively "Wing") and Door Holdings, Inc. and its
subsidiaries R.G. Darby Company, Inc. and Total Trim, Inc. (collectively
"Darby") to the Company.
As Wing was determined to be the acquiror in the reverse acquisition, the
historical financial statements of the Company (prior to October 3, 1998) were
replaced with the historical financial statements of Wing. As a result, the
statement of operations for 1998 only includes the operations of the Company and
Darby from October 3 through December 31. The statements of operations for the
year ended December 31, 1997, the periods ended December 31, 1996 and October
25, 1996 only include the operations and accounts of Wing and its predecessor.
Wing was acquired by the current controlling shareholders on October 25, 1996.
The December 31, 1998 balance sheet includes the accounts of the Company, Wing,
Darby and each of their respective subsidiaries. The December 31, 1997 balance
sheet only includes the accounts of Wing.
Following is a comparison of the actual results for the Company, Wing and
Darby prior to October 3, 1998, to unaudited pro forma information for the same
period assuming the reverse acquisition had taken place as of January 1, 1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997
------------------------ ------------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales.................................... $ 211,059 $ 400,777 $ 99,059 $ 357,870
Income (loss) before income taxes and
extraordinary charge....................... (2,329) 7,464 1,391 5,827
Income (loss) before extraordinary charge.... (2,180) 2,821 696 1,844
Net income (loss)............................ (2,819) 2,821 696 1,844
Depreciation, amortization and stock option
compensation expense....................... 8,009 18,632 1,492 11,026
Interest expense............................. 9,081 17,506 2,953 23,963
</TABLE>
The references to the periods ended December 31, 1996 and October 25, 1996
used throughout these consolidated financial statements, refer to the periods
October 26, 1996 through December 31, 1996 and January 1, 1996 through October
25, 1996, respectively.
F-8
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
2. SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
INDUSTRY SEGMENT
The Company operates in a single industry segment, the fabrication,
distribution and installation of doors and windows and related components.
REVENUE RECOGNITION
Revenue from the sale of doors and windows and related components is
recorded at the time of delivery to the customer. Allowances are established to
recognize the risk of sales returns from customers and estimates of warranty
costs.
CASH AND CASH EQUIVALENTS
The Company considers all highly-liquid investments with original maturities
of three months or less to be cash equivalents. At December 31, 1998, the
Company had $4,012 of bank overdrafts that were reclassified into Accounts
Payable.
EQUITY SECURITIES--AVAILABLE FOR SALE
Investments in equity securities--available for sale are carried at market
based on quoted market prices, with unrealized gains (losses) recorded in
stockholder's equity.
CONCENTRATIONS OF CREDIT RISK
Financial instruments, which potentially expose the Company to
concentrations of credit risk, consist primarily of trade accounts receivable.
The Company's customers are located in all 50 states and in 6 different
countries. The Company performs ongoing credit evaluations of its customers'
financial condition and generally requires no collateral. The Company
establishes an allowance for doubtful accounts based upon factors surrounding
the credit risk of specific customers, historical trends and other information.
Two customers accounted for approximately 58% and 65% of gross sales for 1998
and 1997 and 55% for the periods ended December 31, 1996 and October 25, 1996,
respectively.
INVENTORIES
Inventories are valued at the lower of cost (last-in, first-out or "LIFO")
or market. Work-in-process and finished goods inventories consist of materials,
labor and manufacturing overhead. Inventory costs include direct materials,
labor and manufacturing overhead. Management believes that the LIFO method
results in a better matching of current costs with current revenues.
F-9
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated
depreciation. The Company depreciates the assets principally on a straight-line
basis for financial reporting purposes over their estimated useful lives, as
follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE
-----------
<S> <C>
Buildings and improvements................................................... 5-40 years
Machinery and equipment...................................................... 3-12 years
</TABLE>
Gains or losses on disposition are based on the net proceeds and the
adjusted carrying amount of the assets sold or retired. Expenditures for
maintenance, minor renewals and repairs are expensed as incurred, while major
replacements and improvements are capitalized.
GOODWILL
Goodwill represents the excess of cost over fair market value of net assets
acquired. Goodwill is being amortized over 40 years on a straight-line basis.
Management continually reviews the carrying value of goodwill for recoverability
based on anticipated undiscounted cash flows of the assets to which it relates.
The Company considers operating results, trends and prospects of the Company, as
well as competitive comparisons. The Company also takes into consideration
competition within the building materials industry and any other events or
circumstances which might indicate potential impairment. When goodwill is
determined not to be recoverable, an impairment is recognized as a charge to
operations.
CAPITALIZED SOFTWARE COSTS
The Company capitalizes internal employee costs and external consulting
costs associated with implementing and developing software for internal use.
Internal costs capitalized include payroll and payroll-related costs for
employees who are directly associated with the development, modification and
implementation of the software. External costs capitalized include direct
expenses related to consulting and other professional fees consumed in
developing, modifying and implementing the software. Capitalization of costs
occurs upon the completion of the preliminary project stage and when management
believes it is probable a project will be completed and the software will be
used to perform the function intended. Amortization begins when the software is
put into place and is calculated on a straight-line basis over three years.
Management continually reviews the carrying value and expected functionality of
the accumulated costs for potential impairment. When it is no longer probable
that computer software being developed will be completed, modified or placed in
service, the assets, carrying value will be adjusted to the lower of cost or
fair value.
Unamortized capitalized software costs at December 31, 1998 and 1997 were
$3,665 and $0, respectively. Amortization expense for 1998 was $304.
INCOME TAXES
The provision for income taxes is based on pretax income as reported for
financial statement purposes. Deferred income taxes are provided in accordance
with the liability method of accounting for
F-10
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
income taxes to recognize the tax effects of temporary differences between
financial statement and income tax accounting.
FORWARD COMMITMENTS
The Company periodically enters into forward commitments to hedge price
variances in materials. Changes in the market value of forward commitments are
recognized in income when the effects of the related charges in the hedged items
are recognized.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from these estimates. Significant
estimates are used in calculating bad debt, workers' compensation and warranty
accruals, and in recognizing deferred tax assets and liabilities.
ADVERTISING COSTS
Advertising costs are expensed when incurred and were $2,841, $1,800, $128
and $1,222 for 1998 and 1997 and the periods ended December 31, 1996 and October
25, 1996, respectively. These costs are reflected in "selling, delivery, general
and administrative" in the consolidated statements of operations.
OTHER COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130 ("FAS 130") "Reporting
Comprehensive Income." FAS 130 requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. FAS 130 is effective for financial statement periods
beginning after December 15, 1997. The Company adopted FAS 130 beginning January
1, 1998. The Company had no comprehensive income for all periods presented prior
to January 1, 1998.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants ("AcSEC") Issued Statement of Position
98-1 ("SOP 98-1") "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" that is effective for reporting periods beginning
after December 15, 1998, but provides for earlier application if certain
conditions are met. The Company has applied the provisions of SOP 98-1 in its
financial statements for the year ended December 31, 1998 and its adoption had
no material effect on the Company's consolidated financial position or results
of operations.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133 ("FAS 133") "Accounting for Derivative Instruments and Hedging
Activities" that is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. The Company will implement the provisions of FAS 133 as
F-11
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
required. The future adoption of FAS 133 in not expected to have a material
effect on the Company's consolidated financial position or results of
operations.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 and 1996 balances to
conform to the 1998 presentation.
3. THE REVERSE ACQUISITION (RECAPITALIZATION):
On August 3, 1998, D and W ("Parent"), entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Atrium Corporation ("Corp"), the parent
company of the Company and other necessary parties to acquire all of the
outstanding capital stock of Corp for $225.0 million, through a series of
transactions (the "Recapitalization") described below. Corp owned 100% of the
outstanding capital stock of the Company prior to the Merger discussed below. GE
Investment Private Placement Partners II, a limited partnership ("GEIPPPII"),
and Ardatrium L.L.C. ("Ardatrium") formed Parent by acquiring all of its
outstanding common stock for an aggregate purchase price of $50.0 million.
GEIPPPII is a private equity partnership affiliated with GE Investments, a
wholly-owned investment management subsidiary of General Electric Company.
Ardatrium is an affiliate of Ardshiel, Inc. ("Ardshiel"), a private equity
investment firm based in New York.
The acquisition of Corp by Parent was effected through the merger on October
2, 1998 of a wholly owned subsidiary of Parent, with and into Corp (the
"Merger") pursuant to the terms of the Merger Agreement. Prior to the Merger,
Parent contributed $50.0 million to the wholly-owned subsidiary in exchange for
all of its outstanding common stock. As a result of the Merger, Corp became a
direct wholly-owned subsidiary of Parent, and the Company became an indirect
wholly owned subsidiary of Parent.
Prior to the Merger, GEIPPPII and Ardshiel held investments in debt and
equity securities of Wing and Darby. Immediately prior to the consummation of
the Merger, all of the outstanding subordinated debt and associated warrants to
purchase common stock of Wing and Darby were converted into common stock of Wing
and Darby, respectively. The stockholders of Wing and Darby contributed their
common stock in Wing and Darby to Parent in exchange for common stock of Parent.
Immediately after the consummation of the Merger, Parent contributed all of the
common stock of Wing and Darby to Corp, which in turn contributed such stock to
the Company.
Upon completion of the Recapitalization, GEIPPPII and Ardshiel and its
affiliates beneficially owned approximately 96.7% of the outstanding common
stock of Parent with management owning the remaining 3.3%.
Pursuant to the terms of the Merger Agreement, all of the outstanding equity
securities of Corp were converted into the right to receive the merger
consideration of $94.2 million (the "Merger Consideration") in cash, net of
transaction costs of $5.4 million, outstanding indebtedness of $122.7 million
and $2.7 million of equity securities of Corp, owned by certain members of
management of Corp, which were converted into comparable equity securities of
Parent. The Merger Consideration was funded with (i) the $50.0 million in cash
that became an asset of Corp in the Merger, (ii) $20.0 million in cash proceeds
from the issuance of Senior Discount Debentures due 2010 by Corp. to GEIPPPII
and Ardatrium (the "Discount Debentures"), (iii) approximately $24.0 million in
cash proceeds from a loan from the Company (the
F-12
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
3. THE REVERSE ACQUISITION (RECAPITALIZATION): (CONTINUED)
"Intercompany Loan") which was funded by a portion of the proceeds of a term
loan to the Company under the Credit Facility (see Note 9), and (iv) $0.2
million in cash proceeds from the issuance of common stock of Parent to certain
members of management of Corp followed by a capital contribution of such
proceeds by Parent to Corp.
The acquisition of Corp by Parent and the Merger was accounted for as a
reverse acquisition. As Wing's shareholder group received the largest ownership
interest in Parent, Wing was determined to be the "accounting acquiror" in the
reverse acquisition. As a result, purchase accounting was applied to the assets
and liabilities of the Company. The purchase price was allocated to the
Company's assets and liabilities as follows:
<TABLE>
<S> <C>
Equity securities available for sale...................... $ 113
Accounts receivable....................................... 32,097
Inventories............................................... 18,766
Prepaid expenses and other current assets................. 4,506
Deferred tax asset........................................ 2,268
Property, plant and equipment............................. 18,391
Other noncurrent assets................................... 3,326
Goodwill.................................................. 170,447
Current liabilities....................................... (24,614)
Other long-term liabilities............................... (300)
---------
Total purchase price...................................... $ 225,000
---------
---------
</TABLE>
The purchase price includes cash paid of $120,977, including the retirement
of certain indebtedness, and the assumption of debt and accrued interest
$104,023
The purchase method of accounting was also applied to the net assets of Wing
and Darby to the extent minority interest was acquired. Goodwill was increased
by $1,247 and $242 for Wing and Darby, respectively.
4. ACQUISITION OF DOOR DIVISION OF SUPER MILLWORK, INC.
On November 10, 1997, Wing purchased certain assets of the Door Division of
Super Millwork, Inc. (SMI), a New York corporation for $12,500, including
contingent payments of $2,500 based on future operating results. The total cost
of the acquisition including transaction costs incurred aggregated $13,444. The
purchase price was funded with borrowings under a line of credit of
approximately $194, term loan borrowings of $6,750 and the issuance of
exchangeable subordinated notes of $4,000 with warrants.
F-13
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
4. ACQUISITION OF DOOR DIVISION OF SUPER MILLWORK, INC. (CONTINUED)
The purchase price allocation is as follows:
<TABLE>
<S> <C>
Accounts receivable........................................ $ 1,791
Inventories................................................ 2,540
Other current assets....................................... 31
Property, plant and equipment.............................. 215
Other noncurrent assets.................................... 300
Deferred financing costs................................... 536
Goodwill................................................... 9,945
Current liabilities........................................ (1,914)
---------
Total purchase price....................................... $ 13,444
---------
---------
</TABLE>
5. FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with Statement of Financial Accounting Standards No. 107 ("FAS
107") "Disclosures About Fair Value of Financial Instruments," the following
methods have been used in estimating fair value disclosures for significant
financial instruments of the Company.
Estimated fair value amounts have been determined by the Company using
available market information and appropriate valuation methodologies. Due to the
fact that considerable judgment is required to interpret market data to develop
the estimates of fair value, the estimates presented are not necessarily
indicative of the amounts that could be realized in a current market exchange.
Cash and cash equivalents--The carrying amounts reported in the balance
sheet approximate the fair value.
Equity securities--available for sale--The carrying amounts that are
reported in the balance sheet approximate the fair value based on quoted
market prices.
Notes payable--The fair value of the Company's notes is based on quoted
market prices. The carrying value of notes payable, other than the
exchangeable subordinated notes and the senior subordinated notes,
approximate fair value due to the floating nature of the interest rates.
Management estimates that the effective interest rate for the exchangeable
subordinated note approximates market for similar instruments with
comparable maturities. The senior subordinated notes of $29,070 are valued
at $29,361 as of December 31, 1998 based on quoted market prices.
Interest Rate Swaps--The Company has entered into two interest rate swap
agreements whereby the Company will pay the counterparties interest at a
fixed rate and the counterparties will pay the Company interest at a
floating rate equal to the three-month LIBOR interest rate. The fair value
of
F-14
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
5. FAIR VALUE OF FINANCIAL INSTRUMENTS: (CONTINUED)
interest rate swap agreements is the amount at which they could be settled,
based on estimates obtained from lenders. Swaps consisted of the following
at December 31:
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Swap #1
Notional Amount............................................................ $ 1,406 $ 2,531
Fixed Interest Rate........................................................ 6.50% 6.50%
Termination Date........................................................... 3/31/00 3/31/00
Unrealized Gain/(Loss)..................................................... $ (15) --
Swap #2
Notional Amount............................................................ $ 2,827 --
Fixed Interest Rate........................................................ 6.25% --
Termination Date........................................................... 11/6/03 --
Unrealized Gain/(Loss)..................................................... $ (87) --
</TABLE>
Forward aluminum contracts--The unrealized gains and losses are based on
quotes for aluminum as reported on the London Metal Exchange. As of December
31, 1998, the Company had forward contracts with fixed rate prices totaling
$2,623 with an unrealized loss of $199.
6. INVENTORIES:
Inventories consisted of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Raw materials........................................................... $ 27,362 $ 6,816
Work-in-process......................................................... 4,129 1,591
Finished goods.......................................................... 13,486 5,247
--------- ---------
44,977 13,654
LIFO reserve............................................................ 1,312 (97)
--------- ---------
$ 46,289 $ 13,557
--------- ---------
--------- ---------
</TABLE>
The change in the LIFO reserve for 1998 and 1997, resulted in a decrease in
cost of sales of $1,409 and an increase in cost of sales of $95, respectively
and a decrease in cost of sales for the periods ended December 31, 1996 and
October 26, 1996 of $2 and $360, respectively.
F-15
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
7. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Land.................................................................... $ 1,303 $ 40
Buildings and improvements.............................................. 8,671 1,812
Machinery and equipment................................................. 19,311 6,974
Construction-in-process................................................. 722 --
--------- ---------
Total................................................................. 30,007 8,826
Less accumulated depreciation and amortization.......................... (3,247) (1,273)
--------- ---------
$ 26,760 $ 7,553
--------- ---------
--------- ---------
</TABLE>
Depreciation expense was $1,996, $1,180, $165 and $716 for 1998 and 1997,
and the periods ended December 31, 1996 and October 25, 1996, respectively.
8. DEFERRED FINANCING COSTS:
The deferred financing costs relate to costs incurred in the placement of
the Company's debt and are being amortized using the effective interest method
over the terms of the related debt, which range from five to ten years.
Amortization expense for 1998 and 1997 and for the period ended December 31,
1996 was $732, $390 and $30, respectively and was recorded as interest expense
in the accompanying consolidated statements of operations. No amortization
expense was recorded for the period ended October 25, 1996.
The Company wrote off deferred financing costs of $639, net of income tax
benefit of $392, in connection with the Recapitalization.
F-16
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
9. NOTES PAYABLE:
Notes payable consisted of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
$100,000 Senior Subordinated Notes, due November 15, 2006, with semiannual
interest payments of 10 1/2% due May 15 and November 15........................ $ 29,070 $ --
Revolving credit facility........................................................ 4,118
$75,000 Term Loan B, due June 30, 2005 with $250 quarterly payments, interest at
either the administrative agent's base rate plus an applicable margin or LIBOR
plus an applicable margin (9.625% at December 31, 1998)........................ 74,750 --
$70,930 Term Loan C, due June 30, 2006, with $250 quarterly payments, interest at
either the administrative agent's base rate plus an applicable margin or LIBOR
plus an applicable margin (9.875% at December 31, 1998)........................ 70,680 --
Other notes payable.............................................................. 609 770
$14,500 revolving line of credit with BHF-Bank, bearing interest at bank's base
rate (which approximate prime) plus one and one-half percent (10% at December
31, 1997)...................................................................... -- 4,448
$6,750 note payable to BHF-Bank, due in quarterly installments of $219 through
September 30, 2002 and $591 through maturity, November 6, 2003, plus interest
at the base rate (which approximates prime) plus one and one-half percent (10%
at December 31, 1997).......................................................... -- 6,750
$4,000 exchangeable subordinated note payable to GEIPPPII and Ardwing L.L.C.,
payable interest only in quarterly installments at 11%, due November 10, 2004,
exchangeable into approximately 22,126 shares of common stock.................. -- 4,000
$10,000 note payable to BHF-Bank, due in quarterly installments of $250 through
September 30, 1997 and $562 through maturity, October 25, 2001, plus interest
at the base rate (which approximates prime) plus one and one-half percent (10%
at December 31, 1997).......................................................... -- 9,000
$8,500 exchangeable subordinated note payable to GEIPPPII, payable interest only
in quarterly installments at 11%, due October 25, 2003, exchangeable into
approximately 46,669 shares of common stock.................................... -- 8,500
---------- ---------
179,227 33,468
Less:
Unamortized discount on exchangeable subordinated notes payable................ -- (1,230)
Current maturities of long-term debt........................................... (2,209) (3,364)
---------- ---------
Long-term debt............................................................... $ 177,018 $ 28,874
---------- ---------
---------- ---------
</TABLE>
The Company's exchangeable subordinated notes payable, notes payable to
banks and revolving line of credit existing at December 31, 1997 and through
October 2, 1998, were repaid or converted in connection with the
Recapitalization.
The note agreements existing prior to the merger contained certain
covenants, including, among others, requirements that the Company comply with
certain financial and operational results and ratios. In addition, the loan
agreements placed certain limitations on the ability to pay dividends, to incur
indebtedness, to change its present method of doing business, to make certain
investments (including capital expenditures) or to sell assets. Substantially
all of Wing's assets and capital stock were collateralized under
F-17
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
9. NOTES PAYABLE: (CONTINUED)
the BHF-Bank agreements. The $10,000 and $6,750 term loans contained "excess
cash flow" provisions mandating additional principal payments if certain cash
flow targets were met during each fiscal year. No additional principal payments
were required as of December 31, 1997.
The Company entered into a Credit Agreement (the "Credit Agreement"), dated
as of October 2, 1998 with Bank Boston, as administrative agent (the
"Administrative Agent") and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as lead arranger, syndication agent and documentation agent.
The Credit Agreement provides for three separate facilities (the
"Facilities") consisting of two term loans (referred to individually as "Term
Loan B" and "Term Loan C", and collectively as the "Term Loans") and a revolving
credit facility with a letter of credit sub-facility (the "Revolving Facility",
together with the Term Loans, the "Loans"). The Revolving Facility is in the
amount of $30,000, of which $5,000 is available under a letter of credit
sub-facility. The Revolving Facility has a maturity date of June 30, 2004.
All amounts outstanding under the Credit Agreement are secured by (i) a
pledge of all of the capital stock and intercompany notes of the Company and its
direct and indirect subsidiaries existing October 2, 1998 or thereafter and (ii)
an interest in substantially all of the tangible and intangible properties and
assets (including substantially all contract rights, certain real property
interests, trademarks, tradenames, equipment and proceeds of the foregoing) of
Corp, the Company and their respective direct and indirect domestic subsidiaries
existing on the October 2, 1998 or thereafter created or acquired (the "Domestic
Subsidiaries"). Corp and each of the Domestic Subsidiaries have unconditionally
guaranteed, on a joint and several basis, all obligations of the Company under
the Credit Agreement.
The Term Loans have an "excess cash flows" provision mandating additional
principal payments if certain cash flows targets are met during the year. No
additional principal payments are required as of December 31, 1998 related to
this provision.
The Company is required to pay certain commitment fees in connection with
the Credit Agreement based upon the average daily unused portion of the
Revolving Facility, certain fees assessed in connection with the issuance of
letters of credit as well as other fees specified in the Credit Agreement and
other documents related thereto.
The Credit Agreement requires the Company to comply with certain covenants
which, among other things, include limitations on indebtedness, liens and
further negative pledges, investments, contingent obligations, dividends,
redemptions and repurchases of equity interests, mergers, acquisitions and asset
sales, capital expenditures, sale leaseback transactions, transactions with
affiliates, dividend and other payment restrictions affecting subsidiaries,
changes in business conducted, amendment of documents relating to other
indebtedness and other material documents, creation of subsidiaries, designation
of Designated Senior Indebtedness in respect of the Notes, and prepayment or
repurchase of other indebtedness. The Credit Agreement requires the Company to
meet certain financial tests pertaining to, interest coverage, fixed charge
coverage and leverage.
The Credit Agreement contains customary events of default, including,
without limitation, payment defaults, covenant defaults, breaches of
representations and warranties, bankruptcy and insolvency, judgments, change of
control and cross-default with certain other indebtedness.
F-18
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
9. NOTES PAYABLE: (CONTINUED)
Principal payments due during the next five years on long-term notes payable
as of December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999.............................................. $ 2,209
2000.............................................. 2,260
2001.............................................. 2,140
2002.............................................. 2,000
2003.............................................. 2,000
Thereafter........................................ 168,618
---------
$ 179,227
---------
---------
</TABLE>
10. FEDERAL INCOME TAX:
Temporary differences that give rise to the deferred income tax assets and
liabilities are as follows as of December 31:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Deferred income tax assets:
Stock option compensation.............................................. $ 2,486 $ --
Transaction costs...................................................... 1,341 --
Allowance for doubtful accounts........................................ 380 52
Inventory cost capitalization and valuation............................ 648 72
Accrued vacation and bonus............................................. 608 80
Warranty reserve....................................................... 135 --
Workers' compensation reserve.......................................... 431 --
Other.................................................................. 130 59
--------- ---------
6,159 263
Deferred income tax liabilities:
Depreciation........................................................... (1,861) (449)
LIFO reserve........................................................... (1,505) (829)
Capitalized software costs............................................. (1,039) --
Amortization of goodwill............................................... (506) --
--------- ---------
(4,911) (1,278)
--------- ---------
Net deferred income tax asset asset (liability).......................... 1,248 (1,015)
Less-current deferred tax asset (liability).............................. 1,249 (566)
--------- ---------
Long-term deferred tax liability......................................... $ (1) $ (449)
--------- ---------
--------- ---------
</TABLE>
A valuation allowance is required against deferred tax assets if, based on
the weight of available evidence, it is more likely than not that some of or all
of the deferred tax assets will not be realized. As of December 31, 1998 and
1997, no valuation reserve was required.
F-19
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
10. FEDERAL INCOME TAX: (CONTINUED)
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
------------------------------------------- -------------
YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, OCTOBER 25,
1998 1997 1996 1996
------------- ------------- ------------- -------------
Current federal income tax provision
(benefit).......................... $ (467) $ 462 $ 153 $ 441
<S> <C> <C> <C> <C>
Deferred federal income tax
provision.......................... 330 184 60 182
State income tax provision
(benefit).......................... (12) 49 16 47
----- ----- ----- -----
Provision (benefit) for income
taxes.............................. $ (149) $ 695 $ 229 $ 670
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
Reconciliation of the federal statutory income tax rate to the effective tax
rate, was as follows:
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
------------------------------------------- -------------
YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, OCTOBER 25,
1998 1997 1996 1996
------------- ------------- ------------- -------------
Tax computed at statutory rate...... $ (815) $ 473 $ 181 $ 606
<S> <C> <C> <C> <C>
State taxes, net of federal
benefit........................... (12) 67 22 40
Amortization of goodwill............ 495 110 18 --
Other............................... 183 45 8 24
----- ----- ----- -----
Provision (benefit) for income
taxes............................. $ (149) $ 695 $ 229 $ 670
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
11. PREFERRED STOCK:
Wing was authorized to issue 2,000 shares, $.01 par value of preferred stock
and at December 31, 1997 there were no shares outstanding. Concurrent with the
Recapitalization discussed in Note 3, all of Wing's authorized preferred stock
was canceled.
12. RELATED PARTIES:
MANAGEMENT AND INVESTMENT BANKING AGREEMENT
In November 1997, Wing amended its ten-year Management and Investment
Banking Agreement (the "Old Management Agreement") with Ardshiel. Pursuant
thereto, Wing agreed to pay Ardshiel an annual fee of $375 plus expenses for
ongoing management advisory services to Wing. In 1998, 1997 and 1996, $368, $485
and $72, respectively, was paid to Ardshiel under this agreement. The Old
Management Agreement was terminated in connection with the Recapitalization on
October 2, 1998.
FINANCIAL ADVISORY FEE
Ardshiel received a financial advisory fee of $600 plus expenses on the
closing date of the October 26, 1996 transaction as compensation for its
services as financial advisor to Wing. In addition, Ardshiel received warrants
to obtain 5,714 shares of Class A voting common stock at no additional cost.
Such warrants can be converted into Class A voting common stock at any time. The
warrants were valued at $332 and were included in the total purchase price of
Wing.
Ardshiel received an investment banking fee of $250 plus expenses on the
closing date of the acquisition of the of the Door Division of Super Millwork,
Inc. acquisition as compensation for its services to Wing in connection with
this acquisition.
F-20
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
12. RELATED PARTIES: (CONTINUED)
SHAREHOLDER AGREEMENT
GEIPPPII, Ardatrium and certain of its affiliates, and certain other
shareholders of Parent have entered into a Shareholder Agreement (the
"Shareholder Agreement"), dated as of October 2, 1998, which affect their
relative rights as shareholders of Parent.
MANAGEMENT AGREEMENT
Parent is a party to a Management Agreement (the "Management Agreement")
dated October 2, 1998 with Ardshiel. Pursuant to the Management Agreement,
Ardshiel provides advice to Parent and its subsidiaries with respect to business
strategy, operations and budgeting and financial controls ("Management
Services") in exchange for an annual fee of $1,300 plus expenses. Additionally,
the Management Agreement provides that, prior to entering into any transaction
that involves engaging a financial advisor to perform services in connection
with a sale or purchase of a business or entity or any financing including,
Parent or its subsidiaries must offer Ardshiel the opportunity to perform such
investment banking services, unless in the reasonable exercise of the business
judgment of the Board of Directors of Parent such engagement would result in a
conflict of interest or would otherwise be adverse to the interests of Parent or
such subsidiaries. Ardshiel shall receive a fee for any such services rendered
by Ardshiel to Parent or its subsidiaries which fee shall not be greater than 2%
of the total purchase or sale price for such business or entity and shall be
payable upon consummation of such sale or purchase. The consent of GEIPPPII is
required prior to the payment by Parent or any of its subsidiaries in paying
similar fees to other entities for similar services. Parent paid a closing fee
of approximately $3,375 upon the consummation of the Merger and paid Ardshiel's
fees and expenses in connection therewith. The Management Agreement will remain
in effect until October 2, 2008 and will automatically be renewed for one-year
periods unless either party gives written notice to the contrary at least 30
days prior to the expiration of the initial or any extended term of the
agreement.
NOTES RECEIVABLE
Included in prepaid expenses and other current assets are the following
receivables due from related parties at December 31:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Receivables from officers..................................................... $ 123 $ --
Receivables from employees.................................................... $ 211 $ --
</TABLE>
13. COMMITMENTS AND CONTINGENCIES:
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with several key
executives of the Company including its President and Chief Executive Officer,
its Chief Financial Officer and Chief Operating Officer and several Divisional
Presidents, Vice Presidents, General Managers and Sales Managers of the
Company's divisions. The agreements generally provide for terms of employment,
annual salaries, bonuses, and eligibility for option awards and severance
benefits.
F-21
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
13. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
OPERATING LEASES
The Company has entered into operating lease agreements for office and
manufacturing space, automobiles, and machinery and equipment with unrelated
third parties, affiliates of certain stockholders and certain stockholders of
the Company. Total rent expense for 1998, 1997 and for the periods ended
December 31, 1996 and October 25, 1996 was $2,862, $1,189, $172 and $691,
respectively. Of these totals, amounts paid to related parties was $398 for 1998
and $0 for 1997 and the periods ended December 31, 1996 and October 25, 1996.
Future minimum rents due under operating leases with initial or remaining terms
greater than twelve months are as follows:
<TABLE>
<CAPTION>
RELATED OTHER
PARTIES PARTIES TOTAL
--------- --------- ---------
<S> <C> <C> <C>
1999......................................................... $ 1,317 $ 3,898 $ 5,215
2000......................................................... 1,317 3,348 4,665
2001......................................................... 1,317 2,779 4,096
2002......................................................... 1,180 1,989 3,169
2003......................................................... 1,272 1,407 2,679
Thereafter................................................... 14,001 3,627 17,628
--------- --------- ---------
$ 20,404 $ 17,048 $ 37,452
--------- --------- ---------
--------- --------- ---------
</TABLE>
FORWARD COMMITMENTS
The Company has contracts with various suppliers to purchase aluminum for
use in the manufacturing process. The contracts vary from one to twelve months
and are at fixed quantities with fixed and floating prices. As of December 31,
1998, the Company had forward commitments totaling $2,623 for delivery through
December 1999 for 21.1 million pounds of aluminum, of which 3.6 million pounds
were at fixed prices, respectively. No amounts were outstanding as of December
31, 1997.
CONTINGENCIES
The Company is party to various claims, legal actions and complaints arising
in the ordinary course of business. In the opinion of management, all such
matters are without merit or are of such kind, or involve such amounts, that an
unfavorable disposition would not have a material effect on the consolidated
financial position, results of operations or liquidity of the Company.
During 1993, factory employees voted to unionize and become members of
Amalgamated Clothing and Textile Workers Union. A three-year union contract was
executed during 1995 and extended for three additional years in 1998. In
addition, in connection with its Woodville, Texas operations, the Company is
party to collective bargaining arrangements due to expire in 2001.
The Company is involved in various stages of investigation and cleanup
related to environmental protection matters, some of which relate to waste
disposal sites. The potential costs related to such matters and the possible
impact thereof on future operations are uncertain due in part to: the
uncertainty as to the extent of pollution; the complexity of Government laws and
regulations and their interpretations; the varying costs and effectiveness of
alternative cleanup technologies and methods; the uncertain level of insurance
or other types of recovery; and the questionable level of the Company's
involvement. The
F-22
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
13. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
Company was named in 1988 as a potentially responsible party ("PRP") in two
superfund sites pursuant to the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended (the Chemical Recycling, Inc.
site in Wylie, Texas, and the Diaz Refinery site in Little Rock, Arkansas). The
Company believes that based on the information currently available, including
the substantial number of other PRP's and relatively small share allocated to it
at such sites, its liability, if any, associated with either of these sites will
not have a material adverse effect on the Company's consolidated financial
position, results of operations or liquidity.
14. OTHER INCOME, NET:
Other income, net consists of the following for the year ended December 31,
1998:
<TABLE>
<S> <C>
Rental, interest and other income.................... $ 556
Gain on sale of assets............................... 12
Other................................................ 3
---------
$ 571
---------
---------
</TABLE>
15. STOCK OPTIONS:
The Wing Industries Holdings, Inc. Stock Option Plan (the "Plan") was
adopted on October 25, 1996 and amended on November 17, 1997 to provide certain
employees, officers and directors of Wing an opportunity to purchase Class A
voting common stock of Wing. Options available for grant under the Plan included
(1) "Incentive Stock Options" as defined in Section 422 of the Internal Revenue
Code of 1986, as amended and (2) Nonqualified Stock Options which were options
that did not constitute Incentive Stock Options.
At December 31, 1997, Nonqualified Stock Options for a total of 14,483
shares of Wing's Class A voting common stock had been granted. During 1998, and
prior to the Recapitalization, 1,766 options were exercised. The remaining
12,717 options were exchanged for 2,528,314 options in the D and W Holdings,
Inc. 1998 Stock Option Plan (the "New Plan"). The Plan was terminated in
connection with the Recapitalization. No compensation expense was recorded
during 1997 or 1996.
THE NEW PLAN
In connection with the Recapitalization, the Board of Directors adopted the
New Plan authorizing the issuance of 11,991,142 options to acquire common stock
of the Company. Through December 31, 1998, the Board of Directors granted
11,735,941 options under the New Plan. All options granted under the New Plan
expire ten years from the date of grant, October 2, 1998.
As of December 31, 1998, 1,756,924 options had been granted in three
tranches under the New Plan in replacement of certain of the options granted
under the Plan. These options consist of (a) options to purchase 692,861 shares
of common stock at an exercise price of $0.01 per share; (b) options to purchase
539,135 shares of common stock at an exercise price of $0.72 per share until
December 1, 1999, and then increasing 15% per year thereafter, until and
including December 1, 2000; and (c) options to purchase 524,928 shares of common
stock at an exercise price of $0.82 per share until December 1, 1999, and then
F-23
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
15. STOCK OPTIONS: (CONTINUED)
increasing 30% per year thereafter, until and including December 1, 2000. As of
December 31, 1998, 1,064,030 of these options were fully vested. The remaining
options vest on October 25, 1999, subject to accelerated vesting in the event
(a) the Company sells common stock in an offering registered with the Securities
and Exchange Commission which results in a Change of Control (as defined in the
New Plan); (b) the Company is merged or consolidated with another corporation in
a merger in which the surviving corporation has freely tradeable common stock;
(c) substantially all of the assets of the Company and its subsidiaries, taken
as a whole, are sold or otherwise transferred; or (iv) a plan of liquidation of
the Company of the optionee's employer is adopted.
As of December 31, 1998, options of 771,390 with an exercise price of $1.25
had been granted under the New Plan that become exercisable only as such time at
(each such event, a "Value Event") (a) the Company sells common stock in an
offering registered with the Securities and Exchange Commission, which
constitutes a Qualifying Public Offering (as defined in the New Plan); (b) the
Company is merged or consolidated with another corporation in a merger in which
the surviving corporation has freely tradeable common stock; or (c)
substantially all of the assets of the Company and its subsidiaries, taken as a
whole, are sold or otherwise transferred.
As of December 31, 1998, options of 832,314 had been granted that consisted
of two tranches: (a) - options to purchase 277,438 shares with an exercise price
of $0.83 per share to March 31, 1999 and then increasing 15% per year thereafter
and (b) - options to purchase 554,876 shares with an exercise price of $0.83 per
share to March 31, 1999 and then increasing 30% per year thereafter. For the 15%
and the 30% options, if the holder chooses not to exercise at time of vesting,
the strike price increases annually to the next level until expiration. At
December 31, 1998 none of these options were vested. The options vest equally in
one-third increments on January 9, 1999, 2000 and 2001, respectively.
As of December 31, 1998, options of 221,725 with an exercise price of $1.65
had been granted that are exercisable only upon the occurrence of a Value Event.
These options vest at such time of occurrence of a value event.
As of December 31, 1998, options of 8,153,588 options had been granted with
an exercise price of $1.00. On the anniversary of the grant date and prior to
termination of employment, 3,551,526 options will vest 25% and shall continue to
vest ratably as of and after the fourth anniversary date of grant. The remaining
4,602,062 options will vest 20% and shall continue to vest ratably as of and
after the fifth anniversary date of grant. The options expire ten years from the
date of grant.
The Company recorded non cash stock option compensation expense of $1,038 in
1998 in connection with the difference between the fair value of the stock at
the date of issuance ($1.00) and the respective exercise prices of each of the
above grants.
THE REPLACEMENT PLAN
In addition to the New Plan, the Board of Directors adopted the D and W
Holdings, Inc. Replacement Stock Option Plan (the "Replacement Plan") to govern
the terms of certain options to purchase the Company's common stock which were
granted in replacement of outstanding options of Atrium Corp. in connection with
the Recapitalization. Under the Replacement Plan, options to purchase in
aggregate of 1,575,000 shares of the Company's common stock were granted in
exchange for outstanding options of Atrium Corp. which were not cashed out
pursuant to the Merger Agreement. The options granted
F-24
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
15. STOCK OPTIONS: (CONTINUED)
pursuant to the Replacement Plan vest ratably over a period of five years on
each anniversary date of the grant. The replacement options have an exercise
price of $0.01 per share.
Upon termination of the optionee's employment, the Company shall have the
right to repurchase the options. In the event termination was for cause, the
price per option repurchased will be equal to the lesser of $1.00 per underlying
share and the market value per share of the Company's common stock, in either
case, minus $0.01 per share. If termination is for other than cause, the
repurchase price will differ for the vested and unvested portions. The unvested
portion will be reacquired at a purchase price equal to the lesser of the market
value per share and $1.00 per share, in each case, minus $0.01 per share and the
vested portion may be reacquired at a purchase price equal to the greater of the
market value per share or $1.00 per share, in each case, minus $0.01 per share.
On October 2, 1998, the Company issued a warrant (the "Warrant") to the
President and Chief Executive Officer (the "Executive") of the Company. Pursuant
to the terms of the Warrant, the Executive is entitled to purchase 2,841,221
shares of common stock at any time subsequent to the Recapitalization. The
exercise price of the Warrant is $.01 per share. An additional 1,894,148 shares
may be purchased under the Warrant at an exercise price of $1.00, representing
the fair market value on the date of grant upon the realization of an 8.0%
internal rate of return. The 1,894,148 options vest ratably each day for three
years. The Warrant will terminate on October 2, 2008. The Company recorded non
cash compensation expense of $2,813 for 1998 in connection with the difference
between the fair market value of the stock at the date of issuance ($1.00) and
the exercise price ($.01).
In addition, in exchange for certain warrants to purchase common stock of
Atrium Corp, the Executive received a warrant to purchase 1,000,000 shares of
the Company's common stock at a price of $.01 per share with a term of twenty
years.
The following table summarizes the transactions of the New Plan and the
Replacement Plan for the years ended December 31, 1998 and 1997 and the period
ended December 31, 1996 (all outstanding options were granted to management of
the Company):
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
------------- ------------- ------------
<S> <C> <C> <C>
Outstanding options, beginning of period......... 2,849,863 2,078,473 --
Granted.......................................... 13,310,941 771,390 2,078,473
Canceled or expired.............................. -- -- --
Exchanged........................................ (2,528,314) -- --
Exercised........................................ (321,549) -- --
------------- ------------- ------------
Outstanding options, end of year................. 13,310,941 2,849,863 2,078,473
------------- ------------- ------------
------------- ------------- ------------
Weighted average exercise price of options
exercised...................................... $ .84 $ -- $ --
Weighted average exercise price of options
granted........................................ $ .82 $ 1.25 $ .42
Weighted average exercise price, end of period... $ .85 $ 0.74 $ .42
Options exercisable, end of period............... 1,064,030 461,937 --
</TABLE>
F-25
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
15. STOCK OPTIONS: (CONTINUED)
<TABLE>
<S> <C> <C> <C>
Options available for future grant............... 255,201 731,415 834,837
</TABLE>
The fair value of each stock option granted is estimated on the date of
grant using the minimum value method of option pricing with the following
weighted-average assumptions for grants in 1998 and 1997: dividend yield of
0.0%; risk-free interest rate of 7.0%; and the expected life of 10 years. (In
determining the "minimum value" SFAS 123 does not require the volatility of the
Company's common stock underlying the options to be calculated or considered
because the Company was not publicly-traded when the options were granted).
If an event or value event as previously defined were to become probable,
the difference between the option price and the then fair market value would be
charged to earnings at that time.
The following table summarizes information about stock options and warrants
outstanding at December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------- -----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
RANGE OF EXERCISE NUMBER REMAINING EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING LIFE (MONTHS) PRICE EXERCISABLE PRICE
- ------------------ ------------ ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Options:
$ .01 2,267,861 117 $ .01 461,906 $ .01
$.83 - 1.00 9,525,037 117 $ .98 308,150 $ .79
$1.21 - 1.65 1,518,043 117 $ 1.29 293,974 $ 1.07
------------ ----------
13,310,941 1,064,030
Warrants:
$ .01 2,841,221 117 $ .01 2,841,221 $ .01
$1.00 1,894,148 117 $ 1.00 155,541 $ 1.00
------------ ----------
4,735,369 2,996,762
</TABLE>
In 1995, the FASB issued FASB Statement No. 123 ("FAS 123") "Accounting for
Stock-Based Compensation" which, if fully adopted by the Company, would change
the methods the Company applies in recognizing the cost of the stock based
plans. Adoption of the cost recognition provisions of FAS 123 is optional and
the Company has decided not to elect the provisions of FAS 123. However, pro
forma disclosures as if the Company adopted the cost recognition provisions of
FAS 123 are required by FAS 123; however, there is no pro forma effect of
adopting the cost provisions of FAS 123 for the years ended December 31, 1998
and 1997 and the periods ended December 31, 1996 and October 25, 1996. In 1998,
1997 and 1996, the Company granted only nonqualified stock options and warrants
under the plans.
Had the compensation cost for the Company's stock-based compensation plans
and warrants been determined consistent with FAS 123, the Company's net income
(loss) for 1998, 1997 and 1996 would have been ($3,122), $440 and $224,
respectively.
The effects of applying FAS 123 in this pro forma disclosure are not
indicative of future amounts. FAS 123 does not apply to awards prior to 1995.
F-26
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
16. EMPLOYEE BENEFIT PLANS:
Prior to the formation of Wing, management announced the curtailment of the
defined benefit pension plan covering substantially all employees. Upon receipt
of a favorable tax determination letter from the Internal Revenue Service,
settlement of the plan occurred during the period ended October 25, 1996, at
which time a liquidating distribution of $2,789 was made to the eligible
employees based on years of service and the employee's compensation during the
five consecutive years of employment in which compensation was the highest. In
addition, management retired the two nonqualified, unfunded and noncontributory
plans for the directors. Settlement of the plans occurred during the period
ended October 25, 1996 at which time a lump-sum payout of $801 was made to the
directors.
The Company maintains an employees' savings plan under Section 401(k) of the
Internal Revenue Code (the "Code"). The Company makes discretionary matching
contributions equal to 50% of the first 4% of the employee's contribution. The
Company contributed $101, $85, $78 during 1998 and 1997 and the period ended
December 31, 1996, respectively.
In connection with the Recapitalization, the Company maintains two
additional plans under Section 401(k) and 401 of the Code. Each plan provides
for discretionary contributions by the employer. The Plan covered by Section 401
of the Code does not provide for employee contributions. The Company contributed
$57 to the plans during the period from October 3, 1998 to December 31, 1998.
17. SUBSIDIARY GUARANTORS:
In connection with the Company's Senior Subordinated Notes, the Company's
payment obligations under the Notes are fully and unconditionally guaranteed,
jointly and severally (collectively, the Subsidiary Guarantees) on a senior
subordinated basis by its wholly-owned subsidiaries: ADW-Northeast, ADW-Arizona,
ADW-West Coast, Wing and Darby (collectively, the Subsidiary Guarantors). The
Company has no non-guarantor direct or indirect subsidiaries. The operations
related to the assets of ADW-Northeast ADW-Arizona ADW-West Coast and Darby are
included since the reverse acquisition on October 2, 1998. The operations of
Wing are presented for all periods covered. The balance sheet information
includes all subsidiaries as of December 31, 1998 and only Wing as of December
31, 1997. In the opinion of management, separate financial statements of the
respective Subsidiary Guarantors would not provide additional material
information, which would be useful in assessing the financial composition of the
Subsidiary Guarantors. No single Subsidiary Guarantor has any significant legal
restrictions on the ability of investors or creditors to obtain access to its
assets in event of default on the Subsidiary Guarantee other than its
subordination to senior indebtedness.
Following is summarized combined financial information pertaining to these
Subsidiary Guarantors:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Current assets................................................... $ 42,887 $ 23,610
Noncurrent assets................................................ 157,678 31,773
Current liabilities.............................................. 16,666 12,885
Noncurrent liabilities........................................... 123,049 31,823
</TABLE>
F-27
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
17. SUBSIDIARY GUARANTORS: (CONTINUED)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31,
--------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net sales........................................................ $ 165,333 $ 99,059
Gross profit..................................................... 37,340 20,789
Net income from continuing operations............................ 503 696
Net income....................................................... 503 696
</TABLE>
The Notes and the Subsidiary Guarantees are subordinated to all existing and
future Senior Indebtedness of the Company. The indenture governing the Notes
contains limitations on the amount of additional indebtedness (including Senior
Indebtedness) which the Company may incur.
18. SUBSEQUENT EVENTS:
DELTA ACQUISITION
On January 27, 1999, the Company acquired certain assets of Delta Millwork,
Inc., a privately held door pre-hanger located in Orlando, Florida, for $1,300.
The Company financed the acquisition through its revolving credit facility.
The acquisition will be accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16, "Business Combinations" ("APB 16").
The aggregate purchase price will be allocated to the underlying assets and
liabilities based upon their respective estimated fair market values at the date
of acquisition, with the remainder allocated to goodwill. Based on preliminary
estimates which will be finalized at a later date, the excess of purchase price
over the fair value of the net assets acquired ("goodwill") was approximately
$100, which will be amortized over 40 years. The results of operations for the
acquired business will be included in the Company's consolidated financial
statements beginning January 27, 1999.
MANAGEMENT CHANGE
On April 9, 1999, the Company completed a separation agreement with Randall
S. Fojtasek, President and Chief Executive Officer, whereby Mr. Fojtasek
resigned from the Company effective March 31, 1999. The Board of Directors has
nominated Jeff L. Hull, Executive Vice President and Chief Financial Officer,
and Ken L. Gilmer, Executive Vice President and Chief Operating Officer, to
oversee day-to-day operations and report directly to the Executive Committee of
the Board of Directors. The Company expects to take a charge of approximately
$1,750 in the first quarter of fiscal year 1999 for severance benefits related
to this management change.
$175,000 SENIOR SUBORDINATED NOTES
On May 10, 1999, the Company issued $175,000 of senior subordinated notes
due May 1, 2009. The notes are non-callable for five years, have a 10.50% stated
rate paid semi-annually and were issued at a discount of 98.496 to yield 10.75%
to maturity. The proceeds were used to fund the acquisitions of Heat, Inc. and
Champagne Industries, Inc., refinance certain indebtedness and pay fees and
expenses.
F-28
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
18. SUBSEQUENT EVENTS: (CONTINUED)
HEAT ACQUISITION
On May 17, 1999, the Company acquired Heat, Inc., a privately held vinyl
window and door company located in Pittsburgh, Pennsylvania, for approximately
$85,000. The Company financed the acquisition with a portion of the proceeds
from the issuance of $175,000 of senior subordinated notes.
The acquisition was accounted for as a purchase in accordance with APB 16.
The aggregate purchase price was allocated to the underlying assets and
liabilities based upon their respective estimated fair market values at the date
of acquisition. The excess of purchase price over the fair value of the net
assets acquired was $69,400, which is being amortized over 40 years.
CHAMPAGNE ACQUISITION
On May 17, 1999, the Company acquired Champagne Industries, Inc., a
privately held vinyl window and door company located in Denver, Colorado for
$3,600, excluding $500 to be paid upon achievement of certain operational
targets. The Company financed the acquisition with a portion of the proceeds
from the issuance of $175,000 of senior subordinated notes.
The acquisition was accounted for as a purchase in accordance with APB 16.
The aggregate purchase price was allocated to the underlying assets and
liabilities based upon their respective estimated fair market values at the date
of acquisition. The excess of purchase price over the fair value of the net
assets acquired was approximately $2,300, which is being amortized over 40
years.
F-29
<PAGE>
ATRIUM COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
1998
MARCH 31, ------------
1999
-----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................................... $ -- $ --
Equity securities--available for sale............................................... 144 137
Accounts receivable, net............................................................ 50,718 46,466
Inventories......................................................................... 49,973 46,289
Prepaid expenses and other current assets........................................... 8,020 7,756
Deferred tax asset.................................................................. 1,249 1,249
----------- ------------
Total current assets.............................................................. 110,104 101,897
PROPERTY, PLANT, AND EQUIPMENT, net................................................... 26,907 26,760
GOODWILL, net......................................................................... 213,902 214,749
DEFERRED FINANCING COSTS, net......................................................... 10,740 11,058
OTHER ASSETS.......................................................................... 5,113 5,405
----------- ------------
Total assets...................................................................... $ 366,766 $ 359,869
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of notes payable.................................................... $ 2,206 $ 2,209
Accounts payable.................................................................... 23,703 25,353
Accrued liabilities................................................................. 18,581 15,432
----------- ------------
Total current liabilities......................................................... 44,490 42,994
LONG-TERM LIABILITIES:
Notes payable....................................................................... 183,054 177,018
Deferred tax liability.............................................................. 1 1
Other long-term liabilities......................................................... 5,968 6,800
----------- ------------
Total long-term liabilities..................................................... 189,023 183,819
----------- ------------
Total liabilities............................................................... 233,513 226,813
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock $.01 par value, 3,000 shares authorized, 100 shares issued and
outstanding....................................................................... -- --
Paid-in capital..................................................................... 134,852 134,852
Accumulated deficit................................................................. (1,630) (1,820)
Accumulated other comprehensive income.............................................. 31 24
----------- ------------
Total stockholder's equity...................................................... 133,253 133,056
----------- ------------
Total liabilities and stockholder's equity.................................... $ 366,766 $ 359,869
----------- ------------
----------- ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-30
<PAGE>
ATRIUM COMPANIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED MARCH 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
---------- ---------
<S> <C> <C>
NET SALES.................................................................................. $ 106,842 $ 39,450
COST OF GOODS SOLD......................................................................... 74,708 30,464
---------- ---------
Gross profit............................................................................. 32,134 8,986
OPERATING EXPENSES:
Selling, delivery, general and administrative expenses................................... 23,151 6,606
Amortization expense..................................................................... 1,889 146
Special charge........................................................................... 1,762 --
---------- ---------
26,802 6,752
---------- ---------
Income from operations................................................................. 5,332 2,234
INTEREST EXPENSE........................................................................... 4,346 992
OTHER INCOME, net.......................................................................... 32 --
---------- ---------
Income before income taxes............................................................. 1,018 1,242
PROVISION FOR INCOME TAXES................................................................. 828 556
---------- ---------
NET INCOME................................................................................. $ 190 $ 686
---------- ---------
---------- ---------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-31
<PAGE>
ATRIUM COMPANIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE QUARTERS ENDED MARCH 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Net income........................................................................................ $ 190 $ 686
Other comprehensive income:
Unrealized gains on securities:
Unrealized holding gains arising during the period............................................ 7 --
--------- ---------
Comprehensive income............................................................................ $ 197 $ 686
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-32
<PAGE>
ATRIUM COMPANIES, INC.
CONSOLIDATED STATEMENT OF
STOCKHOLDER'S EQUITY
FOR THE QUARTER ENDED MARCH 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK OTHER TOTAL
------------------------ PAID-IN ACCUMULATED COMPREHENSIVE STOCKHOLDER'S
SHARES AMOUNT CAPITAL DEFICIT INCOME EQUITY
----------- ----------- --------- ------------- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998............. 100 $ -- $ 134,852 $ (1,820) $ 24 $ 133,056
Other comprehensive income......... -- -- -- -- 7 7
Net income......................... -- -- -- 190 -- 190
--- ----- --------- ------------- --- ------------
Balance, March 31, 1999................ 100 $ -- $ 134,852 $ (1,630) $ 31 $ 133,253
--- ----- --------- ------------- --- ------------
--- ----- --------- ------------- --- ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-33
<PAGE>
ATRIUM COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................................. $ 190 $ 686
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization............................................................ 2,937 468
Amortization of deferred financing costs................................................. 381 111
Gain on sale of assets................................................................... (31) --
Changes in assets and liabilities, net of acquisition in 1999:
Accounts receivable, net............................................................... (3,073) (4,539)
Inventories............................................................................ (2,735) (45)
Prepaid expenses and other current assets.............................................. (225) 62
Accounts payable....................................................................... (29) (2,756)
Accrued liabilities.................................................................... 3,265 5,527
--------- ---------
Net cash provided by (used in) operating activities.................................. 680 (486)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment................................................. (1,059) (287)
Proceeds from sale of assets............................................................... 32 --
Payment for acquisition, net of cash acquired.............................................. (1,737) --
Increase in other assets................................................................... (599) (343)
--------- ---------
Net cash used in investing activities................................................ (3,363) (630)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facility............................................. 6,582 1,928
Scheduled principal payments on term notes................................................. (500) (782)
Payment of capital lease obligations....................................................... (49) --
Payment of other long-term liabilities..................................................... (1,032) --
Checks drawn in excess of bank balances.................................................... (2,255) --
Deferred financing costs................................................................... (63) --
Proceeds from exercise of stock options.................................................... -- 216
--------- ---------
Net cash provided by financing activities............................................ 2,683 1,362
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS.................................................... -- 246
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................................... -- 34
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD..................................................... $ -- $ 280
--------- ---------
--------- ---------
SUPPLEMENTAL DISCLOSURE:
Cash paid (received) during the period for:
Interest................................................................................. $ 1,222 $ 881
Income taxes, net of refunds............................................................. (502) 400
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-34
<PAGE>
ATRIUM COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
1. BASIS OF PRESENTATION:
The unaudited consolidated financial statements of Atrium Companies, Inc.
(the "Company") for the quarters ended March 31, 1999 and 1998, and as of March
31, 1999 and December 31, 1998 have been prepared in accordance with generally
accepted accounting principles for interim financial reporting, the instructions
to Form 10-Q, and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements.
These consolidated financial statements and footnotes should be read in
conjunction with the Company's audited financial statements for the fiscal years
ended December 31, 1998, 1997 and 1996 included in the Company's Form 10-K as
filed with the Securities and Exchange Commission on April 15, 1999. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the interim
financial information have been included. The results of operations for any
interim period are not necessarily indicative of the results of operations for a
full year. Certain prior period amounts have been reclassified to conform to the
current period presentation.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133 ("FAS 133") "Accounting for Derivative Instruments and Hedging
Activities" that is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. The Company will implement the provisions of FAS 133 as
required. The future adoption of FAS 133 is not expected to have a material
effect on the Company's consolidated financial position or results of
operations.
Prior to October 2, 1998, the Company's historical financial statements as
previously filed with the Securities and Exchange Commission included its
operations and the operations of its wholly-owned subsidiaries, Atrium Door and
Window Company of the Northeast, Atrium Door and Window Company of New England,
Atrium Door and Window Company of New York (collectively, "ADW-Northeast"),
Atrium Door and Window Company--West Coast ("ADW-West Coast) and Atrium Door and
Window Company of Arizona ("ADW-Arizona"). On October 2, 1998, pursuant to an
acquisition and merger (the "Recapitalization" or "reverse acquisition") as more
fully described in the Company's Form 10-K as filed with the Securities and
Exchange Commission on April 15, 1999, the Company's indirect Parent (D and W
Holdings, Inc.) contributed the stock of Wing Industries Holdings, Inc. and its
subsidiary Wing Industries, Inc. (collectively "Wing") and Door Holdings, Inc.
and its subsidiaries R.G. Darby Company, Inc. and Total Trim, Inc. (collectively
"Darby") to the Company.
As Wing was determined to be the acquiror in a "reverse acquisition", the
historical financial statements of the Company (prior to October 3, 1998) were
replaced with the historical financial statements of Wing. As a result, the
statement of income for 1998 only includes the operations of the Company and
Darby from October 3, 1998 through December 31, 1998. The statements of income
for all periods prior to October 3, 1998 only include the operations and
accounts of Wing. Additionally, the operations of Delta Millwork, Inc. (renamed
R.G. Darby Company-South and Total Trim-South, collectively "Darby-South") are
included since the date of acquisition, January 27, 1999. The March 31, 1999
balance sheet includes the accounts of the Company, Wing, Darby, Darby-South and
each of their respective subsidiaries, while the December 31, 1999 balance sheet
includes the accounts of the Company, Wing, Darby and each of their respective
subsidiaries.
F-35
<PAGE>
ATRIUM COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
1. BASIS OF PRESENTATION: (CONTINUED)
The following unaudited pro forma information presents consolidated
operating results as though the Recapitalization and the acquisition of Delta
Millwork, Inc. (see Note 6) had occurred at the beginning of the periods
presented:
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, QUARTER ENDED MARCH
1999 31, 1998
----------------------- ----------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Net sales..................................... $ 106,842 $ 107,350 $ 39,450 $ 95,192
Gross profit.................................. 32,134 32,225 8,986 26,833
Operating expenses............................ 25,040 25,158 6,752 21,588
Special charge................................ 1,762 1,762 -- --
Income from operations........................ 5,332 5,305 2,234 5,245
Net income from continuing operations......... 190 152 686 236
Depreciation and amortization................. 2,937 2,946 468 3,226
Interest expense.............................. 4,346 4,358 992 4,381
</TABLE>
2. EQUITY SECURITIES--AVAILABLE FOR SALE:
Investments in equity securities--available for sale are carried at market
based on quoted market prices, with unrealized gains (losses) recorded as other
comprehensive income in stockholder's equity.
3. INVENTORIES:
Inventories are valued at the lower of cost or market using the last-in,
first-out (LIFO) method of accounting. Work-in-process and finished goods
inventories consist of materials, labor, and manufacturing overhead. Inventories
consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
Raw materials....................................................... $ 27,461 $ 27,362
Work-in-process..................................................... 4,680 4,129
Finished goods...................................................... 17,068 14,686
----------- ------------
49,209 46,177
LIFO reserve........................................................ 764 112
----------- ------------
$ 49,973 $ 46,289
----------- ------------
----------- ------------
</TABLE>
F-36
<PAGE>
ATRIUM COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
4. NOTES PAYABLE:
Notes payable consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
Revolving credit facility......................................... $ 10,700 $ 4,118
Term loan B....................................................... 74,500 74,750
Term loan C....................................................... 70,430 70,680
Senior subordinated notes......................................... 29,070 29,070
Other............................................................. 560 609
----------- ------------
185,260 179,227
Current portion of notes payable.................................. (2,206) (2,209)
----------- ------------
$ 183,054 $ 177,018
----------- ------------
----------- ------------
</TABLE>
5. CONTINGENCIES:
The Company is party to various claims, legal actions, and complaints
arising in the ordinary course of business. In the opinion of management, all
such matters are without merit or are of such kind, or involve such amounts,
that an unfavorable disposition would not have a material adverse effect on the
consolidated financial position, results of operations or liquidity of the
Company.
During 1993, factory employees voted to unionize and become members of the
Amalgamated Clothing and Textile Workers Union. A three-year union contract was
executed during 1995 and extended for three additional years in 1998. In
addition, in connection with its Woodville, Texas operations, the Company is
party to collective bargaining arrangements due to expire in 2001.
The Company is involved in various stages of investigation and cleanup
related to environmental protection matters, some of which relate to waste
disposal sites. The potential costs related to such matters and the possible
impact thereof on future operations are uncertain due in part to: the
uncertainty as to the extent of pollution; the complexity of Government laws and
regulations and their interpretations; the varying costs and effectiveness of
alternative cleanup technologies and methods; the uncertain level of insurance
or other types of recovery; and the questionable level of the Company's
involvement. The Company was named in 1988 as a potentially responsible party
("PRP") in two superfund sites pursuant to the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended (the Chemical
Recycling, Inc. site in Wylie, Texas, and the Diaz Refinery site in Little Rock,
Arkansas). The Company believes that based on the information currently
available, including the substantial number of other PRP's and relatively small
share allocated to it at such sites, its liability, if any, associated with
either of these sites will not have a material adverse effect on the Company's
financial position, results of operations or liquidity.
F-37
<PAGE>
ATRIUM COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
6. ACQUISITION:
DELTA ASSET PURCHASE:
On January 27, 1999, the Company acquired certain assets of Delta Millwork,
Inc., a privately held door pre-hanger located in Orlando, Florida, for
approximately $1,737 including fees and other transaction expenses. The Company
financed the acquisition through its revolving credit facility.
The acquisition of Delta Millwork, Inc. has been accounted for as a purchase
in accordance with Accounting Principles Board Opinion No. 16, "Business
Combinations" ("APB 16"). The aggregate purchase price has been allocated to the
underlying assets and liabilities based upon their respective estimated fair
market values at the date of acquisition, with the remainder allocated to
goodwill, which will be amortized over 40 years. The results of operations for
the acquired business are included in the Company's consolidated financial
statements beginning January 27, 1999. The purchase price allocation,
preliminary in nature and subject to change, is as follows:
<TABLE>
<S> <C>
Accounts receivable, net............................................ $ 1,178
Inventories......................................................... 949
Prepaid expenses and other current assets........................... 40
Property, plant and equipment, net.................................. 137
Other noncurrent assets............................................. 5
Goodwill............................................................ 145
Current liabilities................................................. (717)
---------
Total purchase price............................................ $ 1,737
---------
---------
</TABLE>
7. SUBSIDIARY GUARANTORS:
In connection with the issuance of the Senior Subordinated Notes (the
"Notes"), the Company's payment obligations under the Notes are fully and
unconditionally guaranteed, jointly and severally (collectively, the Subsidiary
Guarantees) on a senior subordinated basis by its wholly-owned subsidiaries:
ADW-Northeast, ADW-West Coast, ADW-Arizona, Wing, Darby and Darby-South
(collectively, the Subsidiary Guarantors). The Company has no non-guarantor
direct or indirect subsidiaries. The operations related to the assets of
ADW-Northeast, ADW-West Coast, ADW-Arizona and Darby are included since the
reverse acquisition on October 2, 1998. The operations of Darby-South are
included since the date of acquisition, January 27, 1999. The operations of Wing
are presented for all periods covered. The balance sheet information includes
all subsidiaries as of March 31, 1999 and ADW-Northeast, ADW-West Coast,
ADW-Arizona and Darby as of December 31, 1998. In the opinion of management,
separate financial statements of the respective Subsidiary Guarantors would not
provide additional material information, which would be useful in assessing the
financial composition of the Subsidiary Guarantors. No single Subsidiary
Guarantor has any significant legal restrictions on the ability of investors or
creditors to obtain access to its assets in event of default on the Subsidiary
Guarantee other than its subordination to senior indebtedness.
F-38
<PAGE>
ATRIUM COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
7. SUBSIDIARY GUARANTORS: (CONTINUED)
Following is summarized combined financial information pertaining to these
Subsidiary Guarantors:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
---------- ------------
<S> <C> <C>
Current assets..................................................... $ 43,320 $ 42,887
Noncurrent assets.................................................. 106,324 106,684
Current liabilities................................................ 16,375 16,666
Noncurrent liabilities............................................. 79,445 76,826
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
------------------------
1999 1998
---------- ------------
<S> <C> <C>
Net sales.......................................................... $ 59,279 $ 39,450
Gross profit....................................................... 15,601 8,986
Net income from continuing operations.............................. 295 686
</TABLE>
The Notes and the Subsidiary Guarantees are subordinated to all existing and
future Senior Indebtedness of the Company. The indenture governing the Notes
contains limitations on the amount of additional indebtedness (including Senior
Indebtedness) which the Company may incur.
8. SUBSEQUENT EVENTS:
HEAT ACQUISITION
On April 20, 1999, the Company entered into a stock purchase agreement to
acquire Heat, Inc., a privately held vinyl window and door company located in
Pittsburgh, Pennsylvania, for approximately $85,000. The Company expects to
finance the acquisition with a portion of the proceeds from the issuance of
$175,000 of senior subordinated notes (see below).
The acquisition will be accounted for as a purchase in accordance with APB
16. The aggregate purchase price will be allocated to the underlying assets and
liabilities based upon their respective estimated fair market values at the date
of acquisition. Based on preliminary estimates which will be finalized at a
later date, the excess of purchase price over the fair value of the net assets
acquired ("goodwill") will be approximately $72,000, which will be amortized
over 40 years. The results of operations for the acquired business will be
included in the Company's operations subsequent to the completion of the
transaction, which is expected to be on or about May 17, 1999.
CHAMPAGNE ACQUISITION
On May 10, 1999, the Company entered into a stock purchase agreement to
acquire Champagne Industries, Inc., a privately held vinyl window and door
company located in Denver, Colorado for approximately $3,500, excluding $500 to
be paid upon achievement of certain operational targets. The Company expects to
finance the acquisition with a portion of the proceeds from the issuance of
$175,000 of senior subordinated notes (see below).
F-39
<PAGE>
ATRIUM COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
8. SUBSEQUENT EVENTS: (CONTINUED)
The acquisition will be accounted for as a purchase in accordance with APB
16. The aggregate purchase price will be allocated to the underlying assets and
liabilities based upon their respective estimated fair market values at the date
of acquisition. Based on preliminary estimates which will be finalized at a
later date, the excess of purchase price over the fair value of the net assets
acquired ("goodwill") will be approximately $2,300, which will be amortized over
40 years. The results of operations for the acquired business will be included
in the Company's operations subsequent to the completion of the transaction,
which is expected to be on or about May 17, 1999.
$175,000 SENIOR SUBORDINATED NOTES
On May 10, 1999, the Company entered into an agreement to issue $175,000 of
senior subordinated notes due May 1, 2009. The notes are non-callable for five
years, have a 10.50% stated rate paid semi-annually and were issued at a
discount of 98.496 to yield 10.75% to maturity. The proceeds will be used to
fund the acquisitions of Heat, Inc. and Champagne Industries, Inc., refinance
certain indebtedness and pay fees and expenses.
F-40
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Atrium Corporation:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income (loss), of stockholder's equity (deficit) and
of cash flows present fairly, in all material respects, the financial position
of Atrium Companies, Inc. and its subsidiaries (a wholly-owned subsidiary of
Atrium Corporation) at December 31, 1997 and 1996, and the results of their
operations and their cash flows for the period from January 1, 1998 to October
2, 1998 and the years ended December 31, 1997 and 1996, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Dallas, Texas
June 25, 1999
F-41
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....................... $ 1 $ 617
Equity securities--available for sale........... 27 --
Accounts receivable, net........................ 24,376 21,975
Inventories..................................... 16,534 13,474
Prepaid expenses and other current assets....... 1,608 1,765
Deferred tax asset.............................. 692 2,555
------------ ------------
Total current assets............................ 43,238 40,386
PROPERTY, PLANT AND EQUIPMENT, net................ 16,388 13,970
GOODWILL, net..................................... 14,884 11,963
DEFERRED FINANCING COSTS, net..................... 4,961 5,173
OTHER ASSETS...................................... 3,904 3,258
------------ ------------
Total assets.................................... $ 83,375 $ 74,750
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable................................ $ 10,007 $ 8,528
Accrued liabilities............................. 7,102 6,580
------------ ------------
Total current liabilities....................... 17,109 15,108
LONG-TERM LIABILITIES:
Notes payable................................... 100,000 100,000
Deferred tax liability.......................... 1,058 818
------------ ------------
Total long-term liabilities..................... 101,058 100,818
------------ ------------
Total liabilities............................... 118,167 115,926
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY (DEFICIT):
Common stock $.01 par value, 3,000 shares
authorized, 100 shares issued and
outstanding................................... -- --
Paid-in capital................................. 32,790 31,936
Accumulated deficit............................. (67,503) (73,112)
Unrealized loss on equity securities--available
for sale...................................... (79) --
------------ ------------
Total stockholder's deficit..................... (34,792) (41,176)
------------ ------------
Total liabilities and stockholder's deficit... $ 83,375 $ 74,750
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-42
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
PERIOD ENDED ----------------------
OCTOBER 2, 1998 1997 1996
--------------- PERIOD ENDED ---------- ----------
SEPTEMBER 30,
1997
---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES............................................... $ 167,418 $ 139,793 $ 186,764 $ 156,269
COST OF GOODS SOLD...................................... 109,235 89,656 121,301 102,341
--------------- --------------- ---------- ----------
Gross profit.......................................... 58,183 50,137 65,463 53,928
--------------- --------------- ---------- ----------
OPERATING EXPENSES:
Selling, delivery, general and administrative
expenses............................................ 37,704 33,114 44,486 34,815
Special charges....................................... 7,452 -- -- 3,044
Stock option compensation expense..................... 5,265 255 307 3,023
--------------- --------------- ---------- ----------
50,421 33,369 44,793 40,882
--------------- --------------- ---------- ----------
Income from operations.............................. 7,762 16,768 20,670 13,046
INTEREST EXPENSE........................................ 9,545 8,542 11,523 4,786
OTHER INCOME (EXPENSE), net............................. (286) 1,127 1,088 (182)
--------------- --------------- ---------- ----------
Income (loss) before income taxes and extraordinary
charge............................................ (2,069) 9,353 10,235 8,078
PROVISION (BENEFIT) FOR INCOME TAXES.................... (732) 3,485 4,068 2,699
--------------- --------------- ---------- ----------
Income (loss) before extraordinary charge........... (1,337) 5,868 6,167 5,379
EXTRAORDINARY CHARGES ON EARLY RETIREMENT OF DEBT (NET
OF INCOME TAX BENEFIT OF $2,164 AND $720,
RESPECTIVELY)......................................... 3,525 -- -- 1,176
--------------- --------------- ---------- ----------
NET INCOME (LOSS)....................................... $ (4,862) $ 5,868 $ 6,167 $ 4,203
--------------- --------------- ---------- ----------
--------------- --------------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-43
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
STOCKHOLDER'S EQUITY (DEFICIT)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK OTHER RETAINED EARNINGS
---------------------------- COMPREHENSIVE PAID-IN (ACCUMULATED
SHARES AMOUNT INCOME (LOSS) CAPITAL DEFICIT)
------------- ------------- --------------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31,
1995...................... 100 $ -- $ -- $ 23,467 $ (38,011)
Capital contributions..... -- -- -- 5,025 --
Net distributions to
Holding................. -- -- -- -- (39,304)
Stock option compensation
expense................. -- -- -- 3,023 --
Income tax benefit upon
exercise of Holding's
stock options........... -- -- -- 421 --
Net income................ -- -- -- -- 4,203
--- ----- --- ----------- --------
BALANCE, December 31,
1996...................... 100 -- -- 31,936 (73,112)
Capital contributions..... -- -- -- 476 --
Net distributions to
Holding................. -- -- -- -- (558)
Stock option compensation
expense................. -- -- -- 307 --
Income tax benefit upon
exercise of Holding's
stock options........... -- -- -- 71 --
Comprehensive loss:
Net income................ -- -- -- -- 6,167
Unrealized loss on equity
securities available for
sale.................... -- -- (79) -- --
--- ----- --- ----------- --------
BALANCE, December 31,
1997...................... 100 -- (79) 32,790 (67,503)
Contributions from
Holding................. -- -- -- 275 --
Distributions to Holding.. -- -- -- -- (570)
Stock option compensation
expense................. -- -- -- 5,265 --
Income tax benefit upon
exercise of Holding's
stock options........... -- -- -- 1,008 --
Comprehensive loss:
Net loss.................. -- -- -- -- (4,862)
Unrealized gain........... -- -- 86 -- --
--- ----- --- ----------- --------
BALANCE, October 2, 1998.... 100 $ -- $ 7 $ 39,338 $ (72,935)
--- ----- --- ----------- --------
--- ----- --- ----------- --------
<CAPTION>
TOTAL
STOCKHOLDER'S
EQUITY (DEFICIT)
------------------
<S> <C>
BALANCE, December 31,
1995...................... $ (14,544)
Capital contributions..... 5,025
Net distributions to
Holding................. (39,304)
Stock option compensation
expense................. 3,023
Income tax benefit upon
exercise of Holding's
stock options........... 421
Net income................ 4,203
--------
BALANCE, December 31,
1996...................... (41,176)
Capital contributions..... 476
Net distributions to
Holding................. (558)
Stock option compensation
expense................. 307
Income tax benefit upon
exercise of Holding's
stock options........... 71
Comprehensive loss:
Net income................ 6,167
Unrealized loss on equity
securities available for
sale.................... (79)
--------
BALANCE, December 31,
1997...................... (34,792)
Contributions from
Holding................. 275
Distributions to Holding.. (570)
Stock option compensation
expense................. 5,265
Income tax benefit upon
exercise of Holding's
stock options........... 1,008
Comprehensive loss:
Net loss.................. (4,862)
Unrealized gain........... 86
--------
BALANCE, October 2, 1998.... $ (33,590)
--------
--------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-44
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
PERIOD ENDED 31,
OCTOBER 2, --------------------
1998 1997 1996
------------- PERIOD ENDED --------- ---------
SEPTEMBER 30,
1997
-------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................................. $ (4,862) $ 5,868 $ 6,167 $ 4,203
Adjustments to reconcile net income to net cash provided by
operating activities:
Extraordinary charge, net of income tax benefit................ 3,525 -- -- 1,176
Depreciation and amortization.................................. 3,246 2,384 3,278 2,205
Amortization of deferred financing costs....................... 493 482 642 279
Gain on retirement of assets................................... (41) (9) (38) (10)
Gain on sale of equity securities.............................. -- (2) (2) --
Stock option compensation expense.............................. 5,265 255 307 3,023
Changes in assets and liabilities:
Deferred tax provision (benefit)............................... (840) 214 2,102 (1,303)
Accounts receivable, net..................................... (5,363) (4,773) (640) (3,056)
Inventories.................................................. (2,654) (5,761) (1,688) 2,252
Prepaid expenses and other current assets.................... 795 1,020 197 (730)
Accounts payable............................................. 4,182 2,004 (1,165) 815
Accrued liabilities.......................................... 6,004 3,056 (57) (87)
------------- ------------- --------- ---------
Net cash provided by operating activities.................. 9,750 4,738 9,103 8,767
------------- ------------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment..................... (1,376) (2,326) (3,438) (3,380)
Proceeds from sales of assets.................................. 95 15 68 25
Purchases of equity securities................................. -- (480) (480) --
Proceeds from sales of equity securities....................... -- 375 375 --
Increase in other assets....................................... (475) (807) (1,377) (1,134)
Payment for acquisition, net of cash acquired.................. (26,831) (6,505) (6,561) (10,243)
------------- ------------- --------- ---------
Net cash used in investing activities........................ (28,587) (9,728) (11,413) (14,732)
------------- ------------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of notes payable....................................... (800) -- -- (62,928)
Net borrowings under revolving credit facility................. 2,285 2,961 -- 7,740
Proceeds from issuance of senior subordinated notes............ -- -- -- 100,000
Proceeds from issuance of notes payable........................ 17,500 -- -- 6,000
Checks drawn in excess of bank balances........................ (352) 1,752 2,135 --
Deferred financing costs....................................... (509) (425) (430) (5,457)
Capital contributions.......................................... -- -- -- 25
Contributions from Holding..................................... 275 196 476 --
Net distributions to Holding................................... (570) (110) (558) (39,304)
Income tax benefit upon exercise of Holding's stock options.... 1,008 -- 71 421
------------- ------------- --------- ---------
Net cash provided by financing activities.................... 18,837 4,374 1,694 6,497
------------- ------------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............. -- (616) (616) 532
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD................... 1 617 617 85
------------- ------------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD......................... $ 1 $ 1 $ 1 $ 617
------------- ------------- --------- ---------
------------- ------------- --------- ---------
SUPPLEMENTAL DISCLOSURE:
Cash paid during the period for:
Interest..................................................... $ 6,314 $ 5,069 $ 10,393 $ 3,699
Income taxes, net of refunds................................. (141) 1,512 2,737 4,514
Noncash contribution from Holding............................ -- -- -- 5,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-45
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
Atrium Companies, Inc. (the "Company"), (formerly Fojtasek Companies, Inc.,
a Texas corporation), is engaged in the manufacture and sale of doors, windows
and various building materials throughout the United States. A significant
portion of the Company's sales relates to new home construction activity, which
is cyclical in nature.
On July 3, 1995, the stockholders of Fojtasek Companies, Inc. ("Fojtasek")
executed a stock purchase agreement (the "Heritage Transaction") whereby all of
Fojtasek's common stock was acquired by FCI Holding Corp. ("FCI Holding"), a
Delaware holding company which was established in connection with the Heritage
Transaction. On September 30, 1996, Atrium Corporation ("Holding"), a Delaware
company which owned 100% of FCI Holding (which owned 100% of Fojtasek) acquired
Atrium Door and Window Company of the Northeast ("ADW--Northeast," formerly
Bishop), a manufacturer of vinyl replacement windows and doors and contributed
the capital stock of ADW--Northeast to Fojtasek (Note 15). On November 8, 1996,
in connection with the Hicks Muse Transaction (the "Hicks Muse Transaction"),
Fojtasek, which was a Texas corporation, was merged with and into FCI Holding.
The two companies were merged to achieve certain business objectives related to
brand-name recognition. The surviving Delaware corporation was renamed "Atrium
Companies, Inc.," (the "Company") which is a direct, wholly-owned subsidiary of
Holding. The merger was accounted for as a merger of companies under common
control and the assets were valued at historical cost.
BASIS OF CONSOLIDATION AND PRESENTATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, ADW--Northeast, acquired in September 1996,
and Atrium Door and Window Company-- West Coast ("ADW--West Coast," formerly H-R
Window Supply, Inc). ADW--Northeast refers to the combined consolidated results
of Atrium Door and Window Company of the Northeast (the merged companies
formerly named Vinyl Building Specialties of Connecticut, Inc. and Bishop
Manufacturing Company, Incorporated), its subsidiary Atrium Door and Window
Company of New England ("ADW-- New England" formerly Bishop Manufacturing
Company of New England, Inc.), and Atrium Door and Window Company of New York
("ADW--New York" formerly Bishop Manufacturing Co. of New York, Inc.) All
significant intercompany transactions and balances have been eliminated in
consolidation.
The consolidated financial information for the nine months ended September
30, 1997 is unaudited. In the opinion of management, the accompanying unaudited
consolidated financial information and related notes thereto contain all
adjustments consisting only of normal, recurring adjustments, necessary to
present fairly the consolidated financial information as of September 30, 1997
and the operating results and cash flows for the nine months ended September 30,
1997. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for the
full year.
References to amounts used throughout these consolidated financial
statements for the period ended September 30, 1997 are unaudited.
F-46
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INDUSTRY SEGMENT
The Company operates in a single industry segment, the fabrication and
distribution of doors and windows and related components.
REVENUE RECOGNITION
Revenue from the sale of doors and windows and related components is
recorded at the time of delivery and billing to the customer. Allowances are
established to recognize the risk of sales returns from customers.
CASH AND CASH EQUIVALENTS
The Company considers all highly-liquid investments with original maturities
of three months or less to be cash equivalents.
EQUITY SECURITIES--AVAILABLE FOR SALE
Investments in equity securities--available for sale are carried at market
based on quoted market prices, with unrealized gains (losses) recorded in
stockholder's equity.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts receivable are net of allowances for doubtful accounts of $608 and
$1,497 as of December 31, 1997 and 1996, respectively.
PROVISION FOR WARRANTY CLAIMS
Estimated warranty costs are provided at the time of the sale of the
warranted product.
CONCENTRATIONS OF CREDIT RISK
Financial instruments, which potentially expose the Company to
concentrations of credit risk, consist primarily of trade accounts receivable.
The Company's customers are concentrated in the southern regions of the U.S. and
focus upon the distribution and sale of building products. Sales in the state of
Texas accounted for approximately 38.3% of revenue in 1997. The Company performs
ongoing credit evaluations of its customers' financial condition and generally
requires no collateral. The Company establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of specific customers,
historical trends, and other information. The Company does not believe it is
dependent upon any single customer. No single customer accounted for more than
10% of sales in 1998, 1997 or 1996.
INVENTORIES
Inventories are valued at the lower of cost (last-in, first-out or "LIFO")
or market. Management believes that the LIFO method results in a better matching
of current costs with current revenues.
F-47
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated
depreciation. Prior to January 1, 1997 the Company provided for depreciation and
amortization using straight-line and accelerated methods. For all assets
acquired subsequent to January 1, 1997 the Company depreciates the assets on a
straight-line basis over their estimated useful lives, as follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE
-----------
Buildings and improvements..................................... 5-40 years
<S> <C>
Machinery and equipment........................................ 3-12 years
</TABLE>
Gains or losses on disposition are based on the net proceeds and the
adjusted carrying amount of the assets sold or retired. Expenditures for
maintenance, minor renewals and repairs are expensed as incurred, while major
replacements and improvements are capitalized.
GOODWILL
Goodwill represents the excess of cost over fair market value of net assets
acquired. Goodwill is being amortized over 40 years on a straight-line basis.
Amortization expense of $655, $340 and $75 was recorded for the period ended
October 2, 1998 and for the years ended December 31, 1997 and 1996,
respectively. Accumulated amortization at December 31, 1997 and 1996 was $415
and $75, respectively. Management continually reviews the carrying value of
goodwill for recoverability based on anticipated undiscounted cash flows of the
assets to which it relates. The Company considers operating results, trends and
prospects of the Company, as well as competitive comparisons. The Company also
takes into consideration competition within the building materials industry and
any other events or circumstances which might indicate potential impairment.
When goodwill is determined not to be recoverable, an impairment is recognized
as a charge to operations to the extent the carrying value of related assets
(including goodwill) exceeds the fair value of the related assets.
CAPITALIZED SOFTWARE COSTS
The Company capitalizes internal employee costs and external consulting
costs associated with implementing and developing software for internal use.
Internal costs capitalized include payroll and payroll-related costs for
employees who are directly associated with the development, modification and
implementation of the software. External costs include direct expenses related
to consulting and other professional fees consumed in developing, modifying and
implementing the software. Capitalization of costs occurs upon the completion of
the preliminary project stage and when management believes it is probable a
project will be completed and the software will be used to perform the function
intended. Amortization begins when the software is put into place and is
calculated on a straight-line basis over five years. Management continually
reviews the carrying value and expected functionality of the accumulated costs
for potential impairment. When it is no longer probable that computer software
being developed will be completed, modified or placed in service, the assets
carrying value will be adjusted to the lower of cost or fair value.
F-48
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INCOME TAXES
The provision for income taxes is based on pretax income as reported for
financial statement purposes. Deferred income taxes are provided in accordance
with the liability method of accounting for income taxes to recognize the tax
effects of temporary differences between financial statement and income tax
accounting.
FORWARD COMMITMENTS
The Company periodically enters into forward commitments to hedge price
variances in materials. Changes in the market value of forward commitments are
recognized in income when the effects of the related charges in the hedged items
are recognized.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from these estimates. Significant
estimates are used in calculating allowance for bad debt, workers' compensation
and warranty accruals, and deferred tax assets and liabilities.
2. FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with Statement of Financial Accounting Standards (SFAS) No.
107, "Disclosures About Fair Value of Financial Instruments," the following
methods have been used in estimating fair value disclosures for significant
financial instruments of the Company.
Estimated fair value amounts have been determined by the Company using
available market information and appropriate valuation methodologies. Since
considerable judgment is required to interpret market data to develop the
estimates of fair value, the estimates presented are not necessarily indicative
of the amounts that could be realized in a current market exchange.
Cash and cash equivalents--The carrying amounts reported in the balance
sheet approximate the fair value.
Equity securities--available for sale--The carrying amounts that are
reported in the balance sheet approximate the fair value based on quoted
market prices.
Notes payable--The fair value of the Company's notes is based on quoted
market prices.
Forward aluminum contracts--The unrealized gains and losses are based on
quotes for aluminum as reported on the London Metal Exchange.
F-49
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
2. FAIR VALUE OF FINANCIAL INSTRUMENTS: (CONTINUED)
The carrying amounts and estimated fair values of the Company's financial
instruments as of December 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
----------------------- -----------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents...................................... $ 1 $ 1 $ 617 $ 617
Equity securities--available for sale.......................... $ 27 $ 27 $ -- $ --
LIABILITIES:
Notes payable.................................................. $ 100,000 $ 106,000 $ 100,000 $ 102,000
<CAPTION>
NOTIONAL UNREALIZED NOTIONAL UNREALIZED
OFF BALANCE SHEET: AMOUNT GAIN/(LOSS) AMOUNT GAIN/(LOSS)
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Forward aluminum contracts..................................... $ 24,960 $ (21) $ 21,656 $ 519
</TABLE>
3. INVENTORIES:
Inventories are valued at the lower of cost or market using the LIFO method
of accounting. Work-in-process and finished goods inventories consist of
materials, labor and manufacturing overhead. Inventories consisted of the
following at December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Raw materials........................................................... $ 13,653 $ 11,765
Work-in-process......................................................... 705 563
Finished goods.......................................................... 4,056 2,526
--------- ---------
18,414 14,854
LIFO reserve............................................................ (1,880) (1,380)
--------- ---------
$ 16,534 $ 13,474
--------- ---------
--------- ---------
</TABLE>
The change in the LIFO reserve for the periods ended October 2, 1998 and
September 30, 1997 and for the years ended December 31, 1997 and 1996 resulted
in a decrease in cost of sales of $1,469 in 1998, a decrease in cost of sales of
$267 for the period ended September 30, 1997, an increase in cost of sales of
$500 in 1997 and a decrease in cost of sales by $491 in 1996.
F-50
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
4. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Land.................................................................... $ 682 $ 682
Buildings and improvements.............................................. 7,596 7,139
Machinery and equipment................................................. 16,238 11,970
Construction-in-process................................................. 434 705
--------- ---------
Total................................................................. 24,950 20,496
Less accumulated depreciation and amortization.......................... (8,562) (6,526)
--------- ---------
$ 16,388 $ 13,970
--------- ---------
--------- ---------
</TABLE>
Depreciation expense was $1,852, $2,217 and $1,681 for the period ended
October 2, 1998 and for the years ended December 31, 1997 and 1996,
respectively.
5. OTHER ASSETS:
Other assets consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Capitalized software costs, net............................................ $ 2,406 $ 1,355
Non-compete agreements, net................................................ 1,125 1,575
Deposits, notes receivable and other....................................... 373 328
--------- ---------
$ 3,904 $ 3,258
--------- ---------
--------- ---------
</TABLE>
The costs of the non-compete agreements are being amortized over the terms
of the related agreements, which are five years. Amortization expense for the
period ended October 2, 1998 and for the years ended December 31, 1997 and 1996
was $338, $450 and $450, respectively, resulting in accumulated amortization at
December 31, 1997 and 1996 of $1,125 and $675, respectively. Amortization
expense of $401, $271, and $0 was recorded for the period ended October 2, 1998
and for the years ended December 31, 1997 and 1996 for costs related to
capitalized software costs.
6. DEFERRED FINANCING COSTS:
The deferred financing costs relate to costs incurred in the placement of
the Company's debt and are being amortized using the effective interest method
over the terms of the related debt, which range from five to ten years.
Amortization expense for the period ended October 2, 1998 and for the years
ended December 31, 1997 and 1996 was $493, $642 and $279, respectively and was
included in interest expense in the accompanying Consolidated Statements of
Income (Loss).
F-51
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
7. ACCRUED LIABILITIES:
Accrued liabilities include the following at December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Accrued salaries and wages................................................. $ 2,627 $ 2,100
Accrued interest........................................................... 1,358 1,003
Accrued taxes payable...................................................... 1,263 601
Contingent payable related to
ADW-Northeast acquisition.............................................. -- 1,000
Warranty and litigation reserve............................................ 781 961
Workers' compensation reserve.............................................. 250 500
Other...................................................................... 823 415
--------- ---------
$ 7,102 $ 6,580
--------- ---------
--------- ---------
</TABLE>
8. NOTES PAYABLE:
Notes payable consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Senior subordinated notes............................................. $ 100,000 $ 100,000
Less current maturities............................................. -- --
---------- ----------
$ 100,000 $ 100,000
---------- ----------
---------- ----------
</TABLE>
In November 1996, the Company issued $100,000 aggregate principal amount of
10 1/2% Senior Subordinated Notes (the "Notes") due November 15, 2006 under the
Indenture dated as of November 27, 1996. Interest on the Notes is payable
semiannually on May 15 and November 15 of each year, commencing on May 15, 1997.
The Notes mature on November 15, 2006. The Company may redeem the Notes based on
certain triggering events. In addition, under certain circumstances the Company
will be obligated to make an offer to repurchase the Notes at 100% of the
principal amount, plus accrued and unpaid interest to the date of repurchase,
with the net cash proceeds of certain sales or other dispositions of assets.
The Notes are fully and unconditionally guaranteed, jointly and severally,
on an unsecured, senior subordinated basis, by each of the Company's
subsidiaries (see Note 18). The Indenture permits the Company to incur
additional indebtedness (including Senior Indebtedness) of up to $45,000 as of
December 31, 1997, subject to certain limitations. The Indenture restricts the
Company's ability to pay dividends or make certain other restricted payments,
consummate certain asset sales, or otherwise dispose of all or substantially all
of the assets of the Company and its subsidiaries.
The Company has also entered into a Credit Agreement providing for a
revolving credit facility (the "Credit Facility"). The Credit Facility enables
the Company to borrow up to $20,000. The revolving credit loans bear interest at
a rate based upon the lender's prime rate plus a borrowing margin of 1.5% or a
LIBOR-based rate plus a borrowing margin of 2.5%. The Company pays a commitment
fee of .5% based on the unused portion of the Credit Facility. The Credit
Facility terminates in March 2002. The Company had $19,191 of availability under
the Credit Facility as of December 31, 1997, net of outstanding letters of
F-52
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
8. NOTES PAYABLE: (CONTINUED)
credit totaling $809. The Credit Facility contains various covenants that
restrict the Company from taking various actions and requires the Company to
achieve and maintain certain financial covenants.
Principal payments due during the next five years on long-term notes payable
as of December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998.............................................................. $ --
1999.............................................................. --
2000.............................................................. --
2001.............................................................. --
2002.............................................................. --
Thereafter........................................................ 100,000
---------
$ 100,000
---------
---------
</TABLE>
9. FEDERAL INCOME TAX:
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires that deferred income tax expenses
be provided based upon the liability method.
Temporary differences that give rise to the deferred income tax assets and
liabilities are as follows as of December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Deferred income tax assets:
Allowance for doubtful accounts......................................... $ -- $ 495
Deferred stock compensation............................................. 572 501
Inventory cost capitalization and valuation............................. 331 660
Non-compete agreement................................................... 277 167
Accrued vacation........................................................ 178 173
Warranty and litigation................................................. 90 357
Workers' compensation................................................... 92 185
Other................................................................... -- 17
--------- ---------
1,540 2,555
Deferred income tax liabilities:
Depreciation............................................................ (1,050) (811)
Capitalized software costs.............................................. (830) --
Other................................................................... (26) (7)
--------- ---------
(1,906) (818)
--------- ---------
Net deferred income tax asset (liability)................................. (366) 1,737
Less-current deferred tax asset........................................... 692 2,555
--------- ---------
Long-term deferred tax liability.......................................... $ (1,058) $ (818)
--------- ---------
--------- ---------
</TABLE>
F-53
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
9. FEDERAL INCOME TAX: (CONTINUED)
SFAS 109 requires a valuation allowance against deferred tax assets if,
based on the weight of available evidence, it is more likely than not that some
of or all of the deferred tax assets will not be realized. As of December 31,
1997 and 1996, no valuation reserve was recorded.
The components of the provision for income taxes are as follows for the
periods ended October 2, 1998 and September 30, 1997 and for the years ended
December 31, 1997 and 1996:
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 2, --------------------
1998 1997 1996
----------- SEPTEMBER 30, --------- ---------
1997
-------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current federal income tax provision........... $ 159 $ 2,663 $ 1,543 $ 3,388
Deferred federal income tax
provision (benefit)........................ (840) 534 2,103 (930)
State income tax provision (benefit)........... (51) 288 422 241
----------- ------ --------- ---------
Provision (benefit) for income taxes....... $ (732) $ 3,485 $ 4,068 $ 2,699
----------- ------ --------- ---------
----------- ------ --------- ---------
</TABLE>
The Company recognized a tax benefit in 1998, 1997 and 1996 of $1,008, $71
and $421, respectively, related to Holding's stock options. This benefit was
recorded directly to paid-in capital.
Reconciliation of the federal statutory income tax rate to the effective tax
rate, was as follows for the periods ended October 2, 1998 and September 30,
1997 and for the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 2, --------------------
1998 1997 1996
----------- SEPTEMBER 30, --------- ---------
1997
-------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Tax computed at statutory rate................. $ (724) $ 3,180 $ 3,482 $ 2,777
State taxes.................................... (51) 288 423 241
Prior year return to accrual differences....... -- -- -- (352)
Non deductible goodwill and other.............. 43 17 163 33
----------- ------ --------- ---------
Provision for income taxes..................... $ (732) $ 3,485 $ 4,068 $ 2,699
----------- ------ --------- ---------
----------- ------ --------- ---------
</TABLE>
10. RELATED PARTIES:
Included in prepaid expenses and other current assets are the following
receivables due from related parties at December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Receivables from stockholders.............................................. $ 19 $ 82
Receivables from officers.................................................. $ 20 $ 5
Receivables from employees................................................. $ 64 $ 80
</TABLE>
F-54
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
10. RELATED PARTIES: (CONTINUED)
MONITORING AND OVERSIGHT AGREEMENT
Holding and the Company have entered into a ten-year monitoring and
oversight agreement with Hicks Muse. Pursuant thereto, Holding and the Company
have agreed to pay to Hicks Muse a minimum annual fee of $320 for ongoing
financial oversight and monitoring services to the Company. The annual fee is
adjustable upward or downward on January 1 of each calendar year to an amount
equal to 0.2% of the budgeted consolidated annual net sales of the Company and
its subsidiaries for the then-current fiscal year, provided that such fee shall
at no time be less than $320 per year. In the period ended October 2, 1998 and
the year ended December 31, 1997, $405 and $437 was paid to Hicks Muse under
this agreement, respectively. This agreement was terminated in connection with
the Recapitalization as defined in Note 19.
FINANCIAL ADVISORY AGREEMENT
Holding and the Company are parties to a ten-year financial advisory
agreement (the "Financial Advisory Agreement") with Hicks Muse pursuant to which
Hicks Muse received a financial advisory fee of $2,000 on the closing date of
the Hicks Muse Transaction as compensation for its services as financial advisor
to the Company in connection with the Hicks Muse Transaction. Pursuant to the
Financial Advisory Agreement, Hicks Muse is also entitled to receive a fee equal
to 1.5% of the transaction value (as defined in the Financial Advisory
Agreement) for each add-on transaction in which the Company or any of its
subsidiaries is involved. In connection with the ADW-West Coast asset
acquisition (see Note 15), the Company paid $92 to Hicks Muse. This agreement
was terminated in connection with the Recapitalization as defined in Note 19.
11. COMMITMENTS AND CONTINGENCIES:
COMMITMENTS
The Company has entered into operating lease agreements for office and
manufacturing space with unrelated third parties and with certain affiliates of
certain stockholders of the Company. Total rent expense for the period ended
October 2, 1998 and for the years ended December 31, 1997 and 1996 was $2,515,
$4,339 and $2,012, respectively. Of these totals, amounts paid to related
parties were $946, $753 and $605 in the period ended October 2, 1998 and for the
years ended December 31, 1997 and 1996, respectively. Future minimum rents due
under operating leases with initial or remaining terms greater than twelve
months as of December 31, 1997 are as follows:
<TABLE>
<CAPTION>
RELATED OTHER
PARTIES PARTIES TOTAL
----------- ----------- ---------
<S> <C> <C> <C>
1998........................................................ $ 1,030 $ 1,768 $ 2,798
1999........................................................ 1,180 1,371 2,551
2000........................................................ 1,180 1,111 2,291
2001........................................................ 1,245 828 2,073
2002........................................................ 1,311 409 1,720
Thereafter.................................................. 7,603 174 7,777
----------- ----------- ---------
$ 13,549 $ 5,661 $ 19,210
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
F-55
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
11. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
The Company has contracts with various suppliers to purchase aluminum for
use in the manufacturing process. The contracts vary from one to twelve months
and are at fixed quantities and fixed and floating prices. As of December 31,
1997 and 1996, the Company had forward commitments totaling $24,960 and $21,656
for delivery through December 1998 and 1997 for 28.6 and 28.7 million pounds of
aluminum, of which 14.3 and 10.0 million pounds were at fixed prices,
respectively.
The Company has entered into employment agreements with several key
executives of the Company including its President and Chief Executive Officer,
its Chief Financial Officer and several Presidents, Vice Presidents, General
Managers and Sales Managers of the Company's divisions. The agreements generally
provide for terms of employment, annual salaries, bonuses, and eligibility for
option awards and severance benefits.
CONTINGENCIES
The Company is party to various claims, legal actions and complaints arising
in the ordinary course of business. In the opinion of management, all such
matters are without merit or are of such kind, or involve such amounts, that an
unfavorable disposition would not have a material effect on the financial
position, results of operations or liquidity of the Company.
The Company is involved in various stages of investigation and cleanup
relative to environmental protection matters, some of which relate to waste
disposal sites. The potential costs related to such matters and the possible
impact thereof on future operations are uncertain due in part to: the
uncertainty as to the extent of pollution; the complexity of Government laws and
regulations and their interpretations; the varying costs and effectiveness of
alternative cleanup technologies and methods; the uncertain level of insurance
or other types of recovery; and the questionable level of the Company's
involvement. The Company was named in 1988 as a potentially responsible party
("PRP") in two superfund sites pursuant to the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended (the Chemical
Recycling, Inc. site in Wylie, Texas, and the Diaz Refinery site in Little Rock,
Arkansas). The Company believes that based on the information currently
available, including the substantial number of other PRP's and relatively small
share allocated to it at such sites, its liability, if any, associated with
either of these sites will not have a material adverse effect on the Company's
financial position, results of operations or liquidity.
12. STOCK PURCHASE AGREEMENT:
HICKS MUSE TRANSACTION
The Hicks Muse Transaction refers to a recapitalization transaction that
closed concurrent with the closing of the issuance of the Notes in which
affiliates of Hicks Muse purchased a number of newly issued shares of Holding's
Common Stock for $32,000 pursuant to a Stock Purchase Agreement dated November
7, 1996, and certain outstanding shares, and certain options and warrants to
acquire shares of Holding's Common Stock and all outstanding shares of preferred
stock of Holding were redeemed.
This transaction, which was completed on November 27, 1996, required
approximately $134,500 to complete, consisting of $59,417 in redemption payments
to the Selling Securityholders, $54,369 representing all outstanding
indebtedness under the Old Credit Facility and debt assumed in connection with
its acquisition of ADW--Northeast, $12,472 in redemption payments to preferred
stockholders of Holding
F-56
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
12. STOCK PURCHASE AGREEMENT: (CONTINUED)
(including cumulative dividends in arrears) and approximately $8,242 of fees and
expenses. The funds required to consummate the Hicks Muse Transaction were
provided by (i) the proceeds of the issuance of the Notes, (ii) $32,000 in
equity financing, (iii) drawings of $2,000 under the Company's Credit Facility,
and (iv) other cash provided by the Company of $500. The shares issued to Hicks
Muse, after giving effect to the other elements of the Hicks Muse Transaction,
represent approximately 82.0% of the outstanding common stock of Holding. The
Hicks Muse Transaction has been accounted for as a recapitalization.
13. SPECIAL CHARGES AND STOCK OPTION COMPENSATION EXPENSE
Included in special charges in the 1996 Consolidated Statement of Income are
officer bonuses of $3,044 incurred in connection with the Hicks Muse
Transaction.
Included in special charges in the 1998 Consolidated Statement of Loss are
officer bonuses of $3,885, transaction expenses of $2,780 and other costs of
$787 incurred in connection with the Recapitalization (see Note 19).
Included in stock option compensation expense are charges associated with
the issuance of new stock options at exercise prices below the fair value of the
underlying common stock, the expense associated with the cash redemption of
certain options, and amortization of deferred compensation expense related to
previously issued options.
14. OTHER INCOME (EXPENSE), NET:
Other income (expense), net consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 2, --------------------
1998 1997 1996
----------- --------- ---------
<S> <C> <C> <C>
Insurance settlement............................................................... $ -- $ 1,193 $ --
Rental, interest, and other income................................................. (25) 65 49
Legal expense relating to labor negotiations....................................... (239) -- --
Gain on sale of assets............................................................. 41 38 10
Other.............................................................................. (63) (208) (241)
----------- --------- ---------
$ (286) $ 1,088 $ (182)
----------- --------- ---------
----------- --------- ---------
</TABLE>
15. ACQUISITIONS:
MASTERVIEW ASSET PURCHASE:
On March 27, 1998, through its newly-formed subsidiary, Atrium Door and
Window Company of Arizona ("ADW-Arizona"), the Company acquired substantially
all of the assets of Masterview Window Company, LLC ("Masterview"), a privately
held window and door company located in Phoenix, Arizona, for approximately
$26,800 including fees and other transaction expenses. The Company financed the
F-57
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
15. ACQUISITIONS: (CONTINUED)
Acquisition through its Credit Facility, which included a $17,500 senior term
loan with the remainder of the purchase price of approximately $9,300 being
drawn from the $20,000 revolving credit facility.
<TABLE>
<S> <C>
Cash and cash equivalents.......................................... $ 3
Accounts receivable, net........................................... 3,099
Inventories........................................................ 1,635
Prepaid expenses and other current assets.......................... 251
Property, plant and equipment, net................................. 2,700
Goodwill........................................................... 22,797
Current liabilities................................................ (3,354)
Long-term liabilities.............................................. (300)
---------
Total purchase price........................................... $ 26,831
---------
---------
</TABLE>
ADW--WEST COAST (FORMERLY GENTEK) ASSET PURCHASE:
On July 1, 1997, the Company purchased through its wholly-owned subsidiary,
ADW--West Coast (formerly H-R Window Supply, Inc.), the assets of the Western
Window Division of Gentek Building Products, Inc., located in Anaheim,
California. The purchase price (including transactions expenses) was $6,561 and
was funded from borrowings under the Company's revolving credit facility. The
transaction was accounted for under the purchase method of accounting. The
purchase allocation, preliminary in nature and subject to change, is as follows:
<TABLE>
<S> <C>
Cash and advances to the Company................................... $ 1
Accounts receivable, net........................................... 1,760
Inventories........................................................ 1,372
Other current assets............................................... 39
Property, plant and equipment, net................................. 1,131
Other noncurrent assets............................................ 28
Goodwill........................................................... 3,320
Current liabilities................................................ (1,090)
---------
Total purchase price........................................... $ 6,561
---------
---------
</TABLE>
ADW--NORTHEAST (FORMERLY BISHOP):
Effective September 30, 1996, the Company acquired the capital stock of
ADW--Northeast, a manufacturer of vinyl replacement windows and doors for the
residential market in the northeast region of the United States, for $19,531. To
consummate the acquisition, the Company paid $13,531 to ADW-- Northeast's
shareholders (the "Sellers"), agreed to a $1,000 payable to the Sellers to be
paid if certain earnings targets are met, and issued $5,000 of Holding common
stock in exchange for all of ADW-- Northeast's capital stock. The $1,000 was
recorded as an accrued liability in the Company's financial statements at
December 31, 1996. During 1997, the Company paid $500 of the amount and adjusted
the purchase price by the remaining balance (this amount was recorded as a
reduction in goodwill). Holding subsequently contributed the ADW--Northeast
capital stock to the Company. Consequently, as of
F-58
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
15. ACQUISITIONS: (CONTINUED)
September 30, 1996, ADW--Northeast became a wholly-owned subsidiary of the
Company. The ADW-- Northeast acquisition has been accounted for under the
purchase method of accounting. Accordingly, the purchase price has been
allocated to the assets and liabilities based upon their estimated fair values
at the date of acquisition as follows:
<TABLE>
<S> <C>
Cash and advances to the Company................................... $ 3,288
Accounts receivable, net........................................... 2,073
Inventories........................................................ 1,774
Other current assets............................................... 256
Property, plant and equipment, net................................. 1,206
Other noncurrent assets............................................ 70
Goodwill........................................................... 12,038
Current liabilities................................................ (986)
Other noncurrent liabilities....................................... (188)
---------
Total purchase price............................................... $ 19,531
---------
---------
</TABLE>
The acquisitions of Masterview, ADW--West Coast and ADW--Northeast were
accounted for as a purchase in accordance with Accounting Principles Board
Opinion No. 16, "Business Combinations." The aggregate purchase price has been
allocated to the underlying assets and liabilities based upon their respective
estimated fair market values at the date of acquisition, with the remainder
allocated to goodwill.
The Company's Consolidated Statements of Income for the period ended October
2, 1998 and the years ended December 31, 1997 and 1996 include Masterview's,
ADW--West Coast's and ADW-- Northeast's operations from the dates of
acquisition, March 27, 1998, July 1, 1997 and September 30, 1996, respectively.
The following table presents the historical consolidated operating results of
the Company for the period ended October 2, 1998 and the years ended December
31, 1997 and 1996 compared to pro forma operating results for such periods. The
following unaudited pro forma information presents consolidated operating
results as though the acquisitions of Masterview, ADW--West Coast and ADW--
Northeast had occurred at the beginning of the periods presented:
<TABLE>
<CAPTION>
PERIOD ENDED OCTOBER 2, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996
-------------------------- -------------------------- --------------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA ACTUAL PRO FORMA
----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net sales................................. $ 167,418 $ 173,638 $ 186,764 $ 218,574 $ 156,269 $ 182,099
Income (loss) before extraordinary
charge.................................. (1,337) (1,207) 6,167 8,605 5,379 6,358
Net income (loss)......................... (4,862) (4,732) 6,167 8,605 4,203 5,182
</TABLE>
KELLER ASSET PURCHASE:
In June 1996, the Company purchased certain assets from a division of Keller
Building Products for $1,150. In September 1996, the Company purchased the
division's inventory for $500. These asset purchases were recorded at cost.
F-59
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
16. STOCK OPTIONS:
In connection with the Heritage Transaction, FCI Holding issued options (the
"Substitute Options") to certain members of Fojtasek management to purchase FCI
Holding's nonvoting common stock. The options vested ratably over five years or
immediately upon a public offering or a sale of substantially all the assets of
FCI Holding or a subsidiary. In connection with this issuance, $1,350 in
compensation expense representing the difference between the market value of the
underlying common stock and the exercise price of the option was deferred and
amortized over the vesting period. To effect the acquisition of ADW--Northeast,
FCI Holding formed Holding. The Substitute Option holders exchanged 2,875,922
options for equivalent nonvoting common stock options (the "Replacement
Options") in Holding's 1996 Original Stock Option Plan (the "Original Plan"). In
conjunction with the Hicks Muse Transaction, 2,875,922 options of Holding were
tendered at an exercise price of $.01, of which 1,050,000 were exchanged for
Replacement Options of Holding. In connection with the exchanged options, $1,040
was deferred and is being amortized over the new 5 year vesting period. Under
certain circumstances, if the option holders terminate employment prior to the
exercise of such option, they have the right to receive $1.00 per option (net of
the exercise price). Compensation expense of approximately $5,265, $1,384, $307
and $926 related to the options was recognized by the Company for the periods
ended October 2, 1998 and September 30, 1997 and for the years ended December
31, 1997 and 1996, respectively.
FCI Holding also issued stock options (the "Disposition Options") to certain
members of Fojtasek management. Value was recognized on these options based on
the market value of the Company, which became exercisable upon a public offering
or a sale of substantially all the assets of FCI Holding or a subsidiary of FCI
Holding. In connection with the Hicks Muse Transaction, the options vested and
were redeemed and the resultant compensation expense of $743 was recorded in
stock option compensation expense in the 1996 Consolidated Statement of Income.
Upon completion of the Hicks Muse Transaction, Holding adopted the 1996
Stock Option Plan (the "New Plan") authorizing the issuance of 3,500,000 options
to acquire common stock. Holding's New Plan gives certain individuals and key
employees of Holding and any subsidiary corporation thereof who are responsible
for the continued growth of Holding an opportunity to acquire a proprietary
interest in Holding and thus to create in such persons an increased interest in
and a greater concern for the welfare of Holding or any subsidiary. Through
December 31, 1997 and 1996, the Board of Directors of Holding has granted
2,185,390 and 1,910,390 options, respectively, under the New Plan at a weighted
average price of $1.00 per share which represented fair market value on the
dates of grant. The Company applies APB Opinion 25 and related interpretations
in accounting for the Plan.
F-60
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
16. STOCK OPTIONS: (CONTINUED)
The following table summarizes the transactions of the Original Plan and the
New Plan for the period ended October 2, 1998 and for the years ended December
31, 1997 and 1996 (all outstanding options were granted to management of the
Company):
<TABLE>
<CAPTION>
OCTOBER 2, DECEMBER 31, DECEMBER 31,
1998 1997 1996
------------ ------------- ------------
<S> <C> <C> <C>
Outstanding options, beginning of period.............................. 2,375,037 2,960,390 2,875,922
Granted............................................................... 497,500 275,000 2,960,390
Canceled or expired................................................... (40,000) (504,645) --
Exchanged............................................................. (1,330,207) -- (1,050,000)
Exercised............................................................. (1,502,330) (355,708) (1,825,922)
------------ ------------- ------------
Outstanding options, end of period.................................... -- 2,375,037 2,960,390
------------ ------------- ------------
------------ ------------- ------------
Weighted average exercise price of options exercised.................. $ .46 $ .72 $ .01
Weighted average exercise price of options granted.................... $ 1.75 $ 1.00 $ .62
Weighted average exercise price, end of period........................ $ -- $ .60 $ .65
Options exercisable, end of period.................................... -- 420,007 24,500
Options available for future grant.................................... -- 1,819,255 1,589,610
</TABLE>
The options vest over periods ranging from three to five years.
In connection with the Recapitalization (Note 19), options outstanding were
exchanged for options in the D&W Holdings Inc. Replacement Stock Option Plan.
On November 27, 1996, Holding issued a warrant (the "Warrant") to the
President and Chief Executive Officer (the "Executive") of the Company. Pursuant
to the terms of the Warrant, the Executive is entitled to purchase 1,333,333
shares of Holding common stock at any time subsequent to the Hicks Muse
Transaction. The exercise price of the Warrant is $.01 per share. An additional
861,889 shares may be purchased under the Warrant at an exercise price of $1.00,
representing the fair market value on the date of grant upon the realization of
an 8.0% internal rate of return. The 861,889 options vest ratably each day for
three years. The Warrant will terminate on November 27, 2006. The Company
recorded non cash compensation expense of $1,320 for the period ended December
31, 1996 in connection with the difference between the fair market value of the
stock at the date of issuance ($1.00) and the exercise price ($.01).
F-61
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
16. STOCK OPTIONS: (CONTINUED)
The following table summarizes information about stock options and warrants
outstanding at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------ -----------------------
WEIGHTED AVERAGE WEIGHTED WEIGHTED
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER LIFE EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING (MONTHS) PRICE EXERCISABLE PRICE
- -------------- ----------- ---------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Options:
$.01 950,000 107 $ .01 190,000 $ .01
$1.00 1,425,037 107 $ 1.00 230,007 $ 1.00
Warrants:
$.01 1,333,333 107 $ .01 1,333,333 $ .01
$1.00 861,889 107 $ 1.00 314,058 $ 1.00
</TABLE>
In 1995, the FASB issued FASB Statement No. 123 "Accounting for Stock-Based
Compensation" ("SFAS 123") which, if fully adopted by the Company, would change
the methods the Company applies in recognizing the cost of the stock-based
plans. Adoption of the cost recognition provisions of SFAS 123 is optional and
the Company has decided not to elect these provisions of SFAS 123. However, pro
forma disclosures as if the Company adopted the cost recognition provisions of
SFAS 123 in 1995 are required by SFAS 123 and are presented below. In 1998, 1997
and 1996, the Company granted only nonqualified stock options under the plans.
The fair value of each stock option granted is estimated on the date of
grant using the minimum value method of option pricing with the following
weighted-average assumptions for grants in 1997 and 1996: dividend yield of
0.0%; risk-free interest rate of 7.0%; and the expected life of 10 years. (In
determining the "minimum value" SFAS 123 does not require the volatility of the
Company's common stock underlying the options to be calculated or considered
because the Company was not publicly-traded when the options were granted).
Had the compensation cost for the Company's stock-based compensation plans
and warrants been determined consistent with SFAS 123, the Company's net income
(loss) for the period ended October 2, 1998 and the years ended December 31,
1997 and 1996 would have been $(4,880), $6,105 and $3,934, respectively.
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 does not apply to awards prior to 1995,
and the Company anticipates making awards in the future under its stock-based
compensation plans.
17. EMPLOYEE BENEFIT PLANS:
STOCK PURCHASE PLAN
Holding's 1996 Stock Purchase Plan gives certain key employees of Holding or
related entities who are expected to contribute materially to the success of
Holding or related entities an opportunity to acquire a proprietary interest in
Holding, and thus to retain such persons and create in such persons an increased
interest in and a greater concern for the welfare of Holding and any Related
Entities. The Board of
F-62
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
17. EMPLOYEE BENEFIT PLANS: (CONTINUED)
Directors is authorized to offer 500,000 shares for purchase. As of December 31,
1997 and 1996, 425,000 and 375,000 shares, respectively, have been purchased
under the plan.
401(K)
During 1996, the Company established an employee benefit plan in accordance
with Section 401(k) of the Internal Revenue Code for all employees not covered
under a collective bargaining agreement. The Company may at its discretion match
employee contributions. During the period ended October 2, 1998 and the years
ended December 31, 1997 and 1996, the Company incurred no expense.
18. SUBSIDIARY GUARANTORS:
In connection with the Note offering, the Company's payment obligations
under the Notes are fully and unconditionally guaranteed, jointly and severally
(collectively, the Subsidiary Guarantees) on a senior subordinated basis by its
wholly-owned subsidiaries: ADW--Northeast and ADW--West Coast (collectively, the
Subsidiary Guarantors). The Company has no non-guarantor direct or indirect
subsidiaries. The operations related to the assets of ADW--Northeast and
ADW--West Coast are included since September 30, 1996 and July 1, 1997,
respectively, the dates of acquisition. In the opinion of management, separate
financial statements of the respective Subsidiary Guarantors would not provide
additional material information, which would be useful in assessing the
financial composition of the Subsidiary Guarantors. No single Subsidiary
Guarantor has any significant legal restrictions on the ability of investors or
creditors to obtain access to its assets in event of default on the Subsidiary
Guarantee other than its subordination to senior indebtedness.
Following is summarized combined financial information pertaining to these
Subsidiary Guarantors:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Current assets................................................... $ 12,399 $ 7,939
Noncurrent assets................................................ 17,148 13,242
Current liabilities.............................................. 1,906 1,135
Noncurrent liabilities........................................... -- --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
OCTOBER 2, --------------------
1998 1997 1996
----------- --------- ---------
<S> <C> <C> <C>
Net sales................................................... $ 30,232 $ 20,162 $ 5,020
Gross profit................................................ 10,797 8,374 2,289
Net income from continuing operations....................... 2,054 1,495 561
</TABLE>
The Notes and the Subsidiary Guarantees are subordinated to all existing and
future Senior Indebtedness of the Company. The indenture governing the Notes
contains limitations on the amount of additional indebtedness (including Senior
Indebtedness) which the Company may incur. As of December 31, 1997, the maximum
amount of Senior Indebtedness the Company and its Subsidiary Guarantors
collectively, and in the aggregate, could incur was $45,000.
F-63
<PAGE>
ATRIUM COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
19. SUBSEQUENT EVENTS:
On August 3, 1998, D and W ("Parent"), entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Atrium Corporation ("Corp"), the parent
company of the Company and other necessary parties to acquire all of the
outstanding capital stock of Corp for $225.0 million, through a series of
transactions (the "Recapitalization") described below. Corp owned 100% of the
outstanding capital stock of the Company prior to the Merger discussed below. GE
Investment Private Placement Partners II, a limited partnership ("GEIPPPII"),
and Ardatrium L.L.C. ("Ardatrium") formed Parent by acquiring all of its
outstanding common stock for an aggregate purchase price of $50.0 million.
GEIPPPII is a private equity partnership affiliated with GE Investments, a
wholly-owned investment management subsidiary of General Electric Company.
Ardatrium is an affiliate of Ardshiel, Inc. ("Ardshiel"), a private equity
investment firm based in New York.
The acquisition of Corp by Parent was effected through the merger on October
2, 1998 of a wholly owned subsidiary of Parent, with and into Corp (the
"Merger") pursuant to the terms of the Merger Agreement. Prior to the Merger,
Parent contributed $50.0 million to the wholly-owned subsidiary in exchange for
all of its outstanding common stock. As a result of the Merger, Corp became a
direct wholly-owned subsidiary of Parent, and the Company became an indirect
wholly owned subsidiary of Parent.
F-64
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Door Holdings, Inc.
In our opinion, the accompanying combined balance sheets and the related
combined statements of income, stockholder's equity and of cash flows present
fairly, in all material respects, the financial position of R. G. Darby Company,
Inc. and Total Trim, Inc. (the "Companies") at December 31, 1997 and 1996, and
the results of their operations and their cash flows for the years ended
December 31, 1997 and 1996, in conformity with generally accepted accounting
principles. These combined financial statements are the responsibility of the
Companies' management: our responsibility is to express an opinion on these
combined financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Birmingham, Alabama
September 24, 1998
F-65
<PAGE>
R.G. DARBY COMPANY, INC. AND TOTAL TRIM, INC.
COMBINED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................................................................... $ 722 $ 1,650
Accounts receivable, net..................................................................... 1,807 1,744
Inventories.................................................................................. 1,275 947
Prepaid expenses and other current assets.................................................... 23 397
--------- ---------
Total current assets......................................................................... 3,827 4,738
PROPERTY AND EQUIPMENT, net.................................................................... 451 587
--------- ---------
Total assets................................................................................. $ 4,278 $ 5,325
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Line of credit............................................................................... $ 6 $ 690
Current portion of notes payable............................................................. -- 91
Accounts payable............................................................................. 684 569
Accrued liabilities.......................................................................... 874 832
--------- ---------
Total current liabilities.................................................................... 1,564 2,182
LONG-TERM LIABILITIES:
Notes payable................................................................................ -- 153
--------- ---------
Total liabilities............................................................................ 1,564 2,335
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, R.G. Darby Company, Inc.
(1,000 shares at $1 par value authorized and issued)....................................... 1 1
Common stock, Total Trim, Inc. (1,000 shares at $.01 par value authorized, issued and
outstanding)............................................................................... -- --
Retained earnings............................................................................ 2,813 3,089
R.G. Darby Company, Inc. treasury stock (125 shares at cost)................................. (100) (100)
--------- ---------
Total stockholder's equity................................................................... 2,714 2,990
--------- ---------
Total liabilities and stockholder's equity................................................... $ 4,278 $ 5,325
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-66
<PAGE>
R.G. DARBY COMPANY, INC. AND TOTAL TRIM, INC.
COMBINED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
NET SALES................................................................................... $ 16,956 $ 15,777
COST OF GOODS SOLD.......................................................................... 10,227 9,561
--------- ---------
Gross profit.............................................................................. 6,729 6,216
OPERATING EXPENSES:
Selling, delivery, general and administrative expense..................................... 4,707 4,071
--------- ---------
Income from operations.................................................................... 2,022 2,145
--------- ---------
INTEREST INCOME............................................................................. 61 58
INTEREST EXPENSE............................................................................ (61) (78)
OTHER INCOME (EXPENSE), net................................................................. 29 9
--------- ---------
NET INCOME.................................................................................. $ 2,051 $ 2,134
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-67
<PAGE>
R.G. DARBY COMPANY, INC. AND TOTAL TRIM, INC.
COMBINED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
R.G. DARBY COMPANY
TOTAL TRIM TOTAL
---------------------- ------------------------ RETAINED TREASURY STOCKHOLDER'S
SHARES AMOUNT SHARES AMOUNT EARNINGS STOCK EQUITY
----------- --------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995............... 1,000 $ 1 1,000 $ -- $ 2,685 $ (100) $ 2,586
Stockholder distributions,
Total Trim, Inc........................ (506) (506)
Stockholder distributions,
R.G. Darby Company, Inc................ (1,224) (1,224)
Net income............................... 2,134 2,134
----- --------- ----- ----- ----------- ----- ------------
BALANCE, December 31, 1996............... 1,000 1 1,000 -- 3,089 (100) 2,990
Stockholder distributions,
Total Trim, Inc........................ (1,008) (1,008)
Stockholder distributions,
R.G. Darby Company, Inc................ (1,319) (1,319)
Net income............................... 2,051 2,051
----- --------- ----- ----- ----------- ----- ------------
BALANCE, December 31, 1997............... 1,000 $ 1 1,000 $ -- $ 2,813 $ (100) $ 2,714
----- --------- ----- ----- ----------- ----- ------------
----- --------- ----- ----- ----------- ----- ------------
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-68
<PAGE>
R.G. DARBY COMPANY, INC. AND TOTAL TRIM, INC.
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................................. $ 2,051 $ 2,134
Adjustments to reconcile net income to net cash provided by operating activities:.......
Depreciation.......................................................................... 154 189
Loss on disposal of equipment......................................................... 21 --
Change in assets and liabilities:
Accounts receivable, net.............................................................. (63) 78
Inventories........................................................................... (328) (232)
Prepaid expenses and other current assets............................................. 374 (28)
Accounts payable...................................................................... 115 (105)
Accrued liabilities................................................................... 42 123
---------- ----------
Net cash provided by operating activities......................................... 2,366 2,159
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment..................................................... (133) (136)
Proceeds from disposal of property and equipment........................................ 94 --
---------- ----------
Net cash used in investing activities............................................. (39) (136)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit agreement............................................. 15,784 15,264
Repayments under revolving credit agreement............................................. (16,468) (15,416)
Proceeds from the issuance of long term debt............................................ -- 32
Repayment of long-term debt............................................................. (244) (141)
Stockholder distributions............................................................... (2,327) (1,730)
---------- ----------
Net cash used in financing activities............................................. (3,255) (1,991)
---------- ----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS...................................... (928) 32
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.............................................. 1,650 1,618
---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR.................................................... $ 722 $ 1,650
---------- ----------
---------- ----------
SUPPLEMENTAL DISCLOSURE:
Cash paid during the year for interest.................................................. $ 67 $ 78
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-69
<PAGE>
R. G. DARBY COMPANY, INC. AND TOTAL TRIM, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. ORGANIZATION:
DESCRIPTION OF THE COMPANY AND REPORTING ENTITY
R. G. Darby Company, Inc. ("R. G. Darby Company") and Total Trim, Inc.
("Total Trim") (the "Companies"), founded in 1983, provide interior and exterior
doors, vanity mirrors, door knobs and locks, shelving, molding, and related
installation to contractors of apartment buildings and hotels. The Companies are
based in Florence, Alabama and operate out of one facility. The Companies supply
materials and/ or provide contract labor to install purchased materials.
Material requirements, with the exception of doors, are shipped directly from
the manufacturer to the contractor's location. Doors are assembled and shipped
from the Companies' production facility. The Companies consist of three
entities--R. G. Darby Company is the sales company for materials; Darby Doors, a
division of R. G. Darby Company, is the manufacturing division that produces the
doors that are sold through R. G. Darby Company; and Total Trim is responsible
for contracting labor for any installation work. These entities perform work in
approximately 28 states, mainly in the South, Mid-Atlantic and Northeast.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF COMBINATION
The combined financial statements include the accounts of R. G. Darby
Company and Total Trim after elimination of all significant intercompany
accounts and transactions. Combined financial statements are presented as the
Companies are under the common control of their sole stockholder, R. G. Darby.
See Note 9.
CASH AND CASH EQUIVALENTS
The Companies consider all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. The Companies hold
cash and cash equivalents primarily in one major banking institution.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts receivable are net of allowances for doubtful accounts of $175 and
$66 as of December 31, 1997 and 1996, respectively.
REVENUE RECOGNITION
The Companies record sales of materials upon delivery of the materials to
the contractor's location. Revenue relating to the installation services is
recorded as the services are provided.
INVENTORIES
Inventories are stated at the lower of cost ( first-in, first-out or "FIFO")
or market and consist primarily of raw materials. Finished goods include direct
materials, labor and manufacturing overhead.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Major renewals and betterments
are capitalized, while maintenance and repairs are expensed as incurred. Upon
disposition of an asset, the related cost and accumulated depreciation are
removed from the accounts and any gain or loss is included in income.
F-70
<PAGE>
R. G. DARBY COMPANY, INC. AND TOTAL TRIM, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Depreciation is provided principally on the straight-line method for financial
reporting purposes, using the following estimated useful lives of the respective
assets:
<TABLE>
<S> <C>
Furniture and fixtures.................. 7 - 10 years
Vehicles................................ 3 - 5 years
Machinery and equipment................. 7 - 10 years
</TABLE>
INCOME TAXES
The combined financial statements reflect the Companies' S corporation
income tax status. Their taxable income or loss and tax credits are included in
the personal income tax returns of their stockholder and the resulting tax
liabilities or benefits are those of the stockholder.
ACCOUNTING ESTIMATES
The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
3. INVENTORIES:
The inventories for R. G. Darby Company at December 31, 1997 and 1996,
respectively, consisted of the following:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Raw materials.............................................................. $ 1,146 $ 900
Finished goods............................................................. 129 47
--------- ---------
$ 1,275 $ 947
--------- ---------
--------- ---------
</TABLE>
4. PROPERTY AND EQUIPMENT:
The property and equipment for R.G. Darby Company at December 31, 1997 and
1996, respectively, consisted of the following:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Furniture and fixtures..................................................... $ 118 $ 138
Vehicles................................................................... 559 670
Machinery and equipment.................................................... 428 470
--------- ---------
Total.................................................................... 1,105 1,278
Less accumulated depreciation.............................................. (654) (691)
--------- ---------
$ 451 $ 587
--------- ---------
--------- ---------
</TABLE>
Depreciation expense was $154 and $189 for the years ended December 31, 1997
and 1996, respectively.
F-71
<PAGE>
R. G. DARBY COMPANY, INC. AND TOTAL TRIM, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
5. LINE OF CREDIT AND NOTES PAYABLE:
Under R. G. Darby Company's credit facility, which expires in June 1998,
available borrowings are determined by the amounts of eligible assets of R. G.
Darby Company, as defined in the agreement, including accounts receivable and
inventories, with maximum borrowings of $2,000. The interest rate is based upon
the lender's prime rate plus 1% (9.5% and 9.25% at December 31, 1997 and 1996,
respectively). As of December 31, 1997 and 1996, R. G. Darby Company had $6 and
$690, respectively, outstanding under the credit facility. The credit facility
was terminated in connection with the transaction discussed in Note 9.
At December 31, 1996, the Companies had certain notes payable to banks as
follows:
<TABLE>
<S> <C>
Note payable for various loans collateralized by vehicles with
monthly payments of $6, interest rates from 7.9% to 9%, due
April 1997 through March 1998................................... $ 44
Note payable collateralized by plant equipment with annual
payments of $50, interest rate of 9.08%, due May 2000........... 200
---------
$ 244
---------
---------
</TABLE>
Each of the notes payable were repaid in full by R.G. Darby Company in 1997.
As of December 31, 1997, the Company had no other outstanding indebtedness.
6. RELATED PARTY TRANSACTIONS:
The Companies lease their facilities directly from their stockholder. The
lease agreement, as amended on January 8, 1998, requires annual payments of $137
through December 31, 2011. The Companies have the option to extend the lease
agreement for up to three additional five year terms. In addition, the lease
agreement was subsequently amended effective June 1, 1998 to increase the annual
payments to $185 in connection with the lease of additional warehouse and office
space by the Companies. Facility lease payments to the stockholder amounted to
$137 during 1997 and 1996.
The stockholder was paid bonuses of $1,356 and $1,063 from R. G. Darby
Company for the years ended December 31, 1997 and 1996, respectively.
7. COMMITMENTS AND CONTINGENCIES:
LITIGATION
The Companies are party to various claims, legal actions, and complaints
arising in the ordinary course of business. In the opinion of management, all
such matters are without merit or are of such a kind, or involve such amounts
that an unfavorable disposition would not have a material effect on the combined
financial position or results of operations of the Companies.
F-72
<PAGE>
R. G. DARBY COMPANY, INC. AND TOTAL TRIM, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
7. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
OPERATING LEASES
The Companies lease automobiles, trucks, and office equipment under
noncancelable operating leases which expire at various times through 2001.
Future minimum lease payments under operating leases having noncancelable terms
of more than one year at December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998................................................................. $ 100
1999................................................................. 99
2000................................................................. 23
2001................................................................. 2
---------
$ 224
---------
---------
</TABLE>
Rental expense for all operating leases was approximately $83 and $61 for
the years ended December 31, 1997 and 1996, respectively. See Note 6 for
discussion of the Companies' related party operating lease agreement.
8. RETIREMENT PLAN:
The Companies maintain an Integrated Profit Sharing Plan (the Plan) under
Section 401 of the Internal Revenue Code. All employees are eligible to
participate in the Plan after six months of service and may enter the Plan after
such time on the annual enrollment date of January 1st. Under the Plan, the
Companies will contribute to the Plan an amount determined at their discretion
and may choose not to contribute to the Plan for a particular plan year. The
Plan does not permit employees to make contributions. The Companies'
contribution to the Plan was approximately $58 for each of the years ended
December 31, 1997 and 1996, respectively.
9. SUBSEQUENT EVENTS:
Effective January 8, 1998, the Companies were sold to Door Holdings, Inc.
("Door"). As specified in the agreement, the sales price was $24,000 plus or
minus any adjustment resulting from the Companies' combined working capital, as
defined in the sale agreement, being above or below $2,323 as of the closing
date. Included in the $24,000 is a contingent payment of $4,000 to be paid to
the former stockholder based on future operating results. An additional $2,000
payment, which has not been recorded in the purchase price, may be paid to the
Seller if these financial targets are substantially exceeded. The purchase price
was funded primarily with $5,700 equity contributions, $16,000 of long-term
debt, and accrual of the deferred payment. Door did not have any significant
activity prior to this transaction.
Pursuant to the terms of an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of August 3, 1998, Door will become a wholly-owned
subsidiary of Atrium Companies, Inc. and an indirect wholly owned subsidiary of
D and W Holdings, Inc. ("D&W") (the "Merger"). D&W was formed to effect the
Merger by the principal equity holders of Door and Wing Industries Holdings,
Inc., an affiliate of Door. Pursuant to the terms of the Merger Agreement, D&W
is also acquiring Atrium Companies, Inc. Transactions contemplated pursuant to
the Merger Agreement are expected to be consummated no later than September 30,
1998.
F-73
<PAGE>
DOOR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
-------------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................................................ $ 611
Accounts receivable, net......................................................................... 3,596
Inventories...................................................................................... 1,669
Prepaid expenses and other current assets........................................................ 224
-------------
Total current assets............................................................................. 6,100
PROPERTY AND EQUIPMENT, net........................................................................ 571
GOODWILL, net...................................................................................... 22,081
DEFERRED FINANCING COSTS........................................................................... 190
OTHER ASSETS....................................................................................... 25
-------------
Total assets..................................................................................... $ 28,967
-------------
-------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of note payable.................................................................. $ 1,150
Accounts payable................................................................................. 1,173
Accrued liabilities.............................................................................. 1,390
-------------
Total current liabilities........................................................................ 3,713
LONG-TERM LIABILITIES:
Notes payable.................................................................................... 13,663
Other long-term liabilities...................................................................... 4,000
-------------
Total liabilities................................................................................ 21,376
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 100,000 shares authorized, 58,952 issued and outstanding........... 1
Paid-in capital.................................................................................. 6,609
Retained earnings................................................................................ 981
-------------
Total stockholders' equity....................................................................... 7,591
-------------
Total liabilities and stockholders' equity....................................................... $ 28,967
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-74
<PAGE>
DOOR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
1998 1997
----------- -----------
<S> <C> <C>
NET SALES........................................................... $ 16,081 $ 13,077
COST OF GOODS SOLD.................................................. 9,679 7,960
----------- -----------
Gross profit...................................................... 6,402 5,117
OPERATING EXPENSES:
Selling, delivery, general and administrative expenses............ 3,157 3,256
----------- -----------
Income from operations.......................................... 3,245 1,861
INTEREST EXPENSE.................................................... (1,277) (23)
OTHER INCOME (EXPENSE), net......................................... 8 (32)
----------- -----------
Income before income taxes...................................... 1,976 1,806
PROVISION FOR INCOME TAXES.......................................... 995 --
----------- -----------
NET INCOME.......................................................... $ 981 $ 1,806
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-75
<PAGE>
DOOR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
---------------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- ----------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998................................... -- $ -- $ -- $ -- $ --
Initial issuance of common stock......................... 58,952 1 5,699 5,700
Issuance of warrants..................................... -- -- 769 -- 769
Stock option compensation expense........................ -- -- 141 -- 141
Net income............................................... -- -- -- 981 981
--------- ----- --------- ----- ------
Balance, September 30, 1998................................ 58,952 $ 1 $ 6,609 $ 981 $ 7,591
--------- ----- --------- ----- ------
--------- ----- --------- ----- ------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-76
<PAGE>
DOOR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................................ $ 981 $ 1,806
Adjustments to reconcile net income to net cash (used in) provided
by operating activities:........................................
Depreciation.................................................... 72 108
Amortization of deferred financing costs........................ 23 --
Amortization of goodwill........................................ 422 --
Amortization of discount of note payable........................ 82 --
Stock compensation expense...................................... 141 --
Loss on retirement of assets.................................... -- 29
Changes in assets and liabilities:................................
Accounts receivable, net........................................ (2,007) (937)
Inventories..................................................... (372) (288)
Prepaid expenses, deferred taxes, and other assets.............. (88) 31
Accounts payable................................................ 345 282
Accrued liabilities............................................. 151 733
----------- -----------
Net cash (used in) provided by operating activities......... (250) 1,764
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition, net of cash acquired................... (19,945) --
Purchases of property and equipment............................... (181) (103)
Proceeds from sale of assets...................................... -- 94
----------- -----------
Net cash (used in) provided by investing activities............. (20,126) (9)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of note payable............................ 16,000 27
Payment on note payable........................................... (85)
Borrowings under revolving credit facility........................ 1,300 11,332
Payments on revolving credit facility............................. (1,300) (11,820)
Payments on short term debt....................................... (500) --
Stockholder distributions......................................... -- (1,228)
Proceeds from issuance of common stock............................ 5,700 --
Cash paid for financing costs..................................... (213) --
----------- -----------
Net cash (used in) provided by financing activities............. 20,987 (1,774)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................ 611 (19)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...................... -- 1,650
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD............................ $ 611 $ 1,631
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURE:
Cash paid during the period for:
Interest........................................................ $ 1,194 $ 50
Payable to Seller............................................... 4,000 --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-77
<PAGE>
DOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
1. BASIS OF PRESENTATION:
The unaudited consolidated results of operations and cash flow of Door
Holdings, Inc. (formerly known as R.G. Darby Company, Inc. and Total Trim, Inc.
See Note 2.) for the nine months ended September 30, 1998 and 1997, and
financial position as of September 30, 1998 have been prepared in accordance
with generally accepted accounting principles for interim financial reporting.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
These consolidated financial statements and footnotes should be read in
conjunction with the audited combined financial statements of R.G. Darby
Company, Inc. and Total Trim, Inc. for the years ended December 31, 1997 and
1996 included herein. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation of
the interim financial information have been included. The results of operations
for any interim period are not necessarily indicative of the results of
operations for a full year.
2. BASIS OF ACCOUNTING AND CHANGE IN OWNERSHIP:
R.G. Darby Company, Inc. ("R.G. Darby Company") and Total Trim, Inc. ("Total
Trim") (the "Companies") (the "Predecessor"), founded in 1983, provide interior
and exterior doors, vanity mirrors, door knobs and locks, shelving, molding, and
related installation to contractors of apartment buildings and hotels. The
Companies are based in Florence, Alabama and operate out of one facility. The
Companies supply materials and/or provide contract labor to install purchased
materials. Material requirements, with the exception of doors, are shipped
directly from the manufacturer to the contractor's location. Doors are assembled
and shipped from the Companies' production facility. The Companies consist of
three entities-- R.G. Darby Company is the sales company for materials; Darby
Doors, a division of R.G. Darby Company, is the manufacturing division that
produces the doors that are sold through R.G. Darby Company; and Total Trim is
responsible for contracting labor for any installation work. These entities
perform work in approximately 28 states, mainly in the South, Mid-Atlantic and
Northeast.
Effective January 8, 1998, the Companies were sold to Door Holdings, Inc.
("Door"). As specified in the agreement, the sales price was $24,000 plus or
minus any adjustments resulting from the Companies' combined working capital, as
defined in the sale agreement, being above or below $2,323 as of the closing
date. Included in the $24,000 is a contingent payment of $4,000 to be paid to
the former stockholder based on future operating results. An additional $2,000
which has not been recorded in the purchase price may be paid to the seller if
these financial targets are substantially exceeded. The purchase price was
funded primarily with $5,700 equity contributions, $16,000 of long-term debt,
and accrual of the deferred payment. Door did not have any significant activity
prior to this transaction. For the purpose of financial statement presentation,
the change in ownership occurring on January 8, 1998 was considered effective
January 1, 1998.
The Acquisition has been accounted for under the purchase method of
accounting. The aggregate purchase price of $24,520, (which includes $520 of
transaction related expenses) has been allocated to the underlying assets and
liabilities based upon their respective estimated fair market values at the date
of
F-78
<PAGE>
DOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
2. BASIS OF ACCOUNTING AND CHANGE IN OWNERSHIP: (CONTINUED)
acquisition, with the remainder allocated to goodwill, being amortized on a
straight line basis over forty years. The preliminary purchase price allocation
is as follows:
<TABLE>
<S> <C>
Cash and cash equivalents.......................................... $ 575
Accounts receivable, net........................................... 1,651
Inventories........................................................ 1,297
Prepaid expenses and other assets.................................. 101
Property and equipment, net........................................ 462
Goodwill........................................................... 22,503
Accounts payable and accrued liabilities........................... (2,069)
---------
Total purchase price............................................. $ 24,520
---------
---------
</TABLE>
The financial statements for the nine months ended September 30, 1997 were
prepared for the Companies on their predecessor basis. No tax provision was
recorded for the nine months ended September 30, 1997 as the Companies were S
corporations for income tax purposes. The financial statements for the nine
months ended September 30, 1998 reflect the purchase adjustments discussed
above. Door is a C corporation for income tax purposes and therefore an income
tax provision has been recorded for the 1998 period. The primary differences
between the 1998 presentation and the 1997 presentation are the additional
amortization expense, interest expense, and income tax expense reflected in 1998
due to the purchase transaction discussed above.
3. INVENTORIES:
Inventories, which are valued at the lower of cost or market using the
first-in, first-out (FIFO) method of accounting consisted of the following at
September 30, 1998:
<TABLE>
<S> <C>
Raw materials................................................... $ 1,502
Finished goods.................................................. 167
------
$ 1,669
------
------
</TABLE>
4. NOTES PAYABLE:
In connection with the acquisition discussed in Note 2 above, Door entered
into a $6,000 subordinated note payable to GE Investment Private Placement
Partners II ("GEIPPPII"), payable interest only in quarterly installments at
11.5% on the unpaid face amount, due January 9, 2004. The valuation assigned to
common stock warrants of 11,712 issued in conjunction with this note resulted in
a discount of $769 and an effective interest of approximately 16.78%. The
unamortized discount at September 30, 1998 was $687.
Also, in connection with the acquisition discussed in Note 2 above, Door
entered into a Credit Agreement providing for a $5,000 revolving credit facility
(the "Revolving Credit Facility") and a $10,000 Senior secured term loan
facility (the "Term Loan"). The Revolving Credit Facility and the Term Loan bear
interest at a rate based upon the lender's prime rate plus a borrowing margin of
1.5% or a EURO-based rate plus a borrowing margin of 2.5%. Door pays a
commitment fee of .375% based on the unused portion of both credit facilities.
The Revolving Credit Facility terminates on January 7, 2003. Door had
F-79
<PAGE>
DOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
4. NOTES PAYABLE: (CONTINUED)
$5,000 of availability under the Revolving Credit Facility as of September 30,
1998. In connection with the acquisition discussed in Note 2 above, Door
borrowed $10,000 under the Term Loan. Principal payments on the Term Loan are
due quarterly at amounts ranging from $250 to $400 through December 31, 2004.
Outstanding borrowings on the Term Loan at September 30, 1998 were $9,500 at an
approximate interest rate of 8.0%. The Credit Agreement contains various
covenants that restrict Door from taking various actions and requires Door to
achieve and maintain certain financial covenants. All tangible and intangible
assets of Door collateralize these credit facilities.
Principal payments due during the next fiscal five years on notes payable as
of September 30, 1998 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1999............................................................................... $ 1,150
2000............................................................................... 1,350
2001............................................................................... 1,550
2002............................................................................... 1,600
2003............................................................................... 1,600
Thereafter......................................................................... 8,250
---------
15,500
Less unamortized discount.......................................................... (687)
---------
$ 14,813
---------
---------
</TABLE>
5. CONTINGENCIES:
Door is party to various claims, legal actions, and complaints arising in
the ordinary course of business. In the opinion of management, all such matters
are without merit or are of such kind, or involve such amounts, that an
unfavorable disposition would not have a material adverse effect on the
consolidated financial position, results of operations or liquidity of Door.
6. COMMON STOCK PLAN:
Effective January 9, 1998, the Board of Directors of Door approved the Door
Stock Option Plan (the Plan) that provides for the grant of incentive stock
options and nonqualified stock options to certain employees, officers and
directors of Door and its affiliates, as defined in the Plan. Under the Plan,
10,000 shares of Door's common stock have been reserved for issuance. Incentive
stock options granted under the Plan provide for the purchase of Door's common
stock at not less than fair value on the date the option is granted. However,
incentive stock options granted to any employee owning stock possessing more
than 10% of the total combined voting power of all classes of stock of Door
shall be at least 110% of the fair market value of Door's common stock on the
date the option is granted. Nonqualified stock options granted under the Plan
provide for the purchase of Door's common stock at a price specified by the
Stock Option Committee, which may be less than, equal to, or greater than the
fair market value of the common stock on the date such option is granted.
As of September 30, 1998, incentive stock options for approximately 5,900
shares of common stock were granted at approximately $117 per share. The option
price of $117 per share will increase annually by 15% for 2,000 shares and 30%
for 3,900 shares as defined by the Plan. These options become exercisable
F-80
<PAGE>
DOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
6. COMMON STOCK PLAN: (CONTINUED)
over a three-year period and expire in January 2008. In addition, nonqualified
stock options for approximately 1,600 shares of common stock were granted at
approximately $235 per share. These options become exercisable upon the
happening of a "Value Event" as described in the Plan and expire in January
2008. As of September 30, 1998, there has been no Value Event.
7. RELATED PARTIES:
On January 9, 1998, Door entered into a ten-year Management and Investment
Banking Agreement (the "Management Agreement") with Ardshiel, Inc., ("Ardshiel")
a related party of Arddoor, L.L.C., an equityholder of Door Holdings, Inc.
Pursuant thereto, Door has agreed to pay Ardshiel an annual fee of $200 plus
expenses for on-going management advisory services to Door. The management
agreement also gives Ardshiel the first opportunity, in most instances, to
perform investment banking services for Door, for a fee equal to 2% of the total
transaction price related to any such sale/acquisition under the services
provided. The agreement is terminated in the event Ardshiel and Arddoor, L.L.C.
cease to be affiliates of Door.
8. SUBSEQUENT EVENTS:
Pursuant to the terms of an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of August 3, 1998, Door became a wholly-owned subsidiary
of Atrium Companies, Inc. and an indirect wholly owned subsidiary of D and W
Holdings, Inc. ("D&W") (the "Merger"). D&W was formed to effect the Merger by
the principal equity holders of Door and Wing Industries Holdings, Inc., an
affiliate. Pursuant to the terms of the Merger Agreement, D&W is also acquiring
Atrium Companies, Inc. Transactions contemplated pursuant to the Merger
Agreement were consummated October 2, 1998.
Immediately prior to the merger, the subordinated note payable and related
warrants were converted into common stock of Door.
In connection with the Merger, management exchanged all options in Door for
options to purchase stock in D&W. It is expected that the management agreement
will be terminated and replaced by a new agreement with D&W upon consummation
with the Merger.
As a part of the Merger, the notes payable remaining after conversion were
repaid and the deferred financing cost was expensed.
F-81
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Heat, Inc. and Subsidiaries:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Heat, Inc.
and its subsidiaries (the "Company") at December 31, 1998 and 1997, and the
results of their operations and their cash flows for the year ended December 31,
1998, the periods ended December 31, 1997 and May 30, 1997 and the year ended
December 31, 1996, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Dallas, Texas
July 9, 1999
F-82
<PAGE>
HEAT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
MARCH 31, --------- ---------
1999
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................................................... $ 1,143 $ 4,178 $ 1,708
Cash held in escrow.......................................................... -- -- 2,167
Accounts receivable, net of allowance of $221, $343 and $231, respectively... 5,227 6,176 5,109
Inventories.................................................................. 6,710 6,017 5,630
Prepaid expenses and other current assets.................................... 966 1,085 1,998
Deferred tax asset........................................................... 915 915 905
----------- --------- ---------
Total current assets....................................................... 14,961 18,371 17,517
PROPERTY, PLANT AND EQUIPMENT, net............................................. 8,339 8,407 7,747
GOODWILL, net.................................................................. 16,563 16,645 15,228
OTHER ASSETS................................................................... 673 760 1,024
DEFERRED FINANCING COSTS AND OTHER INTANGIBLES, net............................ 1,427 1,499 1,756
----------- --------- ---------
Total assets............................................................. $ 41,963 $ 45,682 $ 43,272
----------- --------- ---------
----------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt............................................ $ 3,568 $ 2,239 $ 1,624
Accounts payable............................................................. 1,775 843 892
Accrued liabilities.......................................................... 3,975 8,655 7,213
----------- --------- ---------
Total current liabilities.................................................. 9,318 11,737 9,729
Long-term debt................................................................. 20,468 20,805 24,869
Deferred tax liability......................................................... 468 468 203
Other long-term liabilities.................................................... 309 152 --
----------- --------- ---------
Total liabilities.......................................................... 30,563 33,162 34,801
----------- --------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A common stock--authorized 5,000,000 shares at $.01 par value; issued
and outstanding 1,312,500 shares........................................... 13 13 13
Class B common stock--authorized 1,000,000 shares at $.01 par value; no
shares issued and outstanding.............................................. -- -- --
Warrants outstanding......................................................... 146 146 146
Paid-in capital.............................................................. 5,239 5,239 5,239
Retained earnings............................................................ 6,002 7,122 3,073
----------- --------- ---------
Total stockholders' equity................................................. 11,400 12,520 8,471
----------- --------- ---------
Total liabilities and stockholders' equity............................... $ 41,963 $ 45,682 $ 43,272
----------- --------- ---------
----------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-83
<PAGE>
HEAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
THE COMPANY THE COMPANY PREDECESSOR
---------------------------- ---------------------------- ----------------------------
PERIOD ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, MAY 30, DECEMBER 31,
1999 1998 1998 1997 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET SALES........................ $ 13,642 $ 12,841 $ 73,458 $ 45,549 $ 16,970 $ 45,459
COST OF GOODS SOLD............... 8,970 7,587 41,780 26,501 10,345 25,959
------------- ------------- ------------- ------------- ------------- -------------
Gross profit................. 4,672 5,254 31,678 19,048 6,625 19,500
------------- ------------- ------------- ------------- ------------- -------------
OPERATING EXPENSES:
Selling, delivery, general and
administrative............... 5,769 4,895 21,680 12,352 6,595 15,682
Special charges................ -- -- -- -- 785 --
Amortization expense........... 182 162 685 391 -- --
------------- ------------- ------------- ------------- ------------- -------------
Total operating expenses..... 5,951 5,057 22,365 12,743 7,380 15,682
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) from
operations................. (1,279) 197 9,313 6,305 (755) 3,818
INTEREST EXPENSE, net............ 530 645 2,330 1,039 92 84
OTHER INCOME (EXPENSE)........... 29 52 (415) (176) 166 446
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) before income
taxes...................... (1,780) (396) 6,568 5,090 (681) 4,180
Provision (benefit) for
income taxes............... (660) (120) 2,519 2,017 (298) 1,634
------------- ------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS)................ $ (1,120) $ (276) $ 4,049 $ 3,073 $ (383) $ 2,546
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-84
<PAGE>
HEAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK ISSUED(A)
TREASURY STOCK
---------------------- PAID-IN ------------------------ WARRANTS RETAINED
SHARES AMOUNT CAPITAL SHARES AMOUNT OUTSTANDING EARNINGS
--------- ----------- ----------- ----------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR
BALANCE, December 31, 1995........ 2,011,088 $ 41 $ 430 57,876 $ (25) $ -- $ 17,684
Stock options exercised......... -- -- -- (5,300) 2 -- --
Net income...................... -- -- -- -- -- -- 2,546
--------- --- ----------- ----------- --- ----- -----------
BALANCE, December 31, 1996........ 2,011,088 41 430 52,576 (23) -- 20,230
Stock options exercised......... -- -- -- (4,463) 2 --
Net loss........................ -- -- -- -- -- -- (383)
--------- --- ----------- ----------- --- ----- -----------
BALANCE, May 30, 1997............. 2,011,088 $ 41 $ 430 48,113 $ (21) $ -- $ 19,847
--------- --- ----------- ----------- --- ----- -----------
--------- --- ----------- ----------- --- ----- -----------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
THE COMPANY
BALANCE, May 31, 1997............. -- $ -- $ -- -- $ -- $ -- $ --
Issuance of common stock........ 1,312,500 13 5,239 -- -- -- --
Issuance of warrants............ -- -- -- -- -- 146 --
Net income...................... -- -- -- -- -- -- 3,073
--------- --- ----------- ----------- --- ----- -----------
BALANCE, December 31, 1997........ 1,312,500 13 5,239 -- -- 146 3,073
Net income...................... 4,049
--------- --- ----------- ----------- --- ----- -----------
Balance, December 31, 1998........ 1,312,500 13 5,239 -- -- 146 7,122
Net loss (unaudited)............ -- -- -- -- -- -- (1,120)
--------- --- ----------- ----------- --- ----- -----------
Balance, March 31, 1999
(unaudited)..................... 1,312,500 $ 13 $ 5,239 -- $ -- $ 146 $ 6,002
--------- --- ----------- ----------- --- ----- -----------
--------- --- ----------- ----------- --- ----- -----------
<CAPTION>
TOTAL
STOCKHOLDER'S
EQUITY
-------------
<S> <C>
PREDECESSOR
BALANCE, December 31, 1995........ $ 18,130
Stock options exercised......... 2
Net income...................... 2,546
-------------
BALANCE, December 31, 1996........ 20,678
Stock options exercised......... 2
Net loss........................ (383)
-------------
BALANCE, May 30, 1997............. $ 20,297
-------------
-------------
- ----------------------------------
- ----------------------------------
THE COMPANY
BALANCE, May 31, 1997............. $ --
Issuance of common stock........ 5,252
Issuance of warrants............ 146
Net income...................... 3,073
-------------
BALANCE, December 31, 1997........ 8,471
Net income...................... 4,049
-------------
Balance, December 31, 1998........ 12,520
Net loss (unaudited)............ (1,120)
-------------
Balance, March 31, 1999
(unaudited)..................... $ 11,400
-------------
-------------
</TABLE>
F-85
<PAGE>
HEAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY THE COMPANY PREDECESSOR
---------------------------- ---------------------------- ------------------------------
PERIOD ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, MAY 30, DECEMBER 31,
1999 1998 1998 1997 1997 1996
------------- ------------- ------------- ------------- ------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................. $ (1,120) $ (276) $ 4,049 $ 3,073 $ (383) $ 2,546
Depreciation and amortization...... 519 482 2,008 1,057 703 1,782
Amortization of deferred debt
discount......................... 5 5 21 12 -- --
Loss/(gain) on disposal of
property, plant and equipment.... -- 5 31 -- 44 (14)
Changes in assets and liabilities:
Accounts receivable.............. 949 (60) (1,067) 1,003 (391) (272)
Inventories...................... (694) (990) (387) 1,814 (784) (740)
Prepaid expenses and other
current assets................. 119 110 1,177 (1,115) (355) (341)
Deferred taxes, net.............. -- -- 255 (21)
Investments...................... -- -- -- -- 5,393 (251)
Other noncurrent assets.......... 65 -- -- -- (122) (391)
Accounts payable................. 932 521 (50) (1,405) 411 507
Accrued liabilities.............. (4,679) (400) 294 (67) 431 440
Other, net....................... (2) (70) (29) (22) --
------------- ------------- ------------- ------------- ------------- ------
Net cash (used in) provided by
operating activities......... (3,906) (673) 6,302 4,329 4,947 3,266
------------- ------------- ------------- ------------- ------------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment, net................... (271) (365) (1,700) (992) (683) (1,696)
Acquisition of Thermal and Best
Built............................ -- -- -- (30,122) -- --
Additional payment to seller....... -- (830) -- -- --
------------- ------------- ------------- ------------- ------------- ------
Net cash used in investing
activities................... (271) (365) (2,530) (31,114) (683) (1,696)
------------- ------------- ------------- ------------- ------------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Liquidation of consolidated escrow
balances......................... -- 2,167 2,167 -- -- --
Proceeds from borrowings in
connection with acquisition of
Thermal and Best Built........... -- -- -- 24,870 -- --
Borrowing/(repayment) of debt...... 1,142 (308) (3,469) (2,883) (28) (172)
Issuance of common stock........... -- -- -- 5,252 -- --
------------- ------------- ------------- ------------- ------------- ------
Net cash (used in) provided by
financing activities......... 1,142 1,859 (1,302) 27,239 (28) (172)
------------- ------------- ------------- ------------- ------------- ------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS................... (3,035) 821 2,470 454 4,236 1,398
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD.......................... 4,178 1,708 1,708 1,254 5,070 3,672
------------- ------------- ------------- ------------- ------------- ------
END OF PERIOD...................... $ 1,143 $ 2,529 $ 4,178 $ 1,708 $ 9,306 5,070
------------- ------------- ------------- ------------- ------------- ------
------------- ------------- ------------- ------------- ------------- ------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid during the period for--
Interest......................... 532 595 $ 2,325 $ 1,574 $ 40 $ 84
Income taxes..................... $ 921 $ 112 $ 1,282 $ 2,202 $ 404 $ 1,255
Noncash investing and financing
activities--
Capital expenditures included in
accrued expenses............... -- $ 312 $ -- $ $ --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-86
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION:
Heat, Inc. (the "Company"), a Delaware corporation, was incorporated on
January 2, 1997 by HIG Capital Management and affiliated companies ("HIG") for
the purpose of acquiring and owning Thermal Industries, Inc. ("Thermal"), based
in Pittsburgh, Pennsylvania, and Best Built, Inc. ("Best Built"), based in Union
Gap, Washington. The acquisitions were consummated effective May 30, 1997. The
statements of operations for the period from January 1, 1997 to May 30, 1997 and
the year ended December 31, 1996 only include the operations of Thermal as
Thermal was deemed to be the predecessor company. The Company is engaged in the
manufacture of vinyl-framed, made-to-order windows, replacement sliding doors,
patio enclosures, vinyl porch decks and boat docks. The products are primarily
sold to remodeling or home improvement contractors for use in residential
remodeling through the Company's twenty-one branch locations. In addition,
products are also sold to wholesale distributors for use in new construction.
The purchase price of the acquisitions exceeded the fair value of the net
assets acquired by approximately $17,273. Pursuant to the terms of the Best
Built purchase agreement, the Company made an additional payment of $830 during
1998. In addition, in January 1999, the Company reached a settlement with
shareholders dissenting to the merger. The settlement amount exceeded the
previously recorded liability by approximately $673. Refer to Note 9 for further
discussion.
2. SIGNIFICANT ACCOUNTING POLICIES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results may differ from previously estimated amounts.
The consolidated financial information as of March 31, 1999 and for the
three months ended March 31, 1998 and 1999 is unaudited. In the opinion of
management, the accompanying unaudited consolidated financial information and
related notes thereto contain all adjustments consisting only of normal
recurring adjustments, necessary to present fairly the consolidated financial
information as of March 31, 1999 and the operating results and cash flows for
the three months ended March 31, 1999 and 1998. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to the
rules and regulations of the Securities and Exchange Commission. The results of
operations for the periods presented are not necessarily indicative of the
results to be expected for the full year.
BASIS OF CONSOLIDATION
The accounts of the Company and its wholly-owned subsidiaries are included
in the consolidated financial statements. All significant intercompany accounts
and transactions have been eliminated in consolidation. The reference to the
periods ended December 31, 1997 and May 30, 1997 used throughout these
consolidated financial statements, refer to the periods May 31, 1997 through
December 31, 1997 and January 1, 1997 through May 30, 1997, respectively.
F-87
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INDUSTRY SEGMENT
The Company operates in a single industry segment, the fabrication and
distribution windows and related components.
REVENUE RECOGNITION
The Company manufactures the products noted above and provides separate
installation services for customers that request such services under sales
contracts that may require cash deposits. The Company records the sale of
products upon transfer of title to the customer, which typically occurs upon
shipment, and records revenue from installation projects when the projects are
complete.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
ninety days or less when purchased to be cash equivalents.
ADVERTISING COSTS
Advertising costs are expensed when incurred and were $185, $68, $61, and
$80 for the year ended December 98, the periods ended December 31, 1997 and May
30, 1997, and the year ended December 31, 1996, respectively.
CONCENTRATIONS OF CREDIT RISK
Financial instruments, which potentially expose the Company to
concentrations of credit risk, consist primarily of trade accounts receivable.
The Company's customers are located in various regions of the United States. The
Company performs ongoing credit evaluations of its customers' financial
condition and generally requires no collateral. The Company establishes an
allowance for doubtful accounts based upon factors surrounding the credit risk
of specific customers, historical trends and other information. No customers
accounted for approximately 10% of gross sales for the year ended December 31,
1998, the periods ended December 31, 1997 and May 30, 1997 and the year ended
December 31, 1996.
INVENTORIES
Inventories are carried at the lower of first-in, first-out (FIFO) cost or
market and consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
MARCH 31, --------- ---------
1999
-----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials................................................ $ 4,012 $ 3,948 $ 3,586
Work-in-process.............................................. 69 69 73
Finished goods............................................... 2,629 2,000 1,971
----------- --------- ---------
$ 6,710 $ 6,017 $ 5,630
----------- --------- ---------
----------- --------- ---------
</TABLE>
F-88
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
MARCH 31, --------- ---------
1999
-----------
(UNAUDITED)
<S> <C> <C> <C>
Accrued payroll and benefits................................. $ 2,125 $ 2,339 $ 1,781
Accrued income taxes......................................... 92 900 56
Reserve for litigation settlement............................ -- 2,840 2,167
Other accrued liabilities.................................... 1,758 2,576 3,209
----------- --------- ---------
$ 3,975 $ 8,655 $ 7,213
----------- --------- ---------
----------- --------- ---------
</TABLE>
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Additions and improvements
of significant items are capitalized while expenditures for maintenance and
repairs are charged to operations as incurred. Provisions for depreciation are
computed principally by the straight-line method based upon the estimated useful
lives of the assets. Property, plant and equipment balances and useful lives are
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
DEPRECIATION --------------------
PERIOD 1998 1997
-------------- --------- ---------
<S> <C> <C> <C>
Land...................................................... N/A $ 334 $ 334
Buildings and improvements................................ 39.5 years 1,522 1,522
Furniture and office equipment............................ 3-7 years 643 471
Machinery and equipment................................... 5-20 years 5,170 4,055
Autos and trucks.......................................... 3-10 years 1,082 934
Leasehold improvements.................................... Life of lease 703 634
Construction-in-progress.................................. N/A 912 459
--------- ---------
10,366 8,409
Less accumulated depreciation............................. (1,959) (662)
--------- ---------
Property, plant and equipment, net........................ $ 8,407 $ 7,747
--------- ---------
--------- ---------
</TABLE>
Depreciation expense for the year ended December 31, 1998, the periods ended
December 31, 1997 and May 30, 1997, and the year ended December 31, 1996 was
$1,321, $662, $703 and $1,782, respectively.
NONCOMPETE AND CONSULTING AGREEMENTS
In connection with the acquisition of Best Built, the seller agreed not to
compete with the Company for a period of five years in exchange for an initial
payment of $150 and an additional payment of $125 during 1998. The cost of this
agreement is being amortized using the straight-line method over its five-year
contractual life. Additionally, the seller is being retained as a consultant for
the Company through May 29, 1999, subject to extension upon mutual agreement of
the Company and the seller.
F-89
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
GOODWILL
Goodwill is being amortized over forty years on a straight-line basis.
Accumulated amortization was approximately $628 and $229 at December 31, 1998
and 1997, respectively. It is the Company's policy to review goodwill (and other
intangible assets) for possible impairment on the basis of whether the carrying
amount of such assets is fully recoverable from projected undiscounted net cash
flows from the related business. If such review indicates that the carrying
amount of goodwill and other intangible assets is not recoverable, then the
Company's policy is to reduce the carrying amount of such assets to fair value.
FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with Statement of Financial Accounting Standards (SFAS) No.
107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, the following
methods have been used in estimating fair value disclosures for significant
financial instruments of the Company.
Estimated fair value amounts have been determined by the Company using
available market information and appropriate valuation methodologies. Since
considerable judgment is required to interpret market data to develop the
estimates of fair value, the estimates presented are not necessarily indicative
of the amounts that could be realized in a current market exchange.
Cash and cash equivalents, accounts receivable, accounts payable, and other
current liabilities--The carrying amounts reported in the balance sheet for
these accounts approximate the fair value due to their short maturities.
Long-term debt--The fair value of the Company's debt approximates the
carrying value since interest rates are variable for the maturity of the
debt. Management believes the fixed rate debt is consistent with other
financial instruments of similar rating and risk.
TREASURY STOCK
Treasury stock represents stock held principally for sale and issuance to
employees. Purchases of treasury stock are recorded at cost. Sales of treasury
stock are valued using the weighted average method. All treasury stock was
eliminated as part of the acquisition of Thermal and Best Built by the Company.
F-90
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
3. LONG-TERM DEBT:
Long-term debt outstanding consisted of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Unsecured note payable, 8.00% interest, principal payable in its entirety on
May 29, 2000.............................................................. $ 1,500 $ 1,500
Pennsylvania Economic Development Financing Authority ("PEDFA") bonds,
variable interest rate (recent interest rates ranging from 2.40% to
3.15%), principal payable $100 annually through November 2004, with a $500
payment due November 2005................................................. 1,100 1,200
Pennsylvania Industrial Development Authority ("PIDA") mortgage note, 3%
interest, principal and interest payable in monthly installments of $8
through July 2006......................................................... 653 723
Nations Credit Term Loan A, variable interest rate of 4.25% plus the
Commercial Paper Rate (total rate of 9.17% at December 31, 1998),
principal payable in quarterly installments through May 30, 2003.......... 14,941 18,212
Nations Credit Term Loan B, variable interest rate of 6.50% plus the
Commercial Paper Rate (total rate of 11.42% at December 31, 1998),
principal payable in its entirety throughout the 12 months ended May 30,
2004...................................................................... 4,700 4,700
Various capital lease obligations at interest rates ranging from 10.91% to
24.20% due in installments through 2003................................... 263 292
--------- ---------
23,157 26,627
Less--
Deferred debt discount.................................................... (113) (134)
Current portion of long-term debt......................................... (2,239) (1,624)
--------- ---------
$ 20,805 $ 24,869
--------- ---------
--------- ---------
</TABLE>
Annual principal payments required under long-term debt obligations are as
follows:
<TABLE>
<S> <C>
1999............................................................... $ 2,239
2000............................................................... 4,266
2001............................................................... 3,426
2002............................................................... 4,124
2003............................................................... 4,163
Thereafter......................................................... 4,939
---------
$ 23,157
---------
---------
</TABLE>
Debt issuance costs of approximately $1,204 were incurred in 1997 in
connection with the Nations Credit agreement. In connection with the borrowings,
warrants were issued to the lender to purchase 98,790 shares. The estimated
value of those warrants of approximately $146 has been recorded as deferred debt
discount and warrants outstanding. Amortization of the Nations Credit deferred
financing costs and other intangible assets approximated $286 and $165 for the
year ended December 31, 1998 and the period ended December 31, 1997,
respectively.
F-91
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
3. LONG-TERM DEBT: (CONTINUED)
The Company maintains a $1,300 letter of credit and a $7,500 working capital
facility with Nations Credit. At December 31, 1998 and 1997, no amounts were
outstanding under these facilities.
The Company is required to meet certain financial and other covenants in
connection with the above obligations, including, among others, restrictions on
new indebtedness, liens, minimum earnings before interest, taxes, depreciation
and amortization, debt coverage and capital expenditures. The Company was in
compliance with all of these covenants as of December 31, 1998. In addition, the
obligations contain mandatory incremental prepayments if certain conditions are
met such as, excess cash flow requirements (as defined), an equity transaction,
or an asset sale. In connection therewith, the company paid $0, $1,853, $0 and
$0 under these provisions for the year ended December 31, 1998, the periods
ended December 31, 1997 and May 30, 1997 and the year ended December 31, 1996,
respectively.
4. EMPLOYEE BENEFIT PLAN:
Thermal maintains a qualified 401(k) and profit-sharing plan covering
substantially all of its employees. Under the terms of the plan, the Company may
contribute up to 25% of the first 8% of each employee's compensation contributed
and may also make discretionary contributions to the plan. Total expense
recorded by the Company was approximately $710, $687, $278 and $534 for the year
ended December 31, 1998, the periods ended December 31, 1997 and May 30, 1997
and the year ended December 31, 1996, respectively.
During 1998, Best Built implemented a qualified 401(k) plan. Under the terms
of the plan, the Company may contribute up to 25% of the first 8% of each
employee's compensation contributed. The total expense recorded by Best Built
was $8 for the year ended December 31, 1998.
5. INCOME TAXES:
The Company records the effect of income taxes in accordance with the
provisions of Statement of Financial Accounting Standards No. 109 (SFAS No.
109), ACCOUNTING FOR INCOME TAXES. Taxes on income, as shown in the accompanying
consolidated statements of operations, include the following components:
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
------------------------ --------------------------
PERIOD
YEAR ENDED ENDED YEAR ENDED
DECEMBER DECEMBER PERIOD ENDED DECEMBER
31, 31, MAY 30, 31,
1998 1997 1997 1996
----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Current provision (benefit):
Federal.................................. $ 2,202 $ 1,765 $ 15 $ 1,403
State.................................... 254 273 95 227
----------- ----------- ----- -----------
Total current provision................ 2,456 2,038 110 1,630
Deferred provision (benefit)............... 63 (21) (408) 4
----------- ----------- ----- -----------
Total provision (benefit).............. $ 2,519 $ 2,017 $ (298) $ 1,634
----------- ----------- ----- -----------
----------- ----------- ----- -----------
</TABLE>
F-92
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
5. INCOME TAXES: (CONTINUED)
The income tax rate on income before taxes differs from the federal
statutory rate for the following reasons:
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
------------------------ ------------------------
PERIOD
YEAR ENDED ENDED PERIOD YEAR ENDED
DECEMBER DECEMBER ENDED DECEMBER
31, 31, MAY 30, 31,
1998 1997 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Tax provision based on the federal
statutory rate........................... $ 2,235 $ 1,715 $ (231) $ 1,421
State income taxes, net of federal
benefit.................................. 168 232 (27) 150
Nondeductible goodwill..................... 101 58 -- --
Other...................................... 15 12 (40) 63
----------- ----------- ----------- -----------
Total provision........................ $ 2,519 $ 2,017 (298) $ 1,634
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The components of the Company's deferred tax accounts are as follows at
December 31:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Depreciation................................................................. $ (368) $ (163)
Vacation accrual............................................................. 318 151
Accrued bonuses.............................................................. 75 136
Warranty accrual............................................................. 257 225
Inventory and bad debt reserve............................................... 199 143
Amortization of goodwill..................................................... (100) (40)
Other nondeductible accruals................................................. 66 250
--------- ---------
Net deferred tax asset....................................................... $ 447 $ 702
--------- ---------
--------- ---------
Deferred tax asset, current.................................................. $ 915 $ 905
Deferred tax liability, long-term............................................ (468) (203)
--------- ---------
$ 447 $ 702
--------- ---------
--------- ---------
</TABLE>
6. STOCKHOLDERS' EQUITY:
VOTING RIGHTS
The holders of the Class A Common Stock are entitled to one vote for each
share of stock held. The holders of Class B Common Stock are not entitled to
vote, except as otherwise required by applicable law, in which case holders of
Class B Common Stock shall vote as a single class.
DIVIDENDS AND LIQUIDATION RIGHTS
The Board of Directors of the Company may pay dividends to both the Class A
and Class B holders out of funds legally available for payments of dividends. In
the event of liquidation, the holders of Class A and Class B stock shall be
entitled to share ratably, according to the number of shares of Common Stock
held by them, in all assets of the Company available for distribution to its
stockholders.
F-93
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
6. STOCKHOLDERS' EQUITY: (CONTINUED)
CONVERSION
Each share of Class A Common Stock is convertible into one share of Class B
Common Stock, and vice versa.
7. STOCK OPTION PLANS:
In October 1984, Thermal adopted an incentive stock option plan (the "Old
Plan") for its key employees. Options granted under the Old Plan were granted
with an exercise price that equaled or exceeded fair market value of Thermal's
common stock at the date of grant.
Ten years from the date the Old Plan was adopted, the Old Plan was
terminated. However, all rights created under options granted continued until
such options were excercised or expired. In connection with acquisition of
Thermal and Best Built by the Company, all options under the Old Plan were
exercised.
On May 30, 1997, the Company adopted a stock option plan pursuant to the
Heat, Inc. 1997 Stock Purchase and Option Plan (the "Plan") for its key
employees, directors, consultants and advisers. The option plan provides for the
grant of up to 250,000 shares of common stock. Under the Plan, certain employees
have received incentive options under the Internal Revenue Service Code Section
422, while others have received nonqualified stock options in accordance with
the Plan.
Generally, all options issued under the Plan vest equally in 25% annual
increments over the four-year period subsequent to the grant date. All options
become fully vested upon a sale of the Company and must be exercised in
connection with the sale of the Company or they shall be forfeited. Options were
granted with an exercise price that equalled or exceed fair value of the
Company's common stock. Options for 22,500 shares were granted at the time of
acquisition, which vest between 1998 and 2005 based upon the Company's future
operating results. The outstanding stock options under the Plan have an average
remaining contractual life of ten years at December 31, 1998.
Stock option transactions are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
THE COMPANY PREDECESSOR
------------------------ ------------------------
PERIOD PERIOD
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER DECEMBER MAY 30, DECEMBER
31, 1998 31, 1997 1997 31, 1996
----------- ----------- ----------- -----------
Outstanding options, beginning of period... 86,555 -- 35,500 15,900
Granted.................................... 17,500 86,555 -- 20,000
Exercised.................................. -- -- (800) (400)
----------- ----------- ----------- -----------
Outstanding options, end of period......... 104,055 86,555 34,700 35,500
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average exercise price of options
exercised................................ $ -- $ -- $ 3.00 $ 3.00
Weighted average exercise price of options
granted.................................. $ 18.29 $ 4.64 $ -- $ 8.75
Weighted average exercise price, end of
period................................... $ 6.93 $ 4.64 $ 6.31 $ 6.24
Options exercisable, end of period......... 21,639 -- 28,434 29,234
Options available for future grant......... 145,945 163,445 -- --
</TABLE>
F-94
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
7. STOCK OPTION PLANS: (CONTINUED)
The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option-pricing model with the following range of assumptions
used for option grants occurring during the year ended December 31, 1998 and the
period ended December 31, 1997:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Volatility..................................................................................... 0% 0%
Risk-free interest rate........................................................................ 5.27% 5.81%
Expected life in years......................................................................... 5.0 5.0
Dividend yield................................................................................. 0% 0%
</TABLE>
The following table summarizes information about stock options outstanding
at December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------ -----------------------
WEIGHTED AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER LIFE EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING (MONTHS) PRICE EXERCISABLE PRICE
- --------------- ----------- ---------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
$4.00 79,055 101 $ 4.00 19,764 $ 4.00
$10.00-$12.00 17,500 107-119 $ 11.71 750 $ 11.33
$20.00 2,500 119 $ 20.00 -- --
$30.00 5,000 116 $ 30.00 -- --
-----------
104,055
</TABLE>
In October 1995, the Financial Accounting Standards Board issued STATEMENT
OF FINANCIAL ACCOUNTING STANDARD ("SFAS") No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION. SFAS No. 123 encourages a fair-value based method of accounting
for employee stock options and similar equity instruments. SFAS No. 123 also
allows an entity to continue to account for stock-based employee compensation
using the intrinsic value for equity instruments using APB Opinion No. 25. As
provided for in SFAS No. 123, the Company elected to continue the intrinsic
value method of expense recognition. Accordingly, no compensation cost has been
recognized for the stock option plans. Had compensation expense for the stock
option plans been determined consistent with the provisions of SFAS No. 123, the
Company's net income for the year ended December 31, 1998, the periods ended
December 31, 1997 and May , 1997 and the year ended December , 1996 would not
have been materially different.
In connection with acquisition transactions discussed in Note 1, the Company
also sold 45,000 shares (Class A) to certain employees, at the fair market value
as determined by management and based on the value of the merger transaction.
These shares and any shares issued under the stock option plan, as described
above, are subject to certain terms and conditions including, among others,
restrictions on transfer, repurchase rights and a put feature.
In connection with the sale of the Company (see Note ), all options
outstanding under the Plan were exercised and the Plan was terminated.
8. RELATED PARTY TRANSACTIONS:
In connection with the merger, the Company agreed to pay a management fee to
HIG. These fees totaled approximately $400 and $239 for the year ended December
31, 1998 and the period ended
F-95
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
8. RELATED PARTY TRANSACTIONS: (CONTINUED)
December 31, 1997, respectively, and are classified as management fees in the
accompanying consolidated statements of operations.
The Company leases certain facilities in Pittsburgh, Pennsylvania from two
members of the board of directors of the Company. Rental expense for these
facilities totaled approximately $137, $78, $56 and $134 for the year ended
December 31, 1998, the periods ended December 31, 1997 and May 30, 1997 and the
year ended December 31, 1996, respectively.
9. FUTURE LEASE OBLIGATIONS:
Future minimum lease payments under operating leases for the Company's main
locations and twenty-one branch locations that have initial or remaining
noncancelable lease terms in excess of one year at December 31, 1998 are:
<TABLE>
<S> <C>
1999................................................................ $ 1,399
2000................................................................ 1,329
2001................................................................ 766
2002................................................................ 528
2003................................................................ 350
Thereafter.......................................................... 725
---------
$ 5,097
---------
---------
</TABLE>
Rental expense amounted to approximately $1,523, $685, $426 and $867 for the
year ended December 31, 1998, the periods ended December 31, 1997 and May 30,
1997 and the year ended December 31, 1996, respectively.
10. COMMITMENTS AND CONTINGENCIES:
The Company is currently a defendant in a lawsuit claiming that the Company
is liable and negligent in the design and manufacture of windows installed in a
large condominium project. The case is currently in mediation with a scheduled
trial date of May 1999. Management is of the opinion that the ultimate
resolution of this matter, after considering its insurance coverage and based on
discussions with outside legal counsel, will not have a material adverse effect
on the Company's financial condition or its results of operation.
The Company is involved in various other claims and litigation incidental to
the conduct of its business. Based on consultation with legal counsel,
management does not believe that any claims or litigation to which the Company
is a party will have a material adverse effect on the Company" financial
condition or results of operations.
11. SPECIAL CHARGES:
Included in special charges in the Consolidated Statement of Operations for
the period ended May , 1997 are transportation expenses (primarily consisting of
legal and investment banker fees) paid by Thermal totaling $785.
F-96
<PAGE>
HEAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
12. THERMAL AND BEST BUILT TRANSACTIONS:
On May 30, 1997, the Company acquired all of the common stock of Thermal and
Best Built. The components of the purchase price are as follows:
<TABLE>
<S> <C>
Cash and cash equivalents.......................................................... $ 1,254
Accounts receivable, net........................................................... 6,212
Inventories........................................................................ 7,344
Prepaid expenses and other current assets.......................................... 1,542
Property, plant and equipment...................................................... 7,050
Goodwill........................................................................... 15,960
Other long term assets............................................................. 1,301
Current liabilities................................................................ (7,467)
Long-term liabilities.............................................................. (3,074)
---------
Total purchase price............................................................. $ 30,122
---------
---------
</TABLE>
The purchase price of $30,122 was financed with net debt proceeds of
$24,870.
13. SUBSEQUENT EVENT:
In connection with the acquisition of Thermal by the Company, certain
shareholders of Thermal exercised their rights to dissent from the merger and to
demand payment of the fair value of their shares. Pursuant to the terms of the
merger, each share of Thermal stock was converted into the right to receive a
cash payment per share, based on the price per share accepted by the
nondissenting shareholders. The dissenting shareholders asserted that they have
certain rights to seek appraisals of the fair value of their shares. In the
aggregate, the dissenting shareholders were the beneficial owners of 144,186
shares of Thermal. On January 22, 1999, the Company entered into a Settlement
and Release Agreement with the dissenting shareholders to pay $2,840 in exchange
for all their shares held. A liability for $2,167 reflecting the anticipated
settlement amount had been previously recorded in the accompanying consolidated
balance sheet at December 31, 1997. As a result of the final settlement of this
matter, the liability was increased to $2,840 and was paid out in January 1999.
This additional amount was reflected as an increase to goodwill.
In connection with the Best Built acquisition, the Company paid the seller
an additional $830 in 1998 as a result of Best Built achieving a defined gross
profit level for the 12-month period ended May 31, 1998. This additional amount
was reflected as an increase to goodwill.
On April 20, 1999, the Company was acquired by Atrium Companies, Inc., a
company engaged in the manufacture and sales of doors, windows, and various
building materials throughout the United States, for approximately $85,000.
F-97
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Atrium Companies, Inc.
Our audits of the financial statements of Atrium Companies, Inc. and
subsidiaries, Atrium Companies, Inc. and subsidiaries (previous registrant),
R.G. Darby Company, Inc. and Total Trim, Inc. and Heat, Inc. referred to in our
reports dated April 4, 1999 (except for Note 18 which is as of May 17, 1999),
June 25, 1999, September 24, 1998, and July 9, 1999, respectively, appearing in
this Registration Statement also included an audit of the related financial
statement schedules. In our opinion, these financial statement schedules present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related financial statements.
PricewaterhouseCoopers LLP
Dallas, Texas
April 4, 1999 (except for Note 18 is as of May 17, 1999),
June 25, 1999, September 24, 1998 and July 9, 1999
F-98
<PAGE>
ATRIUM COMPANIES, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN C -
ADDITIONS
-------------
COLUMN B - (1)
BALANCE AT CHARGED TO COLUMN D - COLUMN E -
BEGINNING COSTS AND DEDUCTIONS - BALANCE AT
COLUMN A - DESCRIPTION OF PERIOD EXPENSES WRITE-OFFS(A) END OF PERIOD
- --------------------------------------------------------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1996................................. $ 0 $ 1,561 $ (731) $ 830
Year ended December 31, 1997................................. $ 830 $ 1,791 $ (1,896) $ 725
Year ended December 31, 1998................................. $ 725 $ 227 $ (174) $ 778
</TABLE>
- --------------------------
(a) net of recoveries
F-99
<PAGE>
ATRIUM COMPANIES, INC. (PREVIOUS REGISTRANT)
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN C - ADDITIONS
--------------------------
COLUMN B - (1) (2)
BALANCE AT CHARGED TO ACQUIRED COLUMN D - COLUMN E -
BEGINNING COSTS AND THROUGH DEDUCTIONS - BALANCE AT
COLUMN A - DESCRIPTION OF PERIOD EXPENSES ACQUISITION WRITE-OFFS(A) END OF PERIOD
- ---------------------------------------------------- ------------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1995...................... $ 1,300 $ 486 $ -- $ (631) $ 1,155
Year ended December 31, 1996...................... $ 1,155 $ 49 $ 237 $ 56 $ 1,497
Year ended December 31, 1997...................... $ 1,497 $ 480 $ 250 $ (1,619) $ 608
Period ended October 2, 1998...................... $ 608 $ 195 $ -- $ (12) $ 791
</TABLE>
- --------------------------
(a) net of recoveries
F-100
<PAGE>
R.G. DARBY COMPANY, INC. AND TOTAL TRIM, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN C -
ADDITIONS
-------------
COLUMN B - (1)
BALANCE AT CHARGED TO COLUMN D - COLUMN E -
BEGINNING COSTS AND DEDUCTIONS - BALANCE AT
COLUMN A - DESCRIPTION OF PERIOD EXPENSES WRITE-OFFS(A) END OF PERIOD
- --------------------------------------------------------------- --------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1996................................. $ 0 $ 183 $ (117) $ 66
Year ended December 31, 1997................................. $ 66 $ 154 $ (45) $ 175
</TABLE>
- --------------------------
(a) net of recoveries
F-101
<PAGE>
HEAT, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN C -
ADDITIONS
-------------
COLUMN B - (1)
BALANCE AT CHARGED TO COLUMN D - COLUMN E -
BEGINNING COSTS AND DEDUCTIONS - BALANCE AT
COLUMN A - DESCRIPTION OF PERIOD EXPENSES WRITE-OFFS(A) END OF PERIOD
- --------------------------------------------------------------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1996................................. $ 101 $ 133 $ (51) $ 183
Period ended May 30, 1997.................................... $ 183 $ 119 $ (173) $ 129
Period ended December 31, 1997............................... $ 129 $ 105 $ (3) $ 231
Year ended December 31, 1998................................. $ 231 $ 123 $ (11) $ 343
</TABLE>
- --------------------------
(a) net of recoveries
F-102
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS EXCHANGE
OFFER OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY US. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT RELATES, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
[LOGO]
ATRIUM COMPANIES, INC.
OFFER TO EXCHANGE
10 1/2% SENIOR SUBORDINATED NOTES DUE
2009, SERIES A
FOR ALL OUTSTANDING
10 1/2% SENIOR SUBORDINATED NOTES DUE
2009, SERIES B
---------------------
PROSPECTUS
---------------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
INDEMNIFICATION UNDER THE BY-LAWS OF ATRIUM
The By-Laws of Atrium authorize Atrium to pay or reimburse any of its
present or former directors or officers for any costs or expenses actually and
necessarily incurred by any such director or officer in any action, suit or
proceeding to which such person is made a party by reason of his or her holding
such position. However, no director or officer will be entitled to receive any
indemnification if such director or officer is finally adjudicated to be liable
for negligence or misconduct in office. The indemnification should also extend
to good faith expenditures incurred in anticipation of or preparation for
threatened or proposed litigation. In addition, the By-Laws authorize Atrium to
extend the indemnification to cover the good faith settlement of any such
action, suit or proceeding.
INDEMNIFICATION AGREEMENTS
Pursuant to indemnification agreements entered into with certain of its
officers, Atrium agreed to indemnify such officers to the full extent permitted
by law, and to advance expenses, if either of them becomes a party to or witness
or other participant in any threatened, pending or completed action, suit or
proceeding by reason of any occurrence related to the fact that the person is or
was director, officer, employee, agent or fiduciary of Atrium, Atrium's
subsidiary or, at Atrium's request, another entity's, unless a reviewing party,
either outside counsel or a director or directors appointed by Atrium's board of
directors, determines that the person would not be entitled to indemnification
under applicable law.
INDEMNIFICATION UNDER THE DELAWARE GENERAL CORPORATION LAW
Section 145 of the Delaware General Corporation Law (the "DGCL"), authorizes
a corporation to indemnify any person who was or is a party, or is threatened to
be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that the person is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by the person in connection with such action, suit or proceeding, if the person
acted in good faith and in a manner the person reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the person's
conduct was unlawful. In addition, the DGCL does not permit indemnification in
any threatened, pending or completed action or suit by or in the right of the
corporation in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation, unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability, but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses, which such court shall deem proper. To the extent
that a present or former director or officer of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to above, or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses, including attorneys'
fees, actually and reasonably incurred by such person in connection therewith.
Indemnity is mandatory to the extent a claim, issue or matter has been
successfully defended. The DGCL also allows a corporation to provide for the
elimination or limit of the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (1) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (2) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (3) for
unlawful payments of dividends or unlawful stock purchases or redemptions, or
(4) for any
II-1
<PAGE>
transaction from which the director derived an improper personal benefit. These
provisions will not limit the liability of directors or officers under the
federal securities laws of the United States.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBITS
<TABLE>
<C> <S>
1.1 Purchase Agreement, dated as of May 10, 1999, by and among Atrium Companies, Inc.,
the Guarantors named therein and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated(6)
1.2 Joinder Agreement to Purchase Agreement, dated as of May 10, 1999, by and among
Heat, Inc., H.I.G. Vinyl, Inc., Champagne Industries, Inc., Thermal Industries,
Inc., Best Built, Inc. and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated(6)
2.1 Asset Purchase Agreement, dated as of March 4, 1998, among Masterview Window Company
LLC, Atrium Companies, Inc. and, for the limited purposes set forth therein,
BancBoston Ventures, Inc.(3)
2.2 Agreement and Plan of Merger by and among D and W Holdings, Inc., D and W
Acquisition Corp., Atrium Corporation, and the securityholders named therein dated
as of August 3, 1998(4)
2.3 Amendment No. 1, dated as of October 2, 1998, to the Agreement and Plan of Merger by
and among D and W Holdings, Inc., D and W Acquisition Corp., Atrium Corporation
and the securityholders named therein(5)
2.4 Amendment No. 2, dated as of April 14, 1999, to the Agreement and Plan of Merger by
and among D and W Holdings, Inc., D and W Acquisition Corp., Atrium Corporation
and the securityholders named therein(5)
2.5 Stock Purchase Agreement, dated as of May 10, 1999, among Champagne Industries, Inc.
and Atrium Companies, Inc.(6)
2.6 Stock Purchase Agreement, dated as of April 20, 1999, among Heat, Inc., shareholders
and optionholders named therein, H.I.G. Vinyl, Inc., H.I.G. Investment Fund, L.P.,
H.I.G. Capital Management, Inc. and Atrium Companies, Inc.(6)
2.7 Amendment No. 1, dated as of May 17, 1999, to the Stock Purchase Agreement dated, as
of April 20, 1999, among Heat, Inc., shareholders and optionholders named therein,
H.I.G. Vinyl, Inc., H.I.G. Investment Fund, L.P., H.I.G. Capital Management, Inc.
and Atrium Companies, Inc.(6)
3.1 Certificate of Incorporation of Atrium Companies, Inc., as amended(1)
3.2 Bylaws of Atrium Companies, Inc.(1)
3.3 Certificate of Incorporation of Bishop Manufacturing Co. of New York, Inc.
(presently known as Atrium Door and Window Company of New York)(1)
3.4 Bylaws of Bishop Manufacturing Co. of New York, Inc. (presently known as Atrium Door
and Window Company of New York)(1)
3.5 Amendment to Certificate of Incorporation for Atrium Door and Window Company of New
York (formerly Bishop Manufacturing Company of New York, Inc.)(1)
3.6 Certificate of Incorporation of Bishop Manufacturing Company, Incorporated
(presently known as Atrium Door and Window Company of the Northeast)(1)
3.7 Bylaws of Bishop Manufacturing Company, Incorporated (presently known as Atrium Door
and Window Company of the Northeast)(1)
3.8 Amendment to Certificate of Incorporation for Atrium Door and Window Company of the
Northeast (formerly Bishop Manufacturing Company, Incorporated)(1)
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
3.9 Certificate of Incorporation of Bishop Manufacturing Company of New England, Inc.
(presently known as Atrium Door and Window Company of New England, Inc.)(1)
3.10 Bylaws of Bishop Manufacturing Company of New England, Inc. (presently known as
Atrium Door and Window Company of New England, Inc.)(1)
3.11 Amendment to Certificate of Incorporation for Atrium Door and Window Company of New
England, Inc. (formerly Bishop Manufacturing Company of New England, Inc.)(1)
3.12 Articles of Incorporation of H-R Window Supply, Inc. (presently known as Atrium Door
and Window Company--West Coast)(1)
3.13 Bylaws of H-R Window Supply, Inc. (presently known as Atrium Door and Window
Company--West Coast)(1)
3.14 Amendment to Certificate of Incorporation for Atrium Door and Window Company--West
Coast (formerly H-R Window Supply, Inc.)(1)
3.15 Certificate of Incorporation of Atrium Door and Window Company of Arizona(7)
3.16 Bylaws of Atrium Door and Window Company of Arizona(7)
3.17 Certificate of Incorporation of Door Holdings, Inc., as amended(7)
3.18 Bylaws of Door Holdings, Inc.(7)
3.19 Articles of Incorporation of Three D Investment, Inc. (presently known as R. G.
Darby Company, Inc.), as amended(7)
3.20 Bylaws of Three D Investment, Inc. (presently known as R G. Darby Company, Inc.)(7)
3.21 Certificate of Incorporation of R. G. Darby Company--South(7)
3.22 Bylaws of R. G. Darby Company--South(7)
3.23 Articles of Incorporation of Total Trim, Inc.(7)
3.24 Bylaws of Total Trim, Inc.(7)
3.25 Certificate of Incorporation of Total Trim, Inc.--South(7)
3.26 Bylaws of Total Trim, Inc.--South(7)
3.27 Certificate of Incorporation of Wing Industries Holdings, Inc., as amended(7)
3.28 Bylaws of Wing Industries Holdings, Inc.(7)
3.29 Articles of Incorporation of The Sam A. Wing Company (presently known as Wing
Industries, Inc.), as amended(7)
3.30 Bylaws of Wing Industries, Inc.(7)
3.31 Certificate of Incorporation of Heat, Inc., as amended(7)
3.32 Amended and Restated By-Laws of Heat, Inc.(7)
3.33 Certificate of Incorporation of AGI Acquisition Corp. (presently known as H.I.G.
Vinyl, Inc.), as corrected(7)
3.34 Bylaws of H.I.G. Vinyl, Inc.(7)
3.35 Articles of Incorporation of Champagne Industries, Inc.(7)
3.36 Bylaws of Champagne Industries, Inc.(7)
3.37 Certificate of Incorporation of Heat Acquisition II, Inc. (presently known as
Thermal Industries, Inc.), as amended(7)
3.38 Bylaws of Thermal Industries, Inc.(7)
3.39 Certificate of Incorporation of Best Built Acquisition, Inc. (presently known as
Best Built, Inc.), as amended(7)
3.40 Bylaws of Best Built, Inc.(7)
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
4.1 Indenture, dated as of May 17, 1999, by and among Atrium Companies, Inc., the
Guarantors named therein and the State Street Bank and Trust Company (6)
4.2 Registration Rights Agreement, dated as May 17, 1999, by and among Atrium Companies,
Inc., the Guarantors named therein and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated (6)
5.1 Opinion of Paul, Hastings, Janofsky & Walker LLP regarding legality (7)
10.1 Employment Agreement between Atrium Companies, Inc. and Louis W. Simi, Jr. dated as
of January 1, 1998 (2)
10.2 Atrium Lease Agreement, as amended (1)
10.3 H-R Windows Lease Agreement (1)
10.4 First Amendment to the H-R Windows Lease Agreement (2)
10.5 Second Amendment to the Atrium Lease Agreement (2)
10.6 Stockholders Agreement, dated as of October 2, 1998, by and among D and W Holdings,
Inc., and the stockholders signatory thereto(4)
10.7 Credit Agreement, dated as of October 2, 1998, by and among Atrium Companies, Inc.,
as Borrower, D and W Holdings, Inc., the Guarantors party thereto, Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Lead Arranger,
Syndication Agent and Documentation Agent, and BankBoston, N.A., as Administrative
Agent, and the Lenders party thereto(4)
10.8 Amendment and Consent No. 1, dated as of May 5, 1999, to the Credit Agreement, dated
as of October 2, 1998, by and among Atrium Companies, Inc., D and W Holdings,
Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
BankBoston(6)
10.9 Amendment No. 2, dated as of June 11, 1999, to the Credit Agreement dated as of
October 2, 1998, by and among Atrium Companies, Inc., D and W Holdings, Inc.,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
BankBoston(6)
10.10 Management Agreement, dated as of October 2, 1998, by and among Ardshiel, Inc., D
and W Holdings, Inc., Atrium Corporation and Atrium Companies, Inc.(5)
10.11 Amended and Restated Management Agreement, dated as of May 17, 1999, by and among
Ardshiel, Inc., D and W Holdings, Inc., Atrium Corporation and Atrium Companies,
Inc.(6)
10.12 Employment Agreement, dated as of October 2, 1998, by and between D and W Holdings,
Inc., Jeff L. Hull and Atrium Companies, Inc.(5)
10.13 Employment Agreement, dated as of October 2, 1998, by and between D and W Holdings,
Inc., R. L. Gilmer and Wing Industries, Inc.(5)
10.14 Employment Agreement, dated as of January 8, 1998, by and between Door Holdings,
Inc. and Cliff Darby(5)
10.15 Buy-Sell Agreement, dated as of October 2, 1998, by and among D and W Holdings,
Inc., GE Investment Private Placement Partners II and R. L. Gilmer(5)
10.16 Buy-Sell Agreement, dated as of October 2, 1998, by and among D and W Holdings,
Inc., GE Investment Private Placement Partners II and Cliff Darby(5)
10.17 D and W Holdings, Inc. 1998 Stock Option Plan(5)
10.18 Amendment No. 1, dated as of May 17, 1999, to the D and W Holdings, Inc. 1998 Stock
Option Plan(6)
10.19 D and W Holdings, Inc. 1998 Replacement Stock Option Plan(5)
10.20 Amendment No. 1, dated as of May 17, 1999, to the D and W Holdings, Inc. Replacement
Stock Option Plan(6)
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10.21 Termination Agreement, dated as of October 2, 1998, between Atrium Corporation,
Atrium Companies, Inc., Hicks, Muse & Co. Partners, L.P. and Hicks, Muse, Tate &
Furst Incorporated(5)
10.22 Agreement and Release, dated as of March 31, 1999, by and among Randall S. Fojtasek
and D and W Holdings, Inc., Atrium Corporation, Atrium Companies, Inc., Ardshiel,
Inc., GE Investment Management Incorporated, GE Investment Private Placement
Partners II, a Limited Partnership and the parties named therein(5)
10.23 Indemnification Escrow Agreement, dated as of October 2, 1998, by and among Hicks,
Muse Fund III Incorporated, D and W Holdings, Inc. and Northwest Bank Texas,
N.A.(5)
10.24 Amendment No. 1, dated April 14, 1999, to Indemnification Escrow Agreement by and
among Hicks, Muse Fund III Incorporated, D and W Holdings, Inc. and Northwest Bank
Texas, N.A.(5)
10.25 Escrow Agreement, dated April 20, 1999, among Atrium Companies, Inc., H.I.G. Vinyl,
Inc. and Bank One, Texas, N.A.(6)
10.26 Escrow Agreement, dated May 17, 1999, among Atrium Companies, Inc., selling
stockholders named therein and Bank One, Texas, N.A.(6)
12.1 Computation of Ratio of Earnings to Fixed Charges(6)
21.1 Subsidiaries of Atrium Companies, Inc.(6)
23.1 Consent of PricewaterhouseCoopers LLP (6)
23.2 Consent of Paul, Hastings, Janofsky & Walker LLP (included in Exhibit 5.1)(7)
24.1 Powers of Attorney (included in part II of the Registration Statement on the
signature page)
25.1 Statement of Eligibility and Qualification (Form T-1) of State Street Bank and Trust
Company(7)
99.1 Form of Letter of Transmittal(7)
99.2 Form of Notice of Guaranteed Delivery(7)
</TABLE>
- ------------------------
(1) Incorporated by reference from the Registrant's Registration Statement on
Form S-4, dated April 4, 1997, SEC File No. 333-20095.
(2) Incorporated by reference from the Registrant's Report on Form 10-K, dated
March 31, 1998.
(3) Incorporated by reference from the Registrant's Report on Form 8-K, dated
March 27, 1998 and filed on April 13, 1998.
(4) Incorporated by reference from the Registrant's Report on Form 8-K, dated
October 2, 1998 and filed on October 19, 1998.
(5) Incorporated by reference from the Registrant's Report on Form 10-K, dated
March 31, 1999 and filed on April 15, 1999.
(6) Filed with the Registrant's Registration Statement on Form S-4, dated July
15, 1999, SEC File No. 333-82921.
(7) Filed herewith.
FINANCIAL STATEMENT SCHEDULES
All financial statement schedules included herein are listed in the Index to
Financial Statements.
II-5
<PAGE>
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that:
(1) Prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to the reofferings by persons who may be
deemed underwriters, in addition to the information called for by the other
items of the applicable form.
(2) Every prospectus: (i) that is filed pursuant to the immediately
preceding paragraph or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities, other than the payment by the Registrants of expenses incurred or
paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding, is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by then is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Atrium
Companies, Inc. has duly caused this registration statement to be signed by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on
the 12th day of August, 1999.
<TABLE>
<S> <C> <C>
ATRIUM COMPANIES, INC.
By: /s/ JEFF L. HULL
-----------------------------------------
Name: Jeff L. Hull
Title: Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Executive Vice President,
Chief Financial Officer,
/s/ JEFF L. HULL Secretary, Treasurer and
- ------------------------------ Director (Co-Principal August 12, 1999
Jeff L. Hull Executive Officer and
Principal Financial
Officer)
/s/ JEFF L. HULL Executive Vice President,
- ------------------------------ Chief Operating Officer
Jeff L. Hull and Director August 12, 1999
As Attorney-In-Fact for (Co-Principal Executive
R.L. Gilmer Officer)
/s/ JEFF L. HULL
- ------------------------------ Vice President, Corporate
Jeff L. Hull Controller (Principal August 12, 1999
As Attorney-In-Fact for Accounting Officer)
Eric W. Long
/s/ JEFF L. HULL
- ------------------------------
Jeff L. Hull Director August 12, 1999
As Attorney-In-Fact for
Daniel T. Morley
/s/ JEFF L. HULL
- ------------------------------
Jeff L. Hull Director August 12, 1999
As Attorney-In-Fact for
Roger A. Knight
/s/ JEFF L. HULL
- ------------------------------
Jeff L. Hull Director August 12, 1999
As Attorney-In-Fact for
James G. Turner
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S> <C>
1.1 Purchase Agreement, dated as of May 10, 1999, by and among Atrium Companies,
Inc., the Guarantors named therein and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated (6)
1.2 Joinder Agreement to Purchase Agreement, dated as of May 10, 1999 by and among
Heat, Inc., H.I.G. Vinyl, Inc., Champagne Industries, Inc., Thermal
Industries, Inc., Best Built, Inc. and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated (6)
2.1 Asset Purchase Agreement, dated as of March 4, 1998, among Masterview Window
Company LLC, Atrium Companies, Inc. and, for the limited purposes set forth
herein, BancBoston Ventures, Inc. (3)
2.2 Agreement and Plan of Merger by and among D and W Holdings, Inc., D and W
Acquisition Corp., Atrium Corporation, and the securityholders named therein
dated as of August 3, 1998 (4)
2.3 Amendment No. 1, dated as of October 2, 1998, to the Agreement and Plan of
Merger by and among D and W Holdings, Inc., D and W Acquisition Corp.,
Atrium Corporation and the securityholders named therein (5)
2.4 Amendment No. 2, dated as of April 14, 1999, to the Agreement and Plan of
Merger by and among D and W Holdings, Inc., D and W Acquisition Corp.,
Atrium Corporation and the securityholders named therein (5)
2.5 Stock Purchase Agreement, dated as of May 10, 1999, among Champagne
Industries, Inc. and Atrium Companies, Inc. (6)
2.6 Stock Purchase Agreement, dated as of April 20, 1999, among Heat, Inc.,
shareholders and optionholders named therein, H.I.G. Vinyl, Inc., H.I.G.
Investment Fund, L.P., H.I.G. Capital Management, Inc. and Atrium Companies,
Inc. (6)
2.7 Amendment No. 1, dated as of May 17, 1999, to the Stock Purchase Agreement
dated, as of April 20, 1999, among Heat, Inc., shareholders and
optionholders named therein, H.I.G. Vinyl, Inc., H.I.G. Investment Fund,
L.P., H.I.G. Capital Management, Inc. and Atrium Companies, Inc. (6)
3.1 Certificate of Incorporation of Atrium Companies, Inc., as amended (1)
3.2 Bylaws of Atrium Companies, Inc. (1)
3.3 Certificate of Incorporation of Bishop Manufacturing Co. of New York, Inc.
(presently known as Atrium Door and Window Company of New York)(1)
3.4 Bylaws of Bishop Manufacturing Co. of New York, Inc. (presently known as
Atrium Door and Window Company of New York)(1)
3.5 Amendment to Certificate of Incorporation for Atrium Door and Window Company
of New York (formerly Bishop Manufacturing Company of New York, Inc.)(1)
3.6 Certificate of Incorporation of Bishop Manufacturing Company, Incorporated
(presently known as Atrium Door and Window Company of the Northeast)(1)
3.7 Bylaws of Bishop Manufacturing Company, Incorporated (presently known as
Atrium Door and Window Company of the Northeast)(1)
3.8 Amendment to Certificate of Incorporation for Atrium Door and Window Company
of the Northeast (formerly Bishop Manufacturing Company, Incorporated)(1)
3.9 Certificate of Incorporation of Bishop Manufacturing Company of New England,
Inc. (presently known as Atrium Door and Window Company of New England,
Inc.)(1)
3.10 Bylaws of Bishop Manufacturing Company of New England, Inc. (presently known
as Atrium Door and Window Company of New England, Inc.)(1)
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
3.11 Amendment to Certificate of Incorporation for Atrium Door and Window Company
of New England, Inc. (formerly Bishop Manufacturing Company of New England,
Inc.)(1)
3.12 Articles of Incorporation of H-R Window Supply, Inc. (presently known as
Atrium Door and Window Company--West Coast)(1)
3.13 Bylaws of H-R Window Supply, Inc. (presently known as Atrium Door and Window
Company--West Coast)(1)
3.14 Amendment to Certificate of Incorporation for Atrium Door and Window Company--
West Coast (formerly H-R Window Supply, Inc.)(1)
3.15 Certificate of Incorporation of Atrium Door and Window Company of Arizona(7)
3.16 Bylaws of Atrium Door and Window Company of Arizona(7)
3.17 Certificate of Incorporation of Door Holdings, Inc., as amended(7)
3.18 Bylaws of Door Holdings, Inc.(7)
3.19 Articles of Incorporation of Three D Investment, Inc. (presently known as R.
G. Darby Company, Inc.), as amended(7)
3.20 Bylaws of Three D Investment, Inc. (presently known as R G. Darby Company,
Inc.)(7)
3.21 Certificate of Incorporation of R. G. Darby Company--South(7)
3.22 Bylaws of R. G. Darby Company--South(7)
3.23 Articles of Incorporation of Total Trim, Inc.(7)
3.24 Bylaws of Total Trim, Inc.(7)
3.25 Certificate of Incorporation of Total Trim, Inc.--South(7)
3.26 Bylaws of Total Trim, Inc.--South(7)
3.27 Certificate of Incorporation of Wing Industries Holdings, Inc., as amended(7)
3.28 Bylaws of Wing Industries Holdings, Inc.(7)
3.29 Articles of Incorporation of The Sam A. Wing Company (presently known as Wing
Industries, Inc.), as amended(7)
3.30 Bylaws of Wing Industries, Inc.(7)
3.31 Certificate of Incorporation of Heat, Inc., as amended(7)
3.32 Amended and Restated By-Laws of Heat, Inc.(7)
3.33 Certificate of Incorporation of AGI Acquisition Corp. (presently known as
H.I.G. Vinyl, Inc.), as corrected(7)
3.34 Bylaws of H.I.G. Vinyl, Inc.(7)
3.35 Articles of Incorporation of Champagne Industries, Inc.(7)
3.36 Bylaws of Champagne Industries, Inc.(7)
3.37 Certificate of Incorporation of Heat Acquisition II, Inc. (presently known as
Thermal Industries, Inc.), as amended(7)
3.38 Bylaws of Thermal Industries, Inc.(7)
3.39 Certificate of Incorporation of Best Built Acquisition, Inc. (presently known
as Best Built, Inc.), as amended(7)
3.40 Bylaws of Best Built, Inc.(7)
4.1 Indenture, dated as of May 17, 1999, by and among Atrium Companies, Inc., the
Guarantors named therein and the State Street Bank and Trust Company (6)
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
4.2 Registration Rights Agreement, dated as May 17, 1999, by and among Atrium
Companies, Inc., the Guarantors named therein and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated (6)
5.1 Opinion of Paul, Hastings, Janofsky & Walker LLP regarding legality (7)
10.1 Employment Agreement between Atrium Companies, Inc. and Louis W. Simi, Jr.
dated as of January 1, 1998 (2)
10.2 Atrium Lease Agreement, as amended (1)
10.3 H-R Windows Lease Agreement (1)
10.4 First Amendment to the H-R Windows Lease Agreement (2)
10.5 Second Amendment to the Atrium Lease Agreement (2)
10.6 Stockholders Agreement, dated as of October 2, 1998, by and among D and W
Holdings, Inc., and the stockholders signatory thereto (4)
10.7 Credit Agreement, dated as of October 2, 1998, by and among Atrium Companies,
Inc., as Borrower, D and W Holdings, Inc., the Guarantors party thereto,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
Lead Arranger, Syndication Agent and Documentation Agent, and BankBoston,
N.A., as Administrative Agent, and the Lenders party thereto (4)
10.8 Amendment and Consent No. 1, dated as of May 5, 1999, to the Credit Agreement,
dated as of October 2, 1998, by and among Atrium Companies, Inc., D and W
Holdings, Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and BankBoston (6)
10.9 Amendment No. 2, dated as of June 11, 1999, to the Credit Agreement dated as
of October 2, 1998, by and among Atrium Companies, Inc., D and W Holdings,
Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and BankBoston (6)
10.10 Management Agreement, dated as of October 2, 1998, by and among Ardshiel,
Inc., D and W Holdings, Inc., Atrium Corporation and Atrium Companies, Inc.
(5)
10.11 Amended and Restated Management Agreement, dated as of May 17, 1999, by and
among Ardshiel, Inc., D and W Holdings, Inc., Atrium Corporation and Atrium
Companies, Inc. (6)
10.12 Employment Agreement, dated as of October 2, 1998, by and between D and W
Holdings, Inc., Jeff L. Hull and Atrium Companies, Inc. (5)
10.13 Employment Agreement, dated as of October 2, 1998, by and between D and W
Holdings, Inc., R. L. Gilmer and Wing Industries, Inc. (5)
10.14 Employment Agreement, dated as of January 8, 1998, by and between Door
Holdings, Inc. and Cliff Darby (5)
10.15 Buy-Sell Agreement, dated as of October 2, 1998, by and among D and W
Holdings, Inc., GE Investment Private Placement Partners II and R. L. Gilmer
(5)
10.16 Buy-Sell Agreement, dated as of October 2, 1998, by and among D and W
Holdings, Inc., GE Investment Private Placement Partners II and Cliff Darby
(5)
10.17 D and W Holdings, Inc. 1998 Stock Option Plan (5)
10.18 Amendment No. 1, dated as of May 17, 1999, to the D and W Holdings, Inc. 1998
Stock Option Plan (6)
10.19 D and W Holdings, Inc. 1998 Replacement Stock Option Plan (5)
10.20 Amendment No. 1, dated as of May 17, 1999, to the D and W Holdings, Inc.
Replacement Stock Option Plan (6)
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
10.21 Termination Agreement, dated as of October 2, 1998, between Atrium
Corporation, Atrium Companies, Inc., Hicks, Muse & Co. Partners, L.P. and
Hicks, Muse, Tate & Furst Incorporated (5)
10.22 Agreement and Release, dated as of March 31, 1999, by and among Randall S.
Fojtasek and D and W Holdings, Inc., Atrium Corporation, Atrium Companies,
Inc., Ardshiel, Inc., GE Investment Management Incorporated, GE Investment
Private Placement Partners II, a Limited Partnership and the parties named
therein (5)
10.23 Indemnification Escrow Agreement, dated as of October 2, 1998, by and among
Hicks, Muse Fund III Incorporated, D and W Holdings, Inc. and Northwest Bank
Texas, N.A. (5)
10.24 Amendment No. 1, dated April 14, 1999, to Indemnification Escrow Agreement by
and among Hicks, Muse Fund III Incorporated, D and W Holdings, Inc. and
Northwest Bank Texas, N.A. (5)
10.25 Escrow Agreement, dated April 20, 1999, among Atrium Companies, Inc., H.I.G.
Vinyl, Inc. and Bank One, Texas, N.A. (6)
10.26 Escrow Agreement, dated May 17, 1999, among Atrium Companies, Inc., selling
stockholders named therein and Bank One, Texas, N.A. (6)
12.1 Computation of Ratio of Earnings to Fixed Charges (6)
21.1 Subsidiaries of Atrium Companies, Inc.(6)
23.1 Consent of PricewaterhouseCoopers LLP (6)
23.2 Consent of Paul, Hastings, Janofsky & Walker LLP (included in Exhibit 5.1)(7)
24.1 Powers of Attorney (included in part II of the Registration Statement on the
signature page) (6)
25.1 Statement of Eligibility and Qualification (Form T-1) of State Street Bank and
Trust Company (7)
99.1 Form of Letter of Transmittal (7)
99.2 Form of Notice of Guaranteed Delivery (7)
</TABLE>
- ------------------------
(1) Incorporated by reference from the Registrant's Registration Statement on
Form S-4, dated April 4, 1997, SEC File No. 333-20095.
(2) Incorporated by reference from the Registrant's Report on Form 10-K, dated
March 31, 1998.
(3) Incorporated by reference from the Registrant's Report on Form 8-K, dated
March 27, 1998 and filed on April 13, 1998.
(4) Incorporated by reference from the Registrant's Report on Form 8-K, dated
October 2, 1998 and filed on October 19, 1998.
(5) Incorporated by reference from the Registrant's Report on Form 10-K, dated
March 31, 1999 and filed on April 15, 1999.
(6) Filed with the Registrant's Registration Statement on Form S-4, dated July
15, 1999, SEC File No. 333-82921.
(7) Filed herewith.
<PAGE>
Exhibit 3.15
CERTIFICATE OF INCORPORATION
OF
ATRIUM DOOR AND WINDOW COMPANY OF ARIZONA
FIRST: The name of the corporation is Atrium Door and Window Company of
Arizona.
SECOND: The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 in New
Castle County, Delaware. The name of its registered agent at such address is
The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
by the corporation is to engage in any lawful act or activity for which
corporations may be organized under the Delaware General Corporation Law.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is One Thousand (1,000) shares of
Common Stock of the par value of One Cent ($.01) per share.
FIFTH: The name of the incorporator is Kathryn Truett and her mailing
address is c/o Vinson & Elkins L.L.P., 3700 Trammell Crow Center, 2001 Ross
Avenue, Dallas, Texas 75201.
SIXTH: The name and mailing address of the director, who shall serve until
the first annual meeting of stockholders or until his successor is elected and
qualified, is as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
---- --------
<S> <C>
Randall S. Fojtasek 1341 West Mockingbird Lane, Suite 1200W
Dallas, Texas 75247
</TABLE>
The number of directors of the corporation shall be as specified in, or
determined in the manner provided in, the bylaws. Election of directors need
not be by written ballot.
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SEVENTH: In furtherance of, and not in limitation of, the powers conferred
by statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the bylaws of the corporation.
EIGHTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
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NINTH: No director of the corporation shall be liable to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an improper personal
benefit. In addition to the circumstances in which a director of the
corporation is not personally liable as set forth in the preceding sentence, a
director of the corporation shall not be liable to the fullest extent permitted
by any amendment to the Delaware General Corporation Law hereafter enacted that
further limits the liability of a director.
TENTH: The corporation shall have the right, subject to any express
provisions or restrictions contained in this certificate of incorporation or
bylaws of the corporation, from time to time, to amend this certificate of
incorporation or any provision hereof in any manner now or hereafter provided by
law, and all rights and powers of any kind conferred upon a director or
stockholder of this corporation by this certificate of incorporation or any
amendment hereof are subject to such right of the corporation.
I, the undersigned, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the Delaware General Corporation
Law, do make this certificate, hereby declaring that this is my act and deed and
that the facts herein stated are true, and accordingly have hereunto set my hand
this 19th day of March, 1998.
/s/ Kathryn Truett
---------------------------------
Kathryn Truett
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<PAGE>
Exhibit 3.16
BYLAWS
OF
ATRIUM DOOR AND WINDOW COMPANY OF ARIZONA
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
required by the General Corporation Law of the State of Delaware to be
maintained in the State of Delaware shall be the registered office named in the
original Certificate of Incorporation of the Corporation (as the same may be
amended and restated from time to time, the "Certificate of Incorporation"), or
such other office as may be designated from time to time by the Board of
Directors in the manner provided by law. Should the Corporation maintain a
principal office within the State of Delaware such registered office need not be
identical to such principal office of the Corporation.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders shall
be held at the principal office of the Corporation, or at such other place
within or without the State of Delaware as shall be specified or fixed in the
notices or waivers of notice thereof.
SECTION 2. QUORUM; ADJOURNMENT OF MEETINGS. Unless otherwise required
by law or provided in the Certificate of Incorporation or these bylaws, the
holders of a majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum at
any meeting of stockholders for the transaction of business and the act of a
majority of such stock so represented at any meeting of stockholders at which a
quorum is present shall constitute the act of the meeting of stockholders. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Notwithstanding the other provisions of the Certificate of Incorporation or
these bylaws, the chairman of the meeting or the holders of a majority of the
issued and outstanding stock, present in person or represented by proxy, at any
meeting of stockholders, whether or not a quorum is present, shall have the
power to adjourn such meeting from time to time, without any notice other than
announcement at the meeting of the time and place of the holding of the
adjourned meeting; PROVIDED, HOWEVER, if the
<PAGE>
adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at such
meeting. At any such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted
at the meeting as originally called.
SECTION 3. ANNUAL MEETINGS. An annual meeting of the stockholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, within or without the State of Delaware, on such
date, and at such time as the Board of Directors shall fix and set forth in the
notice of the meeting, which date shall be within thirteen (13) months
subsequent to the later of the date of incorporation or the last annual meeting
of stockholders.
SECTION 4. SPECIAL MEETINGS. Unless otherwise provided in the
Certificate of Incorporation, special meetings of the stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board (if
any), by the President or by a majority of the Board of Directors, or by a
majority of the executive committee (if any), and shall be called by the
Chairman of the Board (if any), by the President or the Secretary upon the
written request therefor, stating the purpose or purposes of the meeting,
delivered to such officer, signed by the holder(s) of at least ten percent (l0%)
of the issued and outstanding stock entitled to vote at such meeting.
SECTION 5. RECORD DATE. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors of the Corporation
may fix, in advance, a date as the record date for any such determination of
stockholders, which date shall not be more than sixty (60) days nor less than
ten (l0) days before the date of such meeting, nor more than sixty (60) days
prior to any other action.
If the Board of Directors does not fix a record date for any meeting of the
stockholders, the record date for determining stockholders entitled to notice of
or to vote at such meeting shall be at the close of business on the day next
preceding the day on which notice is given, or, if in accordance with
Article VIII, Section 3 of these bylaws notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. If, in
accordance with Section 12 of this Article II, corporate action without a
meeting of stockholders is to be taken, the record date for determining
stockholders entitled to express consent to such corporate action in writing,
when no prior action by the Board of Directors is necessary, shall be the day on
which the first written consent is expressed. The record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
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<PAGE>
SECTION 6. NOTICE OF MEETINGS. Written notice of the place, date and
hour of all meetings, and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given by or at the direction of the
Chairman of the Board (if any) or the President, the Secretary or the other
person(s) calling the meeting to each stockholder entitled to vote thereat not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
Such notice may be delivered either personally or by mail. If mailed, notice is
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
SECTION 7. STOCK LIST. A complete list of stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing the address of each such stockholder and the number
of shares registered in the name of such stockholder, shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The stock list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
SECTION 8. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to a corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Proxies for use at any meeting of stockholders shall be filed with the
Secretary, or such other officer as the Board of Directors may from time to time
determine by resolution, before or at the time of the meeting. All proxies
shall be received and taken charge of and all ballots shall be received and
canvassed by the secretary of the meeting who shall decide all questions
touching upon the qualification of voters, the validity of the proxies, and the
acceptance or rejection of votes, unless an inspector or inspectors shall have
been appointed by the chairman of the meeting, in which event such inspector or
inspectors shall decide all such questions.
No proxy shall be valid after three (3) years from its date, unless the
proxy provides for a longer period. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power.
Should a proxy designate two or more persons to act as proxies, unless such
instrument shall provide the contrary, a majority of such persons present at any
meeting at which their powers thereunder are to be exercised shall have and may
exercise all the powers of voting or giving consents thereby conferred, or if
only one be present, then such powers may be exercised by that one; or, if an
even number attend and a majority do not agree on any particular issue, each
proxy so attending shall be entitled to exercise such powers in respect of the
same portion of the shares as he is of the proxies representing such shares.
SECTION 9. VOTING; ELECTIONS; INSPECTORS. Unless otherwise required by
law or provided in the Certificate of Incorporation, each stockholder shall have
one vote for each share of stock entitled to vote which is registered in his
name on the record date for the meeting. Shares registered in the name of
another corporation, domestic or foreign, may be voted by such officer, agent or
proxy as the bylaw (or comparable instrument) of such corporation may prescribe,
or in the absence of such provision, as
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<PAGE>
the Board of Directors (or comparable body) of such corporation may
determine. Shares registered in the name of a deceased person may be voted
by his executor or administrator, either in person or by proxy.
All voting, except as required by the Certificate of Incorporation or where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by stockholders holding a majority of the issued and outstanding
stock present in person or by proxy at any meeting a stock vote shall be taken.
Every stock vote shall be taken by written ballots, each of which shall state
the name of the stockholder or proxy voting and such other information as may be
required under the procedure established for the meeting. All elections of
directors shall be by ballot, unless otherwise provided in the Certificate of
Incorporation.
At any meeting at which a vote is taken by ballots, the chairman of the
meeting may appoint one or more inspectors, each of whom shall subscribe an oath
or affirmation to execute faithfully the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. Such
inspector shall receive the ballots, count the votes and make and sign a
certificate of the result thereof. The chairman of the meeting may appoint any
person to serve as inspector, except no candidate for the office of director
shall be appointed as an inspector.
Unless otherwise provided in the Certificate of Incorporation, cumulative
voting for the election of directors shall be prohibited.
SECTION 10. CONDUCT OF MEETINGS. The meetings of the stockholders shall
be presided over by the Chairman of the Board (if any), or if he is not present,
by the President, or if neither the Chairman of the Board (if any), nor
President is present, by a chairman elected at the meeting. The Secretary of
the Corporation, if present, shall act as secretary of such meetings, or if he
is not present, an Assistant Secretary shall so act; if neither the Secretary
nor an Assistant Secretary is present, then a secretary shall be appointed by
the chairman of the meeting. The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of discussion as seem to him
in order. Unless the chairman of the meeting of stockholders shall otherwise
determine, the order of business shall be as follows:
(a) Calling of meeting to order.
(b) Election of a chairman and the appointment of a secretary if
necessary.
(c) Presentation of proof of the due calling of the meeting.
(d) Presentation and examination of proxies and determination of a
quorum.
(e) Reading and settlement of the minutes of the previous meeting.
(f) Reports of officers and committees.
(g) The election of directors if an annual meeting, or a meeting called
for that purpose.
(h) Unfinished business.
(i) New business.
(j) Adjournment.
SECTION 11. TREASURY STOCK. The Corporation shall not vote, directly or
indirectly, shares of its own stock owned by it and such shares shall not be
counted for quorum purposes.
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<PAGE>
SECTION 12. ACTION WITHOUT MEETING. Unless otherwise provided in the
Certificate of Incorporation, any action permitted or required by law, the
Certificate of Incorporation or these bylaws to be taken at a meeting of
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than a unanimous written consent shall be given by the Secretary to those
stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWER; NUMBER; TERM OF OFFICE. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors, and subject to the restrictions imposed by law or the Certificate of
Incorporation, they may exercise all the powers of the Corporation.
Unless otherwise provided in the Certificate of Incorporation, the number
of directors that shall constitute the entire Board of Directors shall be
determined from time to time by resolution of the Board of Directors (provided
that no decrease in the number of directors that would have the effect of
shortening the term of an incumbent director may be made by the Board of
Directors). If the Board of Directors makes no such determination, the number
of directors shall be the number set forth in the Certificate of Incorporation
as the number of directors constituting the initial Board of Directors. Each
director shall hold office for the term for which he is elected and thereafter
until his successor shall have been elected and qualified, or until his earlier
death, resignation or removal.
Unless otherwise provided in the Certificate of Incorporation, directors
need not be stockholders nor residents of the State of Delaware.
SECTION 2. QUORUM. Unless otherwise provided in the Certificate of
Incorporation, a majority of the total number of directors shall constitute a
quorum for the transaction of business of the Board of Directors and the vote of
a majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 3. PLACE OF MEETINGS; ORDER OF BUSINESS. The directors may
hold their meetings and may have an office and keep the books of the
Corporation, except as otherwise provided by law, in such place or places,
within or without the State of Delaware, as the Board of Directors may from time
to time determine by resolution. At all meetings of the Board of Directors
business shall be transacted in such order as shall from time to time be
determined by the Chairman of the Board (if any), or in his absence by the
President, or by resolution of the Board of Directors.
SECTION 4. FIRST MEETING. Each newly elected Board of Directors may
hold its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after
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<PAGE>
and at the same place as the annual meeting of the stockholders. Notice of
such meeting shall not be required. At the first meeting of the Board of
Directors in each year at which a quorum shall be present, held next after
the annual meeting of stockholders, the Board of Directors shall proceed to
the election of the officers of the Corporation.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such times and places as shall be designated from
time to time by resolution of the Board of Directors. Notice of such regular
meetings shall not be required.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board (if any), the President or,
on the written request of any two directors, by the Secretary, in each case on
at least twenty-four (24) hours personal, written, telegraphic, cable or
wireless notice to each director. Such notice, or any waiver thereof pursuant
to Article VIII, Section 3 hereof, need not state the purpose or purposes of
such meeting, except as may otherwise be required by law or provided for in the
Certificate of Incorporation or these bylaws.
SECTION 7. REMOVAL. Any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors; provided that, unless the
Certificate of Incorporation otherwise provides, if the Board of Directors is
classified, then the stockholders may effect such removal only for cause; and
provided further that, if the Certificate of Incorporation expressly grants to
stockholders the right to cumulate votes for the election of directors and if
less than the entire board is to be removed, no director may be removed without
cause if the votes cast against his removal would be sufficient to elect him if
then cumulatively voted at an election of the entire Board of Directors, or, if
there be classes of directors, at an election of the class of directors of which
such director is a part.
SECTION 8. VACANCIES; INCREASES IN THE NUMBER OF DIRECTORS. Unless
otherwise provided in the Certificate of Incorporation, vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors then in office, although
less than a quorum, or a sole remaining director; and any director so chosen
shall hold office until the next annual election and until his successor shall
be duly elected and shall qualify, unless sooner displaced.
If the directors of the Corporation are divided into classes, any directors
elected to fill vacancies or newly created directorships shall hold office until
the next election of the class for which such directors shall have been chosen,
and until their successors shall be duly elected and shall qualify.
SECTION 9. COMPENSATION. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority to
fix the compensation of directors.
SECTION 10. ACTION WITHOUT A MEETING; TELEPHONE CONFERENCE MEETING.
Unless otherwise restricted by the Certificate of Incorporation, any action
required or permitted to be taken at any meeting of the Board of Directors, or
any committee designated by the Board of Directors, may be taken without a
meeting if all members of the Board of Directors or committee, as the case may
be consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors
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or committee. Such consent shall have the same force and effect as a
unanimous vote at a meeting, and may be stated as such in any document or
instrument filed with the Secretary of State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation, subject to
the requirement for notice of meetings, members of the Board of Directors, or
members of any committee designated by the Board of Directors, may participate
in a meeting of such Board of Directors or committee, as the case may be, by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
SECTION 11. APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY
STOCKHOLDERS. The Board of Directors in its discretion may submit any act or
contract for approval or ratification at any annual meeting of the stockholders,
or at any special meeting of the stockholders called for the purpose of
considering any such act or contract, and any act or contract that shall be
approved or be ratified by the vote of the stockholders holding a majority of
the issued and outstanding shares of stock of the Corporation entitled to vote
and present in person or by proxy at such meeting (provided that a quorum is
present), shall be as valid and as binding upon the Corporation and upon all the
stockholders as if it has been approved or ratified by every stockholder of the
Corporation. In addition, any such act or contract may be approved or ratified
by the written consent of stockholders holding a majority of the issued and
outstanding shares of capital stock of the Corporation entitled to vote and such
consent shall be as valid and as binding upon the Corporation and upon all the
stockholders as if it had been approved or ratified by every stockholder of the
Corporation.
ARTICLE IV
COMMITTEES
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SECTION 1. DESIGNATION; POWERS. The Board of Directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, including, if they shall so determine, an executive committee, each
such committee to consist of one or more of the directors of the Corporation.
Any such designated committee shall have and may exercise such of the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in such resolution, except that no
such committee shall have the power or authority of the Board of Directors in
reference to amending the Certificate of Incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution of the Corporation, or amending, altering or
repealing the bylaws or adopting new bylaws for the Corporation and, unless such
resolution or the Certificate of Incorporation expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Any such designated committee may authorize
the seal of the Corporation to be affixed to all papers which may require it.
In addition to the above such committee or committees shall have such other
powers and limitations of authority as may be determined from time to time by
resolution adopted by the Board of Directors.
SECTION 2. PROCEDURE; MEETINGS; QUORUM. Any committee designated
pursuant to Section 1 of this Article shall choose its own chairman, shall keep
regular minutes of its proceedings and report the same to the Board of Directors
when requested, shall fix its own rules or procedures, and shall meet at such
times and at such place or places as may be provided by such rules, or by
resolution of such committee or resolution of the Board of Directors. At every
meeting of any such committee, the presence of a majority of all the members
thereof shall constitute a quorum and the affirmative vote of a majority of the
members present shall be necessary for the adoption by it of any resolution.
SECTION 3. SUBSTITUTION OF MEMBERS. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of such committee. In
the absence or disqualification of a member of a committee, the member or
members present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of the absent or disqualified
member.
ARTICLE V
OFFICERS
SECTION 1. NUMBER, TITLES AND TERM OF OFFICE. The officers of the
Corporation shall be a President, one or more Vice Presidents (any one or more
of whom may be designated Executive Vice President or Senior Vice President), a
Treasurer, a Secretary and, if the Board of Directors so elects, a Chairman of
the Board and such other officers as the Board of Directors may from time to
time elect or appoint. Each officer shall hold office until his successor shall
be duly elected and shall qualify or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same person, unless the Certificate of Incorporation
provides otherwise. Except for the Chairman of the Board, if any, no officer
need be a director.
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SECTION 2. SALARIES. The salaries or other compensation of the
officers and agents of the Corporation shall be fixed from time to time by the
Board of Directors.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed, either with or without cause, by the vote of
a majority of the whole Board of Directors at a special meeting called for the
purpose, or at any regular meeting of the Board of Directors, provided the
notice for such meeting shall specify that the matter of any such proposed
removal will be considered at the meeting but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
SECTION 4. VACANCIES. Any vacancy occurring in any office of the
Corporation may be filled by the Board of Directors.
SECTION 5. POWERS AND DUTIES OF THE CHIEF EXECUTIVE OFFICER. The
President shall be the chief executive officer of the Corporation unless the
Board of Directors designates the Chairman of the Board as chief executive
officer. Subject to the control of the Board of Directors and the executive
committee (if any), the chief executive officer shall have general executive
charge, management and control of the properties, business and operations of the
Corporation with all such powers as may be reasonably incident to such
responsibilities; he may agree upon and execute all leases, contracts, evidences
of indebtedness and other obligations in the name of the Corporation and may
sign all certificates for shares of capital stock of the Corporation; and shall
have such other powers and duties as designated in accordance with these bylaws
and as from time to time may be assigned to him by the Board of Directors.
SECTION 6. POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD. If elected,
the Chairman of the Board shall preside at all meetings of the stockholders and
of the Board of Directors; and he shall have such other powers and duties as
designated in these bylaws and as from time to time may be assigned to him by
the Board of Directors.
SECTION 7. POWERS AND DUTIES OF THE PRESIDENT. Unless the Board of
Directors otherwise determines, the President shall have the authority to agree
upon and execute all leases, contracts, evidences of indebtedness and other
obligations in the name of the Corporation; and, unless the Board of Directors
otherwise determines, he shall, in the absence of the Chairman of the Board or
if there be no Chairman of the Board, preside at all meetings of the
stockholders and (should he be a director) of the Board of Directors; and he
shall have such other powers and duties as designated in accordance with these
bylaws and as from time to time may be assigned to him by the Board of
Directors.
SECTION 8. VICE PRESIDENTS. In the absence of the President, or in the
event of his inability or refusal to act, a Vice President designated by the
Board of Directors shall perform the duties of the President, and when so acting
shall have all the powers of and be subject to all the restrictions upon the
President. In the absence of a designation by the Board of Directors of a Vice
President to perform the duties of the President, or in the event of his absence
or inability or refusal to act, the Vice President who is present and who is
senior in terms of time as a Vice President of the Corporation shall so act.
The
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Vice Presidents shall perform such other duties and have such other powers
as the Board of Directors may from time to time prescribe.
SECTION 9. TREASURER. The Treasurer shall have responsibility for the
custody and control of all the funds and securities of the Corporation, and he
shall have such other powers and duties as designated in these bylaws and as
from time to time may be assigned to him by the Board of Directors. He shall
perform all acts incident to the position of Treasurer, subject to the control
of the chief executive officer and the Board of Directors; and he shall, if
required by the Board of Directors, give such bond for the faithful discharge of
his duties in such form as the Board of Directors may require.
SECTION 10. ASSISTANT TREASURERS. Each Assistant Treasurer shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as designated in these bylaws and as from time to time may be
assigned to him by the chief executive officer or the Board of Directors. The
Assistant Treasurers shall exercise the powers of the Treasurer during that
officer's absence or inability or refusal to act.
SECTION 11. SECRETARY. The Secretary shall keep the minutes of all
meetings of the Board of Directors, committees of directors and the
stockholders, in books provided for that purpose; he shall attend to the giving
and serving of all notices; he may in the name of the Corporation affix the seal
of the Corporation to all contracts of the Corporation and attest the affixation
of the seal of the Corporation thereto; he may sign with the other appointed
officers all certificates for shares of capital stock of the Corporation; he
shall have charge of the certificate books, transfer books and stock ledgers,
and such other books and papers as the Board of Directors may direct, all of
which shall at all reasonable times be open to inspection of any director upon
application at the office of the Corporation during business hours; he shall
have such other powers and duties as designated in these bylaws and as from time
to time may be assigned to him by the Board of Directors; and he shall in
general perform all acts incident to the office of Secretary, subject to the
control of the chief executive officer and the Board of Directors.
SECTION 12. ASSISTANT SECRETARIES. Each Assistant Secretary shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as designated in these bylaws and as from time to time may be
assigned to him by the chief executive officer or the Board of Directors. The
Assistant Secretaries shall exercise the powers of the Secretary during that
officer's absence or inability or refusal to act.
SECTION 13. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.
Unless otherwise directed by the Board of Directors, the chief executive officer
shall have power to vote and otherwise act on behalf of the Corporation, in
person or by proxy, at any meeting of security holders of or with respect to any
action of security holders of any other corporation in which this Corporation
may hold securities and otherwise to exercise any and all rights and powers
which this Corporation may possess by reason of its ownership of securities in
such other corporation.
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ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she or a person
of whom he or she is the legal representative, is or was or has agreed to become
a director or officer of the Corporation or is or was serving or has agreed to
serve at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving or having agreed to
serve as a director or officer, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended, (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment) against all expense, liability
and loss (including without limitation, attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to serve in the
capacity which initially entitled such person to indemnity hereunder and shall
inure to the benefit of his or her heirs, executors and administrators;
PROVIDED, HOWEVER, that the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof), other than a
proceeding (or part thereof) brought under Section 3 of this Article VI,
initiated by such person or his or her heirs, executors and administrators only
if such proceeding (or part thereof) was authorized by the board of directors of
the Corporation. The right to indemnification conferred in this Article VI
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; PROVIDED, HOWEVER, that, if the Delaware General
Corporation Law requires, the payment of such expenses incurred by a current,
former or proposed director or officer in his or her capacity as a director or
officer or proposed director or officer (and not in any other capacity in which
service was or is or has been agreed to be rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
indemnified person, to repay all amounts so advanced if it shall ultimately be
determined that such indemnified person is not entitled to be indemnified under
this Section or otherwise.
SECTION 2. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation
may, by action of its Board of Directors, provide indemnification to employees
and agents of the Corporation, individually or as a group, with the same scope
and effect as the indemnification of directors and officers provided for in this
Article.
SECTION 3. RIGHT OF CLAIMANT TO BRING SUIT. If a written claim
received by the Corporation from or on behalf of an indemnified party under
this Article VI is not paid in full by the Corporation
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within ninety days after such receipt, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be
a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law
for the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
SECTION 4. NONEXCLUSIVITY OF RIGHTS. The right to indemnification and
the advancement and payment of expenses conferred in this Article VI shall not
be exclusive of any other right which any person may have or hereafter acquire
under any law (common or statutory), provision of the Certificate of
Incorporation of the Corporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 5. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any person who is or was serving as a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
SECTION 6. SAVINGS CLAUSE. If this Article VI or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify and hold harmless each director and
officer of the Corporation, as to costs, charges and expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative to the full extent permitted by any applicable portion of this
Article VI that shall not have been invalidated and to the fullest extent
permitted by applicable law.
SECTION 7. DEFINITIONS. For purposes of this Article, reference to the
"Corporation" shall include, in addition to the Corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger prior to (or, in the case of an entity specifically
designated in a resolution of the Board of Directors, after) the adoption hereof
and which, if its separate existence had continued, would have had the power and
authority to indemnify its directors, officers and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article with respect to the resulting or
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surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
ARTICLE VII
CAPITAL STOCK
SECTION 1. CERTIFICATES OF STOCK. The certificates for shares of the
capital stock of the Corporation shall be in such form, not inconsistent with
that required by law and the Certificate of Incorporation, as shall be approved
by the Board of Directors. The Chairman of the Board (if any), President or a
Vice President shall cause to be issued to each stockholder one or more
certificates, under the seal of the Corporation or a facsimile thereof if the
Board of Directors shall have provided for such seal, and signed by the Chairman
of the Board (if any), President or a Vice President and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer certifying the
number of shares (and, if the stock of the Corporation shall be divided into
classes or series, the class and series of such shares) owned by such
stockholder in the Corporation; provided, however, that any of or all the
signatures on the certificate may be facsimile. The stock record books and the
blank stock certificate books shall be kept by the Secretary, or at the office
of such transfer agent or transfer agents as the Board of Directors may from
time to time by resolution determine. In case any officer, transfer agent or
registrar who shall have signed or whose facsimile signature or signatures shall
have been placed upon any such certificate or certificates shall have ceased to
be such officer, transfer agent or registrar before such certificate is issued
by the Corporation, such certificate may nevertheless be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent or registrar at the date of issue. The stock certificates shall be
consecutively numbered and shall be entered in the books of the Corporation as
they are issued and shall exhibit the holder's name and number of shares.
SECTION 2. TRANSFER OF SHARES. The shares of stock of the Corporation
shall be transferable only on the books of the Corporation by the holders
thereof in person or by their duly authorized attorneys or legal representatives
upon surrender and cancellation of certificates for a like number of shares.
Upon surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
SECTION 3. OWNERSHIP OF SHARES. The Corporation shall be entitled to
treat the holder of record of any share or shares of capital stock of the
Corporation as the holder in fact thereof and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Delaware.
SECTION 4. REGULATIONS REGARDING CERTIFICATES. The Board of Directors
shall have the power and authority to make all such rules and regulations as
they may deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
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SECTION 5. LOST OR DESTROYED CERTIFICATES. The Board of Directors may
determine the conditions upon which a new certificate of stock may be issued in
place of a certificate which is alleged to have been lost, stolen or destroyed;
and may, in their discretion, require the owner of such certificate or his legal
representative to give bond, with sufficient surety, to indemnify the
Corporation and each transfer agent and registrar against any and all losses or
claims which may arise by reason of the issue of a new certificate in the place
of the one so lost, stolen or destroyed.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall be
such as established from time to time by the Board of Directors.
SECTION 2. CORPORATE SEAL. The Board of Directors may provide a
suitable seal, containing the name of the Corporation. The Secretary shall have
charge of the seal (if any). If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and used by the
Treasurer or by the Assistant Secretary or Assistant Treasurer.
SECTION 3. NOTICE AND WAIVER OF NOTICE. Whenever any notice is
required to be given by law, the Certificate of Incorporation or under the
provisions of these bylaws, said notice shall be deemed to be sufficient if
given (i) by telegraphic, cable or wireless transmission or (ii) by deposit of
the same in a post office box in a sealed prepaid wrapper addressed to the
person entitled thereto at his post office address, as it appears on the records
of the Corporation, and such notice shall be deemed to have been given on the
day of such transmission or mailing, as the case may be.
Whenever notice is required to be given by law, the Certificate of
Incorporation or under any of the provisions of these bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the Certificate of Incorporation
or the bylaws.
SECTION 4. RESIGNATIONS. Any director, member of a committee or
officer may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein, or if no time be specified, at
the time of its receipt by the chief executive officer or Secretary. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.
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SECTION 5. FACSIMILE SIGNATURES. In addition to the provisions for the
use of facsimile signatures elsewhere specifically authorized in these bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors.
SECTION 6. RELIANCE UPON BOOKS, REPORTS AND RECORDS. Each director and
each member of any committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officers, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any such committee, or in
relying in good faith upon other records of the Corporation.
ARTICLE IX
AMENDMENTS
If provided in the Certificate of Incorporation of the Corporation, the
Board of Directors shall have the power to adopt, amend and repeal from time to
time bylaws of the Corporation, subject to the right of the stockholders
entitled to vote with respect thereto to amend or repeal such bylaws as adopted
or amended by the Board of Directors.
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Exhibit 3.17
CERTIFICATE OF INCORPORATION
OF
DOOR HOLDINGS, INC.
ARTICLE ONE
The name of this Corporation (hereinafter called the "Corporation") is
Door Holdings, Inc.
ARTICLE TWO
The address, including street, number, city and county, of the
registered office of the Corporation in the State of Delaware is 1209 Orange
Street, in the City of Wilmington, County of New Castle, 19801. The name of the
registered agent of the Corporation in the State of Delaware at such address is
The Corporation Trust Company.
ARTICLE THREE
The nature of the business and the purposes to be conducted and
promoted by the Corporation is to conduct any lawful business, to promote any
lawful purpose and to engage in any lawful act or activity for which a
corporation may be organized under the General Corporation Law of the State of
Delaware.
ARTICLE FOUR
The Corporation shall have authority, to be exercised by its Board of
Directors, to issue 1000 shares of capital stock with a par value of $.01 per
share, all of which shall be of the same class and designated "Common Stock".
ARTICLE FIVE
The number of directors which shall constitute the whole Board of
Directors of the Corporation shall be determined pursuant to the By-Laws of the
Corporation as provided therein. Elections of directors need not be by written
ballot.
ARTICLE SIX
In furtherance and not in limitation of the powers conferred by
statute and in accordance with any relevant provisions of the By-Laws, the Board
of Directors is expressly authorized to adopt, amend or repeal the By-Laws of
the Corporation.
ARTICLE SEVEN
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
<PAGE>
ARTICLE EIGHT
The Corporation shall indemnify all directors and officers of the
Corporation, to the full extent permitted by the General Corporation Law of the
State of Delaware and as provided in the By-Laws of the Corporation, from and
against any and all expenses, liabilities or other matters. The Corporation may
indemnify, to the full extent permitted by the General Corporation Law of the
State of Delaware and as provided in the By-laws of the Corporation, any and all
persons whom it shall have the power to indemnify from and against any and all
expenses, liabilities or other matters.
ARTICLE NINE
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article Nine
shall not eliminate or limit the liability of a director (i) for any breach of
such director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of Title 8 of the General
Corporation Law of the State of Delaware or (iv) for any transaction from which
such director derived an improper personal benefit. If the General Corporation
Law of the State of Delaware is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the full
extent permitted by the General Corporation Law of the State of Delaware, as so
amended. No amendment to or repeal of this Article Nine shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring at the time of or prior to such amendment or repeal. Any repeal or
modification of this Article Nine shall not adversely affect any right or
protection of a director of the Corporation existing under this Certificate of
Incorporation.
ARTICLE TEN
The name and mailing address of the incorporator is Elizabeth H. Noe,
c/o Paul, Hastings, Janofsky & Walker LLP, 600 Peachtree Street, Suite 2400,
Atlanta, Georgia 30308.
IN WITNESS WHEREOF, the undersigned, being the sole incorporator, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, does hereby make this certificate declaring and
certifying that this is the act and deed of the undersigned and the facts herein
stated are true and, accordingly, has executed this certificate the 10th day of
December, 1997.
/s/ Elizabeth H. Noe
--------------------------------
Elizabeth H. Noe
Sole Incorporator
-2-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DOOR HOLDINGS, INC.
Door Holdings, Inc., a Delaware corporation, pursuant to Section 241
of the General Corporation Law of Delaware, certifies that:
FIRST: The corporation's Board of Directors have adopted the
following resolution amending the corporation's Certificate of Incorporation:
The Board of Directors resolves to increase the number of shares of
authorized capital stock of the Corporation from 1000 shares with a
par value of $.01 per share, as set forth in Article Four of the
Certificate of Incorporation, to 100,000 shares of capital stock with
a par value of $.01 per share, all of which shall be of the same class
and designated "Common Stock".
SECOND: The corporation was originally incorporated on December 10,
1997 and as of the date hereof has no stockholders.
THIRD: The foregoing amendment to the Certificate of Incorporation
has been duly adopted in accordance with the provisions of Section 241 of the
General Corporation Law of Delaware.
<PAGE>
IN WITNESS WHEREOF, Door Holdings, Inc. has caused this Certificate to
be signed and attested by its duly authorized officers this 7th day of
January, 1998.
/s/ D. Morley
----------------------------------
By D. Morley
-------------------------------,
President
ATTEST:
/s/ James G. Turner
- ---------------------------,
Secretary
2
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CERTIFICATE OF AMENDMENT NO. 2
TO
CERTIFICATE OF INCORPORATION
OF
DOOR HOLDINGS, INC.
Door Holdings, Inc., a Delaware corporation (the "Corporation"),
pursuant to Section 242 of the General Corporation Law of Delaware, certifies
that:
FIRST: The Corporation's Board of Directors have adopted the
following resolution amending the Corporation's Certificate of Incorporation:
RESOLVED, to increase the number of shares of authorized capital stock of
the Corporation from 100,000 shares with a par value of $.01 per share, as
set forth in Article Four of the Certificate of Incorporation of the
Corporation, as amended as of January 7, 1998, to 125,000 shares of capital
stock with a par value of $.01 per share, all of which shall be of the same
class and designated "Common Stock".
SECOND: The Corporation was originally incorporated on December 10,
1997. The Certificate of Amendment of Certificate of Incorporation of the
Corporation was filed with the Office of the Secretary of State of the State of
Delaware on January 7, 1998.
THIRD: The foregoing amendment to the Corporation's Certificate of
Incorporation has been duly adopted by the unanimous written consent of the
Board of Directors of the Corporation and by the unanimous written consent of
the holders of all of the outstanding stock of the Corporation entitled to vote,
in accordance with the provisions of Sections 141(f), 228 and 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed and attested to by its duly authorized officers this 25th day of
September 1998.
/s/ Daniel T. Morley
-------------------------------------
Daniel T. Morley
President
ATTEST:
/s/ James G. Turner
- -------------------------------
James G. Turner
Secretary
<PAGE>
CERTIFICATE OF CORRECTION TO BE FILED
TO CORRECT A CERTAIN ERROR IN THE CERTIFICATE OF AMENDMENT
NO. 2 TO CERTIFICATE OF INCORPORATION OF DOOR HOLDINGS, INC.
FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE
ON SEPTEMBER 25, 1998
Door Holdings, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
1. The name of the corporation is Door Holdings, Inc.
2. That a Certificate of Amendment No. 2 of Certificate of
Incorporation of Door Holdings, Inc. was filed by the Secretary of State of
Delaware on September 25, 1998 and that said Certificate requires correction as
permitted by Section 103 of the General Corporation Law of the State of
Delaware.
3. The inaccuracy or defect of said Certificate of to be corrected
is as follows:
the signatory of Door Holdings, Inc. as the President was
Daniel T. Morley.
4. The execution, sealing or acknowledgment of the Certificate is
corrected to read as follows:
By: /s/ Cliff Darby
-------------------
Name: Cliff Darby
Title: President
IN WITNESS WHEREOF, said Door Holdings, Inc. has caused this
Certificate to be signed by Cliff Darby, its President, this 30th day of
September, 1998.
By: /s/ Cliff Darby
---------------------
Name: Cliff Darby
Title: President
<PAGE>
Exhibit 3.18
BY-LAWS
OF
DOOR HOLDINGS, INC.
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office shall be in the City
of Wilmington, County of New Castle, State of Delaware.
Section 2. OTHER OFFICES. The corporation may also have offices at such
other places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. ANNUAL MEETINGS. Annual meetings of stockholders shall be
held at such place either within or without the State of Delaware as shall be
designated from time to time by the board of directors. If the board of
directors shall fail to fix such place, the meeting shall be held at the
principal office of the Corporation. The annual meetings shall be held on
such date and time as shall be designated from time to time by the board of
directors and stated in the notice of the meeting.
Section 2. NOTICE. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten (10) nor more than sixty
(60) days before the date of the meeting.
Section 3. STOCKHOLDER LIST. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and
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showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination
of any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
Section 4. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall be
called by the president or secretary at the request in writing of a majority
of the board of directors, or at the request in writing of stockholders
owning a majority in amount of the entire capital stock of the corporation
issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.
Section 5. NOTICE. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than ten (10) nor more than sixty
(60) days before the date of the meeting, to each stockholder entitled to
vote at such meeting. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 6. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present
or represented at any meeting of the stockholders, the majority of
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any
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business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
Section 7. VOTING. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote for each share of the capital stock of the corporation
registered in the name of such stockholder upon the books of the corporation.
Each stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. When directed by the presiding
officer or upon the demand of any stockholder, the vote upon any matter
before a meeting of stockholders shall be by ballot.
Section 8. SHAREHOLDER ACTION WITHOUT MEETING. Unless otherwise provided
in the certificate of incorporation, any action required to be taken at any
annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted. Prompt
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notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
Section 9. INSPECTORS. The Board of Directors, in advance of any meeting
of stockholders, may, but need not unless prescribed by the General
Corporation Law, appoint one or more inspectors of election to act at the
meeting or any adjournment thereof and make a written report thereof. If an
inspector or inspectors are not appointed, the person presiding at the
meeting may, but need not, appoint one or more inspectors. In case any person
who may be appointed as an inspector fails to appear or act, the vacancy may
be filled by appointment made by the directors in advance of the meeting or
at the meeting by the person presiding thereat. Each inspector, if any,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if
any, shall determine the number of shares of stock outstanding and the voting
power of each, the shares of stock represented at the meeting, the existence
of a quorum, the validity and effect of proxies, and shall count all votes
and ballots, determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by inspectors and
certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots.
Section 10. FIXING RECORD DATE. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the board of directors may
fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior
to any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting
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of stockholders shall apply to any adjournment of the meeting: provided,
however, that the board of directors may fix a new record date for the
adjourned meeting.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held; the record date for determining
stockholders entitled to express consent to corporate action in writing
without a meeting, when no prior action by the board of directors is
necessary, shall be the day on which the first signed written consent is
delivered to the corporation in accordance with applicable law; and the
record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 11. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE III
DIRECTORS
Section 1. NUMBER AND ELECTION. The number of directors which shall
constitute the whole board shall initially be two (2) and shall thereafter be
such number fixed from time to time by resolution of the board of directors.
The directors shall be elected at the annual meeting of the stockholders,
except as provided in Section 2 of this Article, and each director elected
shall hold office until his successor is elected and qualified. Directors
need not be stockholders.
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Section 2. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall
hold office until the next annual election and until their successors are
duly elected and shall qualify, unless sooner displaced. If there are no
directors in office, then an election of directors may be held in the manner
provided by statute. If, at the time of filling any vacancy or any newly
created directorship, the directors then in office shall constitute less than
a majority of the whole board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares
at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors
then in office.
Section 3. MANAGEMENT. The business of the corporation shall be managed
by or under the direction of its board of directors which may exercise all
such powers of the corporation and do all such lawful acts and things as are
not by statute or by the certificate of incorporation or by these by-laws
directed or required to be exercised or done by the stockholders.
Section 4. REMOVAL. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares
entitled to vote at an election of directors.
Section 5. MEETINGS. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. The first meeting of each newly elected board of directors shall be
held at such time and place as shall be fixed by the vote of the stockholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided
a quorum shall be present. In the event of the failure of the stockholders to
fix the time or place of such first meeting of the newly elected board of
directors, or in the event such meeting is not held at the time and place so
fixed by
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the stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of
the board of directors, or as shall be specified in a written waiver signed
by all of the directors.
Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board. Special meetings of the board may be called by the president on ten
(10) days' notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors unless
the board consists of only one director; in which case special meetings shall
be called by the president or secretary in like manner and on like notice on
the-written request of the sole director.
At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority
of the directors present at any meeting at which there is a quorum shall be
the act of the board of directors, except as may be otherwise specifically
provided by statute or by the certificate of incorporation. If a quorum shall
not be present at any meeting of the board of directors the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 6. ACTION WITHOUT MEETING. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the board of directors or of any
committee thereof may be taken without a meeting, if all members of the board
or committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of proceedings of the board or
committee.
Section 7. ELECTRONIC COMMUNICATIONS. Unless otherwise restricted by the
certificate of incorporation or these by-laws, members of the board of
directors, or any committee designated by the board of directors, may
participate in a meeting of the board of directors, or any committee, by
means of conference telephone or similar communications equipment by means of
which all
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persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Section 8. COMMITTEES. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in the
place of any such absent or disqualified member.
Any such committee, to the extent permitted by law and provided in the
resolution of the board of directors, shall have and may exercise all the
powers and authority of the board of directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
certificate of incorporation, (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the board of directors as provided in Section
151(a) fix any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation) adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or
a revocation of a dissolution, or amending the by-laws of the corporation;
and, unless the resolution or the certificate of incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize
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the issuance of stock or to adopt a certificate of ownership and merger. Such
committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors.
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
Section 9. COMPENSATION. Unless otherwise restricted by the certificate
of incorporation or these by-laws, the board of directors shall have the
authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the board of
directors and may be paid a fixed sum for attendance at each meeting of the
board of directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
ARTICLE IV
NOTICE
Section 1. NOTICES. Whenever, under the provisions of the statutes or of
the certificate of incorporation or of these by-laws, notice is required to
be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed
to such director or stockholder, at his address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram.
Section 2. WAIVER OF NOTICE. Whenever any notice is required to be given
under the provisions of the statutes or of the certificate of incorporation
or of these by-laws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
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ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the corporation shall be
chosen by the board of directors and shall be a president, a vice-president,
a secretary and a treasurer. The board of directors may also choose
additional vice-presidents, and one or more assistant secretaries and
assistant treasurers. Any number of offices may be held by the same person,
unless the certificate of incorporation or these by-laws otherwise provide.
The board of directors at its first meeting after each annual meeting of
stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
The board of directors may appoint such other officers and agents as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time
to time by the board.
The salaries of all officers and agents of the corporation shall be
fixed by the board of directors.
The officers of the corporation shall hold office until their successors
are chosen and qualify. Any officer elected or appointed by the board of
directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors. In addition to the
powers and duties of the officers of the corporation as set forth in these
by-laws, the officers shall have such authority and shall perform such duties
as from time to time may be determined by the Board of Directors.
Section 2. PRESIDENT. The president shall be the chief executive officer
of the corporation, shall preside at all meetings of the stockholders and the
board of directors, shall have general and active management of the business
of the corporation and shall see that all orders and resolutions of the board
of directors are carried into effect.
He shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by law
to be otherwise signed and executed and
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except where the signing and execution thereof shall be expressly delegated
by the board of directors to some other officer or agent of the corporation.
Unless otherwise ordered by the board of directors, the president shall
have full power and authority on behalf of the corporation to attend and to
act and to vote, or in the name of the corporation to execute proxies to
vote, at any meeting of stockholders of any corporation in which the
corporation may hold stock, and at any such meeting shall possess and may
exercise, in person or by proxy, any and all rights, powers and privileges
incident to the ownership of such stock. The board of directors may from time
to time, by resolution, confer like powers upon any other person or persons.
Section 3. VICE PRESIDENT(S). In the absence of the president or in the
event of his inability or refusal to act, the vice-president (or in the event
there be more than one vice-president, the vice-presidents in the order
designated by the directors, or in the absence of any designation, then in
the order of their election) shall perform the duties of the president, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-presidents shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
Section 4. SECRETARY AND ASSISTANT SECRETARY. The secretary shall attend
all meetings of the board of directors and all meetings of the stockholders
and record all the proceedings of the meetings of the corporation and of the
board of directors in a book to be kept for that purpose and shall perform
like duties for the standing committees when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and special
meetings of the board of directors, and shall perform such other duties as
may be prescribed by the board of directors or president, under whose
supervision he shall be. He shall have custody of the corporate seal of the
corporation and he, or an assistant secretary, shall have authority to affix
the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary.
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The board of directors may give general authority to any other officer to
affix the seal of the corporation and to attest the affixing by his signature.
The assistant secretary, or if there be more than one, the assistant
secretaries in the order determined by the board of directors (or if there be
no such determination, then in the order of their election) shall, in the
absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may
from time to time prescribe.
Section 5. TREASURER AND ASSISTANT TREASURERS. The treasurer shall have
the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the
name and to the credit of the corporation in such depositories as may be
designated by the board of directors.
The treasurer or assistant treasurer shall disburse the funds of the
corporation as may be ordered by the board of directors, taking proper
vouchers for such disbursements, and shall render to the president and the
board of directors, at its regular meetings, or when the board of directors
so requires, an account of all his transactions as treasurer and of the
financial condition of the corporation.
If required by the board of directors, the treasurer or assistant
treasurer shall give the corporation a bond (which shall be renewed every six
years) in such sum and with such surety or sureties as shall be satisfactory
to the board of directors for the faithful performance of the duties of his
office and for the restoration to the corporation, in case of death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or
under his control belonging to the corporation.
The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall,
in the absence of the treasurer or in the event of his inability or refusal
to act,
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perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may
from time to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. CERTIFICATES. The shares of the corporation shall be
represented by a certificate or shall be uncertificated. Certificates shall
be signed by, or in the name of the corporation by, the chairman or
vice-chairman of the board of directors, or the president or a vice-president
and the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the registered owner
thereof a written notice containing the information required to be set forth
or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or
a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and
relative participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions
of such preferences and/or rights.
Section 2. SIGNATURES. Any of or all the signatures on a certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
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All certificates for shares of stock shall be consecutively numbered as
the same are issued. The name of the person owning the shares represented
thereby with the number of such shares and the date of issue thereof shall be
entered on the books of the corporation.
Section 3. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates or uncertificated shares to be issued in place of
any certificate or certificates theretofore issued by the corporation alleged
to have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed, setting forth to the best of his knowledge and belief the time,
place, and circumstances for the loss, theft or destruction. When authorizing
such issue of a new certificate or certificates or uncertificated shares, the
board of directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the
same in such manner as it shall require and/or to give the corporation a bond
in such sum as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. TRANSFER. Except as hereinafter provided, all certificates
surrendered to the corporation for transfer shall be canceled, and no new
certificates shall be issued until former certificates for the same number of
shares have been surrendered and canceled.
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall
be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books. Upon receipt of proper transfer instructions from the registered
owner of uncertificated shares such uncertificated shares shall be canceled
and issuance of new equivalent uncertificated shares or certificated shares
shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the corporation.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation,
if any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Before payment of any dividend, there may be set aside out of any funds
of the corporation available for dividends such sum or sums as the directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or for such other purpose as
the directors shall think conducive to the interest of the corporation, and
the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. ANNUAL STATEMENT. The board of directors shall present at
each annual meeting, and at any special meeting of the stockholders when
called for by vote of the stockholders, a full and clear statement of the
business and condition of the corporation.
Section 3. CHECKS. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person
or persons as the board of directors may from time to time designate.
Section 4. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 5. SEAL. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
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ARTICLE VIII
INDEMNIFICATION
The Corporation, to the full extent permitted by law, shall indemnify
any director or officer of the Corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
in nature (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding and/or the defense
or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Corporation and, with respect to criminal actions, had no reasonable
cause to believe his conduct was unlawful.
The Corporation, to the full extent permitted by law, shall indemnify
any director or officer of the Corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding by or in the right of the Corporation to procure judgment
in its favor by reason of the fact that such person is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged liable to the Corporation unless and only to the extent that a court
in which such action is brought determines that such person is fairly and
reasonably entitled to indemnity.
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To the extent that a director or officer of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in the preceding paragraph, or in defense of any
claim, issue or matter therein, and the Corporation shall not previously have
reimbursed or paid for all such expenses, such person shall be indemnified
against expenses (including attorneys' fees and disbursements) actually and
reasonably incurred by such person in connection therewith.
Expenses (including attorneys' fees) incurred by a director or officer
in defending any civil, criminal, administrative or investigative action,
suit or proceeding shall by paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that such director is not entitled to be indemnified
by the Corporation against such expenses as authorized by this Article.
The indemnification and advancement of expenses permitted by this
Article shall not be deemed exclusive of any other rights to which any person
may be entitled under any agreement, or by virtue of vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding an
office, and shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such person.
ARTICLE IX
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws may be
adopted by the stockholders or by the board of directors, when such power is
conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at
any special meeting of the stockholders or of the board of directors if
notice of such alteration, amendment, repeal or adoption of new by-laws be
contained in the notice of such
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special meeting. If the power to adopt, amend or repeal by-laws is conferred
upon the board of directors by the certificate of incorporation it shall not
divest or limit the power of the stockholders to adopt, amend or repeal
by-laws.
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Exhibit 3.19
ARTICLES OF INCORPORATION
OF
THREE D INVESTMENT, INC.
TO THE JUDGE OF LAUDERDALE COUNTY, ALABAMA;
The undersigned, R. G. Darby, who is over the age of twenty-one (21)
years, desires to organize a body corporate under the laws of the State of
Alabama, and hereby signs and files these Articles of Incorporation as follows:
ARTICLE I
NAME
The name of the Corporation is:
Three D Investment, Inc.
ARTICLE II
PURPOSE
The nature of the business and the objects and purposes to be
transacted, promoted and carried on by the Corporation are to do any and all
things herein mentioned as fully and to the same extent as natural persons might
or could do, and in any part of the world, viz:
(1) Primarily, to purchase, own, and hold the stock of other
corporations, and to do every act and thing covered generally by the
denomination "holding corporation," and especially to direct the operations of
other corporations through the ownership of stock therein; to purchase,
subscribe for, acquire, own, hold, sell, exchange, assign, transfer, create
security interests in, pledge, or otherwise dispose of shares or voting trust
certificates for shares of the capital stock, or any bonds, notes, securities,
or evidences of indebtedness created by any other corporation or corporations
organized under the laws of this state or any other state or district or
country, nation, or government and also bonds or evidences of indebtedness of
the United States or of any state, district, territory, dependency or country or
subdivision or municipality thereof; to issue in exchange therefor shares of the
capital stock, bonds, notes, or other obligations of the Corporation and while
the owner thereof to exercise all the rights, powers, and privileges of
ownership including the right to vote on any shares of stock or voting trust
<PAGE>
certificates so owned; to promote, lend money to, and guarantee the dividends,
stocks, bonds, notes, evidences of indebtedness, contracts, or other obligations
of, and otherwise aid in any manner which shall be lawful, any corporation or
association of which any bonds, stocks, voting trust certificates, or other
securities or evidences of indebtedness shall be held by or for this
Corporation, or in which, or in the welfare of which, this Corporation shall
have any interest, and to do any acts and things permitted by law and designed
to protect, preserve, improve, or enhance the value of any bonds, stocks, or
other securities or evidences of indebtedness or the property of this
Corporation.
(2) To manufacture, purchase, lease, or otherwise acquire, and to
hold, own, mortgage, pledge, sell, transfer, or in any manner dispose of, and to
deal and trade in and with goods, wares, fixtures, merchandise and personal
property and all articles of commerce of every class and description, wherever
situated.
(3) To purchase, acquire, hold, own, mortgage, sell, convey, lease,
or otherwise deal in real and personal property of every class and description
in any state, district, territory, colony, or foreign country, subject to the
laws of each state, district, territory, colony or foreign country.
(4) To acquire the good will, rights and property, the whole or any
part of the assets, tangible or intangible, and to undertake or assume the whole
or any part of the liabilities of any person, firm, association or corporation;
to pay for the same in cash or the stock or other securities of the Corporation,
or by undertaking or assuming the obligations and liabilities of the transferor,
or otherwise; to hold, or in any manner dispose of the whole or any part of the
property so acquired, and to exercise all the powers necessary in management of
any such business.
(5) To borrow or raise money for any of the purposes of the
Corporation, without limit as to amount, and in connection therewith to grant
collateral or other security either alone, or jointly with any other person,
firm or corporation, by mortgage, pledge, deed of trust, or otherwise, and to
make, execute, draw, accept, endorse, discount, pledge, issue, sell or otherwise
dispose of warrants, promissory notes, drafts, bills of exchange, bonds,
debentures and other evidences of indebtedness, negotiable or non-negotiable,
transferable or non-transferable and to confer upon the holders of any of its
obligations such powers, rights and privileges as from time to time may be
deemed advisable by the Board of Directors, to the extent permitted under the
general corporation law of the State of Alabama; to lend and advance money,
either with or without security, to extend credit, take notes, open accounts and
every kind and nature of evidence of indebtedness and collateral security in
connection therewith.
(6) To endorse, guarantee, and secure the payment and satisfaction
of bonds, coupons, mortgages, deeds of trust, debentures, securities,
obligations and
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evidences of indebtedness, and also to guarantee and secure the payment or
satisfaction of interest on obligations and of dividends on shares of the
capital stock of other corporations; also to assume and guarantee the whole
or any part of the liabilities, existing, or prospective, of any other
person, corporation, firm or association, including without limitation any
employee, officer, director or shareholder of the Corporation, or any person
who may have served at its request as a director or officer of another
corporation; and to aid in any manner any other person or corporation with
which it has business dealings, or whose stocks, bonds, or other obligations
are held or are in any manner guaranteed by the Corporation, and to do any
other acts and things for the preservation, protection, improvement or
enhancement of the value of such stock, bonds, or other obligations.
(7) To acquire by purchase, subscription or otherwise, and to
receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge, hypothecate or otherwise dispose of or deal in and with any of the
shares of the capital stock, or any voting trust certificates in respect to the
shares of capital stock, script, warrants, rights, bonds, debentures, notes,
trust receipts, and other securities, obligations, mortgages, choses in action
and evidences of indebtedness issued or created by any corporations, joint stock
companies, syndicates, associations, firms, trusts or persons, public or
private, or by the government of the United States of America, or by any foreign
government, or by any state, territory, province, municipality or other
political subdivision or by any governmental agency, and covering any kind,
description or character of real or personal property, and as owner thereof to
possess and exercise all the rights, powers and privileges of ownership,
including the right to execute consents and vote thereon, and to do any and all
acts and things necessary or advisable for the preservation, protection,
improvement, and enhancement in value thereof.
(8) To borrow or raise money for any of the purposes of the
Corporation, without limit as to amount, and in connection therewith to grant
collateral or other security either alone, or jointly with any other person,
firm or corporation, by mortgage, pledge, deed of trust, or otherwise, and to
make, execute, draw, accept, endorse, discount, pledge, issue, sell or otherwise
dispose of warrants, promissory notes, drafts, bills of exchange, bonds,
debentures and other evidences of indebtedness, negotiable or non-negotiable,
transferable or non-transferable and to confer upon the holders of any of its
obligations such powers, rights and privileges as from time to time may be
deemed advisable by the Board of Directors, to the extent permitted under the
general corporation law of the State of Alabama; to lend and advance money,
either with or without security, to extend credit, take notes, open accounts and
every kind and nature of evidence of indebtedness and collateral security in
connection therewith.
(9) To endorse, guarantee, and secure the payment and satisfaction
of bonds, coupons, mortgages, deeds of trust, debentures, securities,
obligations and
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evidences of indebtedness, and also to guarantee and secure the payment or
satisfaction of interest on obligations and of dividends on shares of the
capital stock of other corporations; also to assume and guarantee the whole
or any part of the liabilities, existing, or prospective, of any other
person, corporation, firm or association, including without limitation any
employee, officer, director or shareholder of the Corporation, or any person
who may have served at its request as a director or officer of another
corporation; and to aid in any manner any other person or corporation with
which it has business dealings, or whose stocks, bonds, or other obligations
are held or are in any manner guaranteed by the Corporation, and to do any
other acts and things for the preservation, protection, improvement or
enhancement of the value of such stock, bonds, or other obligations.
(10) To acquire by purchase, subscription or otherwise, and to
receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge, hypothecate or otherwise dispose of or deal in and with any of the share
of the capital stock, or any voting trust certificates in respect to the shares
of capital stock, script, warrants, rights, bonds, debentures, notes, trust
receipts, and other securities, obligations, mortgages, choses in action and
evidences of indebtedness issued or created by any corporation, joint stock
companies, syndicates, associations, firms, trusts or persons, public or
private, or by the government of the United States of America, or by any foreign
government, or by any state, territory, province, municipality or other
political subdivision or by any governmental agency, and covering any kind,
description or character of real or personal property, and as owner thereof to
possess and exercise all the rights, powers and privileges of ownership,
including the right to execute consents and vote thereon, and to do any and all
acts and things necessary or advisable for the preservation, protection,
improvement, and enhancement in value thereof.
(11) To acquire by lease, purchase, gift, devise, contract,
concession, or otherwise, and to hold, own, develop, explore, exploit, improve,
operate, lease, sublease, enjoy, control, manage or otherwise turn to account,
mortgage, grant, sell, exchange, convey or otherwise dispose of, wherever
situated within or without the State of Alabama, any and all real estate, lands,
options, concessions, grants, land patents, franchises, rights, privileges,
easements, tenements, estate, hereditaments, interest, and properties of every
kind, nature and description whatsoever.
(12) To adopt, apply for, obtain, register, produce, take, purchase,
exchange, lease, hire, acquire, secure, own, hold, use, operate, contract or
negotiate for, take licenses or other rights in respects of, sell, assign,
collect the royalties on, mortgage, pledge, create liens upon, or otherwise
dispose of, deal in and turn to account, letters patent, patents, patent rights,
patents applied for, or to be applied for, trademarks and indications of origin
or ownership, copyrights, syndicate rights, inventions, discoveries, devices,
machines, improvements, licenses, processes, date and formulae of any and all
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kinds granted by or recognized under or pursuant to the laws of the United
States of America, or of any state thereof, or of any other country or countries
whatsoever, and with a view to the working and development of the same, to carry
on any business, whether manufacturing or otherwise, which the Corporation may
think calculated, directly or indirectly, to effectuate these objects.
(13) To purchase, hold, sell and reissue shares of its own capital
stock and other securities issued by it from time to time; and in that
connection, to purchase shares of stock issued by it to the extent of capital
surplus or any other type of surplus available therefor.
(14) To enter into, make and perform contacts of every kind and
description with any person, firm, association or corporation, municipality,
body politic, country, territory, state, government or colony dependency
thereof.
(15) To have one or more offices to carry on all of its operations
and businesses without restriction or limit as to amount, both within and
without this state, other states, districts, territories, possessions, or
colonies of the United States, and in any and all foreign countries, in any
lawful manner.
(16) To carry on any other business in connection with the
foregoing.
(17) To organize, incorporate and reorganize subsidiary
corporations, joint stock companies, and associations for any purpose permitted
by law.
IN GENERAL, to do any and all things hereinbefore set forth and such
other things as are incidental or conducive to the attainment of the objects and
purposes of this Corporation as principal, factor, agent, contractor, or
otherwise, either alone or in conjunction with, as partner or otherwise any
person, firm, association, corporation, or any entity of whatsoever kind, and to
do such acts and things and to exercise any and all such powers to the full
extent authorized or permitted to a corporation under any laws that may be now
or hereafter applicable or available to this Corporation, provided, however,
that the Corporation shall not engage in the business of insurance, banking or
that of a trust company.
It is the intention that each of the objects, purposes and powers
specified in each of the paragraphs of this Article II of these Articles of
Incorporation shall be in nowise limited or restricted by reference to or
inference from the terms of any other paragraph or of any other Article in these
Articles and each of the Articles or paragraphs of these Articles shall be
regarded as independent objects, purposes and powers, and the enumeration of
specific purposes and powers shall not be construed to restrict in any
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manner the general terms and laws of the State of Alabama, nor shall the
expression of one thing be deemed to exclude another, although it be of like
nature.
ARTICLE III
PERIOD OF DURATION
The period of duration of the Corporation shall be perpetual.
ARTICLE IV
INITIAL REGISTERED OFFICE AND AGENT
The Corporation's initial registered office and mailing address shall
be 3110 Kendall Dr., Florence, Alabama 35630. The registered agent at said
address shall be R. G. Darby.
ARTICLE V
CAPITAL
The total authorized capital stock of the Corporation is 1,000 shares
of common stock with a par value of $1.00 per share.
ARTICLE VI
INCORPORATOR
The name and address of the incorporator is as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
- ---- -------
<S> <C>
R. G. Darby 3110 Kendall Drive
Florence, Alabama 35630
</TABLE>
6
<PAGE>
ARTICLE VII
DIRECTORS
The name and address of the first director of the Corporation is as
follows:
<TABLE>
<CAPTION>
NAME ADDRESS
- ---- -------
<S> <C>
R. G. Darby 3110 Kendall Drive
Florence, Alabama 35630
</TABLE>
The shareholders of the Corporation shall have the right, at any
regular or special meeting of the shareholders, to remove any or all of the
directors, with or without cause, and shall have the right at the same meeting
to fill any vacancy created by such removal.
In furtherance, not in limitation, of the powers conferred upon the
Board of Directors, said Board of Directors is expressly authorized, without any
vote or other action by shareholders other than such as at the time shall be
expressly required by statute applicable to such action or by these Articles of
Incorporation, to exercise all of the powers, rights, and privileges of the
Corporation and do all acts and things which may be done by the Corporation, and
particularly among other things:
(a) In the interval, between meetings of the shareholders, to make,
alter and repeal By-Laws of the Corporation not inconsistent with these Articles
of Incorporation, subject to the power of the shareholders to alter and repeal
By-Laws made by the Board of Directors, which action by the directors shall
fully protect third parties in dealing with the Corporation during any such
interval;
(b) To determine whether any, and if any, what part of the surplus
of the Corporation available for distribution as dividends shall be declared and
paid in dividends to the shareholders, and whether or not in cash or capital
stock of the Corporation or in any other property, and generally to determine
and direct the use and disposition of any such surplus; and to fix the times for
the declaration and payment of dividends;
(c) From time to time, to fix the amount to be reserved over and
above the stated capital of the Corporation and to determine and direct how
amounts so reserved shall be used;
(d) From time to time, and without limit as to amount, to borrow or
otherwise raise money for any of the purposes of the Corporation; to authorize
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the issuance of bonds, debentures, notes or other obligations of the
Corporation, of any nature, or in any manner, and to authorize the creation of
mortgages upon, or the pledge or conveyance or assignment in trust of, the whole
or any part of the property of the Corporation, real or personal, whether at the
time owned or thereafter acquired, including contract rights, to secure the
payment of any such bonds, debentures, notes or other obligations or the
interest thereon; and to authorize the sale or pledge or other disposition of
such bonds, debentures, notes, or other obligations of the Corporation for its
corporate purposes;
(e) To provide, subject to the requirements of law, these Articles
of Incorporation and the By-Laws of the Corporation, for the holding of
stockholders' and directors' meetings within or without the State of Alabama at
such place of places as may from time to time be designated by resolution of the
Board of Directors, and to provide for an office or offices and for the keeping
of the books of the Corporation (subject to the provisions of any applicable
statutes) within or without the State of Alabama;
(f) To take any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof without a meeting,
if prior to such action a written consent thereto is signed by all members of
the Board or of such committee, as the case may be, and if such written consent
is filed with the minutes of proceedings of the Board or committee.
ARTICLE VIII
NON-LIABILITY OF SHAREHOLDERS FOR CORPORATE DEBT
The shareholders shall not be personally liable for the payment of the
Corporation's debts and obligations to any extent whatsoever.
ARTICLE IX
CONTRACTS
No contract or other transaction between the Corporation and any other
corporation, whether or not a majority of the shares of the capital stock of
such other corporation is owned by the Corporation, and no act of the
corporation shall in any way be affected of invalidated by the fact that any of
the directors, officers, or shareholders of the Corporation are pecuniarily or
otherwise interested in, or are directors or officers of, such other
corporation; and any director, individually, or any firm of which such director
may be a member, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the Corporation, and all officers,
directors and agents of the Corporation are relieved from any liability that
might arise by reason of contracting with
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the Corporation for the benefit of themselves or any business entity in which
they are interested. Such interested officers, directors or shareholders
shall be counted in determining whether a quorum exists at any meeting, with
like force and effect as if they were not such officers or directors of such
other corporation, or not so interested.
ARTICLE X
INDEMNIFICATION
The Corporation shall reimburse and indemnify any and all of its
directors or officers or former officers or any person who may have served at
its request as a director or officer of another corporation in which it owns
shares of capital stock or of which it is a creditor against expenses, including
attorney's fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any action, suit or proceeding to
the extent permitted by Section 10-2A-21 of the Alabama Business Corporation
Act, or as it may hereafter be amended. Such indemnification shall not be
deemed exclusive of any other rights to which one so indemnified may be entitled
under any applicable laws, By-Laws, agreements, vote of shareholders, or
otherwise.
ARTICLE XI
PREEMPTIVE RIGHTS
Shareholders shall have preemptive rights.
ARTICLE XII
MISCELLANEOUS
All heading and captions are for reference only and are not to be
construed as part of the Articles. Throughout these Articles the masculine
gender shall be deemed to include the feminine gender and the singular shall be
deemed to include the plural, and vice-versa, whenever the context admits such
construction.
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IN WITNESS WHEREOF, the undersigned incorporator hereunto subscribes
his signature to these Articles of Incorporation, effective this the 30th day of
December, 1985.
WITNESSES:
/s/ Conrad C. Pitts /s/ R.G. Darby
- ---------------------------- ---------------------------------
R.G. Darby
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<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF THREE D INVESTMENT, INC.
Pursuant to the provisions of Section 10-2A-113 of the Code of Alabama, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Three D Investment, Inc.
SECOND: The following amendment of the Articles of Incorporation were adopted
by the shareholders of the corporation of January 2, 1991, in the manner
prescribed by the Alabama Business Corporation Act:
RESOLVED, that the corporation known as Three D Investment, Inc.
shall hereby amend its Articles of Incorporation and change its name
to R.G. Darby Company, Inc.; and
RESOLVED, FURTHER, that Article I of the articles of Incorporation
of Three Investment, Inc. shall be deleted in its entirety and the
following Articles shall be substituted in lieu thereof:
ARTICLE I
The name of the corporation is:
R.G. DARBY COMPANY, INC.
RESOLVED, FURTHER, that the Articles of Incorporation, as amended,
are hereby ratified and confirmed.
Dated: January 2, 1991.
THREE D INVESTMENT, INC.
By: /s/ R.G. Darby
-------------------------------
R.G. Darby, Its President
and /s/ R.G. Darby
-------------------------------
R.G. Darby, its Secretary
<PAGE>
STATE OF ALABAMA )
)
LAUDERDALE COUNTY )
I, the undersigned authority, a Notary Public in and for said County and
State, hereby certify that R.G. Darby, whose name as President and Secretary of
three D Investment, Inc., a corporation, is signed to the foregoing instrument,
and who is known to me, acknowledged before me on this day that, being informed
of the contents of this instrument, he, as such officer, and with full
authority, executed the same voluntarily for and as the act of said corporation.
Given under my hand and official seal, this 2nd day of January, 1991.
/s/ Conrad C. Pitts
----------------------------------
Notary Public
My commission expires: 06/20/92
------------
<PAGE>
Exhibit 3.20
BY-LAWS OF
THREE D INVESTMENT, INC.
ARTICLE I
OFFICES
(1) PRINCIPAL OFFICE. The principal office of the Corporation shall be
located in Florence, Lauderdale County, Alabama. The board of directors may, by
resolution, change the location of this office from time to time.
(2) OTHER OFFICES. The Corporation may have other offices, either
within or outside of the State of Alabama, at such place or places as the board
of directors may from time to time appoint or the business of the Corporation
may require.
ARTICLE II
SEAL
The corporate seal shall be in circular form and shall have inscribed
thereon the name of the Corporation, the words "Corporate Seal," and such other
word or words, if any, as may be determined by the board of directors to be
inscribed thereon.
ARTICLE III
MEETINGS OF STOCKHOLDERS
(1) PLACE OF MEETING. All meetings of the shareholders shall be held
at the offices of the Corporation in Alabama, or at such other place of places
as may be designated by the board of directors.
(2) ANNUAL MEETINGS. The annual meeting of the shareholders for the
election of directors and for the transaction of such other business as may
come before the meeting shall be held on the third week in January each year,
commencing with the year 1987, if not a legal holiday under the laws of the
state where such meeting is to be held, and if a legal holiday under the laws
of said state, then on the next succeeding business day, at such hour as may
be named in the notice of said meeting. If for any reason any annual meeting
shall not be held on the day designated herein, or at any adjournment of such
meeting, the board of directors shall cause the election to be held at a
special meeting called and held as soon thereafter as convenient and
practicable. At such special meeting the shareholders may elect the directors
and transact other business with the same force and effect as at an annual
meeting duly called and held.
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(3) SPECIAL MEETINGS. A special meeting of the shareholders for any
purpose or purposes, unless otherwise prescribed by statute, may be called at
any time by the president, the chairman of the board of directors, the
executive committee, by order of the board of directors or by a shareholder
or shareholders holding of record at least ten percent (10%) of the
outstanding capital stock of any class of the Corporation entitled to vote at
such meeting.
(4) NOTICE OF MEETING. Except as otherwise provided by statute,
notice of each meeting of the shareholders, whether annual or special, shall
be given not less than ten (10) nor more than fifty (50) days before the day
on which the meeting is to be held to each shareholder of record entitled to
vote at such meeting by delivering a written or printed notice thereof to him
personally, or by mailing such notice in a postage prepaid envelope addressed
to him at his post office address furnished by him to the secretary of the
Corporation for such purpose, or, if he shall not have furnished to the
secretary of the Corporation his address for such purpose, then at the post
office address, if any, as the same appears upon the stock record books of
the Corporation or at his post office address last known to the secretary of
the Corporation or by transmitting a notice wireless. Except where expressly
required by law, no publication of any notice of such a meeting of
shareholders shall be required. Every such notice shall state the place, day
and hour of the meeting but need not state the purposes thereof, except for
special meeting or as otherwise in these by-laws or by statute expressly
provided or required. Notice of any meeting of shareholders shall not be
required to be given to any shareholder who shall attend such meeting in
person or by proxy; and if any shareholder shall, in person or by attorney
thereunder authorized, in writing or by telegraph, cable, radio or wireless,
waive notice of any meeting, whether before or after such meeting be held,
notice thereof need not be given to him. Notice of any adjourned meeting of
the shareholders shall not be required to be given, except when expressly
required by law.
(5) ORGANIZATION. At every meeting of the shareholders, the
president, or in his absence, the chairman of the board, or in his absence, a
vice president, or in the absence of all of the foregoing officers, a
chairman chosen by the shareholders present in person or by proxy and
entitled to vote thereat, by a majority vote, shall act as chairman. The
secretary, or in his absence, an assistant secretary, shall act as secretary
at all meetings of the shareholder. In the absence from any such meeting of
the secretary and the assistant secretaries, the chairman may appoint any
person to act as secretary of the meeting.
(6) BUSINESS AND ORDER OF BUSINESS. At each meeting of the
shareholders such business may be transacted as may properly be brought before
such meeting, whether or not such business is stated in the notice of such
meeting or in a waiver of notice thereof, except for special meetings or as
otherwise in these by-laws or by statute expressly provided or required. The
order of business at all meetings of the
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shareholders shall be determined by the chairman, unless the holders of a
majority of the shares of each class present in person or by proxy at such
meeting and entitled to vote thereat shall otherwise determine.
(7) QUORUM. At each meeting of the shareholders, the holders of a
majority of the shares of each class of voting shares of the Corporation
issued and outstanding and entitled to vote thereat, present either in person
or by proxy, shall constitute a quorum for the transaction of business,
except where otherwise provided by law or by the business, or by the articles
of incorporation. In the absence of a quorum, the shareholders of the
Corporation present in person or by proxy and entitled to vote, by a majority
vote, or, in the absence of all the shareholders, any officer entitled to
preside or act as secretary at such meeting, shall have the power to adjourn
the meeting from time to time, until shareholders holding the requisite
amount of shares shall be present or represented. At any such adjourned
meeting at which a quorum may be present any business may be transacted which
might have been transacted at the meeting as originally called. The absence
from any meeting of the number of shares required by the laws of the State of
Alabama, by the articles of incorporation of the Corporation or by these
by-laws for action upon any given matter shall not prevent action at such
meeting upon any other matter or matters which may properly come before the
meeting, if the number of shares required in respect of such other matter
shall be present.
(8) VOTING. At each meeting of the shareholders, each holder of
record of shares entitled to vote thereat, shall be entitled to one vote in
person or by proxy for each share of the Corporation entitled to vote so
registered in his name on the books of the Corporation: (i) on the date fixed
pursuant to Section 3 of Article VII of these by-laws as the record date for
the determination of shareholders entitled to vote at such meeting,
notwithstanding the sale, or other disposal or transfer on the books of the
Corporation of such share on or after the date so fixed; or (ii) at the date of
such meeting if no such record date shall have been fixed. Shares of its on
belonging to the Corporation shall not be voted directly or indirectly. Persons
holding in a fiduciary capacity shares having voting rights shall be entitled to
vote the shares so held, and persons whose shares having voting rights pledged
shall be entitled to vote, unless in the transfer by the pledgor on the books of
the Corporation he shall have expressly empowered the pledgee to vote thereon,
in which case only the pledgee or his proxy, may represent said shares and vote
thereon. Any vote of shares may be cast by the shareholder entitled thereto in
person or by his proxy appointed by an instrument in writing subscribed by such
shareholder or by his attorney thereunto authorized, and delivered to the
secretary of the meeting. At all meetings of the shareholders, all matters
(except in special cases where other provision is made by statute, and except as
otherwise provided in these by-laws or in the certificate of incorporation)
shall be decided by the vote of a majority in interest of the shareholders
present in person or by proxy and entitled to vote thereat, a quorum being
present. Unless required by law or demanded by a shareholder
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present in person or by proxy at any meeting and entitled to vote thereat,
the vote on any question need not be by ballot. On a vote by ballot, each
ballot shall be signed by the shareholder voting, or by his proxy, if there
be such a proxy, and shall state the number of shares voted by him.
(9) LIST OF SHAREHOLDERS. It shall be the duty of the secretary or
other officer who shall have charge of the share ledger, either directly or
through a transfer agent appointed by the board of directors, to keep and
maintain a complete list of shareholders and the number of shares standing in
their respective names. Such list shall be open to the examination of any
shareholder at the place where said list is customarily kept; provided that
such list shall be produced and kept at the time and place of any election
during the whole time thereof and subject to the inspection of any
shareholder who may be present. The original or duplicate share ledger shall
be the only evidence as to the shareholders who are entitled to examine such
list or the books of the Corporation, or to vote in person or by proxy at any
meeting of shareholders.
(10) ADDRESSES OF SHAREHOLDERS. Each shareholder shall designate to
the secretary of the Corporation, or the transfer agent appointed by the
board of directors, an address at which notice of meetings and all other
corporate notices may be served upon him by mail directed to him at his post
office address, if any, as the same appears upon the share record of the
Corporation or at his post office address last known to the secretary of the
Corporation or to the transfer agent.
ARTICLE IV
DIRECTORS
(1) POWERS. The board of directors shall exercise all the powers of
the Corporation except such as are by law, or by the articles of
incorporation of this Corporation, or by these by-laws conferred upon or
reserved to the shareholders of any class or classes and except such powers
as may be delegated to an executive committee and other committees as
provided in Article V of these by-laws.
(2) NUMBER. The board of directors shall consist of two (2)
directors.
(3) TERM OF OFFICE: VACANCIES. Each director shall be elected to
serve until the next annual meeting of shareholders and until his successor
is chosen and qualified. In case one or more vacancies shall occur in the
board of directors, whether caused by death, resignation, retirement,
disqualification or removal, successors to fill such vacancies shall be
elected either by vote of the remaining directors or by vote of the
shareholders at any regular or special meeting, and shall hold office until
the next
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annual meeting of shareholders and until their successors are chosen and
qualified. Directors need not be shareholders.
(4) REMOVAL. Any or all of the directors may be removed from
office, with or without cause, by vote of shareholders holding a majority of
all the shares of stock outstanding and entitled to vote.
(5) ELECTION OF DIRECTORS. Directors shall be elected each year at
the annual meeting of shareholders, or at the special meeting held in lieu
thereof as provided in Article III hereof.
(6) PLACE OF MEETING, ETC. The board of directors may hold its
meetings and have one or more offices at such place or places within or
outside the State of Alabama, as the board may from time to time determine,
or, in the case of meetings, as shall be specified or fixed in the respective
notices or waivers of notice thereof.
(7) ANNUAL MEETINGS. The board of directors shall meet for the
purpose of organization, the election of officers and the transaction of
other business, immediately after, or as soon as practicable after, each
annual meeting of shareholders and election of directors at the same place at
which each such annual meeting of shareholders is held, and notice of such
meeting need not be given; such meeting, however, may be held at any other
time or place which shall be specified in a notice given as hereinafter
provided for special meetings of the board of directors or in a consent and
waiver of notice thereof signed by all the directors.
(8) OTHER REGULAR MEETINGS. Other regular meetings of the board of
directors shall be held at such places and at such times as the board shall
from time to time by resolution determine. If any day fixed for a regular
meeting shall be a legal holiday at the place where the meeting is to be
held, then the meeting which would otherwise be held on that day shall be
held at the same hour on the next succeeding business day not a legal
holiday. Notice of regular meetings need not be given.
(9) SPECIAL MEETINGS: NOTICE. Special meetings of the board of
directors shall be held whenever called by the chairman of the board, the
president, the executive committee, or a majority of the directors then in
office. Notice of each such meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, at least two
(2) days before the day on which the meeting is to be held, or shall be
directed to him at such place by telegraph, cable, radio or wireless, or be
delivered personally not later than the day before the day on which the
meeting is to be held. Every such notice shall state the time and place of
the meeting but need not state the purposes thereof, except as otherwise in
these by-laws or by statute expressly provided. Notice of any meeting of the
board need not be given to any director, however,
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if waived by him in writing or by telephone, cable, radio or wireless,
whether before or after such meeting be held, or if he shall be present at
the meeting; and any meeting of the board shall be a legal meeting without
any notice thereof having been given if all of the directors shall be present
thereat.
(10) ORGANIZATION. At each meeting of the board of directors, the
chairman of the board of directors, or in his absence, the president, or in
the absence of both of the foregoing officers, a director chosen by a
majority of the directors present, shall act as chairman. The secretary, or
in his absence, an assistant secretary, or in the absence of both the
secretary and the assistant secretaries, any person appointed by the chairman
shall act as secretary of the meeting.
(11) BUSINESS AND ORDER OF BUSINESS. At each meeting of the board
of directors such business may be transacted as may properly be brought
before such meeting, whether or not such business is stated in the notice of
such meeting, or in a waiver of notice thereof, except as otherwise in these
by-laws or by statute expressly provided or required. The order of business
at all meetings of the board of directors shall be as determined by the
chairman, subject to the approval of a majority of the directors present at
such meeting.
(12) QUORUM AND MANNER OF ACTING. Except as otherwise provided by
statute or by these by-laws or by the Corporation's articles of
incorporation, a majority of the total number of directors shall constitute a
quorum for the transaction of business at any meeting and the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the board of directors. In the absence of a quorum, a
majority of the directors present may adjourn any meeting from time to time
until a quorum be had. Notice of any adjourned meeting need not be given.
(13) RESIGNATIONS. Any director of the Corporation may resign at
any time by giving verbal or written notice thereof to the chairman of the
board of directors, or the president or to the secretary of the Corporation.
The resignation of any director shall take effect at the time notice thereof
is given, unless otherwise specified in the notice. The acceptance of a
resignation shall not be necessary to make it effective.
ARTICLE V
EXECUTIVE AND OTHER COMMITTEES
(1) APPOINTMENT AND TERM OF OFFICE OF EXECUTIVE COMMITTEE. The
board of directors may establish an executive committee consisting of two (2)
or more directors, which number shall include the president, to serve at the
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pleasure of the board. The president shall be, ex officio, chairman of the
executive committee.
(2) VACANCIES IN EXECUTIVE COMMITTEE. Vacancies occurring in the
executive committee from any cause shall be filled by the board of directors
at any meeting thereof.
(3) EXECUTIVE COMMITTEE TO REPORT TO BOARD. All action by the
executive committee shall be reported to the board of directors at its
meeting next succeeding such action.
(4) PROCEDURE OF EXECUTIVE COMMITTEE. The executive committee shall
fix its own rules of procedure not inconsistent with these by-laws or with
any direction of the board of directors. It shall meet at such times and
places and upon such notice as shall be provided by such rules or by
resolution of the board of directors. The presence of a majority shall
constitute a quorum for the transaction of business, and in every case an
affirmative vote of a majority of all the members of the committee present
shall be necessary for the taking of any action.
(5) GENERAL POWERS OF EXECUTIVE COMMITTEE. During the intervals
between the meetings of the board of directors, the executive committee,
except as limited by the laws of the Corporation or by specific directors of
the board of directors, shall possess and may exercise all the powers of the
board of directors in the management and direction of the business and
conduct of the affairs of the Corporation in such manner as the executive
committee shall deem for the best interests of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to all
instruments and documents which may require it, except that the executive
committee shall not have the power to elect directors nor to elect or remove
any executive officer.
(6) SPECIAL POWERS OF EXECUTIVE COMMITTEE. The executive committee,
if one is established, shall have special charge and control of all financial
affairs of the Corporation. The executive committee shall supervise and
direct all investments, temporary or otherwise, of the funds of the
Corporation and the manner in which the accounts, books and records shall be
kept. The executive committee may authorize the satisfaction of mortgages,
the sale of real estate and sale and reinvestment of any and all other assets
of the Corporation. The executive committee may also appoint investment
advisers, authorize accounts for the Corporation with securities brokers and
dealers, and appoint a general counsel, and other general and special
attorneys. Any appointees of the executive committee shall have such powers,
not contrary to law, the articles of incorporation or these by-laws, and
shall perform such duties as may be assigned to them by the executive
committee.
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(7) OTHER COMMITTEES. From time to time the board of directors may
appoint any other committee or committees for any purpose or purposes to the
extent lawful, which shall have such powers as shall be specified in the
resolution of appointment.
(8) COMPENSATION. The members of any duly appointed committee shall
receive such compensation and/or fees as from time to time may be fixed by
the board of directors.
ARTICLE VI
OFFICERS
(1) EXECUTIVE OFFICERS. The executive officers of the Corporation
shall be a president and a secretary. The board may also elect a chairman of
the board and additional officers. One person may hold all offices and
perform the duties of any of said officers.
(2) ELECTION, TERM OF OFFICE AND QUALIFICATIONS OF EXECUTIVE
OFFICERS. The executive officers shall be elected annually by the board of
directors. Each executive officer shall hold office until his successor shall
have been duly elected and qualified in his stead, or until his death or
until he shall have resigned or shall have been removed in the manner
provided herein. The chairman of the board and the president shall be chosen
from among the directors.
(3) SUBORDINATE OFFICERS. The board of directors or the executive
committee may from time to time appoint such other officers as the board of
directors or the executive committee may deem necessary, including one or
more assistant treasurers and one or more assistant secretaries, and may also
appoint such agents and employees of the Corporation as may be deemed proper.
Such officers, agents and employees shall hold office for such period, have
such authority, and perform such duties as in these by-laws provided or as
the board of directors or the executive committee may from time to time
prescribe. The board of directors may from time to time authorize any officer
to appoint and remove agents and employees and to prescribe the powers and
duties thereof.
(4) REMOVAL. Any officer, agent or employee may be removed either
with or without cause, by the board of directors at any meeting called for
the purpose, or, except in case of any officer elected by the board of
directors, by any officers upon whom the power of removal may be conferred by
the board of directors.
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(5) RESIGNATIONS. Any officer may resign at any time by giving
written notice to the board of directors. Any such resignation shall take
effect at the date of receipt of such notice or at any later time specified
therein, and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
(6) VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these by-laws
for regular election or appointment to such office.
(7) THE CHAIRMAN OF THE BOARD OF DIRECTORS. The chairman of the
board of directors, when present, shall preside at all meetings of the board
of directors. In addition to the powers and duties mentioned in these
by-laws, he shall have supervision of such matters, not contrary to law, the
certificate of incorporation or these by-laws, as may be assigned or
delegated to him by the board of directors or the executive committee.
(8) THE PRESIDENT. The president shall be the chief executive
officer of the Corporation and shall have general supervision of the business
of the Corporation and over its several officers, subject, however, to the
control of the board of directors and the executive committee. He shall at
each annual meeting and from time to time report to the shareholders and the
board of directors and the executive committee all matters within his
knowledge which the interests of the Corporation may require to be brought to
their notice; shall preside when present at all meetings of the shareholders
and, in the absence of the chairman of the board, of the board of directors;
shall sign in the name of the Corporation all deeds, mortgages, bonds,
contracts or other instruments authorized by the board of directors or the
executive committee except in cases where the signing and execution thereof
shall be expressly delegated by the board of directors or by these by-laws to
the president alone or some other officer or agent of the Corporation; and in
general shall perform all duties incident to the office of president and such
other duties as from time to time may be assigned to him by the board of
directors or the executive committee or as are prescribed by these by-laws.
The president shall be, ex officio, a member of all standing committees.
(9) VICE PRESIDENT. The vice president shall perform such duties
and exercise such powers as may be assigned to him from time to time by the
board of directors or the executive committee. In the absence of either the
chairman of the board or the president, or both, or in the case of his or
their inability to act, a vice president shall perform the duties and
exercise the powers of either the chairman of the board of directors or the
president, or both, but subject to the control of the board of directors and
the executive committee.
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(10) THE SECRETARY. The secretary shall keep or cause to be kept in
books the minutes of the meetings of the shareholders and the board of
directors; shall see that all notices are duly given in accordance with the
provisions of these by-laws and as required by law; shall be custodian of the
records and of the seal of the Corporation and see that the seal is affixed
to all documents the execution of which on behalf of the Corporation under
its seal is duly authorized; shall keep directly or through a transfer agent
a register of the post office address of each shareholder, and make proper
changes in such register, retaining and filing his authority for such
entries; shall see that the books, reports, statements, certificates and all
other documents and records required by law are properly kept and filed; and
in general shall perform all duties incident to the office of secretary and
such other duties as may, from time to time, be assigned to him by the board
of directors or the executive committee.
(11) ASSISTANT SECRETARIES. At the request of the secretary or in
his absence or disability, any assistant secretary shall have power to
perform all the duties of the secretary, and when so acting, shall have all
the powers of, and be subject to all restrictions upon, the secretary. The
assistant secretaries shall perform such other duties as from time to time
may be assigned to them by the board of directors, by the executive
committee, by the chairman of the board or by the president.
(12) THE TREASURER. The treasurer shall give such bond for faithful
performance of his duties as the board of directors shall require. He shall
have charge and custody of, and be responsible for, all funds and securities
of the Corporation and deposit all such funds in the name of the Corporation
in such banks, trust companies or other depositories as shall be selected in
accordance with the provisions of these by-laws; at all reasonable times
exhibit the books of accounts and records to any of the directors of the
Corporation, upon application during business hours at the office of the
Corporation or where such books and records are kept; render a statement of
the condition of the finances of the Corporation at all regular meetings of
the board of directors, if called upon to do so, and a full financial report
at the annual meeting of the shareholders, if called upon to do so; receive
and give receipts for moneys due and payable to the Corporation from any
source whatsoever; and in general, perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be
assigned to him by the board of directors or by the executive committee.
(13) ASSISTANT TREASURERS. At the request of the treasurer or in
his absence or disability any assistant treasurer shall have power to perform
all the duties of the treasurer, and when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the treasurer. The
assistant treasurers shall perform such other duties as from time to time may
be assigned to them by the board of directors, by the executive committee, by
the chairman of the board or by the president.
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(14) SALARIES. The salaries of the officers shall be fixed from
time to time by the executive committee of the board of directors. No officer
shall be prevented from receiving such salary by reason of the fact that he
is also a director of the Corporation.
ARTICLE VII
SHARES AND THEIR TRANSFER
(1) CERTIFICATES OF SHARES. Certificates for shares of each class
of the capital stock of the Corporation shall be in such form as the board of
directors shall approve and shall be numbered and shall be entered in the
books of the Corporation as they are issued. They shall exhibit the holder's
name and certify the number of shares owned by him and shall be signed by or
in the name of the Corporation by the president or a vice president and the
secretary or an assistant secretary of the Corporation; provided, however,
that where any such certificate is signed by a transfer agent or an assistant
transfer agent or by a transfer clerk acting on behalf of the Corporation as
a registrar, the signature of any such president, vice president, secretary
or assistant secretary may be facsimile printed or engraved. In case any
officer or officers who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates
shall cease to be such officer or officers of the Corporation, whether
because of death, resignation or otherwise, before such certificate or
certificates shall have delivered by the Corporation, such certificate or
certificates shall nevertheless be adopted by the Corporation and be issued
and delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures shall have been used
thereon had not ceased to be such officer or officers of the Corporation. The
share record books and the blank share certificate books shall be kept by the
secretary or by a transfer agent or by any other officer or agent designated
by the board of directors or by the executive committee or by the president.
(2) TRANSFER OF SHARES. Transfer of shares of the capital stock of
the Corporation shall be made only on the books of the Corporation by the
holder thereof, or by his attorney thereunto duly authorized by a power of
attorney duly executed and filed with the secretary of the Corporation or a
transfer agent of the Corporation, if any, and upon the surrender and
cancellation of the certificate or certificates for such shares, properly
endorsed. A person in whose name shares stand on the books of the Corporation
shall be deemed the owner thereof as regards the Corporation, and upon any
transfer of shares the person or persons into whose name or names such shares
of stock shall be transferred on the books of the Corporation shall be
substituted for the person or persons out of whose name or names such shares
shall have been transferred, with respect to all rights, privileges and
obligations of holders of stock of the Corporation and as against the
Corporation or any other person or persons. The term "person" or "persons"
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wherever used herein shall be deemed to include any firm, corporation, or
association. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact, if known to the secretary or to said
transfer agent, shall be so expressed in the entry of transfer.
(3) CLOSING OF TRANSFER BOOKS. The board of directors may, by
resolution, direct that the stock transfer books of the Corporation be closed
for a period not exceeding fifty (50) days preceding the date of any meeting
of stockholders or the date for payment of any dividend or the date for the
allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect or for a period of not exceeding fifty
(50) days preceding the date of any meeting of shareholders, or the date for
the payment of any dividend or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect or a date in connection with obtaining such consent, as a record date
for the determination of the shareholders entitled to notice of, and to vote
at, any such meeting, and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
capital stock or to give such consent, and in such case such shareholders and
only such shareholders as shall be shareholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such meeting and
any adjournment thereof, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.
(4) LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. The holder
of any shares of the Corporation shall immediately notify the Corporation of
any loss, theft, destruction or mutilation of the certificate; and, the board
of directors may, in its discretion, require the owner of the lost, stolen or
destroyed certificate, or his legal representatives, to give to the
Corporation and to such registrar, transfer agent and/or transfer clerk as
may be authorized or required to countersign such new certificate or
certificates a bond, in such sum as they may direct, and with such surety or
sureties, as they may direct, as indemnity against any claim that may be made
against them or any of them on account of or in connection with the alleged
loss, theft, or destruction of any such certificate.
(5) TRANSFER AGENT AND REGISTRAR: REGULATIONS. The Corporation
shall, if and whenever the board of directors shall so determine, maintain
one or more transfer offices or agencies, each in charge of the transfer
agent or transfer clerk designated by the board of directors, where the
shares of the capital stock of the Corporation shall be directly
transferable, and/or one or more registry offices, each in charge of a
registrar designated by the board of directors where such shares of stock
shall be registered, and, if the board of directors shall so determine, no
certificate for shares of
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the capital stock of the Corporation, in respect of which a transfer agent or
transfer clerk and/or registrar shall have been designated, shall be valid
unless countersigned by such transfer agent or transfer clerk and/or
registered by such registrar. The board may also make such additional rules
and regulations as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of the capital stock of the
Corporation.
ARTICLE VIII
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
(1) CONTRACTS, ETC. The executive committee may authorize any
officer or officers, or agent or agents of the Corporation to enter into any
contract or execute and deliver any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to specific
instances; and, unless so authorized by the executive committee or by these
by-laws, no officer, agent or employee shall have any power or authority to
bind the Corporation by any contract or engagement or to pledge its credit or
to render it liable pecuniarily for any purpose or to any amount.
(2) CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by the president, any vice
president, or the secretary of the Corporation.
(3) DEPOSITS. All cash and securities of the Corporation shall be
placed in trust and/or deposited from time to time to the credit of the
Corporation in such responsible banks or trust companies as the board of
directors or the executive committee or the chairman of the board or the
president may from time to time designated, or as may be designated by any
other officer or officers of the Corporation to whom such power may be
delegated by the board of directors or the executive committee.
(4) GENERAL AND SPECIAL ACCOUNTS. The board of directors or the
executive committee or the chairman of the board or the president may from
time to time authorize the opening and keeping, with responsible banks or
trust companies as it or he may designate, of general and special trust
and/or bank accounts, and may make such special rules and regulations, with
respect thereto, not inconsistent with the provisions of these by-laws, as it
or he may deem expedient.
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ARTICLE IX
BOOKS AND RECORDS
(1) LOCATION. The books and records of the Corporation except the
original or a duplicate stock ledger, may be kept outside the State of
Alabama at such place or places as the board of directors may from time to
time determine, except as otherwise required by law.
(2) EXAMINATION BY SHAREHOLDERS. The board of directors shall,
subject to the laws of Alabama, have power to determine from time to time
whether or to what extent and at what time and places and under what
conditions and regulations any accounts and books of the Corporation, or any
of them, shall be open to the inspection of the shareholders; and no
shareholder shall have any right to inspect any account or book or document
of the Corporation, except as conferred by the laws of Alabama, unless and
until authorized to do so by resolution of the board of directors or of the
shareholders; provided, however, that, subject to such reasonable
restrictions as the board of directors may prescribe, the Corporation shall
at any time, upon the written request of any registered holder of its shares,
mail to such shareholder a statement of the assets then belonging to the
Corporation; provided, further, that an original or duplicate share ledger,
containing the names and addresses of the shareholders and the number of
shares held by them respectively, shall at all times, during the usual hours
for business, be open to the examination of every stockholder at the
principal office or place of business of the Corporation in Alabama or at the
office of any duly appointed transfer agent or registrar.
ARTICLE X
DIVIDENDS, SURPLUS, ETC.
The board of directors shall have power, subject to the provisions
of the certificate of incorporation of the Corporation, to fix and determine
and to vary from time to time, the amount of the working capital of the
Corporation before declaring any dividends among its shareholders; to direct
and determine the use and disposition of any net profits or surplus; to
determine the amount of any reserves necessary in their judgment before
declaring any dividends among its shareholders; to determine from time to
time the amount of the net earnings and net profits of the Corporation
available for dividends; to determine the amount of any dividends; and to
declare and pay the same.
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ARTICLE XI
MISCELLANEOUS
(1) COMPENSATION OF DIRECTORS. The directors shall receive such
compensation and/or fees, and expenses in connection with attendance at
meetings or other performance of their duties, as from time to time may be
fixed by the board of directors. Nothing herein contained shall be construed
to preclude any director from serving the Corporation in any other capacity,
as an officer, agent or otherwise, and receiving compensation therefor.
(2) PROXIES OF THE CORPORATION. Except as otherwise in these
by-laws or in the articles of incorporation the Corporation provided, and
unless otherwise provided by resolution of the board of directors or of the
executive committee, the President may from time to time appoint an attorney
or attorneys or agent or agents of the Corporation, in the name and on behalf
of the Corporation to cast the votes which the Corporation may be entitled to
cast as a shareholder or otherwise in any other corporation any of whose
stock or other securities may be held by the Corporation, at meetings of the
holders of the stock or other securities of such other corporation, or to
contest in writing to any action by such corporation and may instruct the
person or persons so appointed as to the manner of casting such votes or
giving such consent, and may execute or cause to be executed in the name and
on behalf of the corporation and under its corporate seal or otherwise, all
such written proxies or other instruments as he may deem necessary or proper
in the premises.
(3) WAIVER OF NOTICE. Whenever any notice whatever is required to
be given by these by-laws of the articles of incorporation or the laws of the
State of Alabama, a waiver thereof in writing, or by telegraph, cable, radio
or wireless by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto; and any
such notice with respect to any shareholders' or directors' meeting may be
dispensed with, if any shareholder shall attend such shareholders' meeting,
either in person or by proxy, or if every director shall attend such
directors' meeting in person.
(4) CONFLICTS OF INTEREST. Except as otherwise provided in the
articles of incorporation, a director of the Corporation shall not in the
absence of fraud be disqualified by his office from dealing or contracting
with the Corporation either as a vendor, purchaser, or otherwise, nor in the
absence of fraud shall any transaction or contract of the Corporation be void
or voidable or affected by reason of the fact that any director, or any firm
of which any director is a member, or any corporation of which any director
is an officer, director or shareholder, is in any way interested in such
transaction or contract. Nor shall any director be liable to account to the
Corporation for any profit
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realized by him from or through any such transaction or contract of the
Corporation by reason of the fact that he or any firm of which he is a
member, or any corporation of which he is an officer, director or
shareholder, was interested in such transaction or contract.
(5) INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
Every person who is, or has been, a director, officer, employee or agent of
the Corporation, or of a subsidiary or an affiliate of the Corporation, shall
be indemnified by the Corporation to the extent provided in Section 10-2A-
21, Code of Alabama, 1975, and in the articles of incorporation. The
foregoing rights of indemnification shall be without prejudice to any other
rights to which any such director, office, employee or agent may be entitled
as a matter of law.
ARTICLE XII
AMENDMENTS
Subject to any restrictive provisions of law or of the
Corporation's articles of incorporation, all by-laws of the Corporation shall
be subject to alteration or repeal and new by-laws may be made either by the
affirmative vote of the holders of record of a majority of the outstanding
stock of the Corporation entitled to vote in respect thereof at an annual
meeting or at any special meeting, provided that notice of the proposed
alteration or repeal or of the proposed new by-laws be included in the notice
of such meeting, or by the affirmative vote of a majority of the board of
directors at any regular or special meeting, provided that notice of the
proposed alteration or repeal or of the new proposed by-laws be included in
the notice of any such special meeting.
ARTICLE XIII
REQUIREMENT OF REIMBURSEMENT
If the Corporation pays for travel and entertainment expenses of
any shareholder during any tax year and the Internal Revenue Service
subsequently disallows any or all of said travel and entertainment expenses,
the shareholder on whose behalf said expenses were paid is required to
reimburse to the Corporation the amount of said disallowance.
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ARTICLE XIV
MISCELLANEOUS
Throughout these by-laws, the masculine gender shall be deemed to
include the feminine gender and vice-versa.
These By-laws were adopted by unanimous consent of the Shareholders
as the By-laws of the Corporation effective on the 15th day of January, 1986.
SHAREHOLDERS:
/s/ R.G. Darby
------------------------------
/s/ C.K. Riley
------------------------------
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Exhibit 3.21
CERTIFICATE OF INCORPORATION
OF
R.G. DARBY COMPANY - SOUTH
ARTICLE ONE
The name of this Corporation (hereinafter called the
"Corporation") is R.G. Darby Company - South.
ARTICLE TWO
The address, including street number, city and county,
of the registered office of the Corporation in the State of Delaware is 1209
Orange Street, in the City of Wilmington, County of New Castle, 19801. The
name of the registered agent of the Corporation in the State of Delaware at
such address is The Corporation Trust Company.
ARTICLE THREE
The nature of the business and the purposes to be
conducted and promoted by the Corporation is to conduct any lawful business, to
promote any lawful purpose and to engage in any lawful act or activity for which
a corporation may be organized under the General Corporation Law of the State of
Delaware.
ARTICLE FOUR
The Corporation shall have authority, to be
exercised by its Board of Directors, to issue 1,000 shares of capital stock with
a par value of $0.01 per share, all of which shall be of the same class and
designated "Common Stock."
ARTICLE FIVE
The number of directors which shall constitute the
whole Board of Directors of the Corporation shall be determined pursuant to the
By-Laws of the Corporation as provided therein. Elections of directors need not
be by written ballot.
ARTICLE SIX
In furtherance and not in limitation of the powers
conferred by statute and in accordance with any relevant provisions of the
By-Laws, the Board of Directors is expressly authorized to adopt, amend or
repeal the By-Laws of the Corporation.
ARTICLE SEVEN
The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter
<PAGE>
prescribed by statute, and all rights conferred on stockholders herein are
granted subject to this reservation.
ARTICLE EIGHT
The Corporation shall indemnify all directors and
officers of the Corporation, to the full extent permitted by the General
Corporation Law of the State of Delaware and as provided in the By-Laws of the
Corporation, from and against any and all expenses, liabilities or other
matters. The Corporation may indemnify, to the full extent permitted by the
General Corporation Law of the State of Delaware and as provided in the By-laws
of the Corporation, any and all persons whom it shall have the power to
indemnify from and against any and all expenses, liabilities or other matters.
ARTICLE NINE
No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty by such director as a director; provided, however, that this
Article Nine shall not eliminate or limit the liability of a director (i) for
any breach of such director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
Title 8 of the General Corporation Law of the State of Delaware or (iv) for any
transaction from which such director derived an improper personal benefit. If
the General Corporation Law of the State of Delaware is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the full extent permitted by the General Corporation
Law of the State of Delaware, as so amended. No amendment to or repeal of this
Article Nine shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts
or omissions of such director occurring at the time of or prior to such
amendment or repeal. Any repeal or modification of this Article Nine shall
not adversely affect any right or protection of a director of the Corporation
existing under this Certificate of Incorporation.
ARTICLE TEN
The name and mailing address of the incorporator is
Elizabeth H. Noe, c/o Paul, Hastings, Janofsky & Walker LLP, 600 Peachtree
Street, Suite 2400, Atlanta, Georgia 30308.
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IN WITNESS WHEREOF, the undersigned, being the
sole incorporator, for the purpose of forming a corporation pursuant to the
General Corporation Law of the State of Delaware, does hereby make this
certificate declaring and certifying that this is the act and deed of the
undersigned and the facts herein stated are true and, accordingly, has executed
this certificate the 22nd day of December, 1998.
/s/ Elizabeth H. Noe
------------------------------
Elizabeth H. Noe
Sole Incorporator
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Exhibit 3.22
B Y - L A W S
OF
R. G. DARBY COMPANY - SOUTH
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I OFFICES................................................................................... 1
Section 1. Registered Office................................................................ 1
Section 2. Other Offices.................................................................... 1
ARTICLE II MEETINGS OF STOCKHOLDERS.................................................................. 1
Section 1. Annual Meetings.................................................................. 1
Section 2. Notice........................................................................... 1
Section 3. Stockholder List................................................................. 1
Section 4. Special Meetings................................................................. 2
Section 5. Notice........................................................................... 2
Section 6. Quorum........................................................................... 2
Section 7. Voting........................................................................... 3
Section 8. Shareholder Action Without Meeting............................................... 3
Section 9. Inspectors....................................................................... 4
Section 10. Fixing Record Date............................................................... 4
Section 11. Registered Stockholders.......................................................... 5
ARTICLE III DIRECTORS................................................................................. 5
Section 1. Number and Election.............................................................. 5
Section 2. Vacancies........................................................................ 6
Section 3. Management....................................................................... 6
Section 4. Removal.......................................................................... 6
Section 5. Meetings......................................................................... 6
Section 6. Action Without Meeting........................................................... 7
Section 7. Electronic Communications........................................................ 7
Section 8. Committees....................................................................... 8
Section 9. Compensation..................................................................... 9
ARTICLE IV NOTICE.................................................................................... 9
Section 1. Notices.......................................................................... 9
Section 2. Waiver of Notice................................................................. 9
ARTICLE V OFFICERS................................................................................. 10
Section 1. General Provisions.............................................................. 10
Section 2. Chief Executive Officer......................................................... 10
Section 3. Chief Financial Officer......................................................... 11
Section 4. Treasurer....................................................................... 12
Section 5. Secretary....................................................................... 12
ARTICLE VI CERTIFICATES FOR SHARES.................................................................. 12
Section 1. Certificates.................................................................... 12
Section 2. Signatures...................................................................... 13
Section 3. Lost Certificates............................................................... 13
Section 4. Transfer........................................................................ 13
ARTICLE VII GENERAL PROVISIONS....................................................................... 14
Section 1. Dividends....................................................................... 14
Section 2. Annual Statement................................................................ 14
Section 3. Checks.......................................................................... 14
Section 4. Fiscal Year..................................................................... 15
Section 5. Seal............................................................................ 15
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ARTICLE VIII INDEMNIFICATION.......................................................................... 15
ARTICLE IX AMENDMENTS............................................................................... 17
</TABLE>
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<PAGE>
B Y - L A W S
OF
R. G. DARBY COMPANY - SOUTH
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office shall be
in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. OTHER OFFICES. The corporation may also have offices at
such other places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. ANNUAL MEETINGS. Annual meetings of stockholders shall
be held at such place either within or without the State of Delaware as shall be
designated from time to time by the board of directors. If the board of
directors shall fail to fix such place, the meeting shall be held at the
principal office of the Corporation. The annual meetings shall be held on such
date and time as shall be designated from time to time by the board of directors
and stated in the notice of the meeting.
Section 2. NOTICE. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting.
Section 3. STOCKHOLDER LIST. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order,
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and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
Section 4. SPECIAL MEETINGS. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the certificate of incorporation, may be called by the chief
executive officer and shall be called by the chief executive officer or
secretary at the request in writing of a majority of the board of directors,
or at the request in writing of stockholders owning a majority in amount of
the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 5. NOTICE. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than ten nor more than sixty days
before the date of the meeting, to each stockholder entitled to vote at such
meeting. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Section 6. QUORUM. The holders of a majority of the stock issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the majority of stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or
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represented any business may be transacted which might have been transacted
at the meeting as originally notified. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
Section 7. VOTING. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote for each share of the capital stock of the corporation
registered in the name of such stockholder upon the books of the corporation.
Each stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him or her by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. When directed by the presiding officer or
upon the demand of any stockholder, the vote upon any matter before a meeting of
stockholders shall be by ballot.
Section 8. SHAREHOLDER ACTION WITHOUT MEETING. Unless otherwise
provided in the certificate of incorporation, any action required to be taken
at any annual or special meeting of stockholders of the corporation, or any
action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less
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than unanimous written consent shall be given to those stockholders who have
not consented in writing.
Section 9. INSPECTORS. The board of directors, in advance of
any meeting of stockholders, may, but need not unless prescribed by the
General Corporation Law, appoint one or more inspectors of election to act at
the meeting or any adjournment thereof and make a written report thereof. If
an inspector or inspectors are not appointed, the person presiding at the
meeting may, but need not, appoint one or more inspectors. In case any person
who may be appointed as an inspector fails to appear or act, the vacancy may
be filled by appointment made by the directors in advance of the meeting or
at the meeting by the person presiding thereat. Each inspector, if any,
before entering upon the discharge of his or her duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his or her ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall
count all votes and ballots, determine and retain for a reasonable period a
record of the disposition of any challenges made to any determination by
inspectors and certify their determination of the number of shares
represented at the meeting, and their count of all votes and ballots.
Section 10. FIXING RECORD DATE. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting: provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
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If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held; the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the board of directors is
necessary, shall be the day on which the first signed written consent is
delivered to the corporation in accordance with applicable law; and the
record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 11. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLE III
DIRECTORS
Section 1. NUMBER AND ELECTION. The number of directors which
shall constitute the whole board shall be such number fixed from time to time
by resolution of the board of directors. The directors shall be elected at
the annual meeting of the stockholders, except as provided in Section 2 of
this Article, and each director elected shall hold office until his successor
is elected and qualified. The board of directors shall elect from its
membership by a majority vote a chairman of the board and may elect a vice
chairman of the board. Directors need not be stockholders.
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Section 2. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. If, at the
time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
of the total number of the shares at the time outstanding having the right to
vote for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. MANAGEMENT. The business of the corporation shall
be managed by or under the direction of its board of directors which may
exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute or by the certificate of incorporation or by
these by-laws directed or required to be exercised or done by the
stockholders.
Section 4. REMOVAL. Unless otherwise restricted by the
certificate of incorporation or by law, any director or the entire board of
directors may be removed, with or without cause, by the holders of a majority
of shares entitled to vote at an election of directors.
Section 5. MEETINGS. The board of directors of the corporation may
hold meetings, both regular and special, either within or without the State of
Delaware. The first meeting of each newly elected board of directors shall be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not
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held at the time and place so fixed by the stockholders, the meeting may be
held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the board of directors, or as
shall be specified in a written waiver signed by all of the directors.
Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be
determined by the board. Special meetings of the board may be called by the
chairman of the board or the vice chairman of the board on ten days' notice
to each director, either personally or by mail or by telegram; special
meetings shall be called by the chairman of the board or the vice chairman of
the board or secretary in like manner and on like notice on the written
request of two directors unless the board consists of only one director; in
which case special meetings shall be called by the chairman of the board or
the vice chairman of the board in like manner and on like notice on
the-written request of the sole director.
At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 6. ACTION WITHOUT MEETING. Unless otherwise restricted by
the certificate of incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the board of directors or of any
committee thereof may be taken without a meeting, if all members of the board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
Section 7. ELECTRONIC COMMUNICATIONS. Unless otherwise restricted
by the certificate of incorporation or these by-laws, members of the board of
directors, or any committee designated by the board of directors, may
participate in a meeting of the board of
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directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 8. COMMITTEES. The board of directors may, by resolution
passed by a majority of the whole board, designate an executive committee and
one or more committees, each committee to consist of one or more of the
directors of the corporation. The board may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he, she or they constitute a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in the
place of any such absent or disqualified member.
Any such committee, to the extent permitted by law and provided in
the resolution of the board of directors, shall have and may exercise all the
powers and authority of the board of directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall
have the power or authority in reference to amending the certificate of
incorporation, (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock
adopted by the board of directors as provided in Section 151(a) fix any of
the preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or
classes or any other series of the same or any other class or classes of
stock of the corporation) adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the by-laws of the corporation; and, unless the
resolution or the certificate of incorporation expressly so provide, no such
committee
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shall have the power or authority to declare a dividend or to authorize the
issuance of stock or to adopt a certificate of ownership and merger. Such
committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors.
Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Section 9. COMPENSATION. Unless otherwise restricted by the
certificate of incorporation or these by-laws, the board of directors shall
have the authority to fix the compensation of directors. The directors may be
paid their expenses, if any, of attendance at each meeting of the board of
directors and may be paid a fixed sum for attendance at each meeting of the
board of directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
ARTICLE IV
NOTICE
Section 1. NOTICES. Whenever, under the provisions of the statutes
or of the certificate of incorporation or of these by-laws, notice is required
to be given to any director or stockholder, such notice may be communicated in
person, by telephone, telegraph, teletype, or other form of wire or wireless
communication, by personal courier, or by mail, to such director or stockholder,
at his or her address as it appears on the records of the corporation, with
postage thereon prepaid. Notice by mail shall be deemed to be given at the time
when such notice shall be deposited in the United States mail.
Section 2. WAIVER OF NOTICE. Whenever any notice is required
to be given under the provisions of the statutes or of the certificate of
incorporation or of these by-laws, a waiver
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thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the corporation
shall be chosen by the board of directors and shall be a chief executive
officer, a chief financial officer, a secretary and a treasurer. The board of
directors may also choose one or more non-executive officers, including without
limitation, one or more vice-presidents, one or more assistant secretaries and
assistant treasurers and other such officers as it shall deem necessary and
advisable. Any number of offices may be held by the same person, unless the
certificate of incorporation or these by-laws otherwise provide.
The board of directors at its first meeting after each annual
meeting of stockholders shall choose a chief executive officer, a chief
financial officer, a secretary and a treasurer.
The board of directors may appoint such other officers and agents
as it shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the board.
The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.
The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of
the corporation shall be filled by the board of directors. In addition to the
powers and duties of the officers of the corporation as set forth in these
by-laws, the officers shall have such authority and shall perform such duties
as from time to time may be determined by the Board of Directors.
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Section 2. CHIEF EXECUTIVE OFFICER. The chief executive officer
shall preside at all meetings of the stockholders, shall have general and active
management of the business of the corporation and shall see that all orders and
resolutions of the board of directors are carried into effect.
He or she shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
Unless otherwise ordered by the board of directors, the chief
executive officer shall have full power and authority on behalf of the
corporation to attend and to act and to vote, or in the name of the
corporation to execute proxies to vote, at any meeting of stockholders of any
corporation in which the corporation may hold stock, and at any such meeting
shall possess and may exercise, in person or by proxy, any and all rights,
powers and privileges incident to the ownership of such stock. The board of
directors may from time to time, by resolution, confer like powers upon any
other person or persons.
Section 3. CHIEF FINANCIAL OFFICER. The chief financial officer
shall have the custody of the corporate funds and securities and shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the board of directors.
The chief financial officer shall disburse the funds of the
corporation as may be ordered by the board of directors, taking proper vouchers
for such disbursements, and shall render to the chief executive officer and the
board of directors, at its regular meetings, or when the board of directors so
requires, an account of all his or her transactions as chief financial officer
and of the financial condition of the corporation.
If required by the board of directors, the chief financial officer
shall give the corporation a bond (which shall be renewed every six years) in
such sum and with such surety or
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sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of his or her office and for the restoration to the
corporation, in case of death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his or her possession or under his or her control belonging to the
corporation.
Section 4. TREASURER. The treasurer shall, in the absence of the
chief financial officer or in the event of his or her inability or refusal to
act, perform the duties and exercise the powers of the chief financial officer
and shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
Section 5. SECRETARY. The secretary shall attend all meetings of
the board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He or she shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the board
of directors or chief executive officer, under whose supervision he or she shall
be. He or she shall have custody of the corporate seal of the corporation and he
or she, or an assistant secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his or her signature.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. CERTIFICATES. The shares of the corporation shall
be represented by a certificate or shall be uncertificated. Certificates
shall be signed by, or in the name of the corporation by the chief executive
officer and the secretary of the corporation.
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Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement
that the corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
Section 2. SIGNATURES. Any of or all the signatures on a
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue.
All certificates for shares of stock shall be consecutively
numbered as the same are issued. The name of the person owning the shares
represented thereby with the number of such shares and the date of issue thereof
shall be entered on the books of the corporation.
Section 3. LOST CERTIFICATES. The board of directors may direct a
new certificate or certificates or uncertificated shares to be issued in place
of any certificate or certificates theretofore issued by the corporation alleged
to have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed, setting forth to the best of his knowledge and belief the time,
place, and circumstances for the loss, theft or destruction. When authorizing
such issue of a new certificate or certificates or uncertificated shares, the
board of directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his or her legal representative, to advertise
the same in such manner as it shall require and/or to give the corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
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Section 4. TRANSFER. Except as hereinafter provided, all
certificates surrendered to the corporation for transfer shall be canceled,
and no new certificates shall be issued until former certificates for the
same number of shares have been surrendered and canceled.
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Upon receipt of proper transfer instructions from the registered owner of
uncertificated shares such uncertificated shares shall be canceled and issuance
of new equivalent uncertificated shares or certificated shares shall be made to
the person entitled thereto and the transaction shall be recorded upon the books
of the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such
other purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
14
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Section 2. ANNUAL STATEMENT. The board of directors shall
present at each annual meeting, and at any special meeting of the
stockholders when called for by vote of the stockholders, a full and clear
statement of the business and condition of the corporation.
Section 3. CHECKS. All checks or demands for money and notes
of the corporation shall be signed by such officer or officers or such other
person or persons as the board of directors may from time to time designate.
Section 4. FISCAL YEAR. The fiscal year of the corporation
shall be fixed by resolution of the board of directors.
Section 5. SEAL. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its organization and the
words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
The Corporation, to the full extent permitted by law, shall
indemnify any director or officer of the Corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative in
nature (other than an action by or in the right of the Corporation) by reason of
the fact that such person is or was a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding and/or the defense or settlement of such action
or suit if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation and,
with respect to criminal actions, had no reasonable cause to believe his or her
conduct was unlawful.
15
<PAGE>
The Corporation, to the full extent permitted by law, shall
indemnify any director or officer of the Corporation who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding by or in the right of the Corporation to procure
judgment in its favor by reason of the fact that such person is or was a
director or officer of the Corporation, or is or was serving at the request
of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection with the defense or settlement of such action if he or she acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged liable to the Corporation unless
and only to the extent that a court in which such action is brought
determines that such person is fairly and reasonably entitled to indemnity.
To the extent that a director or officer of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in the preceding paragraph, or in defense of any claim,
issue or matter therein, and the Corporation shall not previously have
reimbursed or paid for all such expenses, such person shall be indemnified
against expenses (including attorneys' fees and disbursements) actually and
reasonably incurred by such person in connection therewith.
Expenses (including attorneys' fees) incurred by a director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall by paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that such director is not entitled to be
indemnified by the Corporation against such expenses as authorized by this
Article.
The indemnification and advancement of expenses permitted by this
Article shall not be deemed exclusive of any other rights to which any person
may be entitled under any
16
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agreement, or by virtue of vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding an office, and shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such person.
ARTICLE IX
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws
may be adopted by the stockholders or by the board of directors, when such power
is conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting. If the power to adopt, amend or repeal
by-laws is conferred upon the board of directors by the certificate of
incorporation it shall not divest or limit the power of the stockholders to
adopt, amend or repeal by-laws.
17
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Exhibit 3.23
ARTICLES OF INCORPORATION
OF
TOTAL TRIM, INC.
TO THE JUDGE OF LAUDERDALE COUNTY, ALABAMA:
The undersigned, Deborah A. Palmer, who is over the age of
twenty-one (21) years, desires to organize a body corporate under the laws of
the State of Alabama, and hereby signs and files these Articles of Incorporation
as follows:
ARTICLE I
NAME
The name of the Corporation is:
Total Trim, Inc.
ARTICLE II
PURPOSE
The nature of the business and the objects and purpose to
be transacted, promoted and carried on by the Corporation are to do any and
all things herein mentioned as fully and to the same extent as natural
persons might or could do, and in any part of the world, viz:
(1) To make estimates for itself and for others, and to bid
upon, enter into, and Carry out contracts for the installation of doors of
every kind and description. To manufacture or otherwise produce, buy, sell,
and deal in building materials, and all kinds of materials, supplies, and
equipment for carpenters, builders, electricians, engineers, and contractors.
To acquire, use, employ, sell, and deal in all suitable means, apparatus,
machinery, contrivances, equipment, and facilities for prosecuting its
business.
(2) To manufacture, purchase, lease, or otherwise acquire,
and to hold, own, mortgage, pledge, sell, transfer, or in any manner dispose
of, and to deal and trade in and with
<PAGE>
Articles of Incorporation
of Total Trim, Inc.
Page 2
goods, wares, fixtures, merchandise and personal property and all articles of
commerce of every class and description, wherever situated.
(3) To purchase, acquire, hold, own, mortgage, sell,
convey, lease, or otherwise deal in real and personal property of every class
and description in any state, district, territory, colony, or foreign
country, subject to the laws of each state, district, territory, colony or
foreign country.
(4) To acquire the goodwill, rights and property, the whole
or any part of the assets, tangible or intangible, and to undertake or assume
the whole or any part of the liabilities of any person, firm, association or
corporation; to pay for the same in cash or the stock or other securities of
the Corporation, or by undertaking or assuming the obligations and
liabilities of the transferor, or otherwise; to hold, or in any manner
dispose of the whole or any part of the property so acquired, and to exercise
all the powers necessary in management of any such business.
(5) To borrow or raise money for any of the purposes of the
Corporation, without limit as to amount, and in connection therewith to grant
collateral or other security either alone, or jointly with any other person,
firm or corporation, by mortgage, pledge, deed of trust, or otherwise, and to
make, execute, draw, accept, endorse, discount, pledge, issue, sell or
otherwise dispose of warrants, promissory notes, drafts, bills of exchange,
bonds, debentures and other evidences of indebtedness, negotiable nor
non-negotiable, transferable or nontransferable and to confer upon the
holders or any of its obligations such powers, rights and privileges as from
time to time may be deemed advisable by the Board of Directors, to the extent
permitted under the general corporation law of the State of Alabama; to lend
and advance money, either with or without security, to lend and advance
money, either with or without security, to extend credit, take notes, open
accounts and every kind and nature of evidence of indebtedness and collateral
security in connection therewith.
(6) To endorse, guarantee, and secure the payment and
satisfaction of bonds, coupons, mortgages, deeds of trust, debentures,
securities, obligations and evidences of indebtedness, and also to guarantee
and secure the payment or satisfaction of interest on obligations and of
dividends on shares of the capital stock of other corporations also to assume
and guarantee the whole or any part of the liabilities, existing, or
prospective, of any other person, corporation, firm or association, including
without limitation any employee, officer, director or shareholder of the
Corporation, or any person who may have served at its request as a director
or officer of another corporation; and to aid in any manner guaranteed by the
<PAGE>
Articles of Incorporation
of Total Trim, Inc.
Page 3
Corporation, and to do any other acts and things for the preservation,
protection, improvement or enhancement of the value of such stock, bonds, or
other obligations.
(7) To acquire by purchase, subscription or otherwise, and
to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge, hypothecate or otherwise dispose of or deal in and with any of the
shares of the capital stock, or any voting trust certificates in respect to
the shares of capital stock, script, warrants, rights, bonds, debentures,
notes, trust receipts, and other securities, obligations, mortgages, choses
in action and evidences of indebtedness issued or created by any
corporations, joint stock companies, syndicates, associations, firms, trusts
or persons, public or private, or by the government of the United States of
America, or by any state, territory, province, municipality or other
political subdivision or by any governmental agency, and covering any kind,
description or character of real or personal property, and as owner thereof
to possess and exercise all the rights, powers and privileges of ownership,
including the right to execute consents and vote thereon, and to do any and
all acts and things necessary or advisable for the preservation, protection,
improvement, and enhancement in value thereof.
(8) To acquire by lease, purchase, gift, devise, contract,
concession, or otherwise, and to hold, own, develop, explore, exploit,
improve, operate, lease, sublease, enjoy, control, manage or otherwise turn
to account, mortgage, grant, sell, exchange, convey or otherwise dispose of,
wherever situated within or without the State of Alabama, any and all real
estates, lands, options, concessions, grants, land patents, franchises,
rights, privileges, easements, tenements, estate, hereditaments, interests,
and properties of every kind, nature and description whatsoever.
(9) To adopt, apply for, obtain, register, produce, take,
purchase, exchange, lease, hire, acquire, secure, own, hold, use, operate,
contract or negotiate for, take licenses or other rights in respect of, sell,
assign, collect the royalties on, mortgage, pledge, create liens upon, or
otherwise dispose of, deal in and turn to account, letters patent, patents,
patent rights, patents applied for, or to be applied for, trademarks and
indications of origin or ownership, copyrights, syndicate rights, inventions,
discoveries, devices, machines, improvements, licenses, processes, date and
formulae of any and all kinds granted by or recognized under or pursuant to
the laws of the United States of America, or of any state thereof, or of any
other country or countries whatsoever, and with a view to the working and
development of same, to carry on any business, which the Corporation may
think calculated, directly or indirectly, to effectuate these objects.
<PAGE>
Articles of Incorporation
of Total Trim, Inc.
Page 4
(10) To purchase, hold, sell and reissue shares of its own
capital stock and other securities issued by it front time to time; and in
that connection, to purchase shares of stock issued by it to the extent of
capital surplus or any other type of surplus available thereof.
(11) To enter into, make and perform contracts of every
kind and description with any person, firm, association or corporation,
municipality, body politic, country, territory, state, government or colony
dependency thereof.
(12) To have one or more offices to carry on all of its
operations and businesses without restriction or limit as to amount, both
within and without this state, other states, districts, territories,
possessions, or colonies of the United States, and in any and all foreign
countries, in any lawful manner.
(13) To carry on any other business in connection with the
foregoing.
(14) To organize, incorporate and reorganize subsidiary
corporations, joint stock companies, and associations for any purpose
permitted by law.
IN GENERAL, to do any and all things hereinbefore set forth
and such other things as are incidental or conducive to the attainment of the
objects and purposes of this Corporation as principal, factor, agent,
contractor, or otherwise, either alone or in conjunction with, as partner or
otherwise any person, firm, association, corporation, or any entity of
whatsoever kind, and to do such acts and things and to exercise any and such
powers to the full extent authorized or permitted to a corporation under any
laws that may be now or hereafter applicable or available to this Corporation.
It is the intention that each of the objects, purposes and
powers specified in each of the paragraphs of this Article II of these
Articles of Incorporation shall not be limited or restricted by reference to
or inference from the terms of any other paragraph or of any other Article in
these Articles and each of the Articles or paragraphs of these Articles shall
be regarded as independent objects, purposes and powers, and the enumeration
of specific purposes and powers shall not be construed to restrict in any
manner the general terms and laws of the State of Alabama, nor shall the
expression of one thing be deemed to exclude another, although it be of like
nature.
<PAGE>
Articles of Incorporation
of Total Trim, Inc.
Page 5
ARTICLE III
PERIOD OF DURATION
The period of duration of the Corporation shall be perpetual.
ARTICLE IV
INITIAL REGISTERED OFFICE AND AGENT
The Corporation's initial registered office and mailing
address shall be 3110 Kendall Drive, Florence, Alabama 35630. The registered
agent at said address shall be Deborah A. Palmer.
ARTICLE V
CAPITAL
The total authorized capital stock of the Corporation is
1,000 shares of common stock with a par value of $ .01 per share.
ARTICLE VI
INCORPORATOR
The name and address of the incorporator is as follows:
NAME ADDRESS
---- -------
Deborah A. Palmer 3110 Kendall Drive
Florence, Alabama 35630
<PAGE>
Articles of Incorporation
of Total Trim, Inc.
Page 6
ARTICLE VII
DIRECTORS
The number of directors constituting the initial Board of
Directors of the Corporation is one (1), and the name and address of the first
director of the Corporation who is to serve as director until the first annual
meeting of shareholders or until their successors are elected and shall qualify
is:
NAME ADDRESS
---- -------
Deborah A. Palmer 3110 Kendall Drive
Florence, Alabama 35630
The shareholders of the Corporation shall have the right,
at any regular or special meeting of the shareholders, to remove any or all
of the directors, with or without cause, and shall have the right at the same
meeting to rail any vacancy created by such removal.
In furtherance, not in limitation, of the powers conferred
upon the Board, said Board is expressly authorized, without any vote or other
action by shareholders other than such as at the time shall be expressly
required by statute applicable to such action or by these Articles of
Incorporation, to exercise all of the powers, rights, and privileges of the
Corporation and do all acts and things which may be done by the Corporation,
and particularly among other things:
(a) In the interval, between meetings of the shareholders,
to make, alter and repeal by-laws of the Corporation not inconsistent with
these Articles of Incorporation, subject to the power of the Shareholders to
alter and repeal by-laws made by the Board of Directors, which action by the
directors shall fully protect third parties in dealing with the Corporation
during any such interval;
(b) To determine whether any, and if any, what part of the
surplus of the Corporation available for distribution as dividends shall be
declared and paid in dividends to the shareholders, and whether or not in
cash or capital stock of the Corporation or in any other property, and
generally to determine and direct the use and disposition of any such
surplus; and to fix the times for the declaration and payment of dividends;
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Articles of Incorporation
of Total Trim, Inc.
Page 7
(c) From time to time, to fix the amount to be reserved
over and above the stated capital of the Corporation and to determine and
direct how amounts so reserved shall be used;
(d) From time to time, and without limit as to amount, to
borrow or otherwise raise money for any of the purposes of the Corporation;
to authorize the issuance of bonds, debentures, notes or other obligations of
the Corporation, of any nature, or in any manner, and to authorize the
creation of mortgages upon, or the pledge or conveyance or assignment in
trust of, the whole or any part of the property of the Corporation, real or
personal, whether at the time owned or thereafter acquired, including
contract rights, to secure the payment of any such bonds, debentures, notes
or other obligations or the interest thereon; and to authorize the sale or
pledge or other disposition of such bonds, debentures, notes, or other
obligations of the Corporation for its corporate purposes;
(e) To provide, subject to the requirements of law, these
Articles of Incorporation and the by-laws of the Corporation, for the holding
of stockholders' and directors' meetings within or without the State of
Alabama at such place or places as may from time to time be designated by
resolution of the Board of Directors, and to provide for an office or offices
and for the keeping of the books of the Corporation (subject to the
provisions of any applicable statutes) within or without the State of Alabama;
(f) To take any action required or permitted to be taken at
any meeting of the Board or of any committee thereof without a meeting, if
prior to such action a written consent thereto is signed by all members of
the Board or of such committee, as the case may be, and if such written
consent is filed with the minutes or proceedings of the Board or committee.
ARTICLE VIII
NON-LIABILITY OF SHAREHOLDERS
FOR CORPORATE DEBT
Except as provided herein, the shareholders shall not be
personally liable for the payment of the Corporation's debts and obligations
to any extent whatsoever.
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Articles of Incorporation
of Total Trim, Inc.
Page 8
ARTICLE IX
CONTRACTS
No contract or other transaction between the Corporation
any one or more of its directors or any other corporation, firm, association
or entity in which one or more of its directors are directors or officers or
are financially interested, shall be either void or voidable because of such
relationship or interest or because such director or directors are present at
the meeting of the board of directors or a committee thereof which
authorizes, approves or ratifies such contract or transaction, if the
contract or transaction is fair and reasonable to the corporation and if
either:
(a) A majority of the directors shall constitute a quorum
for the transaction of business, unless the bylaws shall provide that a
different number shall constitute a quorum. The act of a majority of the
directors present at a meeting at which a quorum is present shall be tile act
of the board of directors, unless the act of a greater number is required by
the bylaws.
(b) If a quorum is present when the meeting is convened,
the directors present may continue to do business, taking action by a vote of
a majority of a quorum as fixed above, until adjournment, notwithstanding the
withdrawal of enough directors to leave less than a quorum as fixed above, or
the refusal of any director present to vote.
ARTICLE X
INDEMNIFICATION
The Corporation shall have the power to reimburse and
indemnify any and all persons who may have served at its request as a
director, or officer, employee, or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, partner,
employee, or agent of another corporation to the extent permitted by Section
10-2A-21 of the Alabama Business Corporation Act, or as it may hereafter be
amended. Such indemnification shall not be deemed exclusive of any other
rights to which one so indemnified may be entitled under any applicable laws,
by-laws, agreements, vote of shareholders, or otherwise.
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Articles of Incorporation
of Total Trim, Inc.
Page 9
ARTICLE XI
PREEMPTIVE RIGHTS
Shareholders shall have preemptive rights.
ARTICLE XII
MISCELLANEOUS
All heading and captions are for reference only and are not
to be construed as part of the Articles. Throughout these Articles the
masculine gender shall be deemed to include the feminine gender and the
singular shall be deemed to include the plural, and vice-versa, whenever the
context admits such construction.
IN WITNESS WHEREOF, the undersigned incorporator hereunto
subscribes his signature to the Articles of Incorporation, effective this 5th
day of November, 1992.
WITNESS: INCORPORATOR:
/s/ Marilyn Marks /s/ Deborah A. Palmer
- ------------------------------- -------------------------------
Deborah A. Palmer
This instrument prepared by:
Conrad C. Pitts, Esq.
KELLER & PITTS
P.O. Box 1436
Florence, AL 35630
(205) 764-5822
<PAGE>
Exhibit 3.24
BY LAWS OF
TOTAL TRIM, INC.
OFFICES
(1) PRINCIPAL OFFICE. The principal office of the Corporation
shall be located in Florence, Lauderdale County, Alabama. The board of directors
may, by resolution, change the location of this office from time to time.
(2) OTHER OFFICES. The corporation may have other offices,
either within or outside of the State of Alabama, at such place or places as the
board of directors may from time to time appoint or the business of the
Corporation may require.
ARTICLE II
SEAL
The corporate seal shall be in circular form and shall have
inscribed thereon the name of the Corporation, the words "Corporate Seal," and
such other word or words, if any, as may be determined by the board of directors
to be inscribed thereon.
ARTICLE III
MEETINGS OF STOCKHOLDERS
(1) PLACE OF MEETING. All meetings of the shareholders shall
be held at the offices of the Corporation in Alabama, or at such other place or
places as may be designated by the board of directors.
(2) ANNUAL MEETINGS. The annual meeting of the shareholders
for the election of directors and for the transaction of such other business as
may come before the meeting shall be held on the last week in December each
year, commencing with the year 1992, if not a legal holiday under the laws of
the state where such meeting is to be held, and if a legal holiday under the
laws of said state, then on the next succeeding business day, at such hour as
may be named in the notice of said meeting. If for any reason any annual meeting
shall not be held on the day designated herein, or at any adjournment of such
meeting, the board of directors shall cause the election to be held at a special
meeting called and held as soon thereafter as convenient and practicable. At
such special meeting of the shareholders may elect the directors and transact
other business with the same force and effect as at an annual meeting duly
called and held.
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By-laws of Total Trim, Inc.
Page 2
(3) SPECIAL MEETINGS. A special meeting of the shareholders
for any purpose or purposes, unless otherwise prescribed by statute, may be
called at any time by the president, the chairman of the board of directors, the
executive committee, by order of the board of directors or by a shareholder or
shareholders holding of record at least ten percent (10%) of the outstanding
capital stock of any class of the Corporation entitled to vote at such meeting.
(4) NOTICE OF MEETING. Except as otherwise provided by
statute, notice of each meeting of the shareholders, whether annual or special,
shall be given not less than ten (10) nor more than fifty (50) days before the
day on which the meeting is to be held to each shareholder of record entitled to
vote at such meeting by delivering a written or printed notice thereof to him
personally, or by mailing such notice in a postage prepaid envelope addressed to
him at his post office address furnished by him to the secretary of the
Corporation for such purpose, or, if he shall not have furnished to the
secretary of the Corporation his address for such purpose, then at the post
office address, if any, as the same appears upon the stock record books of the
Corporation or at his post office address last known to the secretary of the
Corporation or by transmitting a notice wireless. Except where expressly
required by law, no publication of any notice of such a meeting of shareholders
shall be required. Every such notice shall state the place, day and hour of the
meeting but need not state the purposes thereof, except for special meeting or
as otherwise in these bylaws or by statute expressly provided or required.
Notice of any meeting of shareholders shall not be required to be given to any
shareholder who shall attend such meeting in person or by proxy; and if any
shareholder shall, in person or by attorney thereunder authorized, in writing or
by telegraph, cable, radio or wireless, waive notice of any meeting, whether
before or after such meeting be held, notice thereof need not be given to him.
Notice of any adjourned meeting of the shareholders shall not be required to be
given, except when expressly required by law.
(5) ORGANIZATION. At every meeting of the shareholders, the
president, or in his absence, the chairman of the board, or in his absence, a
vice president, or in the absence of all of the foregoing officers, a chairman
chosen by the shareholders present in person or by proxy and entitled to vote
thereat, by a majority vote shall act as chairman. The secretary, or in his
absence, an assistant secretary, shall act as secretary at all meetings of the
shareholders. In the absence from any such meeting of the secretary and the
assistant secretaries, the chairman may appoint any person to act as secretary
of the meeting.
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By-laws of Total Trim, Inc.
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(6) BUSINESS AND ORDER OF BUSINESS. At each meeting of the
shareholders such business may be transacted as may properly be brought before
such meeting, whether or not such business is stated in the notice of such
meeting or in a waiver of notice thereof, except for special meetings or as
otherwise in these bylaws or by statute expressly provided or required. The
order of business at all meetings of the shareholders shall be determined by the
chairman, unless the holders of a majority of the shares of each class present
in person or by proxy at such meeting and entitled to vote thereat shall
otherwise determine.
(7) QUORUM. At each meeting of the shareholders, the
holders of a majority of the shares of each class of voting shares of the
Corporation issued and outstanding and entitled to vote thereat, present
either in person or by proxy, shall constitute a quorum for the transaction
of business, except where otherwise provided by law or by the business, or by
the articles of incorporation. In the absence of a quorum, the shareholders
of the Corporation present in person or by proxy and entitled to vote, by a
majority vote, or, in the absence of all the shareholders, any officer
entitled to preside or act as secretary at such meeting, shall have the power
to adjourn the meeting from time to time, until shareholders holding the
requisite amount of shares shall be present or represented. At any such
adjourned meeting, at which a quorum may be present any business may be
transacted which might have been transacted at the meeting as originally
called. The absence from any meeting of the number of shares required by the
laws of the State of Alabama, by the articles of incorporation of the
Corporation or by these by laws for action upon any given matter shall not
prevent action at such meeting upon any other matter or matters which may
properly come before the meeting, if the number of shares required in respect
of such other matter shall be present.
(8) VOTING. At each meeting of the shareholders, each holder
of record of shares entitled to vote thereat, shall be entitled to one (1) vote
in person or by proxy for each share of the Corporation entitled to vote so
registered in his name on the books of the Corporation: (i) on the date fixed
pursuant to Section 3 or Article VII of these by laws as the record date for the
determination of shareholders entitled to vote at such meeting, notwithstanding
the sale, or other disposal or transfer on the books of the Corporation of such
share on or after the date so fixed; or (ii) at the date of such meeting if no
such record date shall have been fixed. Shares of its on belonging to the
Corporation shall not be voted directly or indirectly. Persons holding in a
fiduciary capacity shares having voting rights shall be entitled to vote the
shares so held, and persons whose shares having voting rights pledged shall be
entitled to vote, unless in the transfer by the pledgor on the books of the
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By-laws of Total Trim, Inc.
Page 4
Corporation he shall have expressly empowered the pledgee to vote thereon, in
which case only the pledgee or his proxy, may represent said shares and vote
thereon. Any vote of shares may be cast by the shareholder entitled thereto in
person or by his proxy appointed by an instrument in writing subscribed by such
shareholder or by his attorney thereunto authorized, and delivered to the
secretary of the meeting. At all meetings of the shareholders, all matters
(except in special cases where other provision is made by statute, and except as
otherwise provided in these bylaws or in the certificate of incorporation) shall
be decided by the vote of a majority in interest of the shareholders present in
person or by proxy and entitled to vote thereat, a quorum being present. Unless
required by law or demanded by a shareholder present in person or by proxy at
any meeting and entitled to vote thereat, the vote on any question need not be
by ballot. On a vote by ballot, each ballot shall be signed by the shareholder
voting, or by his proxy, if there be such a proxy, and shall state the number of
shares voted by him.
(9) LIST OF SHAREHOLDERS. It shall be the duty of the
secretary or other officer who shall have charge of the share ledger, either
directly or through a transfer agent appointed by the board of directors, to
keep and maintain a complete list of shareholders and the number of shares
standing in their respective name. Such list shall be open to the examination of
any shareholder at the place where said list is customarily kept; provided that
such list shall be produced and kept at the time and place of any election
during the whole time thereof and subject to the inspection of any shareholder
who may be present. The original or duplicate share ledger shall be the only
evidence as to the shareholders who are entitled to examine such list or the
books of the Corporation, or to vote in person or by proxy at any meeting of
shareholders.
(10) ADDRESSES OF SHAREHOLDERS. Each shareholder shall
designate to the secretary of the Corporation, or the transfer agent appointed
by the board of directors, an address at which notice of meetings and all other
corporate notices may be served upon him by mail directed to him at his post
office address, if any, as the same appears upon the share record of the
Corporation or at his post office address last known to the secretary of the
Corporation or to the transfer agent.
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ARTICLE IV
DIRECTORS
(1) POWERS. The board of directors shall exercise all the
powers of the Corporation except such as are by law, or by the articles of
incorporation of this Corporation, or by these bylaws conferred upon or reserved
to the shareholders of any class or classes and except such powers as may be
deleted to an executive committee and other committees as provided in Article V
of these bylaws.
(2) NUMBER. The board of directors shall consist of one (1)
director.
(3) TERM OF OFFICE: VACANCIES. Each director shall be elected
to serve until the next annual meeting of shareholders and until his successor
is chosen and qualified. In case one (1) or more vacancies shall occur in the
board of directors, whether caused by death, resignation, retirement,
disqualification or removal, successors to fill such vacancies shall be elected
either by vote of the remaining directors or by vote of the shareholders at any
regular or special meeting, and shall hold office until the next annual meeting
of shareholders and until their successors are chosen and qualified. Directors
need not be shareholders.
(4) REMOVAL. Any or all of the directors may be removed from
office, with or without cause, by vote of shareholders holding a majority of all
the shares of stock outstanding and entitled to vote.
(5) ELECTION OF DIRECTORS. Directors shall be elected each
year at the annual meeting of shareholders, or at the special meeting held in
lieu thereof as provided in Article III hereof.
(6) PLACE OF MEETING, ETC. The board of directors may hold its
meetings and have one or more offices at such place or places within or outside
the State of Alabama, as the board may from time to time determine, or, in the
case of meetings, as shall be specified or fixed in the respective notices or
waivers of notice thereof.
(7) ANNUAL MEETINGS. The board of directors shall meet for the
purpose of organization, the election of officers and the transaction of other
business, immediately after, or as soon as practicable after, each annual
meeting of shareholders and
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election of directors at the same place at which each such annual meeting of
shareholders is held, and notice of such meeting need not be given; such
meeting, however, may be held at any other time or place which shall be
specified in a notice given as thereinafter provided for special meetings of
the board of directors or in a consent and waiver of notice thereof signed by
all the directors.
(8) OTHER REGULAR MEETINGS. Other regular meetings of the
board of directors shall be held at such places and at such times as the board
shall from time to time by resolution determine. If any day fixed for a regular
meeting shall be a legal holiday at the place where the meeting is to be held,
then the meeting which would otherwise be held on that day shall be held at the
same hour on the next succeeding business day not a legal holiday. Notice of
regular meetings need not be given.
(9) SPECIAL MEETINGS: NOTICE. Special meetings of the
board of directors shall be held whenever called by the chairman of the
board, the president, the executive committee, or a majority of the directors
then in office. Notice of each such meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, at least two
(2) days before the day on which the meeting is to be held, or shall be
directed to him at such place by telegraph, cable, radio or wireless, or be
delivered personally not later than the day before the day on which the
meeting is to be held. Every such notice shall state the time and place of
the meeting but need not state the purposes thereof, except as otherwise in
these bylaws or by statute expressly provided. Notice of any meeting of the
board need not be given to any director, however, if waived by him in writing
or by telephone, cable, radio or wireless, whether before or after such
meeting be held, or if he shall be present at the meeting; and any meeting of
the board shall be a legal meeting without any notice thereof having been
given if all of the directors shall be present thereat.
(10) ORGANIZATION. At each meeting of the board of directors,
the chairman of the board of directors, or in his absence, the president, or in
the absence of both of the foregoing officers, a director chosen by a majority
of the directors present, shall act as chairman. The secretary, or in his
absence, an assistant secretary, or in the absence of both the secretary and the
assistant secretaries, any person appointed by the chairman shall act as
secretary of the meeting.
(11) BUSINESS AND ORDER OF BUSINESS. At each meeting of the
board of directors such business may be transacted as may properly be brought
before such meeting, whether or not such business is stated in the notice of
such meeting, or in a waiver
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of notice thereof, except as otherwise in these bylaws or by statute
expressly provided or required. The order of business at all meetings of the
board of directors shall be as determined by the chairman, subject to the
approval of a majority of the directors present at such meeting.
(12) QUORUM AND MANNER OF ACTING. Except as otherwise
provided by statute or by these bylaws or by the Corporation's articles of
incorporation, a majority of the total number of directors shall constitute a
quorum for the transaction of business at any meeting and the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the board of directors. In the absence of a quorum, a
majority of the directors present may adjourn any meeting from time to time
until a quorum be had. Notice of any adjourned meeting need not be given.
(13) RESIGNATIONS. Any director of the Corporation may resign
at any time by giving verbal or written notice thereof to the chairman of the
board of directors, or the president or to the secretary of the Corporation. The
resignation of any director shall take effect at the time notice thereof is
given, unless otherwise specified in the notice. The acceptance of a resignation
shall not be necessary to make it effective.
ARTICLE V
EXECUTIVE AND OTHER COMMITTEES
(1) APPOINTMENT AND TERM OF OFFICE OF EXECUTIVE COMMITTEE. The
board of directors may establish an executive committee consisting of one (1) or
more directors, which number shall include the president, to serve at the
pleasure of the board. The president shall be, ex officio, chairman of the
executive committee.
(2) VACANCIES IN EXECUTIVE COMMITTEE. Vacancies occurring in
the executive committee from any cause shall be filled by the board of directors
at any meeting thereof.
(3) EXECUTIVE COMMITTEE TO REPORT TO BOARD. All action by the
executive committee shall be reported to the board of directors at its meeting
next succeeding such action.
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(4) PROCEDURE OF EXECUTIVE COMMITTEE. The executive committee
shall fix its own rules of procedure not inconsistent with these bylaws or with
any direction of the board of directors. It shall meet at such times and places
and upon such notice as shall be provided by such rules or by resolution of the
board of directors. The presence of a majority shall constitute a quorum for the
transaction of business, and in every case an affirmative vote of a majority of
all the members of the committee present shall be necessary for the taking of
any action.
(5) GENERAL POWERS OF EXECUTIVE COMMITTEE. During the
intervals between the meetings of the board of directors, the executive
committee, except as limited by the laws of the Corporation or by specific
directors of the board of directors, shall possess and may exercise all the
powers of the board of directors in the management and direction of the
business and conduct of the affairs of the Corporation in such manner as the
executive committee shall deem for the best interests of the Corporation, and
shall have power to authorize the seal of the Corporation to be affixed to
all instruments and documents which may require it, except that the executive
committee shall not have the power to elect directors nor to elect or remove
any executive officer.
(6) SPECIAL POWERS OF EXECUTIVE COMMITTEE. The executive
committee, if one is established, shall have special charge and control of
all financial affairs of the Corporation. The executive committee shall
supervise and direct all investments, temporary or otherwise, of the funds of
the Corporation and the manner in which the accounts, books and records shall
be kept. The executive committee may authorize the satisfaction of mortgages,
the sale of real estate and sale and reinvestment of any and all other assets
of the Corporation. The executive committee may also appoint investment
advisers, authorize accounts for the Corporation with securities brokers and
dealers, and appoint a general counsel, and other general and special
attorneys. Any appointees of the executive committee shall have such powers,
not contrary to law, the articles of incorporation or these bylaws, and shall
perform such duties as may be assigned to them by the executive committee.
(7) OTHER COMMITTEES. From time to time the board of directors
may appoint any other committee or committees for any purpose or purposes to the
extent lawful, which shall have such powers as shall be specified in the
resolution of appointment.
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(8) COMPENSATION. The members of any duly appointed committee
shall receive such compensation and/or fees as from time to time may be fixed by
the board of directors.
ARTICLE VI
OFFICERS
(1) EXECUTIVE OFFICERS. The executive officers of the
Corporation shall be a president and a secretary. The board may also elect a
chairman of the board and additional officers. One (1) person may hold all
offices and perform the duties of any of said officers.
(2) ELECTION, TERM OF OFFICE AND QUALIFICATIONS OF EXECUTIVE
OFFICERS. The executive officers shall be elected annually by the board of
directors. Each executive officer shall hold office until his successor shall
have been duly elected and qualified in his stead, or until his death or until
he shall have resigned or shall have been removed in the manner provided herein.
The chairman of the board and the president shall be chosen from amount the
directors.
(3) SUBORDINATE OFFICERS. The board of directors or the
execute committee may from time to time appoint such other officers as the board
of directors or the executive committee may deem necessary, including one (1) or
more assistant treasurers and one (1) or more assistant secretaries, and may
also appoint such agents and employees of the Corporation as may be deemed
proper. Such officers, agents and employees shall hold office for such period,
have such authority, and perform such duties as in these bylaws provided or as
the board of directors or the executive committee may from time to time
prescribe. The board of directors may from time to time authorize any officer to
appoint and remove agents and employees and to prescribe the powers and duties
thereof.
(4) REMOVAL. Any officer, agent or employee may be removed
either with or without cause, by the board of directors at any meeting called
for the purpose, or, except in case of any officer elected by the board of
directors, by any officers upon whom the power of removal may be conferred by
the board of directors.
(5) RESIGNATIONS. Any officer may resign at any time by giving
written notice to the board of directors. Any such resignation shall take effect
at the date
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of receipt of such notice or at any later time specified therein,
and unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
(6) VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these bylaws for
regular election or appointment to such office.
(7) THE CHAIRMAN OF THE BOARD OF DIRECTORS. The chairman of
the board of directors, when present, shall preside at all meetings of the
board of directors. In addition to the powers and duties mentioned in these
bylaws, he shall have supervision of such matters, not contrary to law. the
certificate of incorporation or these bylaws, as may be assigned or delegated
to him by the board of directors or the executive committee.
(8) THE PRESIDENT. The president shall be the chief executive
officer of the Corporation and shall have general supervision of the business of
the Corporation and over its several officers, subject, however, to the control
of the board of directors and the executive committee. He shall at each annual
meeting and from time to time report to the shareholders and the board of
directors and the executive committee all matters which in his knowledge which
the interests of the Corporation may require to be brought to their notice;
shall preside when present at all meetings of the shareholders and, in the
absence of the chairman of the board, of the board of directors; shall sign in
the name of the Corporation all deeds, mortgages, bonds, contracts or other
instruments authorized by the board of directors or the executive committee
except in cases where the signing and execution thereof shall be expressly
delegated by the board of directors or by these bylaws to the president alone or
some other officer agent of the Corporation; and in general shall perform all
duties incident to the office of president and such other duties as from time to
time may be assigned to him by the board of directors or the executive committee
or as are prescribed by these bylaws. The president shall be, ex officio, a
member of all standing committees. The President must be a qualified person as
defined in the Revised Professional Corporation Act.
(9) VICE PRESIDENT. The vice president shall perform such
duties and exercise such powers as may be assigned to him from time to time by
the board of directors of the executive committee. In the absence of either the
chairman of the board or the president, or both, or in the case of his or their
inability to act, a vice president shall perform the duties and exercise the
powers of either the chairman of the board of directors or the
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president, or both, but subject to the control of the board of directors and
the executive committee.
(10) THE SECRETARY. The secretary shall keep or cause to be
kept in books the minutes of the meetings of the shareholders and the board of
directors; shall see that all notices are duly given in accordance with the
provisions of these bylaws and as required by law; shall be custodian of the
records and of the seal of the corporation and see that the seal is affixed to
all documents the execution of which on behalf of the Corporation under its seal
is duly authorized; shall keep directly or through a transfer agent a register
of the post office address of each shareholder, and make proper changes in such
register, retaining and filing his authority for such entries; shall see that
the books, reports, statements, certificates and all other documents and records
required by law are properly kept and filed; and in general shall perform all
duties incident to the office of secretary and such other duties as may, from
time to time, be assigned to him by the board of directors or the executive
committee.
(11) ASSISTANT SECRETARIES. At the request of the secretary or
in his absence or disability, any assistant secretary shall have power to
perform all the duties of the secretary, and when so acting, shall have all the
powers of, and be subject to all restrictions upon, the secretary. The assistant
secretaries shall perform such other duties as from time to time may be assigned
to them by the board of directors, by the executive committee, by the chairman
of the board or by the president.
(12) THE TREASURER. The treasurer shall give such bond for
faithful performance of his duties as the board of directors shall require.
He shall have charge and custody of, and be responsible for, all funds and
securities of the Corporation and deposit all such funds and securities of
the Corporation and deposit all such funds in the name of the Corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with the provisions of these bylaws; at all reasonable times
exhibit the books of accounts and records to any of the directors of the
Corporation, upon application during business hours at the office of the
Corporation or where such books and records are dept; render a statement of
the condition of the finances of the Corporation at all regular meetings of
the board of directors, if called upon to do so, and a full financial report
at the annual meeting of the shareholders, if called upon to do so; receive
and give receipts for moneys due and payable to the Corporation from any
source whatsoever; and in general, perform all of the duties ncident to the
office of treasurer and such other duties as from time to time may be
assigned to him by the board of directors or by the executive committee.
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(13) ASSISTANT TREASURERS. At the request of the treasurer or
in his absence or disability any assistant treasurer shall have power to perform
all the duties of the treasurer, and when so acting, shall have all the powers
of, and be subject to all the restrictions upon, the treasurer. The assistant
treasurers shall perform such other duties as from time to time may be assigned
to them by the board of directors, by the executive committee, by the chairman
of the board or by the president.
(14) SALARIES. The salaries of the officers shall be fixed
from time to time by the executive committee of the board of directors. No
officer shall be prevented from receiving such salary by reason of the fact that
he is also a director of the Corporation.
ARTICLE VII
SHARES AND THEIR TRANSFER
(1) CERTIFICATES OF SHARES. Certificates for shares of each
class of the capital stock of the Corporation shall be in such form as the
board of directors shall approve and shall be numbered and shall be entered
in the books of the Corporation as they are issued. They shall exhibit the
holder's name and certify the number of shares owned by him and shall be
signed by or in the name of the Corporation by the president or a vice
president and the secretary or an assistant secretary of the Corporation;
provided, however, that where any such certificate is signed by a transfer
agent or an assistant transfer agent or by a transfer clerk acting on behalf
of the Corporation as a registrar, the signature of any such president, vice
president, secretary or assistant secretary may be facsimile printed or
engraved. In case any officer or officers who shall have signed, or whose
facsimile signature or signatures shall have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have delivered by the Corporation, such
certificate or certificates shall nevertheless be adopted by the Corporation
and be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures shall
have been used thereon had not ceased to be such officer or officers of the
Corporation. The share record books and the blank share certificate books
shall be kept by the secretary or by a transfer agent or by any other officer
or agent designated by the board of directors or by the executive committee
or by the president.
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(2) TRANSFER OF SHARES. Transfer of shares of the capital
stock of the Corporation shall be made only on the books of the Corporation by
the holder thereof, or by his attorney thereunto duly authorized by a power of
attorney duly executed and filed with the secretary of the Corporation or a
transfer agent of the Corporation, if any, and upon the surrender and
cancellation of the certificate or certificates for such shares, properly
endorsed. A person in whose name shares stand on the books of the Corporation
shall be deemed the owner thereof as regards the Corporation, and upon any
transfer of shares the person or persons into whose name or names such shares of
stock shall be transferred on the books of the Corporation shall be substituted
for the person or persons out of whose name or names such shares shall have been
transferred, with respect to all rights, privileges and obligations of holders
of stock of the Corporation and as against the Corporation or any other person
or persons. The term "person" or "persons" wherever used herein shall be deemed
in include any Firm, corporation, or association. Whenever any transfer of
shares shall be made for collateral security, and not absolutely, such fact, if
known to the secretary or to said transfer agent, shall be so expressed in the
entry of transfer.
(3) CLOSING OF TRANSFER BOOKS. The board of directors may,
be resolution, direct that the stock transfer books of the Corporation be
closed for a period not exceeding fifty (50) days preceding the date of any
meeting of stockholders or the date for payment of any dividend or the date
for the allotment of rights or the date when any change or conversion or
exchange of capital stock shall go into effect or for a period of not
exceeding Fifty (50) days preceding the date of any meeting of shareholders,
or the date for the payment of any dividend or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital
stock shall go into effect or a date in connection with obtaining such
consent, as a record date for the determination of the shareholders entitled
to notice of, and to vote at, any such meeting, and any adjournment thereof,
or entitled to receive payment of any such dividend, or to any such allotment
of rights, or to exercise the rights in respect of any such change,
conversion or exchange of capital stock or to give such consent, and in such
case such shareholders and only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights,
or to give such consent, as the case may be, notwithstanding any transfer of
any stock on the books of the Corporation after any such record date fixed as
aforesaid.
(4) LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. The
holder of any shares of the Corporation shall immediately notify the
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Corporation of any loss, theft, destruction or mutilation of the certificate;
and, the board of directors may, in its discretion, require the owner of the
lost, stolen or destroyed certificate, or his legal representatives, to give
to the Corporation and to such registrar, transfer agent and/or transfer
clerk as may be authorized or required to countersign such new certificate or
certificates a bond, in such sum as they may direct, and with such surety or
sureties, as they may direct, as indemnity against any claim that may be made
against them or any of them on account of or in connection with the alleged
loss, theft, or destruction of any such certificate.
(5) TRANSFER AGENT AND REGISTRAR: REGULATIONS. The
Corporation shall, if and whenever the board of directors shall so determine,
maintain one or more transfer offices or agencies, each in charge of the
transfer agent or transfer clerk designated by the board of directors, where
the shares of the capital stock of the Corporation shall be directly
transferable, and/or one or more registry offices, each in charge of a
registrar designated by the board of directors where such shares of stock
shall be registered, and, if the board of directors shall so determine, no
certificate for shares of the capital stock of the Corporation, in respect of
which a transfer agent or transfer clerk and/or registrar shall have been
designated, shall be valid unless countersigned by such transfer agent or
transfer clerk and/or registered by such registrar. The board may also make
such additional rules and regulations as it may deem expedient concerning the
issue, transfer and registration of certificates for shares of the capital
stock of the Corporation.
ARTICLE VIII
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
(1) CONTRACTS, ETC. The executive committee may authorize any
officer or officers, or agent or agents of the Corporation to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Corporation, and such authority may be general or confined to specific
instances; and, unless so authorized by the executive committee or by these
bylaws, no officer, agent or employee shall have any power or authority to bind
the Corporation by any contract or engagement or to pledge its credit or to
render it liable pecuniarily for any purpose or to any amount.
(2) CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes, or other evidences of indebtedness issued in
the name of the
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Corporation, shall be signed by the president, any vice president, or the
secretary of the Corporation.
(3) DEPOSITS. All cash and securities of the Corporation
shall be place din trust and/or deposited from time to time to the credit of
the Corporation in such responsible banks or trust companies as the board of
directors or the executive committee or the chairman of the board or the
president may from time to time designated, or as may be designated by any
other officer or officers of the Corporation to whom such power may be
delegated by the board of directors of the executive committee.
(4) GENERAL AND SPECIAL ACCOUNTS. The board of directors or
the executive committee or the chairman of the board or the president may from
time to time authorize the opening and keeping, with responsible banks or trust
companies as it or he may designate, of general and special trust and/or bank
accounts, and may make such special rules and regulations, with respect thereto,
not inconsistent with the provisions of these bylaws, as it or he may deem
expedient.
ARTICLE IX
BOOKS AND RECORDS
(1) LOCATION. The books and records of the Corporation except
the original or a duplicate stock ledger, may be kept outside the State of
Alabama at such place or places as the board of directors may from time to time
determine, except as otherwise required by law.
(2) EXAMINATION BY SHAREHOLDERS. The board of directors shall,
subject to the laws of Alabama, have power to determine from time to time
whether or to what extent and at what time and places and under what conditions
and regulations any accounts and books of the Corporation, or any of them, shall
be open to the inspection of the shareholders; and no shareholder shall have any
right to inspect any account or book or document of the Corporation, except as
conferred by the laws of Alabama, unless and until authorized to do so by
resolution of the board of directors or of the shareholders; provided, however,
that, subject to such reasonable restrictions as the board of directors may
prescribe, the Corporation shall at any time, upon the written request of any
registered holder of its shares, mail to such shareholder a statement of the
assets then belonging to the Corporation; provided, further, that an original or
duplicate share ledger, containing the names and
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addresses of the shareholders and the number of shares held by them
respectively, shall at all times, during the usual hours for business, be
open to the examination of every stockholder at the principal office or place
of business of the Corporation in Alabama or at the office of any duly
appointed transfer agent or registrar.
ARTICLE X
DIVIDEND, SURPLUS, ETC.
The board of directors shall have power, subject to the
provisions of the certificate of incorporation of the Corporation, to fix and
determine and to vary from time to time, the amount of the working capital of
the Corporation before declaring any dividends among its shareholders; to direct
and determine the use and disposition of any net profits or surplus; to
determine the amount of any reserves necessary in thelrjudgment before declaring
any dividends among its shareholders; to determine from time to time the amount
of the net earnings and net profits of the Corporation available for dividends;
to determine the amount of any dividends; and to declare and pay the same.
ARTICLE XI
MISCELLANEOUS
(1) COMPENSATION OF DIRECTORS. The directors shall receive
such compensation and/or fees, and expenses in connection with attendance at
meetings or other performance of their duties, as from time to time may be fixed
by the board of directors. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity, as an
officer, agent or otherwise, and receiving compensation therefor.
(2) PROXIES OF THE CORPORATION. Except as otherwise in these
bylaws or in the articles of incorporation the Corporation provided, and unless
otherwise provided by resolution of the board of directors or of the executive
committee, the President may from time to time appoint an attorney or attorneys
or agent or agents of the Corporation, in the name and on behalf of the
Corporation to cast the votes which the Corporation may be entitled to cast as a
shareholder or otherwise in any other corporation any of whose stock or other
securities may be held by the Corporation, at meetings of the holders of the
stock or other securities of such other corporation, or to contest in writing to
any action by such
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corporation and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause
to be executed in the name and on behalf of the corporation and under its
corporate seal or otherwise, all such written proxies or other instruments as
he may deem necessary or proper in the premises.
(3) WAIVER OF NOTICE. Whenever any notice whatever is required
to be given by these bylaws of the articles of incorporation or the laws of the
State of Alabama, a waiver thereof in writing, or by telegraph, cable, radio or
wireless by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto; and any such
notice with respect to any shareholders' or directors' meeting may be dispensed
with, if any shareholder shall attend such shareholders' meeting, either in
person or by proxy, or if every director shall attend such directors' meeting in
person.
(4) CONFLICTS OF INTEREST. Except as otherwise provided in the
articles of incorporation, a director of the Corporation shall not in the
absence of fraud be disqualified by his office from dealing or contracting with
the Corporation either as a vendor, purchaser, or otherwise, nor in the absence
of fraud shall any transaction or contract of the Corporation be void or
voidable or affected by reason of the fact that any director, or any firm of
which any director is a member, or any corporation of which any director is an
officer, director or shareholder, is in any way interested in such transaction
or contract. Nor shall any director be liable to account to the Corporation for
any profit realized by him from or through any such transaction or contract of
the Corporation by reason of the fact that he or any firm of which he is an
officer, director or shareholder, was interested in such transaction or
contract.
(5) INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS. Every person who is, or has been, a director, officer, employee or agent
of the Corporation, or of a subsidiary or an affiliate of the Corporation, shall
be indemnified by the Corporation to the extent provided in Section 10-2A-21,
Code of Alabama, 1975, and in the articles of incorporation. The foregoing
rights of indemnification shall be without prejudice to any other rights to
which any such director, officer, employee or agent may be entitled as a matter
of law.
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Page 18
ARTICLE XII
AMENDMENTS
Subject to any restrictive provisions of law or of the Corporation's articles of
incorporation, all bylaws of the Corporation shall be subject to alteration or
repeal and new bylaws may be made either by the affirmative vote of the holders
of record of a majority of the outstanding stock of the Corporation entitled to
vote in respect thereof at an annual meeting or at any special meeting, provided
that notice of the proposed alteration or repeal or of the proposed new bylaws
be included in the notice of such meeting, or by the affirmative vote of a
majority of the board of directors at any regular or special meeting, provided
that notice of the proposed alteration or repeal or of the new proposed bylaws
be included in the notice of any such special meeting.
ARTICLE XIII
REQUIREMENTS OF REIMBURSEMENT
If the Corporation pays for travel and entertainment expenses
of any shareholder during any tax year and the Internal Revenue Service
subsequently disallows any or all of said travel and entertainment expenses, the
shareholder on whose behalf said expenses were paid is required to reimburse to
the Corporation the amount of said disallowance.
ARTICLE XIV
MISCELLANEOUS
Throughout these bylaws, the masculine gender shall be deemed to
include the feminine gender and vice-versa.
<PAGE>
Exhibit 3.25
CERTIFICATE OF INCORPORATION
OF
TOTAL TRIM, INC. - SOUTH
ARTICLE ONE
The name of this Corporation (hereinafter called
the "Corporation") is Total Trim, Inc. - South.
ARTICLE TWO
The address, including street, number, city and county,
of the registered office of the Corporation in the State of Delaware is 1209
Orange Street, in the City of Wilmington, County of New Castle, 19801. The
name of the registered agent of the Corporation in the State of Delaware at
such address is The Corporation Trust Company.
ARTICLE THREE
The nature of the business and the purposes to be
conducted and promoted by the Corporation is to conduct any lawful business,
to promote any lawful purpose and to engage in any lawful act or activity for
which a corporation may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE FOUR
The Corporation shall have authority, to be exercised
by its Board of Directors, to issue 1,000 shares of common stock of the par
value of $.01 per share.
ARTICLE FIVE
The number of directors which shall constitute the
whole Board of Directors of the Corporation shall be determined pursuant to
the By-Laws of the Corporation as provided therein. Elections of directors
need not be by written ballot.
ARTICLE SIX
In furtherance and not in limitation of the powers
conferred by statute and in accordance with any relevant provisions of the
By-Laws, the Board of Directors is expressly authorized to adopt, amend or
repeal the By-Laws of the Corporation.
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ARTICLE SEVEN
The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this
reservation.
ARTICLE EIGHT
The Corporation shall indemnify all directors and
officers of the Corporation, to the full extent permitted by the General
Corporation Law of the State of Delaware and as provided in the By-Laws of
the Corporation, from and against any and all expenses, liabilities or other
matters. The Corporation may indemnify, to the full extent permitted by the
General Corporation Law of the State of Delaware and as provided in the
By-laws of the Corporation, any and all persons whom it shall have the power
to indemnify from and against any and all expenses, liabilities or other
matters.
ARTICLE NINE
No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty by such director as a director; provided, however, that
this Article Nine shall not eliminate or limit the liability of a director
(i) for any breach of such director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of Title 8 of the General Corporation Law of the State of
Delaware or (iv) for any transaction from which such director derived an
improper personal benefit. If the General Corporation Law of the State of
Delaware is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the full extent
permitted by the General Corporation Law of the State of Delaware, as so
amended. No amendment to or repeal of this Article Nine shall apply to or
have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring at the time of or prior to such amendment or repeal. Any repeal or
modification of this Article Nine shall not adversely affect any right or
protection of a director of the Corporation existing under this Certificate
of Incorporation.
ARTICLE TEN
Whenever a compromise or arrangement is proposed
between the Corporation and its creditors or any class of them and/or between
the Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of the Corporation or of any creditor or stockholder thereof
or on the application of any receiver or receivers appointed for the
Corporation under Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation under Section 279 of Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders
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or class of stockholders of the Corporation, as the case may be, to be
summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as
the case may be, agree to any compromise or arrangement and to any
reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors, and/or on all
the stockholders or class of stockholders, of the Corporation, as the case
may be, and also on the Corporation.
ARTICLE ELEVEN
The name and mailing address of the incorporator are
Eric M. Sherbet, c/o Paul, Hastings, Janofsky & Walker LLP, 399 Park Avenue,
New York, New York 10022.
I, THE UNDERSIGNED, being the sole incorporator
hereinbefore named, for the purpose of forming a corporation pursuant to the
General Corporation Law of the State of Delaware, do hereby make this
certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true and, accordingly, have hereunto set my hand
this 23rd day of March, 1999.
/s/ Eric M. Sherbet
-----------------------------
Eric M. Sherbet
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Exhibit 3.26
BY-LAWS
OF
TOTAL TRIM, INC. -- SOUTH
(A DELAWARE CORPORATION)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every
holder of stock in the Corporation shall be entitled to have a certificate
signed by, or in the name of, the Corporation by the Chairman or Vice Chairman
of the Board of Directors, if any, or by the President or a Vice President and
by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation representing the number of shares owned by him or
her in the Corporation. Any and all signatures on any such certificate may be
facsimiles. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he or she
were such officer, transfer agent, or registrar at the date of issue.
Whenever the Corporation shall be authorized to issue
more than one class of stock or more than one series of any class of stock
and whenever the Corporation shall issue any shares of its stock as partly
paid stock, the certificate representing shares of any such class or series
or of any such partly paid stock shall set forth thereon the statements
prescribed by the General Corporation Law. Any restrictions on the transfer
or registration of transfer of any shares of stock of any class or series
shall be noted conspicuously on the certificate representing such shares.
The Corporation may issue a new certificate of stock in
place of any certificate theretofore issued by it, alleged to have been lost,
stolen, or destroyed, and the Board of Directors may require the owner of any
lost, stolen, or destroyed certificate, or his legal representative, to give
the Corporation a bond sufficient to indemnify the Corporation against any
claim that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new
certificate.
2. FRACTIONAL SHARE INTERESTS. The Corporation
may, but shall not be required to, issue fractions of a share. If the
Corporation does not issue fractions of a share, it shall (1) arrange for the
disposition of fractional interests by those entitled thereto, (2) pay in cash
the fair value of fractions of a share as of the time when those entitled to
receive such fractions are determined, or (3) issue scrip or warrants
in registered or bearer form which shall entitle the holder to receive a
certificate for a full share upon the surrender of such scrip or warrants
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aggregating a full share. A certificate for a fractional share shall, but scrip
or warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the Corporation in the event of liquidation, in each case to
the extent of such fraction. The Board of Directors may cause scrip or warrants
to be issued subject to the conditions that they shall become void if not
exchanged for certificates representing full shares before a specified date, or
subject to the conditions that the shares for which scrip or warrants are
exchangeable may be sold by the Corporation and the proceeds thereof distributed
to the holders of scrip or warrants, or subject to any other conditions which
the Board of Directors may impose.
3. STOCK TRANSFERS. Upon compliance with
provisions restricting the transfer or registration of transfer of shares of
stock, if any, transfers or registration of transfers of shares of stock of the
Corporation shall be made only on the stock ledger of the Corporation and on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS. For the purpose
of determining the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, the Board of Directors
may fix, in advance, a record date, which shall not precede the date upon
which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than sixty days nor less
than ten days before the date of such meeting. If no record date is fixed,
the record date for determining stockholders entitled to notice of or to vote
at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting
is held. A determination of stockholders of record entitled to notice of or
to vote at any meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting of stockholders, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which date shall not be
more than ten days after the date upon which the resolution fixing the record
date is adopted by the Board of Directors. If no record date has been fixed by
the Board of Directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting of stockholders, when
no prior action by the Board of Directors is required by the General Corporation
Law, shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by delivery
to its registered office in the State of Delaware, its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made to
the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
the General Corporation Law, the record date for determining stockholders
entitled to consent to corporate action in writing without a
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meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled to
exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix a record date, which record date shall not precede the date upon
which the resolution fixing the record date is adopted, and which record date
shall be not more than sixty days prior to such action. If no record date is
fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS. As used herein in
respect of the right to notice of a meeting of stockholders or a waiver thereof
or to participate or vote thereat or to consent or dissent in writing in lieu of
a meeting, as the case may be, the term "share" or "shares" or "share of stock"
or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding
share or shares of stock and to a holder or holders of record of outstanding
shares of stock when the Corporation has only one class of shares of stock
outstanding; and said reference is also intended to include any outstanding
share or shares of stock and any holder or holders of record of outstanding
shares of stock of any class upon which or upon whom the Certificate of
Incorporation confers such rights where there are two or more classes or series
of shares of stock or upon which or upon whom the General Corporation Law
confers such rights notwithstanding that the Certificate of Incorporation may
provide for more than one class or series of shares of stock, one or more of
which are limited or denied such rights thereunder.
6. STOCKHOLDER MEETINGS.
6.1 TIME. The annual meeting shall be held
on the date and at the time fixed, from time to time, by the Board of Directors,
provided, that the first annual meeting shall be held on a date within thirteen
months after the organization of the corporation, and each successive annual
meeting shall be held on a date within thirteen months after the date of the
preceding annual meeting. A special meeting shall be held on the date and at the
time fixed by the Board of Directors.
6.2 PLACE. Annual meetings and special
meetings shall be held within or without the State of Delaware, as the Board of
Directors may, from time to time, fix. Whenever the Board of Directors shall
fail to fix such place, the meeting shall be held at the registered office of
the Corporation in the State of Delaware.
6.3 CALL. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by the
General Corporation Law or by the Certificate of Incorporation, may be called
by action of the Board of Directors, the Chairman of the Board or the
President and shall be called by the Chairman of the Board, the President or
the Secretary at the written request of a majority of the Board of Directors
then in office or the holders of a majority of the outstanding shares of
stock entitled to vote.
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6.4 NOTICE OR WAIVER OF NOTICE. Written
notice of all meetings of stockholders shall be given, stating the place, date,
and hour of the meeting and stating the place within the city or other
municipality or community at which the list of stockholders of the Corporation
may be examined. The notice of an annual meeting shall state that the meeting is
called for the election of directors and for the transaction of other business
which may properly come before the meeting, and shall (if any other action which
could be taken at a special meeting is to be taken at such annual meeting) state
any other purpose or purposes. The notice of a special meeting shall in all
instances state the purpose or purposes for which the meeting is to be called.
The notice of any meeting shall also include, or be accompanied by, any
additional statements, information, or documents prescribed by the General
Corporation Law. Except as otherwise provided by the General Corporation Law, a
copy of the notice of any meeting shall be given, not less than ten days nor
more than sixty days before the date of the meeting. Notice by mail shall be
deemed to be given when deposited, with postage thereon prepaid, in the United
States mail directed to the stockholder at his or her address as it appears on
the records of the Corporation. If a meeting is adjourned to another time, not
more than thirty days hence, and/or to another place, and if an announcement of
the adjourned time and/or place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the Board of Directors,
after adjournment, fix a new record date for the adjourned meeting. Notice need
not be given to any stockholder who submits a written waiver of notice signed by
him or her before or after the time stated therein. Attendance of a stockholder
at a meeting of stockholders shall constitute a waiver of notice of such
meeting, except when the stockholder attends the meeting for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
6.5 STOCKHOLDER LIST. The officer who
has charge of the stock ledger of the Corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city or other municipality or
community where the meeting is to be held, which place shall be specified in
the notice of the meeting, or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the Corporation, or to vote
at any meeting of stockholders.
6.6 CONDUCT OF MEETING. Meetings of the
stockholders shall be presided over by one of the following officers in the
order of seniority and if present and acting, the Chairman of the Board, if any,
the Vice Chairman of the Board, if any, the President, a Vice President, if any,
or, if none of the foregoing is in office and present and acting, by a chairman
to be chosen by the stockholders. The Secretary of the Corporation, or in his
absence, an Assistant
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Secretary, shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present the chairman of the meeting
shall appoint a secretary of the meeting.
6.7 PROXY REPRESENTATION. Every
stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him or her by proxy. A
stockholder may execute a writing authorizing another person or persons to
act for him or her as proxy. Execution may be accomplished by the stockholder
or his or her authorized officer, director, employee or agent signing such
writing or causing his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile signature. A
stockholder may authorize another person or persons to act for him or her as
proxy by transmitting or authorizing the transmission of a telegram,
cablegram, or other means of electronic transmission to the person who will
be the holder of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the person who will be
the holder of the proxy to receive such transmission, provided that any such
telegram, cablegram or other means of electronic transmission must either set
forth or be submitted with information from which it can be determined that
the telegram, cablegram or other electronic transmission was authorized by
the stockholder. If it is determined that such telegrams, cablegrams or other
electronic transmissions are valid, the inspectors or, if there are no
inspectors, such other persons making that determination shall specify the
information upon which they relied. Any copy, facsimile telecommunication or
other reliable reproduction of the writing or transmission created pursuant
to the above may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of
the entire original writing or transmission. No proxy shall be voted or acted
upon after three years from its date unless such proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and, if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the Corporation generally.
6.8 INSPECTORS. The Board of Directors, in
advance of any meeting of stockholders, may, but need not unless prescribed by
the General Corporation Law, appoint one or more inspectors of election to act
at the meeting or any adjournment thereof and make a written report thereof. If
an inspector or inspectors are not appointed, the person presiding at the
meeting may, but need not, appoint one or more inspectors. In case any person
who may be appointed as an inspector fails to appear or act, the vacancy may be
filled by appointment made by the directors in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, if any, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors, if any, shall determine
the number of shares of stock outstanding and the voting power of each, the
shares of stock represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall count all votes and ballots, determine
and retain for a reasonable period a record of the disposition of any challenges
made to any determination by inspectors and certify their determination of the
number of shares represented at the meeting, and their count of all votes and
ballots.
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6.9 QUORUM. The holders of a majority of
the outstanding shares of stock shall constitute a quorum at a meeting of
stockholders for the transaction of any business. The stockholders present may
adjourn the meeting despite the absence of a quorum.
6.10 VOTING. Each share of stock shall
entitle the holder thereof to one vote. In the election of directors, a
plurality of the votes cast shall elect. Any other action shall be authorized by
a majority of the votes cast except where the General Corporation Law prescribes
a different percentage of votes and/or a different exercise of voting power, and
except as may be otherwise prescribed by the provisions of the Certificate of
Incorporation or these By-Laws. In the election of directors, and for any other
action, voting need not be by written ballot.
7. STOCKHOLDER ACTION WITHOUT MEETINGS. Any
action required by the General Corporation Law to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing and who, if the action
had been taken at a meeting, would have been entitled to notice of the meeting
if the record date for such meeting had been the date that written consents
signed by a sufficient number of holders or members to take the action were
delivered to the Corporation as provided in these By-Laws.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and
affairs of the Corporation shall be managed by or under the direction of the
Board of Directors of the Corporation except as otherwise provided in the
General Corporation Law or in the Certificate of Incorporation. The Board of
Directors shall have the authority to fix the compensation of the members
thereof. The use of the phrase "whole Board of Directors" herein refers to the
total number of directors which the Corporation would have if there were no
vacancies.
2. QUALIFICATIONS AND NUMBER. A director need
not be a stockholder, or a citizen or resident of the United States or the State
of Delaware. The initial Board of Directors shall consist of three persons.
Except for the initial Board of Directors, the number of directors
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may be fixed from time to time by action of the stockholders or of the Board
of Directors. The number of directors may be increased or decreased by action
of the stockholders or of the Board of Directors.
3. ELECTION AND TERM. The first Board of
Directors, unless the members thereof shall have been named in the Certificate
of Incorporation, shall be elected by the incorporator or incorporators and
shall hold office until the first annual meeting of stockholders and until their
successors are elected and qualified or until their earlier resignation or
removal. Any director may resign at any time upon written notice to the
Corporation. Directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
or until their successors are elected and qualified or until their earlier
resignation or removal. Newly created directorships and any vacancies in the
Board of Directors, including unfilled vacancies resulting from the removal of
directors for cause or without cause, may be filled by the vote of a majority of
the remaining directors then in office although less than a quorum, or by the
sole remaining director.
4. MEETINGS.
4.1 TIME. Meetings of the Board of
Directors shall be held at such time as the Board of Directors shall fix,
except that the first meeting of a newly elected Board of Directors shall be
held as soon after its election as the directors may conveniently assemble.
4.2 PLACE. Meetings of the Board of
Directors shall be held at such place within or without the State of Delaware as
shall be fixed by the Board of Directors.
4.3 CALL. No call shall be required for
regular meetings of the Board of Directors for which the time and place have
been fixed. Special meetings of the Board of Directors may be called by or at
the direction of the Chairman of the Board, if any, the Vice Chairman of the
Board, if any, or the President, or of a majority of the directors in office.
4.4 NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER.
No notice shall be required for regular meetings of the Board of Directors for
which the time and place have been fixed. Written, oral, or any other mode of
notice of the time and place shall be given for special meetings of the Board of
Directors in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by him or
her before or after the time for the meeting stated therein. Attendance of any
such person at a meeting shall constitute a waiver of notice of such meeting,
except when he or she attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in any written waiver of notice.
4.5 QUORUM AND ACTION. A majority of the
whole Board of Directors shall constitute a quorum for the transaction of
business except when a vacancy or
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vacancies prevents such majority, whereupon a majority of the directors in
office shall constitute a quorum, provided, that such majority shall
constitute at least one third of the whole Board of Directors. A majority of
the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as otherwise provided by the
General Corporation Law, the vote of the majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors. The quorum and voting provisions herein stated shall not be
construed as conflicting with any provisions of the General Corporation Law
and these By-Laws which govern a meeting of directors held to fill vacancies
and newly created directorships in the Board of Directors or action of
disinterested directors.
4.6 CHAIRMAN OF THE MEETING. The Chairman
of the Board of Directors, if any, and if present and acting, shall preside at
all meetings of the Board of Directors. Otherwise, the Vice Chairman of the
Board of Directors, if any and if present and acting, or the President, if
present and acting, or any other director chosen by the Board of Directors,
shall preside.
5. REMOVAL OF DIRECTORS. Except as may
otherwise be provided by the General Corporation Law, any director or the entire
Board of Directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may
designate one or more committees, each committee to consist of one or more of
the directors of the Corporation. The Board of Directors may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of any member of any such committee or committees, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not such member or members constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise the powers and authority of the Board of Directors in the management of
the business and affairs of the Corporation with the exception of any authority
the delegation of which is prohibited by Section 141 of the General Corporation
Law or by these By-Laws, and may authorize the seal of the Corporation to be
affixed to all papers which may require it.
7. WRITTEN ACTION. Any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting if all members of the Board of Directors
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors, or
committee.
8. ELECTRONIC COMMUNICATION. Any member or
members of the Board of Directors or of any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors, or any
such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other.
8
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ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a
President and a Secretary, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chief Executive Officer, a Chairman of the Board, a
Vice Chairman of the Board, one or more Vice Presidents, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, and such other
officers with such titles as the resolution of the Board of Directors choosing
them shall designate. Except as may otherwise be provided in the resolution of
the Board of Directors choosing him or her, no officer other than the Chairman
or Vice Chairman of the Board, if any, need be a director. Any number of offices
may be held by the same person.
Unless otherwise provided in the resolution choosing
him or her, each officer shall be chosen for a term which shall continue
until the meeting of the Board of Directors following the next annual meeting
of stockholders and until his successor shall have been chosen and qualified
or until his earlier resignation or removal. Any officer may be removed, with
or without cause, by the Board of Directors. Any vacancy in any office may be
filled by the Board of Directors.
All officers of the Corporation shall have such
authority and perform such duties in the management and operation of the
Corporation as may be prescribed in the resolutions of the Board of Directors
designating and choosing such officers or prescribing the authority and
duties of the various officers of the Corporation, and as are customarily
incident to their office, except to the extent that such resolutions may be
inconsistent therewith. The Secretary or Assistant Secretary of the
Corporation shall record all of the proceedings of all meetings and the
actions in writing of stockholders, directors and committees of directors,
and shall exercise such additional authority and perform such additional
duties as the Board of Directors shall assign to him or her.
The President of the Corporation shall, subject to the
control of the Board of Directors, manage the business of the Corporation.
ARTICLE IV
INDEMNIFICATION
The Corporation, to the full extent permitted by law,
shall indemnify any director or officer of the Corporation who was or is a
party or is threatened to be made a party to, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative in nature, by reason of the fact that such person is or was
a director or officer of the Corporation, or is or was serving at the request
of the Corporation as a
9
<PAGE>
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding and/or the defense
or settlement of such action or suit, and the Corporation may enter into
agreements with any such person for the purpose of providing for such
indemnification.
To the extent that a director or officer of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in the preceding paragraph, or in defense
of any claim, issue or matter therein, and the Corporation shall not previously
have reimbursed or paid for all such expenses, such person shall be indemnified
against expenses (including attorneys' fees and disbursements) actually and
reasonably incurred by such person in connection therewith.
Expenses (including attorneys' fees) incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such director or officer is not
entitled to be indemnified by the Corporation against such expenses as
authorized by this Article.
The indemnification and advancement of expenses
permitted by this Article shall not be deemed exclusive of any other rights to
which any person may be entitled under any agreement, or by virtue of vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding an
office, and shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such person.
ARTICLE V
CORPORATE SEAL
The corporate seal shall be in such form as the
Board of Directors shall prescribe.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be fixed,
and shall be subject to change, by the Board of Directors.
10
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ARTICLE VII
CONTROL OVER BY-LAWS
Subject to the provisions of the Certificate of
Incorporation and the provisions of the General Corporation Law, the power to
amend, alter or repeal these By-Laws and to adopt new By-Laws may be exercised
by the Board of Directors or by the stockholders entitled to vote.
ARTICLE VIII
BOOKS AND RECORDS
1. BOOKS AND RECORDS. The books and records of
the Corporation may be kept at such places within or without the State of
Delaware as the proper officers of the Corporation may from time to time
determine.
2. STOCK RECORD. The person in whose name
shares of stock stand on the stock record of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
11
<PAGE>
Exhibit 3.27
CERTIFICATE OF INCORPORATION
OF
WING INDUSTRIES HOLDINGS, INC.
ARTICLE ONE
The name of this Corporation (hereinafter called
the "Corporation") is Wing Industries Holdings, Inc.
ARTICLE TWO
The address, including street, number, city and
county, of the registered office of the Corporation in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of New Castle, 19801. The
name of the registered agent of the Corporation in the State of Delaware at such
address is The Corporation Trust Company.
ARTICLE THREE
The nature of the business and the purposes to be
conducted and promoted by the Corporation is to conduct any lawful business, to
promote any lawful purpose and to engage in any lawful act or activity for which
a corporation may be organized under the General Corporation Law of the State of
Delaware.
ARTICLE FOUR
The total number of shares of capital stock which
the Corporation shall have authority, to be exercised by the Board of Directors,
to issue is 227,000 shares consisting of 200,000 shares of Class A common stock,
par value $.01 per share (the "Common Stock"), 25,000 shares of Class B
non-voting common stock, par value $.01 per share (the "Nonvoting Common
Stock"), and 2,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock"). The express terms and provisions of the Common Stock, the
Nonvoting Common Stock and the Preferred Stock are as follows:
A. VOTING RIGHTS.
1. COMMON STOCK. With respect to all matters upon which
stockholders are entitled to vote or to which stockholders are
entitled to give consent, the holders of the outstanding shares of
Common Stock shall be entitled to cast thereon one (1) vote in
person or by proxy for each share of Common Stock held in his or
her name.
2. NON-VOTING COMMON STOCK. Except as required by the
General Corporation Law of the State of Delaware, the holders of
Non-voting Common Stock shall have no voting power whatsoever, and
no holder of Nonvoting Common Stock shall vote or otherwise
participate in any proceeding in which actions shall be taken by
the Corporation or the stockholders thereof or be entitled to
notification as to any meeting of the Board of Directors of the
Corporation or the stockholders.
<PAGE>
B. OTHER RIGHTS. Except as required by the General Corporation Law
of the State of Delaware or as otherwise provided herein, each share of Common
Stock and each share of Non-voting Common Stock shall be identical in all
respects.
C. CONVERSION OF NON-VOTING COMMON STOCK. The holder of any shares
of the Non-voting Common Stock shall have the right, at such holder's option, to
convert all or any number of such shares of Non-voting Common Stock into such
equal number of fully paid and nonassessable shares of Common Stock as herein
provided at any time and from time to time.
1. CONVERSION NOTICE. The holder of any shares of
Non-voting Common Stock may exercise the conversion right provided
in this Section C by giving written notice (the "Conversion
Notice") to the Corporation stating the number of shares of
Non-voting Common Stock to be converted (the "Non-voting
Conversion Shares"), the name or names in which the stock
certificate or stock certificates for the shares of Common Stock
are to be issued and the address to which such certificates shall
be delivered. The Conversion Notice shall be accompanied by the
stock certificate or stock certificates representing the
Non-voting Conversion Shares, duly endorsed to the Corporation or
endorsed in blank.
2. ISSUANCE OF COMMON STOCK UPON CONVERSION. Conversion
shall be deemed to have been effected on the date the Conversion
Notice is given (the "Conversion Date"). Within ten (10) business
days after receipt of the Conversion Notice, the Corporation shall
issue and deliver by hand against a signed receipt therefor or by
United States registered mail, to the address designated by the
holder of the Non-voting Conversion Shares in the Conversion
Notice, a stock certificate or stock certificates of the
Corporation representing the number of shares of Common Stock to
which such holder is entitled and a check or cash in payment of
accrued and unpaid dividends with respect to the Non-voting
Conversion Shares. In the event that only a portion of the number
of shares of Non-voting Common Stock represented by a stock
certificate surrendered for conversion shall be Non-voting
Conversion Shares, the Corporation shall issue and deliver in the
manner aforesaid to the holder of the stock certificate so
surrendered for conversion, at the expense of the Corporation, a
new stock certificate for the number of unconverted shares of
Non-voting Common Stock.
3. REORGANIZATION AND RECAPITALIZATION. In case of any
capital reorganization, any reclassification of other stock of the
Corporation (other than as a result of a stock dividend) or the
consolidation or merger of the Corporation with or into another
person or entity (other than a merger in which the Corporation is
the continuing corporation and which does not result in any change
in the Common Stock) or the sale, exchange, lease, transfer or
other disposition or stock exchange (each a Recapitalization
Transaction"), the Non-voting Common Stock shall be convertible
into the kind and number of shares of stock or other securities or
property of the Corporation or of the corporation surviving such
merger or to which such properties and assets shall have been
sold, exchanged, leased, transferred or otherwise disposed or
which was the corporation whose securities were exchanged for
those of the Corporation to which the holder of the number of
shares of Common Stock deliverable
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<PAGE>
(at the close of business on the date immediately preceding the
effective date of such Recapitalization Transaction) upon
conversion of such shares of Non-voting Common Stock would have
been entitled upon such Recapitalization Transaction. The
provisions of this Section C.3. shall similarly apply to
successive Recapitalization Transactions.
4. ISSUANCE OF SHARES. Fractional shares of Non-voting
Common Stock or scrip shall be issued, where necessary, upon
conversion of shares of Non-voting Common Stock. If more than one
share of Non-voting Common Stock shall be surrendered for
conversion at any one time by the same holder, the number of
shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of
Non-voting Common Stock so surrendered.
5. TAXES. The Corporation shall pay all documentary,
stamp or other transactional taxes and charges attributable to
the issuance or delivery of shares of stock of the Corporation
upon conversion of any shares of Non-voting Common Stock;
provided, however, that the Corporation shall not be required
to pay any taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any
certificate for such shares in a name other than that of the
holder of the shares Non-voting Common Stock in respect of
which such shares are being issued.
6. RESERVATION OF SHARES. The Corporation shall at all
times reserve and keep available, free from preemptive rights,
unissued shares of Common Stock sufficient to effect the
conversion of all the issued and outstanding shares of Non-voting
Common Stock.
D. PREFERRED STOCK. Authorized and unissued shares of Preferred
Stock of the Corporation may be issued from time to time in one or more series.
The Board of Directors is hereby authorized to provide for the issuance of such
shares of Preferred Stock in one or more series and to fix from time to time
before issuance the number of shares to be included in any series and the
designation, relative powers, preferences and rights, and the qualifications,
limitations or restrictions of all shares of any such series. Without limiting
the generality of the foregoing, as to each such series of Preferred Stock, the
Board of Directors is authorized to fix or to alter the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), the redemption price or prices, the
liquidation preferences, rights to subscribe for or purchase any securities of
the Corporation or any other corporation, and the number of shares constituting
such series or any or all of them all as shall be determined from time to time
by the Board of Directors and as shall be stated in a resolution or resolutions
providing for the issuance of such Preferred Stock. The Board of Directors may
increase or decrease the number of shares in any such series after the issuance
of shares of that series, but not below the number of shares of such series then
outstanding. If the number of shares of any such series is so decreased, the
shares constituting such decrease shall resume the status which they had prior
to the adoption of the resolution originally fixing the number of shares of such
series.
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ARTICLE FIVE
The number of directors which shall constitute the whole Board of
Directors of the Corporation shall be determined pursuant to the By-Laws of
the Corporation as provided therein. Elections of directors need not be by
written ballot.
ARTICLE SIX
In furtherance and not in limitation of the powers
conferred by statute and in accordance with any relevant provisions of the
By-Laws, the Board of Directors is expressly authorized to adopt, amend or
repeal the By-Laws of the Corporation.
ARTICLE SEVEN
The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this reservation.
ARTICLE EIGHT
The Corporation shall indemnify all directors and
officers of the Corporation, to the full extent permitted by the General
Corporation Law of the State of Delaware and as provided in the By-Laws of the
Corporation, from and against any and all expenses, liabilities or other
matters. The Corporation may indemnify, to the full extent permitted by the
General Corporation Law of the State of Delaware and as provided in the By-laws
of the Corporation, any and all persons whom it shall have the power to
indemnify from and against any and all expenses, liabilities or other matters.
ARTICLE NINE
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article
Nine shall not eliminate or limit the liability of a director (i) for any
breach of such director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of Title 8 of the General Corporation Law of the State of Delaware or (iv)
for any transaction from which such director derived an improper personal
benefit. If the General Corporation Law of the State of Delaware is amended
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the full extent permitted by the General
Corporation Law of the State of Delaware, as so amended. No amendment to or
repeal of this Article Nine shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring at the time of or
prior to such amendment or repeal. Any
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<PAGE>
repeal or modification of this Article Nine shall not adversely affect
any right or protection of a director of the Corporation existing under this
Certificate of Incorporation.
ARTICLE TEN
Whenever a compromise or arrangement is proposed
between the Corporation and its creditors or any class of them and/or between
the Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of the Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for the Corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of the Corporation, as the case
may be, and also on the Corporation.
ARTICLE ELEVEN
The name and mailing address of the incorporator
are James G. Turner, c/o Ardshiel, Inc., 230 Park Avenue,
New York, New York 10169.
I, THE UNDERSIGNED, being the sole incorporator
hereinbefore named, for the purpose of forming a corporation pursuant to the
General Corporation Law of the State of Delaware, do hereby make this
certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true and, accordingly, have hereunto set my hand
this 17th day of October, 1996.
/s/ James G. Turner
-----------------------------
James G. Turner
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CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
WING INDUSTRIES HOLDINGS, INC.
Wing Industries Holdings, Inc., a Delaware corporation (the
"Corporation"), certifies that:
1. The Board of Directors of the Corporation, by unanimous
written consent of its members dated the date hereof,
filed with the minutes of the Board of Directors, adopted
the following resolutions proposing and declaring advisable
the following amendment to the Certificate of Incorporation
of the Corporation:
RESOLVED, that Article Four of the Certificate of
Incorporation be amended by deleting the first sentence of
Article Four in its entirety and by substituting in lieu
thereof the following new first sentence of Article Four:
"The total number of shares of capital stock
which the Corporation shall have authority, to be
exercised by the Board of Directors, to issue is
327,000 shares consisting of 225,000 shares of Class
A common stock, par value $.01 per share (the "Common
Stock"), 100,000 shares of Class B non-voting common
stock, par value $.01 per share (the "Non-voting
Common Stock"), and 2,000 shares of preferred stock,
par value $.01 per share (the "Preferred Stock")."
and be it further;
RESOLVED, that such amendment is hereby declared
advisable and is hereby submitted to the stockholders of the
Corporation with a recommendation for its approval; the
appropriate officers of the Corporation are directed to file
such amendment with the Secretary of State of the State of
Delaware.
2. In lieu of a meeting and vote of the stockholders, the sole
stockholder by unanimous written consent dated the date
hereof, consented to said amendment in accordance with the
provisions of Section 228 of the Delaware General Corporation
Law.
3. The aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 228 and 242 of the
Delaware General Corporation Law.
<PAGE>
IN WITNESS WHEREOF, the undersigned does hereby make this
certificate, hereby declaring and certifying that this is the act and deed of
the Corporation and the facts herein stated are true and, accordingly, has
executed this certificate this 1st day of October, 1998.
WING INDUSTRIES HOLDINGS, INC.
By: /s/ James G. Turner
------------------------------
Name: James G. Turner
Title: Vice President and
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
WING INDUSTRIES HOLDINGS, INC.
Wing Industries Holdings, Inc., a Delaware corporation (the
"Corporation"), certifies that:
1. The Board of Directors of the Corporation, by unanimous written
consent of its members dated the date hereof, filed with the
minutes of the Board of Directors, adopted the following
resolutions proposing and declaring advisable the following
amendment to the Certificate of Incorporation of the Corporation:
RESOLVED, that Article Four of the Certificate of Incorporation
be amended by deleting the first sentence of Article Four in its
entirety and by substituting in lieu thereof the following new first
sentence of Article Four:
"The total number of shares of capital stock which the
Corporation shall have authority, to be exercised by the Board of
Directors, to issue is 402,000 shares consisting of 225,000
shares of Class A common stock, par value $.01 per share (the
"Common Stock"), 175,000 shares of Class B non-voting common
stock, par value $.01 per share (the "Non-voting Common Stock"),
and 2,000 shares of preferred stock, par value $.01 per share
(the "Preferred Stock")."
and be it further;
RESOLVED, that such amendment is hereby declared advisable and is
hereby submitted to the stockholders of the Corporation with a
recommendation for its approval; the appropriate officers of the
Corporation are directed to file such amendment with the Secretary of
State of the State of Delaware.
2. In lieu of a meeting and vote of the stockholders, the stockholders,
by unanimous written consent dated the date hereof, consented to
said amendment in accordance with the provisions of Section 228 of
the Delaware General Corporation Law.
3. The aforesaid amendment was duly adopted in accordance with the
applicable provisions of Sections 228 and 242 of the Delaware General
Corporation Law.
<PAGE>
IN WITNESS WHEREOF, the undersigned does hereby make this certificate,
hereby declaring and certifying that this is the act and deed of the Corporation
and the facts herein stated are true and, accordingly, has executed this
certificate this 1st day of October 1998.
WING INDUSTRIES HOLDINGS, INC.
By: /s/ Mike Quadhamer
-------------------------------
Name: Mike Quadhamer
Title: Chief Financial Officer
<PAGE>
Exhibit 3.28
BY-LAWS
OF
WING INDUSTRIES HOLDINGS, INC.
(A DELAWARE CORPORATION)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every
holder of stock in the Corporation shall be entitled to have a certificate
signed by, or in the name of, the Corporation by the Chairman or Vice Chairman
of the Board of Directors, if any, or by the President or a Vice President and
by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation representing the number of shares owned by him or
her in the Corporation. Any and all signatures on any such certificate may be
facsimiles. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he or she
were such officer, transfer agent, or registrar at the date of issue.
Whenever the Corporation shall be authorized to
issue more than one class of stock or more than one series of any class of stock
and whenever the Corporation shall issue any shares of its stock as partly paid
stock, the certificate representing shares of any such class or series or of any
such partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The Corporation may issue a new certificate of stock in
place of any certificate theretofore issued by it, alleged to have been lost,
stolen, or destroyed, and the Board of Directors may require the owner of any
lost, stolen, or destroyed certificate, or his legal representative, to give
the Corporation a bond sufficient to indemnify the Corporation against any
claim that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new
certificate.
2. FRACTIONAL SHARE INTERESTS. The Corporation
may, but shall not be required to, issue fractions of a share. If the
Corporation does not issue fractions of a share, it shall (1) arrange for the
disposition of fractional interests by those entitled thereto, (2) pay in cash
the fair value of fractions of a share as of the time when those entitled to
receive such fractions are determined, or (3) issue scrip or warrants in
registered or bearer form which shall entitle the holder to receive a
certificate for a full share upon the surrender of such scrip or warrants
aggregating a full share. A certificate for a fractional share shall, but scrip
or warrants
<PAGE>
shall not unless otherwise provided therein, entitle the holder to exercise
voting rights, to receive dividends thereon, and to participate in any of the
assets of the Corporation in the event of liquidation, in each case to the
extent of such fraction. The Board of Directors may cause scrip or warrants
to be issued subject to the conditions that they shall become void if not
exchanged for certificates representing full shares before a specified date,
or subject to the conditions that the shares for which scrip or warrants are
exchangeable may be sold by the Corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.
3. STOCK TRANSFERS. Upon compliance with
provisions restricting the transfer or registration of transfer of shares of
stock, if any, transfers or registration of transfers of shares of stock of the
Corporation shall be made only on the stock ledger of the Corporation and on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS. For the purpose
of determining the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, the Board of Directors
may fix, in advance, a record date, which shall not precede the date upon
which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than sixty days nor less
than ten days before the date of such meeting. If no record date is fixed,
the record date for determining stockholders entitled to notice of or to vote
at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting
is held. A determination of stockholders of record entitled to notice of or
to vote at any meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting of stockholders, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which date shall not be
more than ten days after the date upon which the resolution fixing the record
date is adopted by the Board of Directors. If no record date has been fixed by
the Board of Directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting of stockholders, when
no prior action by the Board of Directors is required by the General Corporation
Law, shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by delivery
to its registered office in the State of Delaware, its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made to
the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
the General Corporation Law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the Board of Directors adopts the
resolution taking such prior action.
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<PAGE>
In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders entitled to
exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix a record date, which record date shall not precede the date upon
which the resolution fixing the record date is adopted, and which record date
shall be not more than sixty days prior to such action. If no record date is
fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS. As used herein in
respect of the right to notice of a meeting of stockholders or a waiver thereof
or to participate or vote thereat or to consent or dissent in writing in lieu of
a meeting, as the case may be, the term "share" or "shares" or "share of stock"
or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding
share or shares of stock and to a holder or holders of record of outstanding
shares of stock when the Corporation has only one class of shares of stock
outstanding; and said reference is also intended to include any outstanding
share or shares of stock and any holder or holders of record of outstanding
shares of stock of any class upon which or upon whom the Certificate of
Incorporation confers such rights where there are two or more classes or series
of shares of stock or upon which or upon whom the General Corporation Law
confers such rights notwithstanding that the Certificate of Incorporation may
provide for more than one class or series of shares of stock, one or more of
which are limited or denied such rights thereunder.
6. STOCKHOLDER MEETINGS.
6.1 TIME. The annual meeting shall be held
on the date and at the time fixed, from time to time, by the Board of Directors,
provided, that the first annual meeting shall be held on a date within thirteen
months after the organization of the corporation, and each successive annual
meeting shall be held on a date within thirteen months after the date of the
preceding annual meeting. A special meeting shall be held on the date and at the
time fixed by the Board of Directors.
6.2 PLACE. Annual meetings and special
meetings shall be held within or without the State of Delaware, as the Board of
Directors may, from time to time, fix. Whenever the Board of Directors shall
fail to fix such place, the meeting shall be held at the registered office of
the Corporation in the State of Delaware.
6.3 CALL. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by the
General Corporation Law or by the Certificate of Incorporation, may be called
by action of the Board of Directors, the Chairman of the Board or the
President and shall be called by the Chairman of the Board, the President or
the Secretary at the written request of a majority of the Board of Directors
then in office or the holders of a majority of the outstanding shares of
stock entitled to vote.
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6.4 NOTICE OR WAIVER OF NOTICE. Written
notice of all meetings of stockholders shall be given, stating the place, date,
and hour of the meeting and stating the place within the city or other
municipality or community at which the list of stockholders of the Corporation
may be examined. The notice of an annual meeting shall state that the meeting is
called for the election of directors and for the transaction of other business
which may properly come before the meeting, and shall (if any other action which
could be taken at a special meeting is to be taken at such annual meeting) state
any other purpose or purposes. The notice of a special meeting shall in all
instances state the purpose or purposes for which the meeting is to be called.
The notice of any meeting shall also include, or be accompanied by, any
additional statements, information, or documents prescribed by the General
Corporation Law. Except as otherwise provided by the General Corporation Law, a
copy of the notice of any meeting shall be given, not less than ten days nor
more than sixty days before the date of the meeting. Notice by mail shall be
deemed to be given when deposited, with postage thereon prepaid, in the United
States mail directed to the stockholder at his or her address as it appears on
the records of the Corporation. If a meeting is adjourned to another time, not
more than thirty days hence, and/or to another place, and if an announcement of
the adjourned time and/or place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the Board of Directors,
after adjournment, fix a new record date for the adjourned meeting. Notice need
not be given to any stockholder who submits a written waiver of notice signed by
him or her before or after the time stated therein. Attendance of a stockholder
at a meeting of stockholders shall constitute a waiver of notice of such
meeting, except when the stockholder attends the meeting for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
6.5 STOCKHOLDER LIST. The officer who
has charge of the stock ledger of the Corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city or other municipality or
community where the meeting is to be held, which place shall be specified in
the notice of the meeting, or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the Corporation, or to vote
at any meeting of stockholders.
6.6 CONDUCT OF MEETING. Meetings of the
stockholders shall be presided over by one of the following officers in the
order of seniority and if present and acting, the Chairman of the Board, if any,
the Vice Chairman of the Board, if any, the President, a Vice President, if any,
or, if none of the foregoing is in office and present and acting, by a chairman
to be chosen by the stockholders. The Secretary of the Corporation, or in
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his absence, an Assistant Secretary, shall act as secretary of every meeting,
but if neither the Secretary nor an Assistant Secretary is present the
chairman of the meeting shall appoint a secretary of the meeting.
6.7 PROXY REPRESENTATION. Every
stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him or her by proxy. A
stockholder may execute a writing authorizing another person or persons to
act for him or her as proxy. Execution may be accomplished by the stockholder
or his or her authorized officer, director, employee or agent signing such
writing or causing his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile signature. A
stockholder may authorize another person or persons to act for him or her as
proxy by transmitting or authorizing the transmission of a telegram,
cablegram, or other means of electronic transmission to the person who will
be the holder of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the person who will be
the holder of the proxy to receive such transmission, provided that any such
telegram, cablegram or other means of electronic transmission must either set
forth or be submitted with information from which it can be determined that
the telegram, cablegram or other electronic transmission was authorized by
the stockholder. If it is determined that such telegrams, cablegrams or other
electronic transmissions are valid, the inspectors or, if there are no
inspectors, such other persons making that determination shall specify the
information upon which they relied. Any copy, facsimile telecommunication or
other reliable reproduction of the writing or transmission created pursuant
to the above may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of
the entire original writing or transmission. No proxy shall be voted or acted
upon after three years from its date unless such proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and, if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the Corporation generally.
6.8 INSPECTORS. The Board of Directors, in
advance of any meeting of stockholders, may, but need not unless prescribed by
the General Corporation Law, appoint one or more inspectors of election to act
at the meeting or any adjournment thereof and make a written report thereof. If
an inspector or inspectors are not appointed, the person presiding at the
meeting may, but need not, appoint one or more inspectors. In case any person
who may be appointed as an inspector fails to appear or act, the vacancy may be
filled by appointment made by the directors in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, if any, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors, if any, shall determine
the number of shares of stock outstanding and the voting power of each, the
shares of stock represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall count all votes and ballots, determine
and retain for a reasonable period a record of the disposition of any challenges
made to any determination by inspectors and certify their
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determination of the number of shares represented at the meeting, and their
count of all votes and ballots.
6.9 QUORUM. The holders of a majority of
the outstanding shares of stock shall constitute a quorum at a meeting of
stockholders for the transaction of any business. The stockholders present may
adjourn the meeting despite the absence of a quorum.
6.10 VOTING. Each share of stock shall
entitle the holder thereof to one vote. In the election of directors, a
plurality of the votes cast shall elect. Any other action shall be authorized by
a majority of the votes cast except where the General Corporation Law prescribes
a different percentage of votes and/or a different exercise of voting power, and
except as may be otherwise prescribed by the provisions of the Certificate of
Incorporation or these By-Laws. In the election of directors, and for any other
action, voting need not be by written ballot.
7. STOCKHOLDER ACTION WITHOUT MEETINGS. Any
action required by the General Corporation Law to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing and who, if the action
had been taken at a meeting, would have been entitled to notice of the meeting
if the record date for such meeting had been the date that written consents
signed by a sufficient number of holders or members to take the action were
delivered to the Corporation as provided in these By-Laws.
8. STOCKHOLDERS' AGREEMENT. During the term of
that certain Equityholders' Agreement to be entered into on or about October 25,
1996, among the Corporation and certain of its stockholders, the provisions of
this Article I shall be subject to the provisions thereof.
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ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors of the
Corporation except as otherwise provided in the General Corporation Law or in
the Certificate of Incorporation. The Board of Directors shall have the
authority to fix the compensation of the members thereof. The use of the phrase
"whole Board of Directors" herein refers to the total number of directors which
the Corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need
not be a stockholder, or a citizen or resident of the United States or the State
of Delaware. The initial Board of Directors shall consist of two persons. Except
for the initial Board of Directors, the number of directors may be fixed from
time to time by action of the stockholders or of the Board of Directors. The
number of directors may be increased or decreased by action of the stockholders
or of the Board of Directors.
3. ELECTION AND TERM. The first Board of
Directors, unless the members thereof shall have been named in the Certificate
of Incorporation, shall be elected by the incorporator or incorporators and
shall hold office until the first annual meeting of stockholders and until their
successors are elected and qualified or until their earlier resignation or
removal. Any director may resign at any time upon written notice to the
Corporation. Directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
or until their successors are elected and qualified or until their earlier
resignation or removal. Newly created directorships and any vacancies in the
Board of Directors, including unfilled vacancies resulting from the removal of
directors for cause or without cause, may be filled by the vote of a majority of
the remaining directors then in office although less than a quorum, or by the
sole remaining director.
4. MEETINGS.
4.1 TIME. Meetings of the Board of
Directors shall be held at such time as the Board of Directors shall fix, except
that the first meeting of a newly elected Board of Directors shall be held as
soon after its election as the directors may conveniently assemble.
4.2 PLACE. Meetings of the Board of
Directors shall be held at such place within or without the State of Delaware as
shall be fixed by the Board of Directors.
4.3 CALL. No call shall be required for
regular meetings of the Board of Directors for which the time and place have
been fixed. Special meetings of the Board of Directors may be called by or at
the direction of the Chairman of the Board, if any, the Vice Chairman of the
Board, if any, or the President, or of a majority of the directors in office.
4.4 NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER.
No notice shall be required for regular meetings of the Board of Directors for
which the time and place have been fixed. Written, oral, or any other mode of
notice of the time and place shall be given for special meetings of the Board of
Directors in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of
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directors who submits a written waiver of notice signed by him or her before
or after the time for the meeting stated therein. Attendance of any such
person at a meeting shall constitute a waiver of notice of such meeting,
except when he or she attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in any written waiver of notice.
4.5 QUORUM AND ACTION. A majority of the
whole Board of Directors shall constitute a quorum for the transaction of
business except when a vacancy or vacancies prevents such majority, whereupon
a majority of the directors in office shall constitute a quorum, provided,
that such majority shall constitute at least one third of the whole Board of
Directors. A majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place. Except as otherwise
provided by the General Corporation Law, the vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors. The quorum and voting provisions herein stated
shall not be construed as conflicting with any provisions of the General
Corporation Law and these By-Laws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board of Directors or
action of disinterested directors.
4.6 CHAIRMAN OF THE MEETING. The Chairman
of the Board of Directors, if any, and if present and acting, shall preside at
all meetings of the Board of Directors. Otherwise, the Vice Chairman of the
Board of Directors, if any and if present and acting, or the President, if
present and acting, or any other director chosen by the Board of Directors,
shall preside.
5. REMOVAL OF DIRECTORS. Except as may
otherwise be provided by the General Corporation Law, any director or the entire
Board of Directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may
designate one or more committees, each committee to consist of one or more of
the directors of the Corporation. The Board of Directors may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of any member of any such committee or committees, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not such member or members constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise the powers and authority of the Board of Directors in the management of
the business and affairs of the Corporation with the exception of any authority
the delegation of which is prohibited by Section 141 of the General Corporation
Law or by these By-Laws, and may authorize the seal of the Corporation to be
affixed to all papers which may require it.
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7. WRITTEN ACTION. Any action required or
permitted to be taken at any meeting of the Board of Directors or any
committee thereof may be taken without a meeting if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors, or committee.
8. ELECTRONIC COMMUNICATION. Any member or
members of the Board of Directors or of any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
9. STOCKHOLDERS' AGREEMENT. During the term of
that certain Equityholders' Agreement to be entered into on or about October 25,
1996, among the Corporation and certain of its stockholders, the provisions of
this Article II shall be subject to the provisions thereof.
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a
President and a Secretary, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chief Executive Officer, a Chairman of the Board, a
Vice Chairman of the Board, one or more Vice Presidents, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, and such other
officers with such titles as the resolution of the Board of Directors choosing
them shall designate. Except as may otherwise be provided in the resolution of
the Board of Directors choosing him or her, no officer other than the Chairman
or Vice Chairman of the Board, if any, need be a director. Any number of offices
may be held by the same person.
Unless otherwise provided in the resolution
choosing him or her, each officer shall be chosen for a term which shall
continue until the meeting of the Board of Directors following the next annual
meeting of stockholders and until his successor shall have been chosen and
qualified or until his earlier resignation or removal. Any officer may be
removed, with or without cause, by the Board of Directors. Any vacancy in any
office may be filled by the Board of Directors.
All officers of the Corporation shall have such
authority and perform such duties in the management and operation of the
Corporation as may be prescribed in the resolutions of the Board of Directors
designating and choosing such officers or prescribing the authority and
duties of the various officers of the Corporation, and as are customarily
incident to their office, except to the extent that such resolutions may be
inconsistent therewith. The Secretary or Assistant Secretary of the
Corporation shall record all of the proceedings of all meetings and the
actions in writing of stockholders, directors and committees of directors,
and
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shall exercise such additional authority and perform such additional
duties as the Board of Directors shall assign to him or her.
The President of the Corporation shall, subject to
the control of the Board of Directors, manage the business
of the Corporation.
ARTICLE IV
INDEMNIFICATION
The Corporation, to the full extent permitted by
law, shall indemnify any director or officer of the Corporation who was or is a
party or is threatened to be made a party to, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative in nature, by reason of the fact that such person is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding
and/or the defense or settlement of such action or suit, and the Corporation may
enter into agreements with any such person for the purpose of providing for such
indemnification.
To the extent that a director or officer of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in the preceding paragraph, or in defense
of any claim, issue or matter therein, and the Corporation shall not previously
have reimbursed or paid for all such expenses, such person shall be indemnified
against expenses (including attorneys' fees and disbursements) actually and
reasonably incurred by such person in connection therewith.
Expenses (including attorneys' fees) incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such director or officer is not
entitled to be indemnified by the Corporation against such expenses as
authorized by this Article.
The indemnification and advancement of expenses
permitted by this Article shall not be deemed exclusive of any other rights to
which any person may be entitled under any agreement, or by virtue of vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding an
office, and shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such person.
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ARTICLE V
CORPORATE SEAL
The corporate seal shall be in such form as the
Board of Directors shall prescribe.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be fixed,
and shall be subject to change, by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
Subject to the provisions of the Certificate of
Incorporation, the provisions of the General Corporation Law and the provisions
of that certain Equityholders' Agreement to be entered into on or about October
25, 1996, among the Corporation and certain of its stockholders, the power to
amend, alter or repeal these By-Laws and to adopt new By-Laws may be exercised
by the Board of Directors or by the stockholders entitled to vote.
ARTICLE VIII
BOOKS AND RECORDS
1. BOOKS AND RECORDS. The books and records of the Corporation may be kept at
such places within or without the State of Delaware as the proper officers of
the Corporation may from time to time determine.
2. STOCK RECORD. The person in whose name
shares of stock stand on the stock record of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
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SoftSolution Network ID: ATL-202635.1 Type: BYL
07/23/99 10:14 PM
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Exhibit 3.29
CHARTER -- DOMESTIC CORPORATION
THE SAM A. WING COMPANY
THE STATE OF TEXAS :
:
COUNTY OF DALLAS : KNOW ALL MEN BY THESE PRESENTS:
That we, Sam A. Wing, B. A. Wing, L. M. Wing, Sam A. Wing, Jr., Mary
M. Anderson and Evelyn T. Herrin, all citizens of Dallas County, Texas, under
and by virtue of the laws of this State do hereby voluntarily associate
ourselves together for the purpose of forming a private corporation under the
terms and conditions hereinafter set out, as follows:
FIRST: The name of this corporation is THE SAM A. WING COMPANY, and
by this name it shall contract and be contracted with, sue and be sued, and
transact all of its business.
SECOND: This corporation is formed for the purpose of the manufacture
and sale of Venetian blinds, Venetian blind supplies, building materials,
furniture, fixtures, equipment; products appertaining to building materials,
furniture, fixtures and equipment, and all materials and parts in connection
therewith; and to purchase and sell goods, wares and merchandise for such
business.
THIRD: The home office and principal place of business of said
corporation is Dallas, Dallas County, Texas, and said corporation shall carry on
its business primarily in said County of Dallas and such other territory as may
be deemed advisable by the Board of Directors of said corporation.
<PAGE>
FOURTH: Said corporation shall exist for the term of fifty (50)
years.
FIFTH: The business of the corporation shall be transacted by seven
(7) directors (or such lesser number as may be decided upon by the stockholders)
who shall be elected by the stockholders annually on the 10th day of January of
each year.
SIXTH: The following named stockholders are hereby declared to be
Directors for the first year:
Name Address
---- -------
Sam A. Wing Dallas, Texas
B. A. Wing Dallas, Texas
L. M. Wing Dallas, Texas
Mary M. Anderson Dallas, Texas
Evelyn T. Herrin Dallas, Texas
SEVENTH: The amount of the capital stock is: Forty Thousand Dollars
($40,000.00) divided into four hundred (400) shares of common stock of One
Hundred Dollars ($100) par value each, all of which capital stock has been
subscribed and paid in as per the affidavit hereto attached.
IN WITNESS WHEREOF, we hereunto sign our names this the 23rd day of
December, 1940.
/s/ Sam A. Wing
-------------------------------------
Sam A. Wing
/s/ B. A. Wing
-------------------------------------
B. A. Wing
/s/ L. M. Wing
-------------------------------------
L. M. Wing
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/s/ Sam A. Wing, Jr.
-------------------------------------
Sam A. Wing, Jr.
/s/ Mary M. Anderson
-------------------------------------
Mary M. Anderson
/s/ Evelyn T. Herrin
-------------------------------------
Evelyn T. Herrin
THE STATE OF TEXAS :
:
COUNTY OF DALLAS : BEFORE ME, the undersigned authority, on
this day personally appeared Sam A. Wing, B. A. Wing, L. M. Wing, Sam A. Wing,
Jr., Mary M. Anderson and Evelyn T. Herrin, all of said persons being known to
me to be the persons whose names are subscribed to the foregoing instrument,
and severally acknowledged to me that he and/or she executed the same for the
purposes and consideration therein expressed.
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STATE OF TEXAS
COUNTY OF DALLAS
KNOW ALL MEN BY THESE PRESENTS: That at a special meeting of the
stockholders of SAM A. WING COMPANY, INC., of Dallas, Texas, a private
corporation, duly organized and chartered under the laws of the State of
Texas, with its principal place of business of Dallas, Texas, called and held
in conformity with the by-laws of such corporation, for the purpose of voting
upon the resolution hereinafter referred to, held in the office of said
company on the 29th day of November, 1946, all of the outstanding stock of
said company was voted in favor of a resolution authorizing the amendment to
the charter of said corporation in the manner hereinafter set forth.
NOW, THEREFORE, we, Sam A. Wing, Sr., Mrs. L.M. Wing, B.A. Wing, Mrs.
E.T.Herrin, Mrs. M.M. Anderson and Sam A. Wing, Jr., constituting the entire
Board of Directors of said corporation, in furtherance of such action of the
stockholders thereof, do hereby amend the charter of said corporation, so as
to increase its authorized capital stock from Forty Thousand Dollars
($40,000.00) to Eighty Thousand Dollars ($80,000.00), which additional stock
is divided into four hundred (400) shares, each of the par value of One
Hundred Dollars ($100.00), all of which additional stock has been subscribed
and paid in as is further shown by affidavit attached hereto.
And Section 6 of said charter shall hereafter read and be as follows:
"Sec. 6. The entire amount of capital stock is Eighty Thousand Dollars
($80,000.00), divided into eight hundred (800) shares, each of the par value
of One Hundred Dollars ($100.00), all of which said stock has been fully
subscribed and paid in."
IN WITNESS WHEREOF, we hereunto sign our names, this the 24th day of
February, 1947.
/s/ Sam A. Wing
-----------------------------
/s/ B.A. Wing
-----------------------------
/s/ Sam A. Wing, Jr.
-----------------------------
/s/ L.M. Wing
-----------------------------
/s/ Mary M. Anderson
-----------------------------
/s/ Evelyn T. Herrin
-----------------------------
<PAGE>
STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned authority, on this day personally appeared Sam
A. Wing, Sr., Mrs. L.M. Wing, B.A. Wing, Mrs. E.T. Herrin, Mrs. M. M. Anderson
and Sam A. Wing, Jr., known to me to be the persons whose names are subscribed
to the foregoing instrument, and who comprise the entire Board of Directors of
SAM A. WING COMPANY, INC., and each acknowledged to me that he executed the
same for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 24th day of February,
1947.
<PAGE>
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
THE SAM A. WING COMPANY
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following articles as
Articles of Amendment to its Articles of Incorporation, as previously amended,
which:
(1) Changes the name of the corporation;
(2) Changes the period of duration of said
corporation;
(3) Increases its authorized shares;
(4) Changes the par value of said shares; and
(5) Denies the pre-emptive rights of a shareholder to
acquire unissued or treasury shares in the
corporation.
ARTICLE ONE
The name of the corporation is The Sam A. Wing
Company.
ARTICLE TWO
The following amendments to the Articles of Incorporation were adopted
by the shareholders of the corporation on September 30, 1964:
Article FIRST of the Articles of Incorporation is hereby
amended to read as follows:
"The name of this corporation is THE SAM A. WING
COMPANY, INC."
Article FOURTH of the Articles of Incorporation
is hereby amended to read as follows:
"The period of its duration is perpetual."
Article SEVENTH of the Articles of Incorporation,
as amended, is hereby amended as follows:
<PAGE>
"The aggregate number of shares which the corporation shall
have authority to issue is 500,000 of the par value of $5.00
per share. The pre-emptive rights of a shareholder to acquire
unissued or treasury shares of this corporation is expressly
denied."
ARTICLE THREE
The number of shares of the corporation outstanding at the time of such
adoption was 800; and the number of shares entitled to vote thereon was 800.
ARTICLE FOUR
The holders of all shares outstanding and entitled to vote on said
amendments have signed a consent in writing adopting said amendments.
ARTICLE FIVE
The manner in which any exchange, re-classification or cancellation of
issued shares provided for in the amendment, shall be effected, is as follows:
Each share of the outstanding shares of a par value of $100.00 shall be
surrendered to the corporation in exchange for 20 shares of the
corporation's new capital stock of a par value of $5.00 per share.
THE SAM A. WING COMPANY
By /s/ Sam A. Wing, Jr.
------------------------------
Sam A. Wing, Jr., President
/s/ E. I. Kerrin
------------------------------
Secretary
2
<PAGE>
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
I, Ch. Peters, a Notary Public, do hereby certify that on this
the 21 day of October, 1964, personally appeared before me Sam A. Wing, Jr.,
who declared that he is the President of The Sam A. Wing Company, and being
duly sworn, acknowledged that he signed the foregoing document in the
capacity therein set forth, and that the statements contained therein are
true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office.
/s/ Ch. Peters
-----------------------------------
Notary Public, Dallas County, Texas
3
<PAGE>
ARTICLES OF AMENDMENT BY THE SHAREHOLDERS
TO THE ARTICLES OF INCORPORATION OF
THE SAM A. WING COMPANY, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation which changes the name of the
corporation to WING INDUSTRIES, INC.
ARTICLE ONE. The name of the corporation is THE SAM
A. WING COMPANY, INC.
ARTICLE TWO. The following Amendment to the Articles
of Incorporation was adopted by the shareholders of the
corporation on December 30, 1970:
Article First of the Articles of Incorporation is hereby amended so as
to read as follows:
"ARTICLE FIRST
"The name of the corporation is WING INDUSTRIES, INC."
ARTICLE THREE. The number of shares of the corporation outstanding
at the time of such adoption was 48,640; and the number of shares entitled to
vote thereon was 48,640.
ARTICLE FOUR. The number of shares voted for such amendment was
45,559; and the number of shares voted against such amendment was 0.
ARTICLE FIVE. The manner in which any exchange, reclassification
or cancellation of issued shares provided for in the amendment shall be
effected is as follows: there will be no exchange or reclassification as the
amendment merely changes the name of the corporation.
DATED: January 5, 1971.
THE SAM A. WING COMPANY, INC.
By:
--------------------------------
President
By: /s/ J. E. Poindexter
--------------------------------
Assistant Secretary
<PAGE>
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
I, Edna M. Schuter, a Notary Public, do hereby certify that
on this the 5th day of January, 1971, personally appeared before me Paul N.
Walton, who declared he is President of the corporation executing the foregoing
document, and being first duly sworn, acknowledged that he signed the foregoing
document in the capacity therein set forth and declared that the statements
therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Edna M. Schuter
-------------------------------------
Notary Public, Dallas County, Texas
2
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
WING INDUSTRIES, INC.
Pursuant to the provisions of Art. 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation.
ARTICLE ONE
The name of the corporation is WING INDUSTRIES, INC.
ARTICLE TWO
The following amendment to the Articles of Incorporation was adopted
by the shareholders of the corporation on March 15, 1973.
Article Seventh of the Articles of Incorporation, as amended, is
hereby amended and restated to provide as follows:
The aggregate number of shares which the corporation shall have
authority to issue is 1,500,000 of the par value of $0.50 per share. The
pre-emptive rights of a shareholder to acquire unissued or treasury shares of
this corporation is expressly denied.
ARTICLE THREE
The number of shares of the corporation outstanding at the time of
such adoption was 43,545; and the number of share entitled to vote thereon
was 43,545.
<PAGE>
ARTICLE FOUR
The number of shares voted for such amendment was 38,228; and the
number of shares voted against such amendment was 0.
ARTICLE FIVE
The manner in which any exchange, reclassification, or cancellation
of issued shares provided for in the amendment shall be effected is as
follows: Each share of the outstanding stock at $5.00 par value shall be
surrendered to the corporation in exchange for 10 shares of new stock at
$0.50 par value per share.
ARTICLE SIX
The manner in which such amendment effects a change in the amount of
stated capital, and the amount of stated capital as changed by such
amendment, are as follows: No change in stated capital.
DATED: March 19, 1973.
WING INDUSTRIES, INC.
By:
--------------------------
Vice President
By: /s/ Edward V. Smith
--------------------------
Assistant Secretary
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
2
<PAGE>
I, Frances Kiker, a Notary Public, do hereby certify that on
this 19th day of March, 1973, personally appeared before me MICHAEL H. OWEN, who
declared he is Vice President of the corporation executing the foregoing
document, and being first duly sworn, acknowledged that he signed the foregoing
document in the capacity therein set forth and declared that the statements
therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the
day and year before written.
/s/ Frances Kiker
-----------------------------------
Notary Public, Dallas County, Texas
3
<PAGE>
Exhibit 99
WING INDUSTRIES, INC., A TEXAS CORPORATION,
AND
WING ACQUISITION CORPORATION, A DELAWARE CORPORATION
ARTICLES OF MERGER
Pursuant to the provisions of Article 5.16 of the Texas
Business Corporation Act, and Section 253 of the Delaware General
Corporation Law, WING ACQUISITION CORPORATION, a Delaware corporation
(the "Parent"), hereby adopts the following Articles of Merger for the
purpose of merging into its subsidiary, WING INDUSTRIES, INC., a Texas
corporation (the "Subsidiary"):
1. Merger of Parent into Subsidiary
a. The name of the Parent corporation is Wing Acquisition
Corporation, and the name of the Subsidiary corporation into which the
Parent is to be merged is Wing Industries, Inc. The Parent was
organized under the laws of the State of Delaware, and the Subsidiary
was organized under the laws of the State of Texas.
b. The total number of outstanding shares of each class of
stock of the Subsidiary is 571,064 shares of common stock, $0.50 par
value. The number of shares of common stock of the Subsidiary owned by
the Parent is 571,064, constituting one hundred percent (100%) of the
outstanding shares of each class of stock of the Subsidiary.
c. A copy of the joint resolutions adopted by the Board of
Directors and sole shareholder of the Parent, which resolutions approve
the merger described herein, is attached hereto as EXHIBIT "A" (the
"Parent Resolutions"). The Parent Resolutions were approved by the
Board of Directors and the sole stockholder of the Parent as of October
25, 1996.
d. The Agreement and Plan of Merger (the "Plan") attached to
the Parent Resolutions as SCHEDULE 1 and incorporated herein by
reference, and the performance of its terms, were approved by the Board
of Directors and the sole stockholder of the Parent in the manner
prescribed by Articles 5.16
<PAGE>
and 5.03 of the Texas Business Corporation Act, and by Sections 251, 252
and 253 of the Delaware General Corporation Law.
e. The Subsidiary, which is the surviving corporation in the
above-described merger, is not a foreign corporation.
2. As to the Parent, the number of shares outstanding is as follows:
<TABLE>
<CAPTION>
Number of Shares
Name of Parent Outstanding
- -------------- ----------------
<S> <C>
Wing Acquisition Corporation 1
</TABLE>
3. As to the Parent, the number of shares voted for and against
the Plan, respectively, as evidenced by the Parent Resolutions, are as follows:
<TABLE>
<CAPTION>
Name of Parent Voted For Voted Against
- -------------- --------- -------------
<S> <C> <C>
Wing Acquisition Corporation 1 None
</TABLE>
4. The Plan was duly authorized by all action required by the laws
under which each of the Parent and the Subsidiary was incorporated and by each
such corporation's constituent documents.
DATED TO BE EFFECTIVE as of October 25, 1996.
WING ACQUISITION CORPORATION, a Delaware
corporation
By: /s/ Daniel T. Morley
--------------------
Daniel T. Morley,
President
<PAGE>
Exhibit A
WING ACQUISITION CORPORATION
JOINT UNANIMOUS CONSENT OF THE DIRECTORS
AND THE SOLE STOCKHOLDER
IN LIEU OF SPECIAL MEETING
(OCTOBER 25, 1996)
Pursuant to the provisions of Sections 141(f) and 228(a) of the
Delaware General Corporation Law, the undersigned, being the all of the
members of the Board of Directors and the sole stockholder of WING
ACQUISITION CORPORATION, a Delaware corporation (the "Corporation"), in lieu
of holding a special meeting of the Board of Directors and the sole
stockholder, the call of which is hereby expressly waived, do hereby consent
to the following resolutions:
APPROVAL OF MERGER AND CHANGE OF REGISTERED AGENT
WHEREAS, the Board of Directors and the sole stockholder of the
Corporation have determined that it is in the best interests of the
Corporation to merge the corporation into Wing Industries, Inc., a subsidiary
of the Corporation; and
WHEREAS, the Board of Directors and the sole stockholder of the
Corporation have also determined that it is in the best interests of the
Corporation to change the registered agent of Wing Industries, Inc.
contemporaneously with such merger;
NOW, THEREFORE, BE IT RESOLVED, that the form, terms and provisions
of the Agreement and Plan of Merger (the "Merger Agreement"), attached hereto
as SCHEDULE 1, is hereby in all respects approved, which Merger Agreement
provides for (i) the merger of the Corporation into Wing Industries, Inc. and
setting forth the terms and conditions of said merger and the mode of
carrying the same into effect, and (ii) the change of the registered agent in
the State of Texas of Wing Industries, Inc., as shown in the records of the
Secretary of State of the State of Texas, from Sam A. Wing, to Ken Gilmer.
RESOLVED FURTHER, that the form, terms and provisions of (i) the
Articles of Merger (the "Articles of Merger"), and (ii) the Certificate of
Ownership and Merger (the "Certificate of Merger"), both in the form
heretofore presented to the
<PAGE>
Board of Directors and the sole stockholder of the Corporation are hereby in
all respects approved.
RESOLVED FURTHER, that the President of the Corporation is hereby
authorized and directed, for and in the name and on behalf of the
Corporation, (i) to execute the Merger Agreement, (ii) to execute the
Articles of Merger and to certify in such Articles of Merger the fact that
all of the outstanding shares of capital stock of the Corporation voted in
favor of the adoption of such Merger Agreement, (iii) to file such Articles
of Merger with the Secretary of State of the State of Texas, and (iv) to
execute the Certificate of Merger and to certify in such Certificate of
Merger the fact that all of the outstanding shares of capital stock of the
Corporation voted in favor of the adoption of the Merger Agreement, and (v)
to file the Certificate of Merger with the Secretary of State of the State of
Delaware.
RESOLVED FURTHER, that upon such adoption and filing of the
Articles of Merger and the Merger Certificate, the proper officers of the
Corporation are hereby authorized and directed to take all such steps and
perform all such acts and things to effectuate and consummate the Merger
Agreement as may be provided by law or as may to them seem necessary or
proper.
EXECUTED on the date first above written.
DIRECTORS OF THE CORPORATION:
/s/ Daniel T. Morley
--------------------
Daniel T. Morley
/s/ James G. Turner
-------------------
James G. Turner
SOLE STOCKHOLDER OF THE CORPORATION:
WING INDUSTRIES HOLDINGS, INC.,
a Delaware corporation
By: /s/ Daniel T. Morley
---------------------
Daniel T. Morley,
President
<PAGE>
Schedule 1
WING INDUSTRIES, INC., A TEXAS CORPORATION,
AND
WING ACQUISITION CORPORATION, A DELAWARE CORPORATION
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is made and entered into pursuant
to Section 253 of the Delaware General Corporation Law and Article 5.16 of
the Texas Business Corporation Act with respect to the merger of WING
ACQUISITION CORPORATION, a Delaware corporation, into WING INDUSTRIES, INC.,
a Texas corporation (collectively referred to as the "Constituent
Corporations");
W I T N E S S E T H:
WHEREAS, Wing Acquisition Corporation, a Delaware corporation
("WAC"), is a corporation duly organized and existing under the laws of the
State of Delaware, having been incorporated on October 7, 1996, under the
Delaware General Corporation Law, and having an authorized capital stock of
100 shares of common stock, $0.01 par value, of which 1 share is issued and
outstanding;
WHEREAS, Wing Industries, Inc., a Texas corporation ("WII"), is a
corporation duly organized and existing under the laws of the State of Texas,
having been incorporated on January 2, 1941, under the Texas Business
Corporation Act, and having an authorized capital stock of 1,500,000 shares
of common stock, $0.50 par value, of which 571,064 shares are issued and
outstanding;
WHEREAS, the total number of shares of common stock of WII owned by
WAC is 571,064, constituting one hundred (100%) of the outstanding shares of
each class of stock of WII;
WHEREAS, as a result of WAC's ownership of more than ninety percent
(90%) of the outstanding shares of each class of stock of WII, WAC is
entitled to accomplish this merger without the approval of the shareholders
or directors of WII by effecting this merger pursuant to the terms of Section
253 of the Delaware General Corporation Law and Article 5.16 of the Texas
Business Corporation Act;
WHEREAS, the Board of Directors and the sole stockholder of WAC
deem it advisable and in the best interest of the Constituent Corporations
that WAC be
<PAGE>
merged with and into WII as permitted by and in accordance with the Delaware
General Corporation Law and the Texas Business Corporation Act under and
pursuant to the terms and conditions hereinafter set forth, and such Board of
Directors and sole stockholder of WAC have duly approved this Agreement and
Plan of Merger (this "Agreement");
NOW, THEREFORE, WAC shall be merged with and into WII in accordance
with the applicable provisions of the Delaware General Corporation Law and
the Texas Business Corporation Act, on the following terms and conditions:
ARTICLE I
TERMS AND CONDITIONS OF THE PROPOSED MERGER
At the Effective Time of the Merger (as hereinafter defined):
1. The separate existence and corporate organization of WAC (the
"Merging Corporation"), except insofar as it may be continued by operation of
the laws of the State of Delaware in the case of a corporation after its
merger into another corporation, shall be terminated and cease.
2. WII, as the surviving corporation (the "Surviving
Corporation"), shall continue its corporate existence under the laws of the
State of Texas.
3. The directors and officers of the Surviving Corporation shall
be the directors and officers of WAC immediately prior to the Effective Time
of the Merger.
4. The Bylaws of the Surviving Corporation shall be the Bylaws of
WII in effect immediately prior to the Effective Time of the Merger.
5. The Articles of Incorporation of the Surviving Corporation
shall be the Articles of Incorporation of WII as in effect immediately prior
to the Effective Time of the Merger except Article Fifth of the Articles of
Incorporation of WII is hereby amended in its entirety to read as follows,
which change shall constitute an amendment to the Articles of Incorporation
of the Surviving Corporation:
"FIFTH. The board of directors shall consist of two (2) members. The
number of the members of subsequent boards of directors shall be fixed by, or
in the manner provided in, the bylaws."
6. Change of Registered Agent in the State of Texas:
<PAGE>
a. The name of WII's present registered agent, as shown in
the records of the Secretary of State of the State of Texas prior to filing
this Agreement, is Sam A. Wing.
b. The name of the Surviving Corporations's new registered
agent in the State of Texas is Ken Gilmer.
c. The address of the registered office of the Surviving
Corporation, and the address of the office of its registered agent will be
identical.
d. Such changes in the Surviving Corporation's registered
agent were authorized by the Merging Corporation's Board of Directors.
ARTICLE II
MANNER AND BASIS OF CONVERTING SHARES
The manner and basis of converting any of the shares or other
evidences of ownership of each of the Constituent Corporations into shares,
obligations or other securities of the Surviving Corporation shall be as
follows:
a. Each outstanding share of common stock of the Surviving
Corporation held immediately prior to the Effective Time of the Merger by the
Merging Corporation shall be canceled.
b. Each outstanding share of common stock of the Merging
Corporation held immediately prior to the Effective Time of the Merger shall
be converted into 2,000 shares of common stock of the Surviving Corporation.
ARTICLE III
SUBMISSION TO DIRECTORS AND
STOCKHOLDER AND EFFECTIVENESS
1. In accordance with the terms of Section 253 of the Delaware
General Corporation Law and Article 5.16 of the Texas Business Corporation
Act, this Agreement has been submitted for approval to each of the directors
of WAC and the holder of all of the outstanding shares of common stock of
WAC. The officers of
<PAGE>
WAC have and/or will take all steps necessary in order to make the merger
effective as provided for in this Agreement.
2. The merger shall become effective upon the last to occur of
the following (such time and date being referred to herein as the "Effective
Time of the Merger"):
a. A Certificate of Ownership and Merger shall be filed in
the office of the Secretary of State of the State of Delaware, and a
certified copy of such Certificate of Ownership and Merger shall be marked as
filed by the Secretary of State of the State of Delaware; and
b. Articles of Merger shall be filed in the office of the
Secretary of State of the State of Texas, and a Certificate of Merger shall
be issued by the Secretary of State of the State of Texas.
ARTICLE IV
TRANSFER OF ASSETS AND LIABILITIES
At the Effective Time of the Merger, the rights, privileges, powers
and franchises, both of a public as well as a private nature, of the
Constituent Corporations shall be vested in and possessed by the Surviving
Corporation, subject to all liabilities, duties and restrictions of or upon
each of the Constituent Corporations, and all and singular the rights,
privileges, powers and franchises of each of the Constituent Corporations,
and all property, real, personal and mixed, of each of the Constituent
Corporations on whatever account, and all things in action or belonging to
each of the Constituent Corporations shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises, and
all and every other interest, shall be thereafter as effectively the property
of the Surviving Corporation as they were of the Constituent Corporations,
and the title to any real estate vested by deed or otherwise in any of the
Constituent Corporations shall not revert or be in any way impaired by reason
of the merger; provided, however, that all rights of creditors and all liens
upon any property of any of the Constituent Corporations shall be preserved
unimpaired, except as they may be modified with the consent of such
creditors, and all debts, liabilities and duties of or upon each of the
Constituent Corporations shall thence forth attach to the Surviving
Corporation, and may be endorsed against it to the same extent as if such
debts, liabilities and duties had been incurred or contracted by it. The
parties hereto agree that from time to time and as and when requested by the
Surviving Corporation, or by its successors or assigns, to the extent
permitted by law, the officers and directors of the Surviving Corporation,
are fully authorized in the name of each of the Constituent Corporations or
otherwise to execute and deliver all such deeds,
<PAGE>
assignments, confirmations, assurances and other instruments and to take and
to cause to be taken all such further action as the Surviving Corporation may
deem necessary or desirable in order to vest, perfect, confirm in or assure
the Surviving Corporation title to and possession of all of said property,
rights, privileges, powers and franchises and otherwise to carry out the
intent and purposes of this Agreement.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, WAC, pursuant to the approval and authority
duly given by resolutions adopted by its Board of Directors and sole
stockholder, has caused this Agreement and Plan of Merger to be executed in
its name by its President and attested by its Secretary to be effective as of
the 25th day of October, 1996.
WAC:
WING ACQUISITION CORPORATION, a Delaware
corporation
By: /s/ Daniel T. Morley
--------------------
Daniel T. Morley,
President
ATTEST:
/s/ James G. Turner
- --------------------
James G. Turner, the Secretary
of Wing Acquisition Corporation
<PAGE>
Exhibit 3.30
BYLAWS
OF
WING INDUSTRIES, INC.
(HEREIN REFERRED TO AS THE "CORPORATION")
ARTICLE I.
CAPITAL STOCK
SECTION 1. CERTIFICATES REPRESENTING SHARES. The Corporation shall
deliver certificates representing shares to which shareholders are entitled in
such form as shall be approved by the Board of Directors, or the Corporation may
issue uncertificated shares in accordance with the requirements of the Texas
Business Corporation Act. Each certificate shall bear on its face the statement
that the Corporation is organized in Texas, the name of the shareholder to whom
the certificate is being issued, the name of the Corporation, the number, class
and series of shares issued and the par value or a statement that the shares are
without par value. Each certificate shall also contain, on its face or back, all
recitations or references required by law. Certificates for shares of the
Corporation shall be issued only when consideration for the shares has been
fully paid. Such certificates shall be signed by the President or a Vice
President and the Secretary or any Assistant Secretary, and may be sealed with
the seal of the Corporation or a facsimile thereof. Where any such certificate
is countersigned by a transfer agent or registered by a registrar, either of
which is other than the Corporation itself or an employee of the Corporation,
the signatures of any such President or Vice President and Secretary or
Assistant Secretary may be facsimiles. In case any officer who has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is issued, it may be issued by
the Corporation with the same effect as if he were such officer at the date of
its issuance. The certificates shall be consecutively numbered and shall be
entered in the books of the Corporation as they are issued.
SECTION 2. SHAREHOLDERS OF RECORD. The Board of Directors of the
Corporation may appoint one or more transfer agents or registrars of any
class of stock of the Corporation. Unless and until such appointment is made,
the Secretary of the Corporation shall maintain, among other records, a stock
transfer book, the stubs in which shall set forth the names and addresses of
the holders of all issued shares of the Corporation, the number of shares
held by each, the certificate numbers representing such shares, the date of
issue of the certificates representing such shares, and whether or not such
shares
<PAGE>
originate from original issues or from transfer. The names and addresses of
shareholders as they appear on the stock transfer book shall be the official
list of shareholders of record of the Corporation for all purposes. The
Corporation shall be entitled to treat the holder of record of any shares of
the Corporation as the owner thereof for all purposes, and shall not be bound
to recognize any equitable or other claim to, or interest in, such shares or
any rights deriving from such shares, on the part of any other person,
including (but without limitation) a purchaser, assignee or transferee,
unless and until such other person becomes the holder of record of such
shares, whether or not the Corporation shall have either actual or
constructive notice of the interest of such other person.
SECTION 3. TRANSFER OF SHARES. The shares of the Corporation shall
be transferable on the stock transfer book of the Corporation by the holder of
record thereof, or his duly authorized attorney or legal representative, upon
endorsement and surrender for cancellation of the certificates representing such
shares. All certificates surrendered for transfer shall be cancelled and no new
certificate shall be issued until a former certificate or certificates for a
like number of shares shall have been surrendered and cancelled, except that in
the case of a lost, destroyed or mutilated certificate, a new certificate may be
issued therefor upon such conditions for the protection of the Corporation and
any transfer agent or registrar as the Board of Directors or the secretary may
prescribe. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its sole discretion and as a condition precedent to
the issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate or certificates alleged
to have been lost or destroyed.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of shareholders shall be
held at the registered office of the Corporation in the City of Dallas, Texas or
at such other place within or without the State of Texas as may be designated by
the Board of Directors or officer calling the meeting.
SECTION 2. ANNUAL MEETING. Commencing with the year 1997, annual
meetings of the shareholders shall be held on the first Tuesday of May each year
at such hour as may be designated in the notice of the meeting, if such day is
not a legal holiday, and if a holiday, then on the first following day that is
not a legal holiday. If the annual meeting is not held on the date above
specified, the Board of Directors shall cause a meeting in lieu thereof to be
held as soon thereafter as convenient, and any business transacted or election
-2-
<PAGE>
held at that meeting shall be as valid as if held at the annual meeting.
Failure to hold the annual meeting at the designated time shall not work a
dissolution of the Corporation.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders
may be called at any time by the President, the executive committee or the Board
of Directors. Special meetings of shareholders may also be called by the
Secretary upon the written request of the holders of at least ten percent (10%)
of the outstanding stock entitled to be voted at such meeting, unless the
Articles of Incorporation provide for a number of shares greater than or less
than ten percent (10%), in which event special meetings of the shareholders may
be called by the holders of at least the percentage of shares so specified in
the Articles of Incorporation, but in no event shall the Articles of
Incorporation provide for a number of shares greater than fifty percent (50%).
Such request shall state the purpose or purposes of such meeting and the matters
proposed to be acted on thereat.
SECTION 4. NOTICE OF MEETING. Written notice of all meetings,
stating the place, day and hour of the meeting and in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten (10) nor more than sixty (60) days before the
meeting, either personally or by mail, by or at the direction of the
President, the Secretary or the officer or person calling the meeting, to
each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail addressed to the shareholder at his address as it appears on the stock
transfer book of the Corporation, with postage thereon prepaid. Notice for an
adjourned meeting is not necessary unless the meeting is adjourned for thirty
days or more, in which case, notice of the adjourned meeting shall be given
as in the case of any special meeting. Any notice required to be given to any
shareholder under any provision of the Texas Business Corporation Act, the
Articles of Incorporation or these Bylaws need not be given to the
shareholder if (1) notice of two consecutive annual meetings and all notices
of meetings held during the period between those annual meetings, if any, or
(2) all (but in no event less than two) payments (if sent by first class
mail) of distributions or interest on securities during a twelve (12) month
period have been mailed to that person, addressed at his address as shown on
the records of the Corporation, and have been returned undeliverable. Any
action or meeting taken or held without notice to such a person shall have
the same force and effect as if the notice had been duly given and, if the
action taken by the Corporation is reflected in any articles or document
filed with the Texas Secretary of State, those articles or that document may
state that notice was duly given to all persons to whom notice was required
to be given. If such a person delivers to the Corporation a written notice
setting forth his then current address, the requirement that notice be given
to that person shall be reinstated.
SECTION 5. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. The
Board of Directors may fix, in advance, a date as the record date for the
purpose of determining shareholders entitled to notice of, or to vote at, any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive any distribution, dividend or the
-3-
<PAGE>
allotment of any rights, or in order to make a determination of shareholders
for any other proper purpose. Such date, in any case, shall be not more than
sixty (60) days, and in case of a meeting of shareholders not less than ten
(10) days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. In lieu of fixing a record
date, the Board of Directors may provide that the stock transfer book shall
be closed for a stated period, but not to exceed, in any case, sixty (60)
days. If the stock transfer book is closed for the purpose of determining
shareholders entitled to notice of, or to vote at, a meeting of shareholders,
such book shall be closed for at least ten (10) days immediately preceding
such meeting.
SECTION 6. VOTING LIST. The officer or agent having charge of the
stock transfer book of the Corporation shall make, at least ten (10) days before
each meeting of shareholders, a complete list of the shareholders entitled to
vote at such meeting or any adjournment thereof, arranged in alphabetical order,
with the address of, and the number of shares held by, each shareholder, which
list, for a period of ten days prior to such meeting, shall be kept on file at
the registered office of the Corporation and shall be subject to inspection by
any shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to the identity of
the shareholders entitled to examine such list or transfer books or to vote at
any meeting of shareholders. Failure to comply with any requirements of this
Section 6 shall not affect the validity of any action taken at such meeting.
SECTION 7. VOTING AT MEETINGS. Any holder of shares of the
Corporation entitled to vote shall be entitled to one vote for each such share,
either in person or by proxy executed in writing by him or by his duly
authorized attorney in fact. Voting on any resolution at the meeting shall be by
voice, unless any shareholder demands a ballot vote before the voting begins. No
proxy shall be valid after eleven months from the date of its execution unless
otherwise provided in the proxy. Each proxy shall be revocable unless the proxy
form conspicuously states that the proxy is irrevocable and the proxy is coupled
with an interest, including the appointment as proxy of (a) a pledgee, (b) a
person who purchased or agreed to purchase, or owns or holds an option to
purchase, the shares, (c) a creditor of the Corporation who extended its credit
under terms requiring the appointment, (d) an employee of the Corporation whose
employment contract requires the appointment, or (e) a party to a voting
agreement created under the Texas Business Corporation Act. A revocable proxy
shall be deemed to have been revoked if the Secretary of the Corporation shall
have received at or before the meeting instructions or revocation or a proxy
bearing a later date, which instructions or proxy shall have been duly executed
and dated in writing by the shareholder.
SECTION 8. QUORUM OF SHAREHOLDERS. The holders of a majority of
shares entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting
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of shareholders, but, if a quorum is not represented, a majority in interest
of those represented may adjourn the meeting from time to time, without
notice of adjournment other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting, at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally notified. The vote of the
holders of a majority of the shares entitled to vote, and, thus, represented,
at a meeting at which a quorum is present, shall be the act of the
shareholders' meeting, unless the vote of a greater number is required by
law, the Articles of Incorporation or these Bylaws.
SECTION 9. OFFICERS. The President shall preside at, and the
Secretary shall keep the records of, each meeting of shareholders. In the
absence of either such officer, his or her duties shall be performed by another
director or officer of the Corporation appointed at the meeting.
ARTICLE III.
DIRECTORS
SECTION 1. NUMBER AND TENURE. The business and affairs of the
Corporation shall be managed by a Board of Directors, consisting initially of
two (2) members. The number of members on the Board of Directors may be
increased or decreased from time to time by resolution of the Board of
Directors, provided that no decrease shall have the effect of shortening the
term of any incumbent director. Unless sooner removed in accordance with these
Bylaws, members of the Board of Directors shall hold office until the next
annual meeting of shareholders and until their successors shall have been
elected and qualified. Directors need not be shareholders of the Corporation.
SECTION 2. VACANCIES. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the entire Board. Any directorship to be
filled by reason of an increase in the number of directors may be filled by the
Board of Directors for a term of office continuing only until the next election
of one or more directors by the shareholders provided that the Board of
Directors may not fill more than two such directorships during the period
between any two successive annual meetings of shareholders. Any vacancy
occurring in the Board of Directors or any directorship to be filled by reason
of an increase in the number of directors may be filled by election at an annual
or special meeting of shareholders called for that purpose. A director elected
to fill a vacancy shall be elected for the unexpired term of his predecessor in
office.
SECTION 3. PLACE OF MEETING. Meetings of the Board of Directors may
be held either within or without the State of Texas, at whatever place is
specified by the officer
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calling the meeting. In the absence of specific designation, the meetings
shall be held at the office of the Corporation in the City of Dallas, Texas.
SECTION 4. REGULAR MEETINGS. The Board of Directors shall meet each
year immediately following the annual meeting of the shareholders, at the place
of such meeting, for the transaction of such business as may properly be brought
before it. The Board of Directors may designate other times for the conduct of
regular meetings of the Board of Directors. No notice of annual meetings or
regular meetings for which the Board of Directors has designated a time need be
given to members of the Board of Directors.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any time upon the call of the President, or any two
(2) directors of the Corporation. Notice shall be sent by mail or telegram to
the last known address of each director at least four (4) days before the
meeting. Oral notice may be substituted for such written notice if given not
later than one day before the meeting. Notice of the time, place and purpose
of such meeting may be waived in writing before or after such meeting, and
shall be equivalent to the giving of notice. Attendance of a director at such
meeting shall also constitute a waiver of notice thereof, except where such
director attends for the announced purpose of objecting to the transaction of
any business on the ground that the meeting is not lawfully called or
convened. Except as otherwise herein provided, neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of notice of
such meeting.
SECTION 6. QUORUM. A majority of the number of directors fixed by
or in the manner provided in these Bylaws, as from time to time amended,
shall constitute a quorum for the transaction of business, but a smaller
number may adjourn the meeting from time to time until they can secure the
attendance of a quorum. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board of
Directors. Any regular or special directors' meeting may be adjourned from
time to time by those present, whether a quorum is present or not.
SECTION 7. COMPENSATION. Directors as such shall not receive any
stated salary for their services, but, by resolution of the Board, a fixed sum
and expenses of attendance, if any, may be allowed for attendance at each
regular or special meeting of the Board; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
SECTION 8. REMOVAL. Any and all directors may be removed, either for
or without cause, at any special meeting of shareholders by the affirmative vote
of a majority of the outstanding shares entitled to vote at elections of
directors. The notice calling such meeting shall give notice of the intention to
act upon such matter, and if the notice so provides, the vacancy caused by such
removal may be filled at such meeting by vote of a
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majority of the shares represented at such meeting and entitled to vote for
the election of directors.
SECTION 9. COMMITTEES. The Board of Directors may, by resolution,
designate an executive Committee and one (1) or more other committees to
conduct the business and affairs of the Corporation, to the extent authorized
by the resolution and subject to the restrictions of the Texas Business
Corporation Act. The Board of Directors, by majority vote, shall have the
power at any time to change the powers and members of any committee, to fill
vacancies and to terminate the existence of any committee. Members of any
committee shall receive such compensation as the Board of Directors may from
time to time provide. The designation of any committee and the delegation
thereto of authority shall not operate to relieve the Board of Directors, or
any member thereof, of any responsibility imposed by law. Every committee so
designated shall keep regular minutes of the proceedings and regularly report
the minutes to the Board of Directors.
ARTICLE IV.
OFFICERS
SECTION 1. OFFICERS. The officers of the Corporation shall be
elected by the Board of Directors and shall, at a minimum, consist of a
President and a Secretary. The Board of Directors may elect such other officers,
including a Chairman of the Board, a Vice President or Vice Presidents, a
Treasurer, and Assistant Secretaries and Assistant Treasurers, and appoint such
agents, as it may deem necessary or desirable. All officers shall, unless
otherwise removed by the Board of Directors, hold office until their successors
are elected and qualified. Any two or more offices may be held by the same
person. The salaries of the officers shall be determined by the Board of
Directors, and may be altered by the Board from time to time, except as
otherwise provided by contract. All officers shall be entitled to be paid or
reimbursed for all costs and expenditures incurred in the Corporation's
business.
SECTION 2. VACANCIES. Whenever any vacancies shall occur in any
office by death, resignation, increase in the number of officers of the
Corporation, or otherwise, the same shall be filled by the Board of Directors,
and the officer so elected shall, unless otherwise removed by the Board of
Directors, hold office until his successor is chosen and qualified.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever, in its
judgment, the best interests of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
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SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board, if
there shall be such an officer, shall, if present, preside at all meetings of
the Board of Directors and exercise and perform such other powers and duties
as may from time to time be assigned to the Chairman by the Board of
Directors or prescribed by these Bylaws.
SECTION 5. PRESIDENT. Subject to the supervisory powers, if any,
that may be given by the Board of Directors to the Chairman of the Board, if
there be such an officer, the President shall be the principal executive officer
of the Corporation, and subject to the control of the Board of Directors, shall,
in general, supervise and control all of the business and affairs of the
Corporation. The President shall preside at all meetings of the shareholders
and, in the absence of the Chairman of the Board, of the Board of Directors. The
President may sign, with the Secretary or any other proper officer of the
Corporation hereunto authorized by the Board of Directors, certificates for
shares of the Corporation, any deeds, mortgages, bonds, contracts or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed and executed;
and in general shall perform all duties incident to the office of President and
such other duties as may be prescribed by the Board of Directors from time to
time.
SECTION 6. VICE PRESIDENT. Any Vice President, if there shall be
such an officer, may perform the usual and customary duties that pertain to such
office (but no unusual or extraordinary duties or powers conferred by the Board
of Directors upon the President) and, under the direction and subject to the
control of the Board of Directors, such other duties as may be assigned to him
or her.
SECTION 7. SECRETARY. It shall be the duty of the Secretary to
send any and all required notices of and to attend all meetings of the
shareholders and Board of Directors and record correctly the proceedings of
such meetings in a book suitable for that purpose. It shall also be the duty
of the Secretary to attest with his or her signature and the seal of the
Corporation all stock certificates issued by the Corporation and to keep a
stock transfer book in which shall be correctly recorded all transactions
pertaining to the capital stock of the Corporation. The Secretary shall
attest and keep at the registered office of the Corporation the original or a
copy of these Bylaws, as they may be amended, and the original of the
Articles of Incorporation, as they may be amended. The Secretary shall also
attest with his or her signature and the seal of the Corporation all deeds,
conveyances or other instruments requiring the seal of the Corporation. The
person holding the office of Secretary shall also perform, under the
direction and subject to the control of the Board of Directors, such other
duties as may be assigned to him or her. The duties of the Secretary may also
be performed by any Assistant Secretary.
SECTION 8. TREASURER. The Treasurer, if there shall be such an
officer, shall keep such moneys of the Corporation as may be entrusted to his or
her keeping and account for
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the same. The Treasurer shall be prepared at all times to give information as
to the condition of the Corporation and shall make a detailed annual report
of the entire business and financial condition of the Corporation. The person
holding the office of Treasurer shall also perform, under the direction and
subject to the control of the Board of Directors, such other duties as may be
assigned to him or her. The duties of the Treasurer may also be performed by
any Assistant Treasurer.
SECTION 9. DELEGATION OF AUTHORITY. In the case of any absence of
any officer of the Corporation or for any other reason that the Board may deem
sufficient, the Board of Directors may delegate some or all of the powers or
duties of such officer to any other officer or to any director, employee,
shareholder or agent for whatever period of time seems desirable, providing that
a majority of the entire Board concurs therein.
ARTICLE V.
INDEMNIFICATION AND INSURANCE
SECTION 1. INDEMNIFICATION OF DIRECTORS.
A. DEFINITIONS.
For purposes of this Article:
(1) "Expenses" include court costs and attorneys' fees.
(2) "Official capacity" means
(a) when used with respect to a director, the
office of director in the Corporation, and
(b) when used with respect to a person other than a
director, the elective or appointive office in the
Corporation held by the officer or the employment or
agency relationship undertaken by the employee or agent
on behalf of the Corporation, but
(c) in both clauses (a) and (b) of this subsection A(2),
such term does not include service for any other foreign
or domestic corporation or any partnership, joint
venture, sole proprietorship, trust, employee benefit
plan, or other enterprise.
(3) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, any
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appeal in such an action, suit, or proceeding, and any inquiry or
investigation that could lead to such an action, suit, or proceeding.
B. INDEMNIFICATION WHERE DIRECTOR HAS BEEN WHOLLY SUCCESSFUL IN THE
PROCEEDING. The Corporation shall indemnify a director against reasonable
expenses incurred by him in connection with a proceeding in which he is a party
because he is or was a director if he has been wholly successful, on the merits
or otherwise, in the defense of the proceeding.
C. INDEMNIFICATION WHERE DIRECTOR HAS NOT BEEN WHOLLY SUCCESSFUL IN
PROCEEDING.
(1) The Corporation shall indemnify a person who was, is, or is
threatened to be made a named defendant or respondent in a proceeding because
the person is or was a director of the Corporation, and who does not qualify for
indemnification under subsection B of this Section, if it is determined, in
accordance with the procedure set out in subsection C(4) of this Section, that
the person:
(a) conducted himself in good faith;
(b) reasonably believed:
(i) in the case of conduct in his official capacity as
a director of the Corporation, that his conduct
was in the Corporation's best interest; and
(ii) in all other cases, that his conduct was at least
not opposed to the Corporation's best interests;
and
(c) in the case of any criminal proceeding, had no
reasonable cause to believe his conduct was unlawful.
(2) The termination of a proceeding by judgment, order,
settlement, or conviction, or on a plea of nolo contendere or its equivalent,
is not of itself determinative that the person did not meet the requirements
set forth in subsection C(1) of this Section. A person shall be deemed to
have been found liable in respect of any claim, issue or matter only after
the person shall have been so adjudged by a court of competent jurisdiction
after exhaustion of all appeals therefrom.
(3) A person may be indemnified under subsection C(1) of this
Section against judgments, penalties (including excise and similar taxes),
fines, settlements, and reasonable expenses actually incurred by the person in
connection with the proceeding; but if the person is found liable to the
Corporation or is found liable on the basis that personal
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benefit was improperly received by the person, the indemnification (a) is
limited to reasonable expenses actually incurred by the person in connection
with the proceeding and (b) shall not be made in respect of any proceeding in
which the person shall have been found liable for willful or intentional
misconduct in the performance of his duty to the Corporation.
(4) Any indemnification under subsection C(1) of this Section shall
be made by the Corporation only upon a determination that indemnification of the
director is proper in the circumstances because he has met the applicable
standard of conduct. Such determination shall be made:
(a) by the Board of Directors by a majority vote of a quorum
consisting of directors who, at the time of such vote,
are not named defendants or respondents in the
proceeding;
(b) if such a quorum cannot be obtained, then by
a majority vote of a committee of the Board
of Directors, duly designated to act in the
matter by a majority vote of all directors
(in which designation directors who are named
defendants or respondents in the proceeding
may participate), such committee to consist
solely of two (2) or more directors who, at
the time of the committee vote, are not named
defendants or respondents in the proceeding;
(c) by special legal counsel selected by the
Board of Directors or a committee thereof by
vote as set forth in clauses (a) or (b) of
this subsection C(4) or, if the requisite
quorum of all of the directors cannot be
obtained therefor and such committee cannot
be established, by a majority vote of all of
the directors (in which directors who are
named defendants or respondents in the
proceeding may participate); or
(d) by the shareholders in a vote that excludes the shares
held by directors who are named defendants or
respondents in the proceeding.
Determination as to reasonableness of expenses shall be made in the
same manner as the determination that indemnification is proper, except hat if
the determination that indemnification is proper is made by special legal
counsel, determination as to reasonableness of expenses must be made in the
manner specified in clause (c) of this subsection C(4) for the selection of
special legal counsel. In the event a determination is made under this
subsection C(4) that a director has met the applicable standard of conduct as to
some matters but not as to others, amounts to be indemnified may be reasonably
prorated.
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(5) Except to the extent permitted by subsection C(3) of this
Section, a director may not be indemnified under subsection C(1) of this Section
in respect of a proceeding:
(a) in which the director is found liable on the basis that
personal benefit was improperly received by him, whether
or not the benefit resulted from an action taken in the
director's official capacity; or
(b) in which the person is found liable to the Corporation.
D. COURT-ORDERED INDEMNIFICATION. A director may apply to a court of
competent jurisdiction for indemnification from the Corporation, whether or not
he has met the requirements set forth in subsection C(1) of this Section or has
been adjudged liable in the circumstances described by subsection C(5) of this
Section. If a director of the Corporation seeks to obtain court-ordered
indemnification, the Corporation and its Board of Directors shall cooperate
fully with such director in satisfying the procedural steps required therefor.
E. ADVANCEMENT OF EXPENSES. Reasonable expenses incurred by a
director who was, is, or is threatened to be made a named defendant or
respondent in a proceeding shall be paid or reimbursed by the Corporation at
reasonable intervals in advance of the final disposition of the proceeding, and
without making any of the determinations specified in subsection C(4) of this
Section, after receipt by the Corporation of:
(1) a written affirmation by such director of his good faith
belief that he has met the standard of conduct necessary for
indemnification under this Article; and
(2) a written undertaking by or on behalf of such director to
repay the amount paid or reimbursed by the Corporation if it
shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized in this Article.
Such written undertaking shall be an unlimited general
obligation of the director but need not be secured and it may
be accepted by the Corporation without reference to financial
ability to make repayment.
F. DIRECTORS AS WITNESSES. The Corporation shall pay or reimburse
expenses incurred by a director in connection with his appearance as a witness
or other participation in a proceeding at a time when he is not a named
defendant or respondent in the proceeding.
G. NOTICE TO SHAREHOLDERS. Any indemnification of or advancement of
expenses to a director in accordance with this Section shall be reported in
writing to the shareholders of the Corporation with or before the notice or
waiver of notice of the next
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shareholders' meeting or with or before the next submission to shareholders
of a consent to action without a meeting and, in any case, within the twelve
(12) month period immediately following the date of the indemnification or
advance.
H. DIRECTORS' SERVICES TO BENEFIT PLANS. For purposes of this
Article, the Corporation is deemed to have requested a director to serve an
employee benefit plan whenever the performance by him of his duties to the
Corporation also imposes duties on or otherwise involves service by him to the
plan or participants or beneficiaries of the plan. Excise taxes assessed on a
director with respect to any employee benefit plan pursuant to applicable law
are deemed fines. Action taken or omitted by him with respect to an employee
benefit plan in the performance of his duties for a purpose reasonably believed
by him to be in the interest of the participants and beneficiaries of the plan
is deemed to be for a purpose which is not opposed to the best interests of the
Corporation.
SECTION 2. INDEMNIFICATION OF OFFICERS. EMPLOYEES.
AGENTS AND OTHERS.
A. IN GENERAL. The Corporation shall indemnify and advance expenses
to an officer, employee, or agent of the Corporation in the same manner and to
the same extent as is provided by Section l of this Article for a director. An
officer is entitled to seek indemnification to the same extent as a director.
B. INDEMNIFICATION FOR SERVICE TO OTHER ENTERPRISES. The Corporation
may indemnify and advance expenses to persons who are not or were not officers,
employees, or agents of the Corporation but who are or were serving at the
request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise to the same extent that it may
indemnify and advance expenses to directors under this Article.
C. ADDITIONAL RIGHTS TO INDEMNIFICATION. The Corporation may, at the
discretion of the Board of Directors in view of all the relevant circumstances,
indemnify and advance expenses to a person who is an officer, employee, or agent
of the Corporation and who is not a director of the Corporation or a person
identified in subsection B of this Section and who is not a director of the
Corporation to such further extent, consistent with law, as may be provided by
the Articles of Incorporation, by general or specific actions of the Board of
Directors, by contract, or as permitted or required by common law.
SECTION 3. CONTINUING OFFER; RELIANCE: EFFECT OF
AMENDMENT.
The provisions of this Article are for the benefit of, and may be
enforced by, each director, officer, employee, agent or person identified in
subsection B of Section 2, the same as if set forth in their entirety in a
written instrument duly executed and delivered
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by the Corporation and such person, and constitute a continuing offer to all
present and future persons occupying any such position. The Corporation, by
its adoption of these Bylaws, acknowledges and agrees that each such person
has relied upon and will continue to rely upon the provisions of this Article
in agreeing to serve and serving in any of the capacities referred to above,
waives reliance upon, and all notices of acceptance of, such provisions by
each such person and acknowledges and agrees that no present or future person
occupying any such position shall be prejudiced in his right to enforce the
provisions of this Article in accordance with their terms by any act or
failure to act on the part of the Corporation. No amendment, modification or
repeal of this Article or any provision hereof shall in any manner terminate,
reduce or impair the right of any past, present or future director, officer,
employee, agent or person identified in subsection B of Section 2 to be
indemnified by the Corporation, nor the obligation of the Corporation to
indemnify any such person, under and in accordance with the provisions of
this Article as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.
SECTION 4. INSURANCE.
The Corporation may purchase and maintain insurance or another
arrangement on behalf of any person who is or was a director, officer, employee
or agent of the Corporation or who is or was serving at the request of the
Corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, against any liability asserted against him
and incurred by him in such a capacity or arising out of this status as such a
person, whether or not the Corporation would have the power to indemnify him
against that liability under Sections l and 2 of this Article. If the insurance
or other arrangement is with a person or entity that is not regularly engaged in
the business of providing insurance coverage, the insurance or arrangement may
provide for payment of a liability with respect to which the Corporation would
not have the power to indemnify the person only if including coverage for the
additional liability has been approved by the shareholders of the Corporation.
Without limiting the power of the Corporation to procure or maintain any kind of
insurance or other arrangement, the Corporation may, for the benefit of persons
indemnified by the Corporation, (l) create a trust fund; (2) establish any form
of self-insurance; (3) secure its indemnity obligation by grant of a security
interest or other lien on the assets of the Corporation; or (4) establish a
letter of credit, guaranty, or surety arrangement. The insurance or other
arrangement may be procured, maintained, or established within the Corporation
or with any insurer or other person deemed appropriate by the Board of Directors
regardless of whether all or part of the stock or other securities of the
insurer or other person are owned in whole or part by the Corporation. In the
absence of fraud, the judgment of the Board of Directors as to the terms and
conditions
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of the insurance or other arrangement and the identity of the insurer or
other person participating in an arrangement shall be conclusive and the
insurance or arrangement shall not be voidable and shall not subject the
directors approving the insurance or arrangement to liability, on any ground,
regardless of whether directors participating in the approval are
beneficiaries of the insurance or arrangement.
SECTION 5. SEVERABILITY.
The indemnification provided by this Article shall be subject to all
valid and applicable laws, including, without limitation, Article 2.02-l of the
Texas Business Corporation Act. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer, employee,
agent, or person identified in Section 2.B hereof, as to expenses, judgments,
fines and amounts paid in settlement with respect to any proceeding, to the
fullest extent permitted by any applicable portion of this Article that shall
not have been invalidated and to the fullest extent permitted by applicable law.
If any provision hereof should be held by a court of competent jurisdiction to
be invalid, it shall be limited only to the extent necessary to make such
provision enforceable, it being the intent of this Article to indemnify each
individual who serves or who has served as a director, officer, employee, agent,
or person identified in subsection B of Section 2 to the maximum extent
permitted by law.
ARTICLE VI.
MISCELLANEOUS PROVISIONS
SECTION 1. AMENDMENTS. The Board of Directors shall have the
power to amend or repeal these Bylaws or adopt new Bylaws, unless the
shareholders in amending, repealing or adopting a new Bylaw expressly provide
that the Board of Directors may not amend or repeal that Bylaw. The Board of
Directors may exercise this power at any regular or special meeting at which
a quorum is present by the affirmative vote of a majority of the directors
present at the meeting and without any notice of the action taken with
respect to the Bylaws having been contained in the notice or waiver of notice
of such meeting. Unless the Corporation's Articles of Incorporation or a
Bylaw adopted by the shareholders provide otherwise as to all or some portion
of the Bylaws, the Corporation's shareholders may amend, repeal or adopt
Bylaws even though the Bylaws may also be amended, repealed or adopted by the
Board of Directors. The shareholders may amend, repeal or adopt new Bylaws at
any annual meeting of the shareholders or at any special meeting of the
shareholders at which a quorum is present or represented, provided that
notice of the proposed alteration or repeal is contained in the notice of
such special meeting, by the affirmative vote of a majority of the shares
entitled to vote at such meeting and present or represented thereat. The
directors shall not amend these Bylaws so as to
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effect a change in the time or place of the meeting for the election of
directors within sixty (60) days next before the day on which such meeting is
to be held; furthermore, in case of any change of said time or place, notice
thereof shall be given to each shareholder in person or by letter mailed to
his last known post office address at least twenty (20) days before the
meeting is held.
SECTION 2. WAIVER. Whenever, under the provisions of any law, the
Articles of Incorporation or amendments thereto, or these Bylaws, any notice is
required to be given to any shareholders, director or committee member, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Moreover, attendance at any meeting by a shareholder or
director shall constitute a waiver of notice of said meeting by such shareholder
or director unless such individual attends the meeting for the specific purpose
of objecting to the transaction of any business thereat on the ground that the
meeting is not lawfully called or convened.
SECTION 3. CONFERENCE TELEPHONE MEETINGS. Meetings of shareholders,
directors or any committee thereof, may be held by means of conference telephone
or similar communications equipment so long as all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this Section
shall constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business thereat on the ground that the meeting is not
lawfully called or convened.
SECTION 4. ACTION BY WRITTEN CONSENT. Any action that may be taken
at a regular or special meeting of the shareholders, directors or committees may
be taken without a meeting if a consent in writing, setting forth the actions to
be taken, shall be signed by all of those persons entitled to vote at that
meeting, and such consent shall have the same force and effect as a unanimous
vote of said shareholders, directors or committee members. No notice shall be
required in connection with the use of a written consent pursuant to this
Section.
SECTION 5. OFFICES. The principal office of the Corporation shall
be located in Dallas, Texas unless and until changed by resolution of the
Board of Directors. The Corporation may also have offices at such other
places as the Board of Directors may from time to time designate or as the
business of the Corporation may require.
SECTION 6. RESIGNATIONS. Any director or officer may resign at any
time. Such resignations shall be made in writing and shall take effect at the
time specified therein, or, if no time be specified, at the time of its receipt
by the President or Secretary. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.
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<PAGE>
SECTION 7. SEAL. The seal of the Corporation shall be such as from
time to time may be approved by the Board of Directors, but the use of a seal
shall not be essential to the validity of any agreement entered into by the
Corporation, unless otherwise provided by law.
SECTION 8. FISCAL YEAR. The fiscal year of the Corporation shall
end at the close of business on the 30th day of June in each year.
SECTION 9. BOOKS AND RECORDS. The Corporation shall maintain those
books and records as provided by statute and as it may deem necessary or
desirable. All books and records provided for by statute shall be open to
inspection of the shareholders from time to time and to the extent expressly
provided by statute, and not otherwise. The members of the Board of Directors
may examine all such books and records at all reasonable times.
-17-
<PAGE>
THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
SoftSolution Network ID: ATL-205177.1 Type: MISC
<PAGE>
Exhibit 3.31
CERTIFICATE OF INCORPORATION
OF
HEAT, INC.
ARTICLE ONE
The name of the corporation is Heat, Inc.
ARTICLE TWO
The address of the corporation's registered office in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle,
19805. The name of its registered agent at such address is Corporation Service
Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
The total number of stock which the corporation has authority to issue
is one thousand (1,000) shares of Common Stock, par value one cent ($0.01) per
share.
ARTICLE FIVE
The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
----------------- -----------------------------
Thaddine G. Gomez 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
ARTICLE SIX
The corporation is to have perpetual existence.
<PAGE>
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the corporation is expressly authorized to
make, alter or repeal the by-laws of the corporation.
ARTICLE EIGHT
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places
as may be designated from time to time by the board of directors or in the
by-laws of the corporation. Election of directors need not be by written
unless the by-laws of the corporation so provide.
ARTICLE NINE
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
The corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand on the 2nd day of January, 1997.
/s/ Thaddine G. Gomez
------------------------------
Thaddine G. Gomez
Sole Incorporator
2
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
BEFORE PAYMENT OF CAPITAL
OF
HEAT, INC.
* * * * *
ADOPTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION.241(b) OF THE
GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE
* * * * *
The undersigned, being the President of Heat, Inc., a
corporation duly organized and existing under and by virtue of the laws of the
State of Delaware (the "Corporation"), does hereby certify as follows:
FIRST: The Certificate of Incorporation of the Corporation
(the "Certificate of Incorporation") is hereby amended by deleting ARTICLE
FOUR in its entirety and substituting therefor a new ARTICLE FOUR as set
forth on Exhibit A attached hereto and made a part hereof.
SECOND: The Corporation has not received payment for any of
its stock.
THIRD: The foregoing amendment has been duly adopted,
pursuant to the provisions of Section 241(b) of the General Corporation Law
of the State of Delaware, by the sole incorporator of the Corporation.
IN WITNESS WHEREOF, the undersigned, being the President of the
<PAGE>
Corporation, for the purpose of amending the Certificate of Incorporation of
the Corporation pursuant to the General Corporation Law of the State of
Delaware, under penalties of perjury does hereby declare and certify that
this is the act and deed of the Corporation and the facts stated herein are
true, and accordingly has hereunto signed this Certificate of Amendment
Before of Payment Capital to the Certificate of Incorporation as of the 29th
Day of May, 1997.
Heat, Inc.,
a Delaware corporation
By: /s/ BRIAN D. SCHWARTZ
----------------------------------
Brian D. Schwartz
President
2
<PAGE>
EXHIBIT A
ARTICLE FOUR
The corporation shall have authority to issue 6,000,000 shares
consisting of 5,000,000 shares of Class A Common Stock par value $0.01 per share
("Class A Common Stock") and 1,000,000 shares of Class B Common Stock, par value
$0.01 per share sometimes collectively referred to herein as the "Common Stock."
The designations and the powers, preferences and rights of the
Class A Common Stock and Class B Common Stock are as follows:
(a) VOTING RIGHTS. (1) The holders of the Class A Common Stock
shall be entitled to vote on each matter on which the stockholders of the
Corporation shall be entitled to vote, and each holder of Class A Common Stock
shall be entitled to one vote for each share of such stock held by such holder.
(2) The holders of Class B Common Stock shall not have any
voting rights, except as otherwise required by applicable law, in which case
holders of Class B Common shall vote (at the rate of one vote per share of Class
B Common Stock held) as a single class of such matter unless otherwise required
by law.
(b) DIVIDENDS. The Board of Directors of the Corporation may
cause dividends to be paid to the holders of shares of Common Stock out of funds
legally available for the payment of dividends or other distributions (including
without limitations any grant or distribution of rights to subscribe for or
purchase shares of capital stock or securities or indebtedness convertible into
capital stock of the Corporation) are declared, whether payable in cash, in
property or in shares of stock of the Corporation, other than shares of Class A
Common Stock or Class B Common Stock, the holders of Class A Common Stock and
Class B Common Stock shall be entitled to share equally, share for share, in
such dividends or other distributions as if all such shares were of a single
class. No dividends or other distributions shall be declared or paid in shares
of Class A Common securities convertible into or exchangeable for shares of
Common Stock held by them, in shares of Class A Common Stock to holders of that
class of stock and Class B Common Stock to holders of that class of stock.
(c) LIQUIDATION RIGHTS. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation holders of Common Stock shall be entitled t share ratably
according to the number of shares of Common Stock held by them, in all assets of
the Corporation available for distribution to its stockholders.
1
<PAGE>
(d) CONVERSION. (1) Each share of Class B Common Stock shall
be convertible into one share of Class A Common Stock, at any time and from time
to time, upon delivery to the Corporation of a Certificate, signed by or on
behalf of the holders seeking such conversion, to the effect that such
conversion and the holding of such Class A Common Stock by such holder or
holders are permitted under the then current applicable law, in form and
substance reasonably acceptable to the Corporation. Any conversion of shares of
Class B Common Stock into shares of Class A Common Stock pursuant to this Clause
(d)(1) shall be effected by the delivery to the Corporation at its principal
executive office of the certificates representing shares to be converted, duly
endorsed, together with written instructions that the shares are to be
converted, and accompanied by the required certificate described herein.
(2) Each share Class A Common Stock shall be convertible into
one share of Class B Common Stock at any time and from time to time, at the
options of the holder thereof. Any conversion of shares of Class A Common Stock
into shares of Class B common Stock pursuant to this Clause (d)(2) shall be
effected by the delivery to the Corporation at its principal executive office of
the certificates representing shares to be converted, duly endorsed, together
with written instructions that the shares are to be converted.
(3) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock, solely for the
purpose of effecting conversions pursuant to this ARTICLE FOUR, the full number
of shares of Common Stock of each class from time to time issuable upon the
Conversion of all shares of Common Stock then outstanding and entitled to
convert, and shall take all such action and obtain all such permits or orders as
may be necessary to enable the corporation lawfully to issue such shares upon
any such conversion. In addition, the Corporation shall also reserve and keep
available other such securities and property as may from time to time be
deliverable upon conversion on Common Stock and shall take all such action and
obtain all such permits or orders as may be necessary to enable the Corporation
lawfully to deliver such other securities and property upon conversion. So long
as any shares of Common Stock shall be outstanding, the Corporation will take
all corporate action necessary in order that the Corporation may validly and
legally issue full paid and nonassessable shares of Common Stock upon any
conversion thereof.
(e) SUBDIVISIONS AND COMBINATIONS. If shares of either class
of Common Stock are subdivided or combined, then shares of both classes of
Common Stock shall be so subdivided or combined.
(f) REGULATED STOCKHOLDERS. The Corporation will not
convert or directly or indirectly redeem, purchase, acquire or take any other
actions affecting the percentage of outstanding voting securities owned or
controlled by any Regulations Y Holder and its Affiliates (other than a
Regulation Y Holder which waives in writing its
2
<PAGE>
rights under this ARTICLE FOUR) unless the Corporation gives written notice
(the "Deferral Notice") of such actions to each Regulation Y Holder. The
Corporation will defer making any such conversion, redemption, purchase or
other acquisition, or taking any such other action, for a period or 20 days
(the "Deferral Period") after giving the Deferral Notice in order to allow
each Regulation Y Holder to determine whether it wishes to convert or take
any other action with respect to the Common Stock it owns, controls or has
the power to vote, and if any Regulation Y Holder then elects to convert any
shares of Class A Common Stock, it shall notify the Corporation in writing
within 10 days of the issuance of the Deferral Notice in which case the
Corporation shall promptly notify from time to time prior to the end of such
20-day period each other Regulation Y Holder of each proposed conversion and
effect the conversions requested by all Regulation Y Holders at the end of
the Deferral Period. The Corporation will not directly or indirectly redeem
purchase, acquire or take any other action affecting outstanding shares of
Common Stock of the Corporation if such action wiII increase over 24.9% the
percentage of outstanding Common Stock owned or controlled by any Regulation
Y Holder and its Affiliates (other than a Regulation Y Holder which waives in
writing its rights under this ARTICLE FOUR).
(g) DEFINED TERMS. As used in this ARTICLE FOUR, the following
terms shall have the meanings shown below:
1. "AFFILIATE" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such Person. For the purpose of the above definition, the term "control"
(including with correlative meaning, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contact otherwise.
2. "REGULATION Y HOLDER" shall mean any stockholder of the
Corporation that is a bank holding company within ft meaning of the Bank Holding
Company Act of 1956, as amended, or a subsidiary thereof subject to Regulation Y
under such Act.
3
<PAGE>
CERTIFICATE OF CORRECTION
TO
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
HEAT, INC.
* * * *
ADOPTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION.103(f) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
* * * *
Brian D. Schwartz, being the President of Heat, Inc., a
corporation duly organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY
CERTIFY as follows:
FIRST: The name of the corporation is Heat Inc. (the
"Corporation").
SECOND: The section entitled (b) DIVIDENDS and the section
entitled (f) REGULATED STOCKHOLDERS of the Certificate of Amendment to the
Certificate of Incorporation of the Corporation (the "Certificate of Amendment")
which was filed with the Secretary of State of Delaware on May 29, 1997
erroneously stated the intention of the Board of Directors and such sections are
hereby corrected.
THIRD: The Exhibit A to the Certificate of Amendment
containing the erroneous sections in its corrected form is as set forth of
Exhibit A attached hereto.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the President
hereinabove named, for the purpose of correcting the Certificate of Amendment
pursuant to the General Corporation Law of the State of Delaware, under the
penalties of perjury does hereby declare and certify that this is the act and
deed of the Corporation and the facts stated herein are true, and accordingly
has hereunto signed this Certificate of Correction to the Certificate of
Amendment this 30th day of May, 1997.
Heat Inc.,
a Delaware corporation
By: /s/ BRIAN D. SCHWARTZ
-------------------------------
Brian D. Schwartz
President
-2-
<PAGE>
EXHIBIT A
ARTICLE FOUR
The corporation shall have authority to issue 6,000,000 shares
consisting of 5,000,000 shares of Class A Common Stock, par value $0.01 per
share ("Class A Common Stock") and 1,000,000 shares of Class B Common Stock, par
value $0.01 per share sometimes collectively referred to herein as the "Common
Stock."
The designations and the powers preferences and rights of the
Class A Common Stock and Class B Common Stock are as follows:
(a) VOTING RIGHTS. (1) The holders of the Class A Common Stock
shall be entitled to vote on each matter on which the stockholders of the
Corporation shall be entitled to vote, and each holder of Class A Common Stock
shall be entitled to one vote for each share of such stock held by such holder.
(2) The holders of Class B Common Stock shall not have any
voting rights, except as otherwise required by applicable law, in which case
holders of Class B Common Stock shall vote (at the rate of one vote per share of
Class B Common Stock held) as a single class on such matter unless otherwise
required by law.
(b) DIVIDENDS. The Board of Directors of the Corporation may
cause dividends to be paid to the holders of shares of Common Stock out of
funds legally available for the payment of dividends by declaring an amount
per share as a dividend. When and as dividends or other distributions,
(including without limitations any grant or distribution of rights to
subscribe for or purchase shares of capital stock or securities or
indebtedness convertible into capital stock of the Corporation) are declared,
whether payable in cash, in property or in shares of stock of the
Corporation, other than shares of Class A Common Stock or Class B Common
Stock, the holders of Class A Common Stock and Class B Common Stock shall be
entitled to share equally, share for share, in such dividends or other
distributions as if all such shares were of a single class. No dividends or
other distributions shall be declared or paid in shares of Class A Common
Stock or Class B Common Stock or options, warrants or rights to acquire such
stock or securities convertible into or exchangeable for shares of such
stock, except dividends or other distributions payable to all of the holders
of Common Stock held by them, in shares of Class A Common Stock to holders of
that class of stock and Class B Common Stock to holders of that class of
stock.
(c) LIQUIDATION RIGHTS. In the event of any voluntary or
involuntary
-3-
<PAGE>
liquidation, dissolution or winding up of the affairs of the Corporation
holders of Common Stock shall be entitled t share ratably according to the
number of shares of Common Stock held by them, in all assets of the
Corporation of the Corporation available for distribution to its stockholders
(d) CONVERSION. (1) Each share of Class B Common Stock shall be
convertible into one share of Class A Common Stock, at any time and from time to
time, upon delivery to the Corporation of a certificate, signed by or on behalf
of the holder or holders seeking such conversion, to the effect that such
conversion and the holding of such Class A Common Stock by such holder or
holders are permitted under the then current applicable law, in form and
substance reasonably acceptable to the Corporation. Any conversion of shares of
Class B Common Stock into shares of Class A Common Stock pursuant to this Clause
(d)(1) shall be effected by the delivery to the Corporation at its principal
executive office of the certificates representing shares to be converted, duly
endorsed, together with written instructions that the shares are to be
converted, and accompanied by the required certificate described herein.
(2) Each share of Class A Common Stock shall be convertible into
one share of Class B Common Stock, at any time and from time to time, at the
options of the holder thereof. Any conversion of shares of Class A Common Stock
into shares of Class B Common Stock pursuant to this Clause (d)(2) shall be
effected by the delivery to the Corporation at its principal executive office of
the certificates representing shares to be converted, duly endorsed, together
with written instructions that the shares are to be converted.
(3) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock, solely for the
purpose of effecting conversions pursuant to this ARTICLE FOUR, the full
number of shares of Common Stock of each class from time to time issuable
upon the conversion of all shares of Common Stock then outstanding and
entitled to convert, and shall take all such action and obtain all such
permits or orders as may be necessary to enable the corporation lawfully to
issue such shares upon any such conversion. In addition, the Corporation
shall also reserve and keep available such other securities and property as
may from time to time be deliverable upon conversion on Common Stock and
shall take all such action and obtain all such permits or orders as may be
necessary to enable the Corporation lawfully to deliver such other securities
and property upon conversion. So long as any shares of Common Stock shall be
outstanding, the Corporation will take all corporate action necessary in
order that the Corporation may validly and legally issue full paid and
nonassessable shares of Common Stock upon any conversion thereof.
(e) SUBDIVISIONS AND COMBINATIONS. If shares of either class of
Common Stock are subdivided or combined, then shares of both classes of Common
Stock shall be so subdivided or combined.
(f) REGULATED STOCKHOLDERS. The Corporation will not convert
or directly or
-4-
<PAGE>
indirectly redeem, purchase, acquire or take any other actions
affecting outstanding shares of capital stock of the Corporation if such
action will increase the percentage of outstanding voting securities owned or
controlled by any Regulations Y Holder and its Affiliates (other than a
Regulation Y Holder which waives in writing its rights under this ARTICLE
FOUR), unless the Corporation gives written notice (the "Deferral Notice") of
such actions to each Regulation Y Holder. The Corporation will defer making
any such conversion, redemption, purchase or other acquisition, or taking any
such other action, for a period of 20 days (the "Deferral Period") after
giving the Deferral Notice in order to allow each Regulation Y Holder to
determine whether it wishes to convert or take any other action with respect
to the Common Stock it owns, controls or has the power to vote, and if any
regulation Y Holder then elects to convert any shares of Class A Common
Stock, it shall notify the Corporation in writing within 10 days of the
issuance of the Deferral Notice, in which case the Corporation shall promptly
notify from time to time prior to the end of such 20-day period each other
Regulation Y Holder of each proposed conversion and effect the conversions
requested by all Regulation Y Holders at the end of the Deferral Period. The
Corporation will not directly or indirectly redeem, purchase, acquire or take
any other action affecting outstanding shares of Common Stock of the
Corporation if such action will increase over 24.9% the percentage of
outstanding Common Stock owned or controlled by any Regulation Y Holder and
its Affiliates (other than a Regulation Y Holder which waives in writing its
rights under the ARTICLE FOUR).
(g) DEFINED TERMS. As used in this ARTICLE FOUR, the following
terms shall have the meanings shown below:
1. "AFFILIATE" shall mean, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under
common control with such Person. For the purpose of the above definition,
the term "control" (including with correlative meaning, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contact
otherwise.
2. "REGULATION Y HOLDER" shall mean any stockholder of the
Corporation that is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended, or a subsidiary thereof subject to
Regulation Y under such Act.
-5-
<PAGE>
Exhibit 3.32
AMENDED AND RESTATED BY-LAWS
OF
HEAT, INC.
A Delaware corporation
(Adopted as of May 24, 1997)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the
corporation in the State of Delaware shall be located at 1013 Centre Road,
Wilmington, Delaware, County of New Castle 19805. The name of the
corporation's registered agent at such address shall be Corporation Service
Company. The registered office and/or registered agent of the corporation may
be changed from time to time by action of the board of directors.
SECTION 2. OTHER OFFICES. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE AND TIME OF MEETINGS. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall be
determined by the president of the corporation; provided, that if the president
does not act, the board of directors shall determine the date, time and place of
such meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or
without the State of Delaware, as shall be stated in a notice of meeting or
in a duly executed waiver of notice thereof. Such meetings may be called at
any time by the board of directors or the president and shall be called by
the president upon the written request of holders of shares entitled to cast
not less than a majority of the votes at the meeting, such written request
shall state the purpose or purposes of
<PAGE>
the meeting and shall be delivered to the president.
SECTION 3. PLACE OF MEETINGS. The board of directors may designate
any place, either within or without the State of Delaware, as the place of
meeting for any annual meeting or for any special meeting called by the board
of directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting
not less than ten (10) nor more than sixty (60) days before the date of the
meeting. All such notices shall be delivered, either personally or by mail, by
or at the direction of the board of directors, the president or the secretary,
and if mailed, such notice shall be deemed to be delivered when deposited in
the United States mail, postage prepaid, addressed to the stockholder at his,
her or its address as the same appears on the records of the corporation.
Attendance of a person at a meeting shall constitute a waiver of notice of
such meeting, except when the person attends for the express purpose of
objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened.
SECTION 5. STOCKHOLDERS LIST. The officer having charge of the stock
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 6. QUORUM. The holders of a majority of the outstanding
shares of capital stock, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders, except as otherwise
provided by statute or by the certificate of incorporation. If a quorum is
not present, the holders of a majority of the shares present in person or
represented by proxy at the meeting, and entitled to vote at the meeting, may
adjourn the meeting to another time and/or place.
SECTION 7. ADJOURNED MEETINGS. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are
2
<PAGE>
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
SECTION 8. VOTE REQUIRED. When a quorum is present, the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
SECTION 9. VOTING RIGHTS. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one (1) vote in person or by proxy for each share of common stock
held by such stockholder.
SECTION 10. PROXIES. Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
him or her by proxy, but no such proxy shall be voted or acted upon after
three (3) years from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally. Any
proxy is suspended when the person executing the proxy is present at a
meeting of stockholders and elects to vote, except that when such proxy is
coupled with an interest and the fact of the interest appears on the face of
the proxy, the agent named in the proxy shall have all voting and other
rights referred to in the proxy, notwithstanding the presence of the person
executing the proxy. At each meeting of the stockholders, and before any
voting commences, all proxies filed at or before the meeting shall be
submitted to and examined by the secretary or a person designated by the
secretary, and no shares may be represented or voted under a proxy that has
been found to be invalid or irregular.
SECTION 11. ACTION BY WRITTEN CONSENT. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be
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necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered to the
corporation by delivery to its registered office in the state of Delaware, or
the corporation's principal place of business, or an officer or agent of the
corporation having custody of the book or books in which proceedings of
meetings of the stockholders are recorded. Delivery made to the corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested provided, however, that no consent or consents delivered by
certified or registered mail shall be deemed delivered until such consent or
consents are actually received at the registered office. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered to the corporation as required by this
section, written consents signed by the holders of a sufficient number of
shares to take such corporate action are so recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented
in writing. Any action taken pursuant to such written consent or consents of
the stockholders shall have the same force and effect as if taken by the
stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the
corporation shall be managed by or under the direction of the board of
directors.
SECTION 2. NUMBER, ELECTION AND TERM OF OFFICE. The number of
directors which shall constitute the board shall be __________. Thereafter,
the number of directors shall be established from time to time by in
accordance with the provisions of that certain Voting Agreement, dated as of
May 29, 1997 by and among the corporation and certain of its stockholders
(the "Voting Agreement"). The directors shall be elected by a plurality of
the votes of the shares present in person or represented by proxy at the
meeting and entitled to vote in the election of directors. Except as provided
in the Voting Agreement and Section 4 of this Article III, the directors
shall be elected in this manner at the annual meeting of the stockholders.
Each director elected shall hold office until a successor is duly elected and
qualified or until his or her earlier death, resignation or removal as
hereinafter provided.
SECTION 3. REMOVAL AND RESIGNATION. The directors may only be
removed, with or without cause, as set forth in the Voting Agreement. Any
director may resign at any time upon written notice to the corporation.
SECTION 4. VACANCIES. Vacancies and newly created directorships
resulting from any
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increase in the authorized number of directors may only be filled as set
forth in the Voting Agreement. Each director so chosen shall hold office
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as herein provided.
SECTION 5. ANNUAL MEETINGS. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of
stockholders.
SECTION 6. OTHER MEETINGS AND NOTICE. Regular meetings, other than
the annual meeting, of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by
resolution of the board. Special meetings of the board of directors may be
called by or at the request of the president on at least twenty-four (24)
hours notice to each director, either personally, by telephone, by mail, or
by telegraph.
SECTION 7. QUORUM, REQUIRED VOTE AND ADJOURNMENT. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which
a quorum is present shall be the act of the board of directors. If a quorum
shall not be present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present.
SECTION 8. COMMITTEES. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
SECTION 9. COMMITTEE RULES. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the board
of directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the
committee shall be necessary to constitute a quorum. In the event that a
member and that member, alternate, if alternates are designated by the board
of directors as provided in Section 8 of this Article III, of such committee
is or are absent or disqualified, the member or members thereof present at
any meeting and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the
board of directors to act at the meeting in place of any such absent or
disqualified
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member.
SECTION 10. COMMUNICATIONS EQUIPMENT. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
SECTION 11. WAIVER OF NOTICE AND PRESUMPTION OF ASSENT. Any member
of the board of directors or any committee thereof who is present at a
meeting shall be conclusively presumed to have waived notice of such meeting
except when such member attends for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened. Such member shall be conclusively
presumed to have assented to any action taken unless his or her dissent shall
be entered in the minutes of the meeting or unless his or her written dissent
to such action shall be filed with the person acting as the secretary of the
meeting before the adjournment thereof or shall be forwarded by registered
mail to the secretary of the corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to any member who voted in
favor of such action.
SECTION 12. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be elected
by the board of directors and shall consist of a president, one or more
vice-presidents, secretary, a treasurer, and such other officers and
assistant officers as may be deemed necessary or desirable by the board of
directors. Any number of offices may be held by the same person. In its
discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
corporation shall be elected annually by the board of directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter
as conveniently may be. The president shall be elected annually by the board
of directors at the first meeting of the board of directors held after each
annual meeting of stockholders or as soon thereafter as conveniently may be.
The president shall
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appoint other officers to serve for such terms as he or she deems desirable.
Vacancies may be filled or new offices created and filled at any meeting of
the board of directors. Each officer shall hold office until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal as hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment
the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed.
SECTION 4. VACANCIES. Any vacancy occurring in any office because
of death, resignation, removal, disqualification or otherwise, may be filled
by the board of directors for the unexpired portion of the term by the board
of directors then in office.
SECTION 5. COMPENSATION. Compensation of all officers shall be
fixed by the board of directors, and no officer shall be prevented from
receiving such compensation by virtue of his or her also being a director of
the corporation.
SECTION 6. THE PRESIDENT. The president shall be the chief executive
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he is present; subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent
of the corporation. The president shall have such other powers and perform
such other duties as may be prescribed by the board of directors or as may be
provided in these by-laws.
SECTION 7. VICE-PRESIDENTS. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors or by the president, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions
of the president. The vice-presidents shall also perform such other duties
and have such other powers as the board of directors, the president or these
bylaws may, from time to time, prescribe.
SECTION 8. THE SECRETARY AND ASSISTANT SECRETARIES. The secretary
shall attend all meetings of the board of directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the president's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-laws or by law; shall
have such powers and
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perform such duties as the board of directors, the president or these bylaws
may, from time to time, prescribe; and shall have custody of the corporate
seal of the corporation. The secretary, or an assistant secretary, shall have
authority to affix the corporate seal to any instrument requiring it and when
so affixed, it may be attested by his signature or by the signature of such
assistant secretary. The board of directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing
by his signature. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors, the president, or secretary
may, from time to time, prescribe.
SECTION 9. THE TREASURER AND ASSISTANT TREASURER. The treasurer
shall have the custody of the corporate funds and securities; shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name
and to the credit of the corporation as may be ordered by the board of
directors; shall cause the funds of the corporation to be disbursed when such
disbursements have been duly authorized, taking proper vouchers for such
disbursements; and shall render to the president and the board of directors,
at its regular meeting or when the board of directors so requires, an account
of the corporation; shall have such powers and perform such duties as the
board of directors, the president or these by- laws may, from time to time,
prescribe. If required by the board of directors, the treasurer shall give
the corporation a bond (which shall be rendered every six (6) years) in such
sums and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of the office of
treasurer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers,
vouchers, money, and other property of whatever kind in the possession or
under the control of the treasurer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers shall perform such other
duties and have such other powers as the board of directors, the president or
treasurer may, from time to time, prescribe.
SECTION 10. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS.
Officers, assistant officers and agents, if any, other than those whose
duties are provided for in these bylaws, shall have such authority and
perform such duties as may from time to time be prescribed by resolution of
the board of directors.
SECTION 11. ABSENCE OR DISABILITY OF OFFICERS. In the case of the
absence or disability of any officer of the corporation and of any person
hereby authorized to act in such officers place during such officers absence
or disability, the board of directors may by resolution delegate the powers
and duties of such officer to any other officer or to any director, or to any
other person whom it may select.
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ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
SECTION 1. NATURE OF INDEMNITY. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of
whom he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of
a partnership, joint venture, trust or other enterprise, shall be indemnified
and held harmless by the corporation to the fullest extent which it is
empowered to do so unless prohibited from doing so by the General Corporation
Law of the State of Delaware, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification rights
than said law permitted the corporation to provide prior to such amendment)
against all expense, liability and loss (including attorneys' fees actually
and reasonably incurred by such person in connection with such proceeding)
and such indemnification shall inure to the benefit of his heirs, executors
and administrators; provided, however, that, except as provided in Section 2
hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding initiated by such person only
if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article V shall
be a contract right and, subject to Sections 2 and 5 hereof, shall include
the right to be paid by the corporation the expenses incurred in defending
any such proceeding in advance of its final disposition. The corporation may,
by action of its board of directors, provide indemnification to employees and
agents of the corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
SECTION 2. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Any indemnification of a director or officer of the corporation under Section
1 of this Article V or advance of expenses under Section 5 of this Article V
shall be made promptly, and in any event within thirty (30) days, upon the
written request of the director or officer. If a determination by the
corporation that the director or officer is entitled to indemnification
pursuant to this Article V is required, and the corporation fails to respond
within sixty (60) days to a written request for indemnity, the corporation
shall be deemed to have approved the request. If the corporation denies a
written request for indemnification or advancing of expenses, in whole or in
part, or if payment in full pursuant to such request is not made within
thirty (30) days, the right to indemnification or advances as granted by this
Article V shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his right to indemnification, in
whole or in part, in any such action shall also be indemnified by the
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corporation. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any proceeding
in advance of its final disposition where the required undertaking, if any,
has been tendered to the corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation
Law of the State of Delaware for the corporation to indemnify the claimant
for the amount claimed, but the burden of such defense shall be on the
corporation. Neither the failure of the corporation (including its board of
directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he has met the
applicable standard of conduct set forth in the General Corporation Law of
the State of Delaware, nor an actual determination by the corporation
(including its board of directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
SECTION 3. ARTICLE NOT EXCLUSIVE. The rights to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 4. INSURANCE. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, whether or not the corporation would have
the power to indemnify such person against such liability under this Article
V.
SECTION 5. EXPENSES. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition unless
otherwise determined by the board of directors in the specific case upon
receipt of an undertaking by or on behalf of the director or officer to repay
such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the corporation. Such expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
SECTION 6. EMPLOYEES AND AGENTS. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or
agents of the corporation, or who are or were serving at the request of the
corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent
authorized at any time or from time to time by the board of directors.
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SECTION 7. CONTRACT RIGHTS. The provisions of this Article V shall
be deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and
the relevant provisions of the General Corporation Law of the State of
Delaware or other applicable law are in effect, and any repeal or
modification of this Article V or any such law shall not affect any rights or
obligations then existing with respect to any state of facts or proceeding
then existing.
SECTION 8. MERGER OR CONSOLIDATION. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or
was a director, officer, employee or agent of such constituent corporation,
or is or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position
under this Article V with respect to the resulting or surviving corporation
as he or she would have with respect to such constituent corporation if its
separate existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation
by the president or a vice president and the secretary or an assistant
secretary of the corporation, certifying the number of shares of a specific
class or series owned by such holder in the corporation. If such a
certificate is countersigned (1) by a transfer agent or an assistant transfer
agent other than the corporation or its employee or (2) by a registrar, other
than the corporation or its employee, the signature of any such president,
vice-president, secretary, or assistant secretary may be facsimiles. In case
any officer or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or certificates shall
cease to be such officer or officers of the corporation whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or
officers of the corporation. All certificates for shares shall be
consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of
stock of the corporation shall only be transferred on the books of the
corporation by the holder of record thereof or by such holder's attorney duly
authorized in writing, upon surrender to the corporation of the certificate
or certificates for
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such shares endorsed by the appropriate person or persons, with such evidence
of the authenticity of such endorsement, transfer, authorization, and other
matters as the corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under
the laws of the United States or any state thereof to act as its transfer
agent or registrar, or both in connection with the transfer of any class or
series of securities of the corporation.
SECTION 2. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be
made against the corporation on account of the loss, theft or destruction of
any such certificate or the issuance of such new certificate.
SECTION 3. FIXING A RECORD DATE FOR STOCKHOLDER MEETINGS. In order
that the corporation may determine the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which record date shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting. If no record date is fixed
by the board of directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be the
close of business on the next day preceding the day on which notice is given,
or if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the board of directors
may fix a new record date for the adjourned meeting.
SECTION 4. FIXING A RECORD DATE FOR ACTION BY WRITTEN CONSENT. In
order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the board of directors may
fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the board of directors,
and which date shall not be more than ten (10) days after the date upon which
the resolution fixing the record date is adopted by the board of directors.
If no record date has been fixed by the board of directors, the record date
for determining stockholders entitled to consent to corporate action in
writing without a meeting, when no prior action by the board of
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directors is required by statute, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or agent of
the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the board of directors and
prior action by the board of directors is required by statute, the record
date for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on
which the board of directors adopts the resolution taking such prior action.
SECTION 5. FIXING A RECORD DATE FOR OTHER PURPOSES. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment or any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purposes of any other lawful
action, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior
to such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the
day on which the board of directors adopts the resolution relating thereto.
SECTION 6. REGISTERED STOCKHOLDERS. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the
corporation may treat the registered owner as the person entitled to receive
dividends, to vote, to receive notifications, and otherwise to exercise all
the rights and powers of an owner. The corporation shall not be bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or
other notice thereof.
SECTION 7. SUBSCRIPTIONS FOR STOCK. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined
by the board of directors. Any call made by the board of directors for
payment on subscriptions shall be uniform as to all shares of the same class
or as to all shares of the same series. In case of default in the payment of
any installment or call when such payment is due, the corporation may proceed
to collect the amount due in the same manner as any debt due the corporation.
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ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation,
if any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or any other
purpose and the directors may modify or abolish any such reserve in the
manner in which it was created.
SECTION 2. CHECKS, DRAFTS OR ORDERS. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and
other evidences of indebtedness issued in the name of the corporation shall
be signed by such officer or officers, agent or agents of the corporation,
and in such manner, as shall be determined by resolution of the board of
directors or a duly authorized committee thereof.
SECTION 3. CONTRACTS. The board of directors may authorize any officer
or officers, or any agent or agents, of the corporation to enter into any
contract or to execute and deliver any instrument in the name of and on behalf
of the corporation, and such authority may be general or confined to specific
instances.
SECTION 4. LOANS. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of
the directors, such loan, guaranty or assistance may reasonably be expected
to benefit the corporation. The loan, guaranty or other assistance may be
with or without interest, and may be unsecured, or secured in such manner as
the board of directors shall approve, including, without limitation, a pledge
of shares of stock of the corporation. Nothing in this section contained
shall be deemed to deny, limit or restrict the powers of guaranty or warranty
of the corporation at common law or under any statute.
SECTION 5. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
SECTION 6. CORPORATE SEAL. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have
inscribed thereon the name of the corporation and the words "Corporate Seal,
Delaware". The seal may be used by causing it or
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a facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 7. VOTING SECURITIES OWNED BY CORPORATION. Voting securities
in any other corporation held by the corporation shall be voted by the
president, unless the board of directors specifically confers authority to
vote with respect thereto, which authority may be general or confined to
specific instances, upon some other person or officer. Any person authorized
to vote securities shall have the power to appoint proxies, with general
power of substitution.
SECTION 8. INSPECTION OF BOOKS AND RECORDS. Any stockholder of
record, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's stock
ledger, a list of its stockholders, and its other books and records, and to
make copies or extracts therefrom. A proper purpose shall mean any purpose
reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent shall be the person who seeks the
right to inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing which authorizes the attorney or other agent
to so act on behalf of the stockholder. The demand under oath shall be
directed to the corporation at its registered office in the State of Delaware
or at its principal place of business.
SECTION 9. SECTION HEADINGS. Section headings in these by-laws are
for convenience of reference only and shall not be given any substantive
effect in limiting or otherwise construing any provision herein.
SECTION 10. INCONSISTENT PROVISIONS. In the event that any provision
of these bylaws is or becomes inconsistent with any provision of the
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these by-laws shall
not be given any effect to the extent of such inconsistency but shall
otherwise be given full force and effect.
ARTICLE VIII
AMENDMENTS
Except for Article III hereof, the Voting Agreement, these by-laws may
be amended, altered, or repealed and new by-laws adopted at any meeting of the
board of directors by a majority vote. The fact that the power to adopt,
amend, alter, or repeal the by-laws has been conferred upon the board of
directors shall not divest the stockholders of the same powers.
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Exhibit 3.33
CERTIFICATE OF INCORPORATION
OF
AGI ACQUISITION CORP.
ARTICLE ONE
The name of the corporation is AGI Acquisition Corp.
ARTICLE TWO
The address of the corporation's registered office in the State of
Delaware is 9 Loockerman Street, in the City of Dover, County of Kent, 19901.
The name of its registered agent at such address is National Registered Agents,
Inc.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
The total number of shares of stock which the corporation has authority
to issue is one thousand (1,000) shares of Common Stock, par value one cent
($0.01) per share.
ARTICLE FIVE
The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Thaddine G. Gomez 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
ARTICLE SIX
The corporation is to have perpetual existence.
<PAGE>
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the corporation is expressly authorized to
make, alter or repeal the by-laws of the corporation.
ARTICLE EIGHT
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide.
ARTICLE NINE
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
The corporation expressly elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
-2-
<PAGE>
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts stated herein are true, and
accordingly have hereunto set my hand on the 17th day of August, 1998.
/s/ Thaddine G. Gomez
--------------------------
Thaddine G. Gomez
Sole Incorporator
-3-
<PAGE>
CERTIFICATE OF CORRECTION
TO
CERTIFICATE OF INCORPORATION
OF
AGI ACQUISITION CORP.
* * * *
ADOPTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 103(f) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
* * * *
The undersigned being the sole incorporator of AGI Acquisition Corp., a
corporation duly organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY
CERTIFY as follows:
FIRST: The name of the corporation is AGI Acquisition Corp. (the
"Corporation").
SECOND: Article One of the Certificate of Incorporation, the
Corporation which was filed with the Secretary of State of Delaware on August
17, 1998, inaccurately reflected the name of the Corporation and is hereby
corrected.
THIRD: The defect to be corrected in Article One of the Certificate of
Incorporation is as follows:
"ARTICLE ONE
The name of the corporation is H.I.G. Vinyl, Inc."
IN WITNESS WHEREOF, the undersigned, being the sole incorporator
hereinabove
<PAGE>
named, for the purpose of correcting Article One of the Certificate
of Incorporation of the Corporation pursuant to the General Corporation Law of
the State of Delaware, under penalties of perjury does hereby declare and
certify that this is the act and deed of the Corporation and the facts stated
herein are true, and accordingly has hereunto signed this Certificate of
Correction to the Certificate of Incorporation this 26th day of February, 1999.
AGI Acquisition Corp.,
a Delaware corporation
By: /s/ Thaddine G. Gomez
--------------------------
Thaddine G. Gomez
Sole Incorporator
-2-
<PAGE>
Exhibit 3.34
BY-LAWS
OF
H.I.G. VINYL, INC.
A Delaware corporation
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the
corporation in the State of Delaware shall be located at 9 East Loockerman
Street, Dover, Delaware, County of Kent, 19901. The name of the corporation's
registered agent at such address shall be National Registered Agents, Inc.
The registered office and/or registered agent of the corporation may be
changed from time to time by action of the board of directors.
SECTION 2. OTHER OFFICES. The corporation may also have offices at
such other places, both within and without the State of Delaware, as the
board of directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE AND TIME OF MEETINGS. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days
after the close of the immediately preceding fiscal year of the corporation
for the purpose of electing directors and conducting such other proper
business as may come before the meeting. The date, time and place of the
annual meeting shall be determined by the president of the corporation;
provided, that if the president does not act, the board of directors shall
determine the date, time and place of such meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or
without the State of Delaware, as shall be stated in a notice of meeting or
in a duly executed waiver of notice thereof. Such meetings may be called at
any time by the board of directors or the president and shall be called by
the president upon the written request of holders of shares entitled to cast
not less than a majority of the votes at the meeting, such wriften request
shall state the purpose or purposes of the meeting and shall be delivered to
the president.
<PAGE>
SECTION 3. PLACE OF MEETINGS. The board of directors may designate
any place, either within or without the State of Delaware, as the place of
meeting for any annual meeting or for any special meeting called by the board
of directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting
not less than ten (10) nor more than sixty (60) days before the date of the
meeting. All such notices shall be delivered, either personally or by mail,
by or at the direction of the board of directors, the president or the
secretary, and if mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, postage prepaid, addressed to the
stockholder at his, her or its address as the same appears on the records of
the corporation. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends for the
express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 5. STOCKHOLDERS LIST. The officer having charge of the stock
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 6. QUORUM. The holders of a majority of the outstanding
shares of capital stock, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders, except as otherwise
provided by statute or by the certificate of incorporation. If a quorum is
not present, the holders of a majority of the shares present in person or
represented by proxy at the meeting, and entitled to vote at the meeting, may
adjourn the meeting to another time and/or place.
SECTION 7. ADJOURNED MEETINGS. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each
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stockholder of record entitled to vote at the meeting.
SECTION 8. VOTE REQUIRED. When a quorum is present, the affirmative
vote of the majority of shares present in person or represented by proxy at
the meeting and entitled to vote on the subject matter shall be the act of
the stockholders, unless the question is one upon which by express provisions
of an applicable law or of the certificate of incorporation a different vote
is required, in which case such express provision shall govern and control
the decision of such question.
SECTION 9. VOTING RIGHTS. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of
incorporation of the corporation or any amendments thereto and subject to
Section 3 of Article VI hereof, every stockholder shall at every meeting of
the stockholders be entitled to one (1) vote in person or by proxy for each
share of common stock held by such stockholder.
SECTION 10. PROXIES. Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
him or her by proxy, but no such proxy shall be voted or acted upon after
three (3) years from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally. Any
proxy is suspended when the person executing the proxy is present at a
meeting of stockholders and elects to vote, except that when such proxy is
coupled with an interest and the fact of the interest appears on the face of
the proxy, the agent named in the proxy shall have all voting and other
rights referred to in the proxy, notwithstanding the presence of the person
executing the proxy. At each meeting of the stockholders, and before any
voting commences, all proxies filed at or before the meeting shall be
submitted to and examined by the secretary or a person designated by the
secretary, and no shares may be represented or voted under a proxy that has
been found to be invalid or irregular.
SECTION 11. ACTION BY WRITTEN CONSENT. Unless otherwise provided in
the certificate of incorporation, any action required to be taken at any
annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken and bearing
the dates of signature of the stockholders who signed the consent or
consents, shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the corporation by delivery to
its registered office in the state of Delaware, or the corporation's
principal place of business, or an officer or agent of the corporation having
custody of the book or books in which proceedings of meetings of the
3
<PAGE>
stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested provided, however, that no consent or consents delivered by
certified or registered mail shall be deemed delivered until such consent or
consents are actually received at the registered office. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered to the corporation as required by this
section, written consents signed by the holders of a sufficient number of
shares to take such corporate action are so recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented
in writing. Any action taken pursuant to such written consent or consents of
the stockholders shall have the same force and effect as if taken by the
stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the
corporation shall be managed by or under the direction of the board of
directors.
SECTION 2. NUMBER, ELECTION AND TERM OF OFFICE. The number of
directors which shall constitute the first board shall be one (1).
Thereafter, the number of directors shall be established from time to time by
resolution of the board. The directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting
and entitled to vote in the election of directors. The directors shall be
elected in this manner at the annual meeting of the stockholders, except as
provided in Section 4 of this Article III. Each director elected shall hold
office until a successor is duly elected and qualified or until his or her
earlier death, resignation or removal as hereinafter provided.
SECTION 3. REMOVAL AND RESIGNATION. Any director or the entire board
of directors may be removed at any time, with or without cause, by the
holders of a majority of the shares then entitled to vote at an election of
directors. Whenever the holders of any class or series are entitled to elect
one or more directors by the provisions of the corporation's certificate of
incorporation, the provisions of this section shall apply, in respect to the
removal without cause of a director or directors so elected, to the vote of
the holders of the outstanding shares of that class or series and not to the
vote of the outstanding shares as a whole. Any director may resign at any
time upon written notice to the corporation.
SECTION 4. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director. Each director so chosen shall hold
office until a successor is duly elected and qualified or until his or her
earlier death,
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<PAGE>
resignation or removal as herein provided.
SECTION 5. ANNUAL MEETINQS. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of
stockholders.
SECTION 6. OTHER MEETINGS AND NOTICE. Regular meetings, other than
the annual meeting, of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by
resolution of the board. Special meetings of the board of directors may be
called by or at the request of the president on at least twenty-four (24)
hours notice to each director, either personally, by telephone, by mail, or
by telegraph.
SECTION 7. QUORUM, REQUIRED VOTE AND ADJOURNMENT. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which
a quorum is present shall be the act of the board of directors. If a quorum
shall not be present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present.
SECTION 8. COMMITTEES. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees,
each committee to consist of one or more of the directors of the corporation,
which to the extent provided in such resolution or these by-laws shall have
and may exercise the powers of the board of directors in the management and
affairs of the corporation except as otherwise limited by law. The board of
directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the board of
directors. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
SECTION 9. COMMITTEE RULES. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the board
of directors designating such commiftee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the
committee shall be necessary to constitute a quorum. In the event that a
member and that member's alternate, if alternates are designated by the board
of directors as provided in Section 8 of this Article III, of such committee
is or are absent or disqualified, the member or members thereof present at
any meeting and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the
board of directors to act at the meeting in place of any such absent or
disqualified member.
5
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SECTION 10. COMMUNICATIONS EQUIPMENT. Members of the board of
directors or any committee thereof may participate in and act at any meeting
of such board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to
this section shall constitute presence in person at the meeting.
SECTION 11. WAIVER OF NOTICE AND PRESUMPTION OF ASSENT. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except
when such member attends for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened. Such member shall be conclusively
presumed to have assented to any action taken unless his or her dissent shall
be entered in the minutes of the meeting or unless his or her written dissent
to such action shall be filed with the person acting as the secretary of the
meeting before the adjournment thereof or shall be forwarded by registered
mail to the secretary of the corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to any member who voted in
favor of such action.
SECTION 12. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be
taken at any meeting of the board of directors, or of any committee thereof,
may be taken without a meeting if all members of the board or committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be elected
by the board of directors and shall consist of a president, one or more
vice-presidents, secretary, a treasurer, and such other officers and
assistant officers as may be deemed necessary or desirable by the board of
directors. Any number of offices may be held by the same person. In its
discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
corporation shall be elected annually by the board of directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter
as conveniently may be. The president shall be elected annually by the board
of directors at the first meeting of the board of directors held after each
annual meeting of stockholders or as soon thereafter as conveniently may be.
The president shall appoint other officers to serve for such terms as he or
she deems desirable. Vacancies may be filled or new offices created and
filled at any meeting of the board of directors. Each officer
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shall hold office until a successor is duly elected and qualified or until
his or her earlier death, resignation or removal as hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment
the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed.
SECTION 4. VACANCIES. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by
the board of directors for the unexpired portion of the term by the board of
directors then in office.
SECTION 5. COMPENSATION. Compensation of all officers shall be
fixed by the board of directors, and no officer shall be prevented from
receiving such compensation by virtue of his or her also being a director of
the corporation.
SECTION 6. THE PRESIDENT. The president shall be the chief executive
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he is present" subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent
of the corporation. The president shall have such other powers and perform
such other duties as may be prescribed by the board of directors or as may be
provided in these by-laws.
SECTION 7. VICE-PRESIDENTS. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors or by the president, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions
of the president. The vice-presidents shall also perform such other duties
and have such other powers as the board of directors, the president or these
bylaws may, from time to time, prescribe.
SECTION 8. THE SECRETARY AND ASSISTANT SECRETARIES. The secretary
shall attend all meetings of the board of directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the president's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-laws or
by law; shall have such powers and perform such duties as the board of
directors, the president or these by-laws may, from time to time, prescribe; and
shall have custody of the corporate seal of the corporation. The secretary, or
an
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assistant secretary, shall have authority to affix the corporate seal to any
instrument requiring it and when so affixed, it may be aftested by his
signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal
of the corporation and to attest the affixing by his signature. The assistant
secretary, or if there be more than one, the assistant secretaries in the
order determined by the board of directors, shall, in the absence or
disability of the secretary, perform the duties and exercise the powers of
the secretary and shall perform such other duties and have such other powers
as the board of directors, the president, or secretary may, from time to
time, prescribe.
SECTION 9. THE TREASURER AND ASSISTANT TREASURER. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name
and to the credit of the corporation as may be ordered by the board of
directors; shall cause the funds of the corporation to be disbursed when such
disbursements have been duly authorized, taking proper vouchers for such
disbursements; and shall render to the president and the board of directors,
at its regular meeting or when the board of directors so requires, an account
of the corporation; shall have such powers and perform such duties as the
board of directors, the president or these by-laws may, from time to time,
prescribe. If required by the board of directors, the treasurer shall give
the corporation a bond (which shall be rendered every six (6) years) in such
sums and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of the office of
treasurer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers,
vouchers, money, and other property of whatever kind in the possession or
under the control of the treasurer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers shall perform such other
duties and have such other powers as the board of directors, the president or
treasurer may, from time to time, prescribe.
SECTION 10. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such
duties as may from time to time be prescribed by resolution of the board of
directors.
SECTION 11. ABSENCE OR DISABILITY OF OFFICERS. In the case of the
absence or disability of any officer of the corporation and of any person
hereby authorized to act in such officer's place during such officer's
absence or disability, the board of directors may by resolution delegate the
powers and duties of such officer to any other officer or to any director, or
to any other person whom it may select.
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ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
SECTION 1. NATURE OF INDEMNITY. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of
whom he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of
a partnership, joint venture, trust or other enterprise, shall be indemnified
and held harmless by the corporation to the fullest extent which it is
empowered to do so unless prohibited from doing so by the General Corporation
Law of the State of Delaware, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification rights
than said law permitted the corporation to provide prior to such amendment)
against all expense, liability and loss (including attorneys' fees actually
and reasonably incurred by such person in connection with such proceeding)
and such indemnification shall inure to the benefit of his heirs, executors
and administrators; provided, however, that, except as provided in Section 2
hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding initiated by such person only
if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article V shall
be a contract right and, subject to Sections 2 and 5 hereof, shall include
the right to be paid by the corporation the expenses incurred in defending
any such proceeding in advance of its final disposition. The corporation may,
by action of its board of directors, provide indemnification to employees and
agents of the corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
SECTION 2. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Any indemnification of a director or officer of the corporation under Section
1 of this Article V or advance of expenses under Section 5 of this Article V
shall be made promptly, and in any event within thirty (30) days, upon the
written request of the director or officer. If a determination by the
corporation that the director or officer is entitled to indemnification
pursuant to this Article V is required, and the corporation fails to respond
within sixty (60) days to a written request for indemnity, the corporation
shall be deemed to have approved the request. If the corporation denies a
written request for indemnification or advancing of expenses, in whole or in
part, or if payment in full pursuant to such request is not made within
thirty (30) days, the right to indemnification or advances as granted by this
Article V shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his right to indemnification, in
whole or in part, in any such action shall also be indemnified by the
corporation. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any
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proceeding in advance of its final disposition where the required
undertaking, if any, has been tendered to the corporation) that the claimant
has not met the standards of conduct which make it permissible under the
General Corporation Law of the State of Delaware for the corporation to
indemnify the claimant for the amount claimed, but the burden of such defense
shall be on the corporation. Neither the failure of the corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination
by the corporation (including its board of directors, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
SECTION 3. ARTICLE NOT EXCLUSIVE. The rights to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 4. INSURANCE. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, whether or not the corporation would have
the power to indemnify such person against such liability under this Article
V.
SECTION 5. EXPENSES. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition unless
otherwise determined by the board of directors in the specific case upon
receipt of an undertaking by or on behalf of the director or officer to repay
such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the corporation. Such expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
SECTION 6. EMLOYEES AND AGENTS. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or
agents of the corporation, or who are or were serving at the request of the
corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent
authorized at any time or from time to time by the board of directors.
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SECTION 7. CONTRACT RIGHTS. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and
the relevant provisions of the General Corporation Law of the State of
Delaware or other applicable law are in effect, and any repeal or
modification of this Article V or any such law shall not affect any rights or
obligations then existing with respect to any state of facts or proceeding
then existing.
SECTION 8. MERGER OR CONSOLIDATION. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or
was a director, officer, employee or agent of such constituent corporation,
or is or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position
under this Article V with respect to the resulting or surviving corporation
as he or she would have with respect to such constituent corporation if its
separate existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation
by the president or a vice president and the secretary or an assistant
secretary of the corporation, certifying the number of shares of a specific
class or series owned by such holder in the corporation. If such a
certificate is countersigned (1) by a transfer agent or an assistant transfer
agent other than the corporation or its employee or (2) by a registrar, other
than the corporation or its employee, the signature of any such president,
vice-president, secretary, or assistant secretary may be facsimiles. In case
any officer or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or certificates shall
cease to be such officer or officers of the corporation whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or
officers of the corporation. All certificates for shares shall be
consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of
stock of the corporation shall only be transferred on the books of the
corporation by the holder of record thereof or by such holder's attorney duly
authorized in writing, upon surrender to the corporation of the certificate
or certificates for such shares
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endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization, and other matters
as the corporation may reasonably require, and accompanied by all necessary
stock transfer stamps. In that event, it shall be the duty of the corporation
to issue a new certificate to the person entitled thereto, cancel the old
certificate or certificates, and record the transaction on its books. The
board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent
or registrar, or both in connection with the transfer of any class or series
of securities of the corporation.
SECTION 2. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the board
of directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen, or destroyed
certificate or certificates, or his or her legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against the corporation on account of the loss, theft or
destruction of any such certificate or the issuance of such new certificate.
SECTION 3. FIXING A RECORD DATE FOR STOCKHOLDER MEETING. In order
that the corporation may determine the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which record date shall not be more than sixty (60) nor
less than ten (10) days before the date of such meeting. If no record date is
fixed by the board of directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be the
close of business on the next day preceding the day on which notice is given,
or if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
SECTION 4. FIXING A RECORD DATE FOR ACTION BY WRITTEN CONSENT. In
order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the board of directors may
fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the board of directors,
and which date shall not be more than ten (10) days after the date upon which
the resolution fixing the record date is adopted by the board of directors.
If no record date has been fixed by the board of directors, the record date
for determining stockholders entitled to consent to corporate action in
writing without a meeting, when no prior action by the board of directors is
required by statute, shall be the first date on which a signed written
consent setting forth the
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action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of
directors is required by statute, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the board of
directors adopts the resolution taking such prior action.
SECTION 5. FIXING A RECORD DATE FOR OTHER PURPOSES. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purposes of any other lawful action, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted, and which
record date shall be not more than sixty (60) days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the board
of directors adopts the resolution relating thereto.
SECTION 6. REGISTERED STOCKHOLDERS. Prior to the surrender to the
corporation o fthe certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the
corporation may treat the registered owner as the person entitled to receive
dividends, to vote, to receive notifications, and otherwise to exercise all
the rights and powers of an owner. The corporation shall not be bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or
other notice thereof.
SECTION 7. SUBSCRIPTIONS FOR STOCK. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined
by the board of directors. Any call made by the board of directors for
payment on subscriptions shall be uniform as to all shares of the same class
or as to all shares of the same series. In case of default in the payment of
any installment or call when such payment is due, the corporation may proceed
to collect the amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the
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provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from
time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or any other purpose and the
directors may modify or abolish any such reserve in the manner in which it
was created.
SECTION 2. CHECKS, DRAFTS OR ORDERS. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and
other evidences of indebtedness issued in the name of the corporation shall
be signed by such officer or officers, agent or agents of the corporation,
and in such manner, as shall be determined by resolution of the board of
directors or a duly authorized committee thereof.
SECTION 3. CONTRACTS. The board of directors may authorize any
officer or officers, or any agent or agents, of the corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
SECTION 4. LOANS. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of
the directors, such loan, guaranty or assistance may reasonably be expected
to benefit the corporation. The loan, guaranty or other assistance may be
with or without interest, and may be unsecured, or secured in such manner as
the board of directors shall approve, including, without limitation, a pledge
of shares of stock of the corporation. Nothing in this section contained
shall be deemed to deny, limit or restrict the powers of guaranty or warranty
of the corporation at common law or under any statute.
SECTION 5. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
SECTION 6. CORPORATE SEAL. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have
inscribed thereon the name of the corporation and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
SECTION 7. VOTING SECURITIES OWNED BY CORPORATION. Voting securities
in any other corporation held by the corporation shall be voted by the
president, unless the board of directors specifically confers authority to
vote with respect thereto, which authority may be general or confined to
specific instances, upon some other person or officer. Any person authorized
to vote
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securities shall have the power to appoint proxies, with general power of
substitution.
SECTION 8. INSPECTION OF BOOKS AND RECORDS. Any stockholder of
record, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's stock
ledger, a list of its stockholders, and its other books and records, and to
make copies or extracts therefrom. A proper purpose shall mean any purpose
reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent shall be the person who seeks the
right to inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing which authorizes the attorney or other agent
to so act on behalf of the stockholder. The demand under oath shall be
directed to the corporation at its registered office in the State of Delaware
or at its principal place of business.
SECTION 9. SECTION HEADINGS. Section headings in these by-laws are
for convenience of reference only and shall not be given any substantive
effect in limiting or otherwise construing any provision herein.
SECTION 10. INCONSISTENT PROVISIONS. In the event that any provision
of these by-laws is or becomes inconsistent with any provision of the
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these by-laws shall
not be given any effect to the extent of such inconsistency but shall
otherwise be given full force and effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of director shall not divest the stockholders of the same powers.
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Exhibit 3.35
ARTICLES OF INCORPORATION
OF
CHAMPAGNE INDUSTRIES, INC.
I, the undersigned, a natural person more than eighteen years of age,
of Morrato, Bieging, Burrus & Colantuno, P.C., 5350 South DTC Parkway, Building
52, Englewood, Colorado 80111, acting as an incorporator in order to organize
and establish a corporation under and pursuant to the Colorado Corporation Code,
hereby adopt the following Articles of Incorporation:
ARTICLE I
NAME
The name of the corporation is: Champagne Industries, Inc.
ARTICLE II
TERM OF EXISTENCE
The period of duration of the corporation shall be perpetual.
ARTICLE III
PURPOSE
The purpose for which the corporation is organized is the transaction
of all lawful business for which corporations may be incorporated pursuant to
the Colorado Corporation Code.
ARTICLE IV
POWERS
In furtherance of the purposes set forth in Article III of these
Articles of Incorporation, the corporation shall have and may exercise all of
the rights, powers, and privileges now or hereafter conferred upon corporations
organized under and pursuant to the laws of the State of Colorado, including,
but not limited to, the power to enter into general partnerships, limited
partnerships (whether the corporation be a limited or general partner), joint
ventures, syndicates, pools, associations and other arrangements for carrying on
the
<PAGE>
purposes set forth in Article III of these Articles of Incorporation, jointly
or in common with others. In addition, the corporation may do everything
necessary, suitable or proper for the accomplishment of its corporate
purposes.
ARTICLE V
CAPITAL STOCK
A. AUTHORIZED SHARES. The aggregate number of shares which the
corporation shall have authority to issue is 50,000 shares of common stock,
all of which shall be without par value. All shares of common stock shall be
fully paid stock and not liable to any call of assessment.
B. TRANSFER RESTRICTIONS. The corporation shall have the right by
appropriate action to impose restrictions upon the transfer of any shares of
its common stock, or any interest therein, from time to time issued, provided
that such restrictions as may from time to time be so imposed or notice of
the substance thereof shall be set forth upon the face or back of the
certificates representing such shares of common stock.
C. PREEMPTIVE RIGHTS. The holders of the shares of the common stock
of the corporation shall not be entitled as of right to purchase or subscribe
for any unissued or treasury shares of any class, or any additional shares of
any class to be issued by reason of any increase of the authorized shares of
the corporation of any class, or any bonds, certificates of indebtedness,
debentures, or other securities, rights, warrants or options convertible into
shares of the corporation or carrying any right to purchase shares of any
class in accordance with their proportionate equity in the corporation.
D. CUMULATIVE VOTING. The cumulative system of voting for directors
or for any other purpose shall not be allowed.
ARTICLE VI
BOARD OF DIRECTORS
The Board of Directors of the corporation shall consist of not less
than three (3) members who need not be shareholders of the corporation nor
residents of the State of Colorado; except that there need be only as many
directors as there are shareholders in the event that the outstanding shares
are held of record by fewer than three (3) shareholders.
2
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The names and addresses of the persons who are to serve as the initial
Board of Directors of the corporation until the first annual meeting of
shareholders, and until their successors shall be elected and shall qualify, are
as follows:
- -------------------------------------------------------------------
Donald A. Sloane David Hilliard
5380 East Sanford 5350 South DTC
Circle Parkway
Englewood, CO 80112 Englewood, CO 80111
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Joseph McAdams Thomas Bowen
5350 South DTC 5350 South DTC
Parkway Parkway
Englewood, CO 80111 Englewood, CO 80111
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Steve Dobler
5350 South DTC
Parkway
Englewood, CO 80111
- -------------------------------------------------------------------
ARTICLE VII
BYLAWS
The Board of Directors or shareholders shall have the power to make and
adopt such prudent Bylaws for the government of the corporation not inconsistent
with the laws of the State of Colorado or with these Articles for the purpose of
regulating and carrying on the business of the corporation. The Board of
Directors or shareholders, from time to time, may change, alter or amend the
same as may be beneficial to the interests of the corporation.
ARTICLE VIII
CONTRACTS
A. No contract or other transaction between the corporation and one or
more of its directors or any other corporation, firm, association, or entity in
which one or more of its directors are directors or officers or are financially
interested shall be either void or voidable solely because of such relationship
or interest, or solely because such directors are present at the meeting of the
board of directors or a committee thereof which authorizes, approves, or
ratifies such contract or transaction, or solely because their votes are counted
for such purpose if:
1. The fact of such relationship or interest is disclosed or
known to the board of directors or committee which authorizes,
approves, or ratifies the contract or transaction by a vote or consent
sufficient for the purpose without counting the votes or consents of
such interested directors;
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2. The fact of such relationship or interest is disclosed or
known to the shareholders entitled to vote and they authorize, approve,
or ratify such contract or transaction by vote or written consent; or
3. The contract or transaction is fair and reasonable to the
corporation.
B. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves, or ratifies such contract or transaction.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS
Any person made a party to any civil action, suit or proceeding by
reason of the fact that he or his predecessors- in-interest is or was an officer
or director of the corporation shall be indemnified by the corporation against
judgment, fines or penalties, amounts paid in settlement, and reasonable
expenses, including attorney's fees, actually and necessarily incurred by him in
connection with the defense of such action, suit or proceeding or in connection
with any appeal therein, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such director or officer is
liable for gross negligence or intentional or reckless misconduct in the
performance of his duties. Indemnification is not available to an officer or
director if, under the circumstances, it would be contrary to public policy,
federal or state statute, or any governmental rule, regulation or policy.
ARTICLE X
CORPORATE ASSETS
In addition to the other powers now or hereafter conferred upon the
Board of Directors by these Articles of Incorporation, the Bylaws of the
corporation, or by the laws of the State of Colorado, the Board of Directors
may from time to time distribute to the shareholders in partial liquidation,
out of the stated capital or the capital surplus of the corporation, a
portion of the corporate assets, in cash or in kind; subject, however, to the
limitations contained in the Colorado Corporation Code.
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ARTICLE XI
REGISTERED OFFICE
The address of the initial registered office of the corporation is 5380
East Sanford Circle, Englewood, CO 80112, and the name of the initial registered
agent of the corporation at such address is Donald A. Sloane.
ARTICLE XII
AMENDMENTS
The corporation reserves the right to amend, alter, change or repeal
any provision contained in, or to add any provision to, its Articles of
Incorporation from time to time, in any manner now or hereafter prescribed or
permitted by the Colorado Corporation Code, and all rights and powers conferred
upon directors and shareholders hereby are granted subject to this reservation.
ARTICLE XIII
VOTING REQUIREMENTS
When, with respect to any action to be taken by the shareholders of
this corporation, the Colorado Corporation Code requires the vote or concurrence
of the holder of two-thirds of the outstanding shares, or the shares entitled to
vote thereon, such action may be taken by a majority of such outstanding shares,
or shares entitled to vote thereon.
ARTICLE XIV
INCORPORATOR
The name and address of the incorporator of the corporation is as
follows:
Jeffrey H. Katz
5350 South DTC Parkway
Englewood, CO 80111
IN WITNESS WHEREOF, I, the undersigned, being the sole incorporator
designated in Article XIII of these Articles of Incorporation, have executed
these Articles of Incorporation as of the 11th day of March, 1986.
/s/ Jeffrey H. Katz
--------------------------------
Jeffrey H. Katz
STATE OF COLORADO )
) ss.:
COUNTY OF ARAVANOE )
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<PAGE>
I, Brenda L. Beck, a Notary Public, hereby certify that Jeffrey H.
Katz, known to me to be the person whose name is subscribed to the annexed
and foregoing Articles of Incorporation, appeared before me this day in
person and each being by me first duly sworn, acknowledged and declared that
he signed said Articles of Incorporation as his free and voluntary act and
deed for the uses and purposes therein set forth and that the statements
contained are true.
My Commission Expires: January 8, 1990
WITNESS my hand and official seal this 11th day of March, 1986.
/s/ Brenda L. Beck
-------------------------
NOTARY PUBLIC
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<PAGE>
Exhibit 3.36
BYLAWS
OF
CHAMPAGNE INDUSTRIES, INC.
ARTICLE ONE
STOCK
1.1 REGULATION. The Board of Directors may make such Rules and
Regulations as it may deem appropriate concerning the issuance, transfer and
registration of certificates of shares of the corporation, including the
appointment of transfer agents and registrars.
1.2 CERTIFICATES OF STOCK shall be in a form approved by the Board of
Directors; be numbered consecutively; be issued in numerical order from the
stock certificate book; be signed by the President and Secretary; and be sealed
with the corporate seal.
1.3 TRANSFERS OF STOCK shall be made only upon the books of the
corporation, and before a new certificate is issued, the old certificate,
properly endorsed, shall be surrendered. Surrendered certificates shall be
canceled and attached to their proper stubs in the stock certificate book. The
stock book of the corporation shall be closed to transfers ten (10) days before
shareholders meetings and ten (10) days before the date on which any dividend
declared by the directors shall be paid.
1.4 THE TREASURY STOCK of the corporation shall include such issued
and outstanding stock of the corporation as may be acquired by purchase,
donation or otherwise and shall be held subject to disposal by the Board of
Directors. Such stock shall neither vote nor participate in dividends while
held by the corporation.
1.5 LOST, STOLEN OR DESTROYED CERTIFICATES. Any shareholder claiming
that his certificate is lost, stolen or destroyed may make an affidavit or
affirmation of that fact and lodge the same with the Secretary of the
corporation, accompanied by a signed application for a new certificate.
Thereupon, and upon the giving of a satisfactory bond of indemnity to the
corporation not exceeding double the value of the shares as represented by such
certificate, a new certificate may be issued of the same tenor and represented
by the certificate alleged to be lost, stolen or destroyed.
<PAGE>
1.6 TRANSFER RESTRICTIONS.
(a) No stockholder shall sell or otherwise transfer any share
or shares of the capital stock of this corporation without first offering to
sell such share or shares to this corporation on the same terms and at the
actual price per share at which it is proposed to sell or otherwise transfer
such share or shares. Such offer shall state in writing the terms on which the
proposed sale is to be made and shall identify the proposed transferee. It
shall be sent by certified or registered mail addressed to the corporation at
its principal place of business. such offer shall remain open for acceptance by
the corporation for a period of thirty (30) days from the date of mailing,
unless sooner refused by the corporation or revoked by said stockholder. Any
such offer not expressly accepted or rejected within said thirty (30) day period
shall be held and deemed to have thereby been refused by the corporation. If
any such offer is so rejected by the corporation, the stockholder shall
thereupon be at liberty to consummate the proposed sale, at only upon such terms
and to such person as set forth in the written offer to the corporation as above
required.
(b) Paragraph (a) hereof shall not apply to mortgages or
pledges, provided, however, that no mortgaged or pledged stock of this
corporation shall be foreclosed or offered at public sale and no mortgagee or
pledgee thereof shall buy or sell the same without complying with the
requirements of said paragraph (a).
(c) Any transfer by a stockholder of shares in this corporation
to a person related to him by blood or marriage shall be exempted from the
restrictions imposed by this Article.
(d) Notice of the restriction upon the transfer of shares
imposed by this Article shall be placed upon each certificate of stock now
issued and outstanding or which hereafter may be issued in substantially the
following form:
"The right of the holder of this certificate to
transfer the shares represented hereby is subject to
restriction contained in Article One of the Bylaws."
Said restriction shall thereupon be binding upon each and every present or
future holder or holders thereof, their executors, administrators or
representatives, whether such stock be acquired by sale, forfeiture, bequest,
inheritance or otherwise.
(e) Except as provided to the contrary by previous paragraphs
of this Article, shares of stock of the corporation may be transferred at any
time by the holders thereof, in writing, but no transfer shall be binding upon
the corporation, nor shall it be required to take notice thereof, until the
surrender of the certificate of the corporation, duly transferred by the holder
in person or by his attorney in fact, and the issuance of a new share
certificate by the
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corporation to the person to whom the transfer is entered on the books of the
corporation. Until surrender of the transferred certificate to the
corporation and the issuance of a new certificate, the corporation shall have
the right to treat the record owner as the owner of the shares so
represented, and shall not be liable therefor to the transferee of any share
certificate which has not been so presented to the corporation for transfer.
ARTICLE TWO
SHAREHOLDERS
2.1 THE ANNUAL MEETING of the shareholders of the corporation shall be
held on the Second Tuesday of March each year if not a legal holiday, but if a
legal holiday, then on the business day next succeeding, for the transaction of
such business as may be brought before the meeting.
2.2 SPECIAL MEETINGS of the shareholders shall be held at the
principal office of the corporation and may be called by the President, the
Board of Directors, or the holders of not less than ten percent (10%) of all the
shares entitled to vote at such meeting.
2.3 PLACE OF MEETINGS. The Board of Directors may designate any
place, either within or without the State of Colorado as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors.
2.4 NOTICE OF MEETING. Written or printed notice, for every annual or
special meeting of the shareholders shall be prepared and mailed to the post
office address of each shareholder as shown by the stock books of the
corporation not less than ten (10) nor more than fifty (50) days before such
meeting, except if a meeting of the shareholders be called for the purpose of
increasing the authorized capital stock of the corporation, written or printed
notice shall be given at least thirty (30) days in advance of the date on which
such meeting shall be held. If a special meeting of the shareholders shall be
called, the written notice thereof shall state the object or objects of such
meeting and no other business save that so notified shall be transacted at such
meeting. The notice shall state the place, day and hour of the meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
stock transfer books of the corporation, with postage thereon prepaid.
2.5 A QUORUM at any meeting of the shareholders, save as otherwise
prescribed by statute or by the Articles of Incorporation, shall consist of a
majority of the issued and outstanding voting stock of the corporation
represented in person or by written proxy. A majority of such quorum shall be
necessary to decide any question coming before the meeting, except as otherwise
specifically provided by the Bylaws, the Articles of Incorporation or by law.
If a quorum is not represented at any duly called meeting, such meeting may be
adjourned
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for a period not to exceed thirty (30) days as the result of any single
adjournment, but no business shall be transacted until a quorum is
represented.
2.6 VOTING at elections of directors shall be by ballot, and shall
also be by ballot on any other matter submitted to a shareholders' meeting when
so requested by the holders or representatives of not less than ten percent
(10%) of the shares represented at any shareholders' meeting. Each shareholder
shall be entitled to one (1) vote for each share of stock held by him and such
vote may be cast in person or by written proxy. Cumulative voting shall not be
allowed in the election of directors.
2.7 THE ELECTION OF DIRECTORS shall be held at the annual meeting of
shareholders.
2.8 PROXIES. At all meetings of shareholders a shareholder may vote
in person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of
the corporation before or at the time of the meeting. No proxy shall be valid
after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy.
2.9 CONSENT OF SHAREHOLDERS. Any action required or permitted to be
taken by the shareholders at a meeting thereof may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by all
of the shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE THREE
BOARD OF DIRECTORS
3.1 GENERAL POWERS. The business and affairs of the corporation shall
be managed by its Board of Directors.
3.2 PERFORMANCE OF DUTIES. A Director of the corporation shall
perform his duties as a director, including his duties as a member of any
committee of the Board upon which he may serve, in good faith, in a manner he
reasonably believes to be in the best interests of the corporation, and with
such care as an ordinarily prudent person in a like position would use under
similar circumstances. In performing his duties, a Director shall be entitled
to rely on information, opinions, reports, or statements, including financial
statements and other financial data, in each case prepared or presented by
persons and groups listed in paragraphs (a), (b), and (c) of this Section 3.2;
but he shall not be considered to be acting in good faith if he has knowledge
concerning the matter in questions that would cause such reliance to be
unwarranted. A person who so performs his duties shall not have any liability
by reason of being or having been a Director of the corporation. Those persons
and groups on whose information, opinions, reports, and statements a Director is
entitled to rely upon are:
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a. one or more officers or employees of the corporation whom
the director reasonably believes to be reliable and competent in the
matters presented;
b. Counsel, public accountants, or other persons as to matters
which the Director reasonably believes to be within such persons'
professional or expert competence; or
c. A committee of the Board upon which he does not serve, duly
designated in accordance with the provision of the Articles of
Incorporation or the bylaws, as to matters within its designated
authority, which committee the Director reasonably believes to merit
confidence.
3.3 NUMBER, TENURE AND QUALIFICATIONS. The number of directors of the
corporation shall be three or such other number as determined by the
shareholders at the annual meeting. The number of Directors of the corporation
shall be fixed from time to time by resolution of the Board of Directors, but in
no instance shall there be less than one Director or less than that number
otherwise required by law. Each Director shall hold office until the next
annual meeting of shareholders or until his successor shall have been elected
and qualified. Directors need not be residents of the State of Colorado or
shareholders of the corporation.
3.4 REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this bylaw immediately after, and at the
same place as, the annual meeting of shareholders. The Board of Directors may
provide, by resolution, the time and place, either within or without the State
of Colorado, for the holding of additional regular meetings without other notice
than such resolution.
3.5 SPECIAL MEETING. Special meetings of the Board of Directors may
be called by or at the request of the President or any two Directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix any place, either within or without the State of Colorado, as the place
for holding any special meeting of the Board of Directors called by them.
3.6 NOTICE. Written notice of any special meeting of Directors shall
be given as follows:
a. By mail to each Director at his business address at least
three (3) days prior to the meeting; or
b. By personal delivery or telegram at least twenty-four (24)
hours prior to the meeting to the business address of each Director, or
in the event such notice is given on a Saturday, Sunday or holiday, to
the residence address of each Director. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, so
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addressed, with postage thereon prepaid. If notice be given by telegram,
such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any Director may waive notice of any
meeting. The attendance of a Director at any meeting shall constitute a
waiver of notice of such meeting, except where a Director attends a
meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of any regular or
special meeting of the Board of Directors need be specified in the notice
or waiver of notice of such meeting.
3.7 QUORUM. A majority of the number of Directors fixed by or
pursuant to Section 3.3 of this Article Three shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than such majority is present at a meeting, a majority of the directors present
may adjourn the meeting from time to time without further notice.
3.8 MANNER OF ACTING. Except as otherwise required by law or by the
Articles of -f Incorporation, the act of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors.
3.9 CONSENT OF DIRECTORS. Any action required or permitted to be
taken by the Board of Directors or by a committee thereof at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the Directors or all of the committee members
entitled to vote with respect to the subject matter thereof.
3.10 PARTICIPATION BY ELECTRONIC MEANS. Any member of the Board of
Directors or any committee designated by such Board may participate in a meeting
of the Board of Directors or committee by means of telephone conference or
similar communications equipment by which all persons participating in the
meeting can hear each other at the same time. Such participation shall
constitute presence in person at the meeting.
3.11 VACANCIES. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining Directors through
less than a quorum of the Board of Directors. A Director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
Directors may be filled by election by the Board of Directors for a term of
office continuing only until the next election of Directors by the shareholders.
3.12 RESIGNATION. Any Director of the corporation may resign at any
time by giving written notice to the President or the Secretary of the
corporation. The resignation of any Director shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice;. and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. When one or more of the Directors resign
from the Board, effective at a future date, a majority of the Directors then in
office, including those who
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have so resigned, shall have power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or resignations shall
become effective.
3.13 REMOVAL. Any Director or Directors of the corporation may be
removed at any time, with or without cause, in a manner provided in the Colorado
Corporation Code.
3.14 COMMITTEES. By resolution adopted by a majority of the Board of
Directors, the Directors may designate two or more Directors to constitute a
committee, any of which shall have such authority in the management of the
corporation as the Board of Directors shall designate and as shall not be
prescribed by the Colorado Corporation Code.
3.15 COMPENSATION. By resolution of the Board of Directors and
irrespective of any personal interest of any of the members, each Director may
be paid his expenses, if any, of attendance of each meeting of the Board of
Directors, and may be paid a stated salary as Director of a fixed sum for
attendance at each meeting of the Board of Directors or both. No such payment
shall preclude any Director from serving the corporation in any other capacity
and receiving compensation therefor.
3.16 PRESUMPTION OF ASSENT. A Director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the Secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a Director
who voted in favor of such action.
3.17 INDEMNIFICATION. Any person made a party to any civ il action,
suit or proceeding by reason of the fact that he or his predecessors-in-interest
is or was an officer or director of the corporation shall be indemnified by the
corporation against judgment, fines or penalties, amounts paid in settlement,
and reasonable expenses, including attorney's fees, actually and necessarily
incurred by him in connection with the defense of such action, suit or
proceeding or in connection with any appeal therein, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding that
such director or officer is liable for gross negligence or intentional or
reckless misconduct in the performance of his duties. Indemnification is not
available to an officer or director if, under the circumstances, it would be
contrary to public policy, federal or state statute, or any governmental rule,
regulation or policy.
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ARTICLE FOUR
OFFICERS
4.1 NUMBER. The officers of the corporation shall be a President, a
Vice President, a Secretary, and a Treasurer, each of whom shall be elected by
the Board of Directors. Such other officers and assistant officers as may be
deemed necessary may be elected or appointed by the Board of Directors. Any two
or more offices may be held by the same person, except the offices of President
and Secretary.
4.2 ELECTION AND TERM OF OFFICE. The officers of the corporation to
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after the annual
meeting of the shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as practicable.
Each officer shall hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
4.3 REMOVAL. Any officer or agent may be removed by the Board of
Directors whenever in their judgment the best interests of the corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
4.4 VACANCIES. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the Board of Directors
for the unexpired portion of the term.
4.5 THE PRESIDENT. The President shall be the chief executive officer
of the corporation and, subject to the control of the Board of Directors, shall
in general supervise and control all of the business and affairs of the
corporation. He shall , when present, and in the absence of a Chairman of the
Board, preside at all meetings of the shareholders and of the Board of
Directors. He may sign, with the Secretary or any other proper officer of the
corporation there unto authorized by the Board of Directors, certificates for
shares of the corporation and deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these Bylaws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Board of Directors from time to time.
4.6 THE VICE PRESIDENT. If elected or appointed by the Board of
Directors, the Vice President, (or in the event there be more than one vice
president, the Vice Presidents in the
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order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall, in the absence of
the President or in the event of his death, inability or refusal to act,
perform all duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. Any
Vice President may sign, with the Secretary or an Assistant Secretary,
certificates for shares of the corporation; and shall perform such other
duties as from time to time may be assigned to him by the President or by the
Board of Directors.
4.7 THE SECRETARY. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the Board of Directors in one or more
books which is provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the corporate seal and see that
the seal of the corporation is affixed to all documents at the execution which
is on behalf of the corporation and under which seal is duly authorized; (d)
keep a register of the post office address of each shareholder; (e) sign with
the President, or a Vice President, certificates for shares of the corporation,
the issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
4.8 THE TREASURER. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the corporation; (b)
receive and give receipts for monies due and payable to the corporation from any
source whatsoever, and deposit all such monies in the name of the corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with the provisions of Article Five of these Bylaws; and (c) in
general perform all of the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the President or by
the Board of Directors.
4.9 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the
President or a Vice President certificates for shares of the corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Secretaries and Assistant Treasurers, in general,
shall perform such duties as shall be assigned to them by the Secretary or the
Treasurer, respectively, or by the President or the Board of Directors.
4.10 BONDS. If the Board of Directors by resolution shall so require,
any officer or agent of the corporation shall give bond to the corporation in
such amount and with such surety as the Board of Directors may deem sufficient,
conditioned upon the faithful performance of their respective duties and
offices.
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4.11 SALARIES. The salaries of the officers shall be fixed from time
to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
corporation.
ARTICLE FIVE
CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
5.2 LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such authority
may be general or confined to specific instances.
5.3 CHECKS, DRAFTS, ETC. All checks, drafts or other order for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers, agent or agents of
the corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
5.4 DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
ARTICLE SIX
SEAL
THE CORPORATE SEAL. The Corporate Seal of the corporation shall be in
such form as approved by the Board of Directors. Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise the impression of the seal may be ready and attested by either the
secretary or an assistant secretary for the authentication of contracts or
other papers requiring the seal.
ARTICLE SEVEN
FISCAL YEAR
The fiscal year of the corporation shall by such year as may be
adopted by the Board of Directors.
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ARTICLE EIGHT
WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of
these Bylaws or under the provisions of the Articles of Incorporation or
otherwise, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the event or other
circumstance requiring such notice shall be deemed equivalent to the giving
of such notice.
ARTICLE NINE
AMENDMENTS
These Bylaws may be amended, repealed or altered, in whole or in part,
by a majority vote of the Directors or shareholders at any regular meeting
thereof, or at any special meeting of such Directors or shareholders where
such action has been announced in the call and notice of such special
meeting, at which a quorum is present.
ARTICLE TEN
OFFICES
10.1 BUSINESS OFFICES. The principal office of the corporation shall
be in Englewood, Colorado. The corporation may also have one or more offices at
such other place or places within or without the State of Colorado as the Board
of Directors may from time to time determine or as the business of the
corporation may require.
10.2 REGISTERED OFFICE. The registered office of the corporation shall
be as set forth in the Articles of Incorporation, unless changed as provided by
the Colorado Corporation Code.
CERTIFICATE
I hereby certify that the foregoing Bylaws, consisting of 12 pages,
including this page, constitute the Bylaws of The Champagne Industries, Inc.,
adopted by the Board of Directors of the corporation as of March 17, 1986.
------------------------------
Secretary
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Exhibit 3.37
CERTIFICATE OF INCORPORATION
OF
HEAT ACQUISITION II, INC.
ARTICLE ONE
The name of the corporation is Heat Acquisition II, Inc.
ARTICLE TWO
The address of the corporation's registered office in the State of Delaware
is 1013 Centre Road, in the City of Wilmington, County of New Castle, 19805.
The name of its registered agent at such address is Corporation Service Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
The total number of shares of stock which the corporation has authority to
issue is one thousand (1,000) shares of Common Stock, par value one cent ($0.01)
per share.
<PAGE>
ARTICLE FIVE
The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Thaddine G. Gomez 200 East Randolph Drive Suite 5700
Chicago, Illinois 60601
ARTICLE SIX
The corporation is to have perpetual existence.
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the corporation is expressly authorized to make, alter
or repeal the by-laws of the corporation.
ARTICLE EIGHT
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide.
ARTICLE NINE
To the fullest extent permitted by the General Corporation Law of the State
of Delaware as the same exists or may hereafter be amended, a director of this
corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
The corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
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ARTICLE ELEVEN
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation in the manner now or
hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
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I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts stated herein are true, and
accordingly have hereunto set my hand on the 19th day of May, 1997.
/s/ Thaddine G. Gomez
-------------------------------------
Thaddine G. Gomez
Sole Incorporator
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<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
HEAT ACQUISITION II, INC.
ADOPTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 242 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned being the Vice President of Heat Acquisition II,
Inc., a corporation duly organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY as follows:
FIRST: The Board of Directors of the Corporation adopted the
resolution set forth below proposing an amendment to the Certificate of
Incorporation of the Corporation (the "Amendment") and directed that the
Amendment be submitted to the sole holder of the issued and outstanding
shares of Common Stock of the Corporation entitled to vote thereon for its
consideration and approval:
"RESOLVED, that the Certificate of Incorporation of the
Corporation be, and hereby is, amended in accordance with Section
242 of the General Corporation Law of the State of Delaware by
deleting ARTICLE ONE thereof in its entirety and substituting
therefor ARTICLE ONE as follows:
ARTICLE ONE
The name of the corporation is Thermal Industries, Inc. (the
"corporation")."
<PAGE>
SECOND: The Amendment was duly adopted in accordance with Section
228 and Section 242 of the General Corporation Low of the State of Delaware
by the sole holder of the issued and outstanding shares of the Common Stock
of the Corporation entitled to vote thereon.
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IN WITNESS WHEREOF. the undersigned does hereby certify under
penalties of perjury that this Certificate of Amendment to the Certificate of
lncorporation of the Corporation is the act and deed of the undersigned and
the facts stated herein are true and accordingly has hereunto set his hand
this 18th day of June, 1997.
Heat Acquisition II, Inc.,
a Delaware corporation
By: /S/ BRIAN D. SCHWARTZ
--------------------------------
Brian D. Schwartz
Vice President
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<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
THERMAL INDUSTRIES, INC.
(A PENNSYLVANIA CORPORATION)
WITH AND INTO
HEAT ACQUISITION II, INC.
(A DELAWARE CORPORATION)
* * * * * * * * * *
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 253 OF THE
GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE
* * * * * * * * * *
Heat Acquisition II, Inc., a corporation duly organized and existing
under and by virtue of the laws of the State of Delaware (the "Corporation"),
desiring to merge Thermal Industries, Inc., a Pennsylvania corporation, with
and into itself, pursuant to the provisions of Section 253 of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY as follows:
FIRST: The Corporation is the owner of all of the issued and
outstanding shares of capital stock of the following constituent corporation
(the "Subsidiary"):
<TABLE>
<CAPTION>
<S> <C>
CORPORATION STATE OF INCORPORATION
Thermal Industries, Inc. Pennsylvania
</TABLE>
SECOND: The Board of Directors of the Corporation adopted the
resolution set forth below approving the merger of the Subsidiary with and
into the Corporation (the 'Merger') on May 29th, 1997:
<PAGE>
"RESOLVED", that the merger of Thermal with and into the
Corporation be, and hereby is, in all respects approved.
"FURTHER RESOLVED", that the President, any Vice President,
Secretary, any Assistant Secretary or other officer as may
be designated by the Board of Directors of the Corporation
(collectively referred to herein as the "Proper Officers")
be, and hereby are, authorized and empowered to execute and
deliver Articles of Merger, including, without limitation a
plan of merger, in the name and on behalf of the Corporation
and under its corporate seal or otherwise, and to cause the
Articles of Merger to be filed with the office of the
Secretary of the Commonwealth of Pennsylvania; and further
resolved, that any of the Proper Officers be, and hereby
are, authorized and empowered to execute and deliver a
Certificate of Ownership and Merger, in the name and on
behalf of the Corporation and under its corporate seal or
otherwise, and to cause the Certificate of Ownership and
Merger to be filed with the office of the Secretary of the
State of Delaware."
THIRD: Anything herein or elsewhere to the contrary
notwithstanding, the Merger may be amended or terminated and abandoned by the
Board of Directors of the Corporation at any time prior to the date of filing
the Certificate of Ownership and Merger with the Secretary of State of the
State of Delaware.
FOURTH: The Merger shall become effective upon filing with the
Secretary of State of Delaware.
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IN WITNESS WHEREOF, the undersigned, for the purpose of effectuating
the Merger, pursuant to the General Corporation Law of the State of Delaware,
under penalties of perjury does hereby declare and certify that this is the act
and deed of the Corporation and the facts stated herein are true and accordingly
has hereunto signed this Certificate of Ownership and Merger this 30th day of
May, 1997.
Heat Acquisition II, Inc.,
a Delaware corporation
By: /s/ Brian D. Schwartz
-------------------------
Brian D. Schwartz
President
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<PAGE>
Exhibit 3.38
BY-LAWS
OF
THERMAL INDUSTRIES, INC.
A Delaware corporation
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation in
the State of Delaware shall be located at 1013 Centre Road, Wilmington,
Delaware, County of New Castle 19805. The name of the corporation's registered
agent at such address shall be Corporation Service Company. The registered
office and/or registered agent of the corporation may be changed from time to
time by action of the board of directors.
SECTION 2. OTHER OFFICES. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE AND TIME OF MEETINGS. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the board of directors or the president and shall be called by the president
upon the written request of holders of shares entitled to cast not less than a
majority of the votes at the meeting, such written request shall state the
purpose or purposes of the meeting and shall be delivered to the president.
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SECTION 3. PLACE OF MEETINGS. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose or purposes, of such meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than ten (10) nor more than sixty (60) days before the date of the meeting. All
such notices shall be delivered, either personally or by mail, by or at the
direction of the board of directors, the president or the secretary, and if
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, addressed to the stockholder at his, her or its
address as the same appears on the records of the corporation. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends for the express purpose of objecting at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 5. STOCKHOLDERS LIST. The officer having charge of the stock
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 6. QUORUM. The holders of a majority of the outstanding shares of
capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
SECTION 7. ADJOURNED MEETINGS. When a meeting is adjourned to another time
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken.
At the adjourned meeting the corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than thirty (30) days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each
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stockholder of record entitled to vote at the meeting.
SECTION 8. VOTE REQUIRED. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
SECTION 9. VOTING RIGHTS. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one (1) vote in person or by proxy for each share of common stock
held by such stockholder.
SECTION 10. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
SECTION 11. ACTION BY WRITTEN CONSENT. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the
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stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested provided, however, that no consent or consents delivered by
certified or registered mail shall be deemed delivered until such consent or
consents are actually received at the registered office. All consents
properly delivered in accordance with this Section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take
the corporate action referred to therein unless, within sixty (60) days of
the earliest dated consent delivered to the corporation as required by this
section, written consents signed by the holders of a sufficient number of
shares to take such corporate action are so recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented
in writing. Any action taken pursuant to such written consent or consents of
the stockholders shall have the same force and effect as if taken by the
stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
SECTION 2. NUMBER, ELECTION AND TERM OF OFFICE. The number of directors
which shall constitute the first board shall be one (1). Thereafter, the number
of directors shall be established from time to time by resolution of the board.
The directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote in the
election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article Ill. Each director elected shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
SECTION 3. REMOVAL AND RESIGNATION. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this Section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
SECTION 4. VACANCIES. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then
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in office, though less than a quorum, or by a sole remaining director. Each
director so chosen shall hold office until a successor is duly elected and
qualified or until his or her earlier death, resignation or removal as herein
provided.
SECTION 5. ANNUAL MEETINGS. The annual meeting of each newly elected board
of directors shall be held without other notice than this by-law immediately
after, and at the same place as, the annual meeting of stockholders.
SECTION 6. OTHER MEETINGS AND NOTICE. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at
the request of the president on at least twenty-four (24) hours notice to each
director, either personally, by telephone, by mail, or by telegraph.
SECTION 7. QUORUM, REQUIRED VOTE AND ADJOURNMENT. A majority of the total
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 8. COMMITTEES. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution or these by-laws shall have and may exercise
the powers of the board of directors in the management and affairs of the
corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
SECTION 9. COMMITTEE RULES. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified
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member.
SECTION 10. COMMUNICATIONS EQUIPMENT. Members of the board of directors or
any committee thereof may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this SECTION shall
constitute presence in person at the meeting.
SECTION 11. WAIVER OF NOTICE AND PRESUMPTION OF ASSENT. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
SECTION 12. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be elected by
the board of directors and shall consist of a president, one or more
vice-presidents, secretary, a treasurer, and such other officers and
assistant officers as may be deemed necessary or desirable by the board of
directors. Any number of offices may be held by the same person. In its
discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall be elected annually by the board of directors at
the first meeting of the board of directors held after each annual meeting of
stockholders or as soon thereafter as conveniently may be. The president shall
appoint other officers to serve for such terms as he or she deems desirable.
Vacancies may be
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filled or new offices created and filled at any meeting of the board of
directors. Each officer shall hold office until a successor is duly elected
and qualified or until his or her earlier death, resignation or removal as
hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected by the board of directors
may be removed by the board of directors whenever in its judgment the best
interests of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
SECTION 4. VACANCIES. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
SECTION 5. COMPENSATION. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
SECTION 6. THE PRESIDENT. The president shall be the chief executive
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he is present; subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. The
president shall have such other powers and perform such other duties as may be
prescribed by the board of directors or as may be provided in these by-laws.
SECTION 7. VICE-PRESIDENTS. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the board of directors
or by the president, shall, in the absence or disability of the president, act
with all of the powers and be subject to all the restrictions of the president.
The vice-presidents shall also perform such other duties and have such other
powers as the board of directors, the president or these bylaws may, from time
to time, prescribe.
SECTION 8. THE SECRETARY AND ASSISTANT SECRETARIES. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these bylaws
may, from time to time,
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prescribe; and shall have custody of the corporate seal of the corporation.
The secretary, or an assistant secretary, shall have authority to affix the
corporate seal to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary.
The board of directors may give general authority to any other officer to
affix the seal of the corporation and to attest the affixing by his
signature. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors, the president, or secretary
may, from time to time, prescribe.
SECTION 9. THE TREASURER AND ASSISTANT TREASURER. The treasurer shall have
the custody of the corporate funds and securities; shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation;
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation as may be ordered by the board of directors; shall
cause the funds of the corporation to be disbursed when such disbursements have
been duly authorized, taking proper vouchers for such disbursements; and shall
render to the president and the board of directors, at its regular meeting or
when the board of directors so requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time, prescribe. If required by
the board of directors, the treasurer shall give the corporation a bond (which
shall be rendered every six (6) years) in such sums and with such surety or
sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of the office of treasurer and for the restoration to
the corporation, in case of death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money, and other property of whatever
kind in the possession or under the control of the treasurer belonging to the
corporation. The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors, shall in
the absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers shall perform such other
duties and have such other powers as the board of directors, the president or
treasurer may, from time to time, prescribe.
SECTION 10. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these bylaws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
SECTION 11. ABSENCE OR DISABILITY OF OFFICERS. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
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ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
SECTION 1. NATURE OF INDEMNITY. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation to the fullest extent which it is empowered to
do so unless prohibited from doing so by the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment) against all expense,
liability and loss (including attorneys' fees actually and reasonably incurred
by such person in connection with such proceeding) and such indemnification
shall inure to the benefit of his heirs, executors and administrators; provided,
however, that, except as provided in SECTION 2 hereof, the corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was authorized by
the board of directors of the corporation. The right to indemnification
conferred in this Article V shall be a contract right and, subject to Sections 2
and 5 hereof, shall include the right to be paid by the corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
The corporation may, by action of its board of directors, provide
indemnification to employees and agents of the corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
SECTION 2. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS. Any
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall be
made promptly, and in any event within thirty (30) days, upon the written
request of the director or officer. If a determination by the corporation that
the director or officer is entitled to indemnification pursuant to this Article
V is required, and the corporation fails to respond within sixty (60) days to a
written request for indemnity, the corporation shall be deemed to have approved
the request. If the corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within thirty (30) days, the right to indemnification
or advances as granted by this Article V shall be enforceable by the director or
officer in any court of competent jurisdiction. Such person's costs and
expenses incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such
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action (other than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition where the
required undertaking, if any, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the General Corporation Law of the State of Delaware for the corporation to
indemnify the claimant for the amount claimed, but the burden of such defense
shall be on the corporation. Neither the failure of the corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination
by the corporation (including its board of directors, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
SECTION 3. ARTICLE NOT EXCLUSIVE. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 4. INSURANCE. The corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the corporation or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the power to indemnify such
person against such liability under this Article V.
SECTION 5. EXPENSES. Expenses incurred by any person described in Section
1 of this Article V in defending a proceeding shall be paid by the corporation
in advance of such proceeding's final disposition unless otherwise determined by
the board of directors in the specific case upon receipt of an undertaking by or
on behalf of the director or officer to repay such amount if it shall ultimately
be determined that he or she is not entitled to be indemnified by the
corporation. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
SECTION 6. EMPLOYEES AND AGENTS. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
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SECTION 7. CONTRACT RIGHTS. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
SECTION 8. MERGER OR CONSOLIDATION. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article V
with respect to the resulting or surviving corporation as he or she would have
with respect to such constituent corporation if its separate existence had
continued.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president or a vice president and the secretary or an assistant secretary of
the corporation, certifying the number of shares of a specific class or series
owned by such holder in the corporation. If such a certificate is countersigned
(1) by a transfer agent or an assistant transfer agent other than the
corporation or its employee or (2) by a registrar, other than the corporation or
its employee, the signature of any such president, vice-president, secretary, or
assistant secretary may be facsimiles. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the corporation. All certificates for shares shall
be consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of
stock of the corporation shall only be transferred on the books of the
corporation by the holder of record thereof or by such holder's attorney duly
authorized in writing, upon surrender to the corporation of the certificate or
certificates for
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such shares endorsed by the appropriate person or persons, with such evidence
of the authenticity of such endorsement, transfer, authorization, and other
matters as the corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under
the laws of the United States or any state thereof to act as its transfer
agent or registrar, or both in connection with the transfer of any class or
series of securities of the corporation.
SECTION 2. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
SECTION 3. FIXING A RECORD DATE FOR STOCKHOLDER MEETINGS. In order that
the corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting. If no record date is
fixed by the board of directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be the
close of business on the next day preceding the day on which notice is given,
or if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
SECTION 4. FIXING A RECORD DATE FOR ACTION BY WRITTEN CONSENT. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting
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<PAGE>
forth the action taken or proposed to be taken is delivered to the corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of
directors is required by statute, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be
at the close of business on the day on which the board of directors adopts the
resolution taking such prior action.
SECTION 5. FIXING A RECORD DATE FOR OTHER PURPOSES. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty (60) days prior to such action. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the board of directors adopts the
resolution relating thereto.
SECTION 6. REGISTERED STOCKHOLDERS. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
SECTION 7. SUBSCRIPTIONS FOR STOCK. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
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<PAGE>
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or any other purpose and the directors may
modify or abolish any such reserve in the manner in which it was created.
SECTION 2. CHECKS, DRAFTS OR ORDERS. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
SECTION 3. CONTRACTS. The board of directors may authorize any officer or
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
SECTION 4. LOANS. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this SECTION contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
SECTION 5. FISCAL YEAR. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
SECTION 6. CORPORATE SEAL. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile
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<PAGE>
thereof to be impressed or affixed or reproduced or otherwise.
SECTION 7. VOTING SECURITIES OWNED BY CORPORATION. Voting securities in
any other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
SECTION 8. INSPECTION OF BOOKS AND RECORDS. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
SECTION 9. SECTION HEADINGS. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
SECTION 10. INCONSISTENT PROVISIONS. In the event that any provision of
these bylaws is or becomes inconsistent with any provision of the certificate of
incorporation, the General Corporation Law of the State of Delaware or any other
applicable law, the provision of these by-laws shall not be given any effect to
the extent of such inconsistency but shall otherwise be given full force and
effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that
the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of directors shall not divest the stockholders of the same
powers.
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<PAGE>
Exhibit 3.39
CERTIFICATE OF INCORPORATION
OF
BEST BUILT ACQUISITION, INC.
ARTICLE ONE
The name of the corporation is Best Built Acquisition, Inc.
ARTICLE TWO
The address of the corporation's registered office in the state of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle,
19805. The name of its registered agent at such address is Corporation Service
Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
The total number of shares of stock which the corporation has
authority to issue is one thousand (1,000) shares of Common Stock, par value
one cent ($0.01) per share.
ARTICLE FIVE
The name and mailing address of the sole incorporator are as
follows:
NAME MAILING ADDRESS
---- ---------------
Thaddine G. Gomez 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
<PAGE>
ARTICLE SIX
The corporation is to have perpetual existence.
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the corporation is expressly authorized to
male, alter or repeal the by-laws of the corporation
ARTICLE EIGHT
Meetings of stockholders may be hold within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places
as may be designated from time to time by the board of directors or in the
by-laws of the corporation. Election of directors need not be by written
ballot unless the by-laws of the corporation so provide.
ARTICLE NINE
To the full extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director
of this corporation shall not be liable to the corporation or its stockholders
for monetary damages for a breach of fiduciary duty as a director. Any repeal
or modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such
repeal or modification.
ARTICLE TEN
The corporation expressly elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
The corporation reserves the right to amend, after, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and
all rights conferred upon stockholders herein are granted subject to this
reservation.
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<PAGE>
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand on the 19th day of May, 1997.
/s/ Thaddine G. Gomez
-------------------------------------
Thaddine G. Gomez
Sole Incorporator
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<PAGE>
CERTIFICATE OF CORRECTION
TO
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
BEST BUILT ACQUISITION, INC.
ADOPTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 103(f) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
Brian D. Schwartz, being the President of Best Built Acquisition, Inc., a
corporation duly organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY
CERTIFY as follows:
FIRST: The name of the corporation is Best Built Acquisition, Inc. (the
"Corporation").
SECOND: Article One of the Certificate of Incorporation of the
Corporation (the "Certificate of Incorporation"), which was filed with the
Secretary of State of Delaware on May 19, 1997, inaccurately stated the
Corporation's name and is hereby corrected.
THIRD: The defect to be corrected in the Certificate of Incorporation as
follows:
ARTICLE ONE
The name of the corporation is Beat Built Acquisition Corp.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the President hereinabove named,
for the purpose of correcting the Certificate of Incorporation pursuant to the
General Corporation Law of the State of Delaware, under penalties of perjury
does hereby declare and certify that this is the act and deed of the Corporation
and the facts stated herein are true, and accordingly has hereunto signed this
Certificate of Correction to Certificate of Incorporation this 28th day of May,
1997.
Best Built Acquisition, Inc.
a Delaware corporation
By: /S/ BRIAN D. SCHWARTZ
---------------------------------
Brian D. Schwartz
President
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<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
BEST BUILT ACQUISITION CORP.
* * * *
ADOPTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 242 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned being the Vice President of Best Built Acquisition
Corp., a corporation duly organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY as follows:
FIRST: The Board of Directors of the Corporation adopted the
resolution set forth below proposing an amendment to the Certificate of
Incorporation of the Corporation (the "Amendment") and directed that the
Amendment to be submitted to the sole holder of the issued and outstanding
shares of Common Stock of the Corporation entitled to vote thereon for its
consideration and approval:
"RESOLVED, that the Certificate of Incorporation of the
Corporation be, and hereby is, amended in accordance with Section
242 of the General Corporation Law of the State of Delaware by
deleting ARTICLE ONE thereof in its entirety and substituting
therefor ARTICLE ONE as follows:
ARTICLE ONE
The name of the corporation is Best Built, Inc. (the
"corporation")."
SECOND: The Amendment was duty adopted in accordance with Section
228 and Section 242 of the General Corporation Law of the State of Delaware by
the sole holder of the issued
<PAGE>
and outstanding shares of the Common Stock of the Corporation entitled to vote
thereon.
* * * * * * * * * *
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<PAGE>
IN WITNESS WHEREOF, the undersigned does hereby certify under
penalties of perjury that this Certificate of Amendment to the Certificate of
Incorporation of the Corporation is the act and deed of the undersigned and
the facts stated herein are true and accordingly has hereunto set his hand
this 18th day of June, 1997.
Best Built Acquisition Corp.,
a Delaware corporation
By /s/ BRIAN D. SCHWARTZ
----------------------------------
Brian D. Schwartz
Vice President
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<PAGE>
Exhibit 3.40
BY-LAWS
OF
BEST BUILT, INC.
A Delaware corporation
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be located at 101 3 Centre Road, Wilmington,
Delaware, County of New Castle 19805. The name of the corporation's registered
agent at such address shall be Corporation Service Company. The registered
office and/or registered agent of the corporation may be changed from time to
time by action of the board of directors.
SECTION 2. OTHER OFFICES. The corporation may also have offices at
such other places, both within and without the State of Delaware, as the board
of directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE AND TIME OF MEETINGS. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the board of directors or the president and shall be called by the president
upon the written request of holders of shares entitled to cast not less than a
majority of the votes at the meeting, such written request shall state the
purpose or purposes of the meeting and shall be delivered to the president.
<PAGE>
SECTION 3. PLACE OF MEETINGS. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
All such notices shall be delivered, either personally or by mail, by or at the
direction of the board of directors, the president or the secretary, and if
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, addressed to the stockholder at his, her or its
address as the same appears on the records of the corporation. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends for the express purpose of objecting at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 5. STOCKHOLDERS LIST. The officer having charge of the stock
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business ho4urs, for a period of at
least ten (10) days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
SECTION 6. QUORUM. The holders of a majority of the outstanding shares
of capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
SECTION 7. ADJOURNED MEETINGS. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2
<PAGE>
SECTION 8. VOTE REQUIRED. When a quorum is present, the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
SECTION 9. VOTING RIGHTS. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one (1) vote in person or by proxy for each share of common stock
held by such stockholder.
SECTION 10. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
SECTION 11. ACTION BY WRITTEN CONSENT. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or consents
delivered by certified or registered
3
<PAGE>
mail shall be deemed delivered until such consent or consents are actually
received at the registered office. All consents properly delivered in
accordance with this section shall be deemed to be recorded when so delivered.
No written consent shall be effective to take the corporate action referred
to therein unless, within sixty (60) days of the earliest dated consent
delivered to the corporation as required by this section, written consents
signed by the holders of a sufficient number of shares to take such corporate
action are so recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing. Any action taken
pursuant to such written consent or consents of the stockholders shall have
the same force and effect as if taken by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
SECTION 2. NUMBER, ELECTION AND TERM OF OFFICE. The number of
directors which shall constitute the first board shall be one (1). Thereafter,
the number of directors shall be established from time to time by resolution of
the board. The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. The directors shall be elected in this
manner at the annual meeting of the stockholders, except as provided in Section
4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
SECTION 3. REMOVAL AND RESIGNATION. Any director or the entire board
of directors may be removed at any time, with or without cause, by the holders
of a majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
SECTION 4. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
4
<PAGE>
SECTION 5. ANNUAL MEETINGS. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
SECTION 6. OTHER MEETINGS AND NOTICE. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at
the request of the president on at least twenty-four (24) hours notice to each
director, either personally, by telephone, by mail, or by telegraph.
SECTION 7. QUORUM, REQUIRED VOTE AND ADJOURNMENT. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum shall
not be present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 8. COMMITTEES. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
SECTION 9. COMMITTEE RULES. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
members alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
SECTION 10. COMMUNICATIONS EQUIPMENT. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons
5
<PAGE>
participating in the meeting can hear each other, and participation in the
meeting pursuant to this section shall constitute presence in person at the
meeting.
SECTION 11. WAIVER OF NOTICE AND PRESUMPTION OF ASSENT. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
SECTION 12. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be elected
by the board of directors and shall consist of a president, one or more
vice-presidents, secretary, a treasurer, and such other officers and assistant
officers as may be deemed necessary or desirable by the board of directors.
Any number of offices may be held by the same person. In its discretion, the
board of directors may choose not to fill any office for any period as it may
deem advisable, except that the offices of president and secretary shall be
filled as expeditiously as possible.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
corporation shall be elected annually by the board of directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter as
conveniently may be. The president shall be elected annually by the board of
directors at the first meeting of the board of directors held after each annual
meeting of stockholders or as soon thereafter as conveniently may be. The
president shall appoint other officers to serve for such terms as he or she
deems desirable. Vacancies may be filled or new offices created and filled at
any meeting of the board of directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected by the board of
directors may be
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removed by the board of directors whenever in its judgment the best interests
of the corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
SECTION 4. VACANCIES. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
SECTION 5. COMPENSATION. Compensation of all officers shall be fixed
by the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
SECTION 6. THE PRESIDENT. The president shall be the chief executive
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he is present; subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. The
president shall have such other powers and perform such other duties as may be
prescribed by the board of directors or as may be provided in these by-laws.
SECTION 7. VICE-PRESIDENTS. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors or by the president, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other duties and
have such other powers as the board of directors, the president or these by-laws
may, from time to time, prescribe.
SECTION 8. THE SECRETARY AND ASSISTANT SECRETARIES. The secretary
shall attend all meetings of the board of directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the president's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-laws or by law; shall have
such powers and perform such duties as the board of directors, the president or
these by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
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duties and have such other powers as the board of directors, the president, or
secretary may, from time to time, prescribe.
SECTION 9. THE TREASURER AND ASSISTANT TREASURER. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the corporation as may be ordered by the board of directors;
shall cause the funds of the corporation to be disbursed when such disbursements
have been duly authorized, taking proper vouchers for such disbursements; and
shall render to the president and the board of directors, at its regular meeting
or when the board of directors so requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time, prescribe. If required by
the board of directors, the treasurer shall give the corporation a bond (which
shall be rendered every six (6) years) in such sums and with such surety or
sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of the office of treasurer and for the restoration to
the corporation, in case of death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money, and other property of whatever
kind in the possession or under the control of the treasurer belonging to the
corporation. The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors, shall in
the absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers shall perform such other
duties and have such other powers as the board of directors, the president or
treasurer may, from time to time, prescribe.
SECTION 10. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
SECTION 11. ABSENCE OR DISABILITY OF OFFICERS. In the case of the
absence or disability of any officer of the corporation and of any person hereby
authorized to act in such offices place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
SECTION 1. NATURE OF INDEMNITY. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director or officer, of the
corporation or is or was
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serving at the request of the corporation as a director, officer, employee,
fiduciary, or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, shall be indemnified and held harmless by the
corporation to the fullest extent which it is empowered to do so unless
prohibited from doing so by the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment) against all expense,
liability and loss (including attorneys' fees actually and reasonably incurred
by such person in connection with such proceeding) and such indemnification
shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in Section 2 hereof, the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding initiated by such person only if such proceeding
was authorized by the board of directors of the corporation. The right to
indemnification conferred in this Article V shall be a contract right and,
subject to Sections 2 and 5 hereof, shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance
of its final disposition. The corporation may, by action of its board of
directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors
and officers.
SECTION 2. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Any indemnification of a director or officer of the corporation under Section 1
of this Article V or advance of expenses under Section 5 of this Article V shall
be made promptly, and in any event within thirty (30) days, upon the written
request of the director or officer. If a determination by the corporation that
the director or officer is entitled to indemnification pursuant to this Article
V is required, and the corporation fails to respond within sixty (60) days to a
written request for indemnity, the corporation shall be deemed to have approved
the request. If the corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within thirty (30) days, the right to indemnification
or advances as granted by this Article V shall be enforceable by the director or
officer in any court of competent jurisdiction. Such person's costs and
expenses incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to the corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the corporation to indemnify the claimant for the
amount claimed, but the burden of such defense shall be on the corporation.
Neither the failure of the corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, nor
an actual determination by the corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the
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claimant has not met the applicable standard of conduct.
SECTION 3. ARTICLE NOT EXCLUSIVE. The rights to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 4. INSURANCE. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the corporation would have the power
to indemnify such person against such liability under this Article V.
SECTION 5. EXPENSES. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition unless otherwise
determined by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
SECTION 6. EMPLOYEES AND AGENTS. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
SECTION 7. CONTRACT RIGHTS. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
SECTION 8. MERGER OR CONSOLIDATION. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or
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<PAGE>
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this Article V with respect to the
resulting or surviving corporation as he or she would have with respect to
such constituent corporation if its separate existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president or a vice-president and the secretary or an assistant secretary of
the corporation, certifying the number of shares of a specific class or series
owned by such holder in the corporation. If such a certificate is countersigned
(1) by a transfer agent or an assistant transfer agent other than the
corporation or its employee or (2) by a registrar, other than the corporation or
its employee, the signature of any such president, vice-president, secretary, or
assistant secretary may be facsimiles. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the corporation. All certificates for shares shall
be consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of
stock of the corporation shall only be transferred on the books of the
corporation by the holder of record thereof or by such holder's attorney duly
authorized in writing, upon surrender to the corporation of the certificate or
certificates for such shares endorsed by the appropriate person or persons, with
such evidence of the authenticity of such endorsement, transfer, authorization,
and other matters as the corporation may reasonably require, and accompanied by
all necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
SECTION 2. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue
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of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his
or her legal representative, to give the corporation a bond sufficient to
indemnify the corporation against any claim that may be made against the
corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
SECTION 3. FIXING A RECORD DATE FOR STOCKHOLDER MEETINGS. In order
that the corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting. If no record date is fixed by
the board of directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be the close of business
on the next day preceding the day on which notice is given, or if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
SECTION 4. FIXING A RECORD DATE FOR ACTION BY WRITTEN CONSENT. In
order that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
SECTION 5. FIXING A RECORD DATE FOR OTHER PURPOSES. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the
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resolution fixing the record date is adopted, and which record date shall be
not more than sixty (60) days prior to such action. If no record date is
fixed, the record date for determining stockholders for any such purpose shall
be at the close of business on the day on which the board of directors adopts
the resolution relating thereto.
SECTION 6. REGISTERED STOCKHOLDERS. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
SECTION 7. SUBSCRIPTIONS FOR STOCK. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
SECTION 2. CHECKS, DRAFTS OR ORDERS. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
SECTION 3. CONTRACTS. The board of directors may authorize any officer
or officers, or any
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agent or agents, of the corporation to enter into any contract or to execute
and deliver any instrument in the name of and on behalf of the corporation,
and such authority may be general or confined to specific instances.
SECTION 4. LOANS. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
SECTION 5. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
SECTION 6. CORPORATE SEAL. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 7. VOTING SECURITIES OWNED BY CORPORATION. Voting securities
in any other corporation held by the corporation shall be voted by the
president, unless the board of directors specifically confers authority to vote
with respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
SECTION 8. INSPECTION OF BOOKS AND RECORDS. Any stockholder of record,
in person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
SECTION 9. SECTION HEADINGS. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
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SECTION 10. INCONSISTENT PROVISIONS. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been
conferred upon the board of directors shall not divest the stockholders of the
same powers.
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Exhibit 5.1
August 12, 1999
Atrium Companies, Inc.
1341 W. Mockingbird Lane, Suite 1200W
Dallas, Texas 75247
ATRIUM COMPANIES, INC.
REGISTRATION STATEMENT ON FORM S-4
Ladies and Gentlemen:
This opinion is delivered in our capacity as counsel to Atrium
Companies, Inc., a Delaware corporation (the "Issuer"), in connection with
the Issuer's registration statement on Form S-4 (the "Registration
Statement") filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, relating to the
offering by the Issuer of $175,000,000 aggregate principal amount of its
10-1/2% Senior Subordinated Notes due 2009, Series B (collectively, the
"Notes").
In connection with this opinion, we have examined copies or originals of
such documents, resolutions, certificates and instruments of the Issuer as we
have deemed necessary to form a basis for the opinion hereinafter expressed.
In addition, we have reviewed certificates of public officials, statutes,
records and other instruments and documents as we have deemed necessary to
form a basis for the opinion hereinafter expressed. In our examination of
the foregoing, we have assumed, without independent investigation, (i) the
genuineness of all signatures, and the authority of all persons or entities
signing all documents examined by us and (ii) the authenticity of all
documents submitted to us as originals and the conformity to authentic
original documents of all copies submitted to us as certified, conformed or
photostatic copies. With regard to certain factual matters, we have relied,
without independent investigation or verification, upon statements and
representations of representatives of the Issuer.
Based upon and subject to the foregoing, we are of the opinion that, as
of the date hereof, when the Notes have been duly authenticated by the State
Street Bank and Trust
<PAGE>
Atrium Companies, Inc.
August 12, 1999
Page 2
Company, in its capacity as Trustee, and duly executed and delivered on
behalf of the Issuer against payment therefor as contemplated by the
Registration Statement, the Notes will be legally issued and will constitute
a binding obligation of the Issuer, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and transfer, moratorium or
other laws now or hereafter in effect relating to or affecting the rights or
remedies of creditors generally and by general principles of equity (whether
applied in a proceeding at law or in equity) including, without limitation,
standards of materiality, good faith and reasonableness in the interpretation
and enforcement of contracts, and the application of such principles to limit
the availability of specific equitable remedies such as specific performance.
We hereby consent to being named as counsel to the Issuer in the
Registration Statement, to the references therein to our firm under the
caption "Legal Matters" and to the inclusion of this opinion as an exhibit to
the Registration Statement. In giving this consent, we do not thereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Commission thereunder.
Very truly yours,
/s/ PAUL, HASTINGS, JANOFSKY & WALKER LLP
<PAGE>
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
---------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
Massachusetts 04-1867445
(JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
225 Franklin Street, Boston, Massachusetts 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
ATRIUM COMPANIES, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-2642488
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1341 MOCKINGBIRD LANE
SUITE 1200W
DALLAS, TX 75247
(Address of principal executive offices) (Zip Code)
10 1/2% SENIOR SUBORDINATED NOTES DUE 2009
<PAGE>
(TITLE OF INDENTURE SECURITIES)
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY
TO WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System,
Washington, D.C., Federal Deposit Insurance Corporation,
Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee,
as now in effect, is on file with the Securities and
Exchange Commission as Exhibit 1 to Amendment No. 1
to the Statement of Eligibility and Qualification of
Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and
is incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO
COMMENCE BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF
ASSOCIATION.
A copy of a Statement from the Commissioner of Banks
of Massachusetts that no certificate of authority for
the trustee to commence business was necessary or
issued is on file with the Securities and Exchange
Commission as Exhibit 2 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of
Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE
CORPORATE TRUST POWERS, IF SUCH AUTHORIZATION IS NOT
CONTAINED IN THE DOCUMENTS SPECIFIED IN PARAGRAPH (1) OR
(2), ABOVE.
A copy of the authorization of the trustee to
exercise corporate trust powers is on file with the
Securities and Exchange Commission as Exhibit 3
to Amendment No. 1 to the Statement of Eligibility
and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc. (File
No. 22-17940) and is incorporated herein by reference
thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR
INSTRUMENTS CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in
effect, is on file with the Securities and Exchange
Commission as Exhibit 4 to the Statement of
Eligibility and Qualification of Trustee (Form T-1)
filed with the Registration Statement of Eastern
Edison Company (File No. 33-37823) and is
incorporated herein by reference thereto.
1
<PAGE>
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR
IS IN DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED
BY SECTION 321(b) OF THE ACT.
The consent of the trustee required by Section 321(b)
of the Act is annexed hereto as Exhibit 6 and made a
part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE
PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS
SUPERVISING OR EXAMINING AUTHORITY.
A copy of the latest report of condition of the
trustee published pursuant to law or the requirements
of its supervising or examining authority is annexed
hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for
the accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which
would have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts,
has duly caused this statement of eligibility to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 3rd day of August, 1999.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Kathy A. Larimore
-------------------------------------
NAME KATHY A. LARIMORE
TITLE ASSISTANT VICE PRESIDENT
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by ATRIUM
COMPANIES, INC. of its 10 1/2% SENIOR SUBORDINATED NOTES DUE 2009, we hereby
consent that reports of examination by Federal, State, Territorial or
District authorities may be furnished by such authorities to the Securities
and Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Kathy A. Larimore
-------------------------------------
NAME KATHY A. LARIMORE
TITLE ASSISTANT VICE PRESIDENT
DATED: AUGUST 3, 1999
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this
commonwealth and a member of the Federal Reserve System, at the close of
business March 31, 1999, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions of the
Federal Reserve Act and in accordance with a call made by the Commissioner of
Banks under General Laws, Chapter 172, Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin .............................. 1,249,670
Interest-bearing balances ....................................................... 13,236,699
Securities .................................................................................. 10,970,415
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary ............................................. 9,561,556
Loans and lease financing receivables:
Loans and leases, net of unearned income ......... 7,053,580
Allowance for loan and lease losses .............. 85,416
Allocated transfer risk reserve .................. 0
Loans and leases, net of unearned income and allowances ......................... 6,968,164
Assets held in trading accounts ............................................................. 1,553,354
Premises and fixed assets ................................................................... 536,535
Other real estate owned ..................................................................... 0
Investments in unconsolidated subsidiaries .................................................. 606
Customers' liability to this bank on acceptances outstanding ................................ 71,273
Intangible assets............................................................................ 207,323
Other assets................................................................................. 1,371,043
-----------
Total assets ................................................................................ 45,726,638
===========
LIABILITIES
Deposits:
In domestic offices ............................................................. 10,101,297
Noninterest-bearing .................. 6,932,549
Interest-bearing ..................... 3,168,748
In foreign offices and Edge subsidiary .......................................... 18,061,721
Noninterest-bearing .................. 54,654
Interest-bearing ..................... 18,007,067
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ............................................. 12,063,069
Demand notes issued to the U.S. Treasury .................................................... 149,322
Trading liabilities ........................................................ 1,140,080
Other borrowed money ........................................................................ 285,027
Subordinated notes and debentures ........................................................... 0
Bank's liability on acceptances executed and outstanding .................................... 71,273
Other liabilities............................................................................ 1,079,470
Total liabilities ........................................................................... 42,951,259
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ............................................... 0
Common stock ................................................................................ 29,931
Surplus...................................................................................... 480,330
Undivided profits and capital reserves/Net unrealized holding gains (losses) ................ 2,258,177
Net unrealized holding gains (losses) on available-for-sale securities ..... 15,937
Cumulative foreign currency translation adjustments ......................................... (8,996)
Total equity capital......................................................................... 2,775,379
----------
Total liabilities and equity capital ........................................................ 45,726,638
----------
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true
and correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
5
<PAGE>
Exhibit 99.1
LETTER OF TRANSMITTAL
FOR TENDER OF
10-1/2% SENIOR SUBORDINATED NOTES DUE 2009, SERIES A
IN EXCHANGE FOR
10-1/2% SENIOR SUBORDINATED NOTES DUE 2009, SERIES B
OF
ATRIUM COMPANIES, INC.
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THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
SEPTEMBER __, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). OUTSTANDING
NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
- -------------------------------------------------------------------------------
DELIVER TO THE EXCHANGE AGENT
BY REGISTERED OR CERTIFIED MAIL OR OVERNIGHT COURIER:
State Street Bank and Trust Company
Corporate Trust Division
P.O. Box 778
Boston, MA 02102-0778
Attn: Kellie Mullen
BY FACSIMILE:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(617) 662-1452
CONFIRM BY TELEPHONE:
(617) 662-1523
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING
THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned hereby acknowledges receipt and review of the Prospectus
dated August __, 1999 (the "Prospectus") of Atrium Companies, Inc. (the
"Company") and this Letter of Transmittal (the "Letter of Transmittal"), which
together describe the Company's offer (the "Exchange Offer") to exchange its
10-1/2% Senior Subordinated Notes due 2009, Series B (the "Exchange Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which the Prospectus
is a part, for a like principal amount of its issued and outstanding 10-1/2%
Senior Subordinated Notes due 2009, Series A (the "Outstanding Notes").
Capitalized terms used but not defined herein have the respective meaning given
to them in the Prospectus.
<PAGE>
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date in which the Exchange Offer is extended.
The Company shall notify the Exchange Agent and the holders of the Outstanding
Notes of any extension by oral or written notice, followed by a public
announcement thereof prior to 9:00 A.M., New York City time, on the next
business day after the previously scheduled Expiration Date.
This Letter of Transmittal is to be used by a Holder of Outstanding Notes
either if original Outstanding Notes are to be forwarded herewith or if delivery
of Outstanding Notes, if available, is to be made by book-entry transfer to the
account maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in the
Prospectus under the caption "The Exchange Offer--Book-Entry Delivery
Procedures." Holders of Outstanding Notes whose Outstanding Notes are not
immediately available, or who are unable to deliver their Outstanding Notes and
all other documents required by this Letter of Transmittal to the Exchange Agent
on or prior to the Expiration Date, or who are unable to complete the procedure
for book-entry transfer on a timely basis, must tender their Outstanding Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures." See
Instruction 2. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Outstanding Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered Holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their
Outstanding Notes must complete this Letter of Transmittal in its entirety.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space below is inadequate, list the registered numbers and
principal amounts on a separate signed schedule and affix the list to this
Letter of Transmittal.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES TENDERED
- ----------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
NAME(s) AND ADDRESS(es) PRINCIPAL
OF REGISTERED OUTSTANDING NOTE HOLDER(s) AMOUNT PRINCIPAL
EXACTLY AS NAME(s) APPEAR(s) ON REGISTERED REPRESENTED BY AMOUNT
OUTSTANDING NOTES (PLEASE FILL IN IF BLANK) NUMBERS* NOTE(s) TENDERED**
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry Holders.
2
<PAGE>
** Unless otherwise indicated, any tendering Holder of Outstanding Notes will
be deemed to have tendered the entire aggregate principal amount
represented by such Outstanding Notes. All tenders must be in integral
multiples of $1,000.
/ / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THIS ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (FOR USE BY
ELIGIBLE INSTITUTIONS ONLY):
Name of Tendering Institution:____________________________________________
Account Number:___________________________________________________________
Transaction Code Number:__________________________________________________
/ / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING
(FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered Holder(s) of Outstanding Notes:_____________________
Date of Execution of Notice of Guaranteed Delivery:_______________________
Window Ticket Number (if available):______________________________________
Name of Eligible Institution that Guaranteed Delivery:____________________
Account Number (if delivered by book-entry transfer):_____________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:_____________________________________________________________________
Address:__________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Outstanding Notes that were
acquired as a result of market-making activities or other trading activities, it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes received in respect of such
Outstanding Notes in the Exchange Offer; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company for exchange the principal amount of Outstanding
Notes indicated above. Subject to and effective upon the acceptance for
exchange of the principal amount of Outstanding Notes tendered in accordance
with this Letter of Transmittal, the undersigned hereby exchanges, assigns, and
transfers to the Company all right, title and interest in and to the Outstanding
Notes tendered for exchange hereby. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as the agent and attorney-in-fact of
the undersigned (with full knowledge that the Exchange Agent also acts as the
agent of the Company in connection with the Exchange Offer) with respect to the
tendered Outstanding Notes with full power of substitution to (i) deliver such
Outstanding Notes, or transfer ownership of such Outstanding Notes on the
account books maintained by the Book-Entry Transfer Facility to the Company and
deliver all accompanying evidences of transfer and authenticity, and (ii)
present such Outstanding Notes for transfer on the books of the Company and
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Outstanding Notes, all in accordance with the terms of the Exchange
Offer. The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
3
<PAGE>
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the
Outstanding Notes tendered hereby and to acquire the Exchange Notes issuable
upon the exchange of such tendered Outstanding Notes and that the Company will
acquire good, marketable and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim or proxy, when the same are accepted for exchange by the Company.
The undersigned acknowledge(s) that this Exchange Offer is being made in
reliance upon interpretations contained in no-action letters issued to third
parties unrelated to the Company by the staff of the Securities and Exchange
Commission (the "Commission") that the Exchange Notes issued in exchange for the
Outstanding Notes pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by any person receiving such Exchange Notes,
whether or not such person is the Holder thereof (other than any broker-dealer,
as set forth below, and any such Holder or other person which is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of business of such Holder or such other person and such Holder or other
person is not engaged in, has no intention to engage in, and has no arrangement
or understanding with any person to participate in the distribution of such
Exchange Notes. By acceptance of the Exchange Offer, the undersigned hereby
represent(s) to the Company that (i) any Exchange Notes acquired in exchange for
Outstanding Notes tendered hereby are being acquired in the ordinary course of
business of the person receiving such Exchange Notes, (ii) if the undersigned or
any such other person is not a broker-dealer, then neither the undersigned nor
any such other person is engaged in or intends to engage in a distribution of
such Exchange Notes, (iii) neither the undersigned nor any such other person has
an arrangement or understanding with any person to participate in the
distribution (within the meaning of the Securities Act) of such Exchange Notes,
and (iv) neither the Holder nor any such other person is an "affiliate" (as
defined in Rule 405 under the Securities Act) of the Company or any of its
subsidiaries.
If the undersigned or the person receiving the Exchange Notes is a
broker-dealer that is receiving Exchange Notes for its own account in
exchange for Outstanding Notes, the undersigned hereby represents to the
Company that such Outstanding Notes were acquired in the ordinary course of
business as a result of market-making activities or other trading activities
and the undersigned hereby acknowledges that it or such other person will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that the undersigned or such other person is an "underwriter"
within the meaning of the Securities Act. The undersigned acknowledges that
if the undersigned or the person receiving the Exchange Notes is
participating in the Exchange Offer for the purpose of distributing the
Exchange Notes (i) the undersigned or such person cannot rely on the position
of the staff of the Commission in certain no-action letters and, in the
absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the Exchange Notes, and (ii) failure to
comply with such requirements in such instance could result in the
undersigned or such person incurring liability under the Securities Act for
which the undersigned or such person is not indemnified by the Company.
If the undersigned or the person receiving the Exchange Notes is an
"affiliate" (as defined in Rule 405 under the Securities Act) of the Company,
the undersigned represents to the Company that the undersigned understands and
acknowledges that the Exchange Notes may not be offered for resale, resold or
otherwise transferred by the undersigned or such other person without
registration under the Securities Act and compliance with the prospectus
delivery requirements of the Securities Act or an exemption therefrom.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Outstanding
Notes tendered hereby, including the transfer of such Outstanding Notes on the
account books maintained by the Book-Entry Transfer Facility.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange validly tendered Outstanding Notes when, as and if the
Company gives oral or written notice thereof to the Exchange Agent. Any
4
<PAGE>
tendered Outstanding Notes that are not accepted for exchange pursuant to the
Exchange Offer for any reason will be returned, without expense to the
undersigned, at the address shown below or at a different address as may be
indicated herein under "Special Delivery Instructions" as promptly as
practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned acknowledges that the Company's acceptance of properly
tendered Outstanding Notes pursuant to the procedures described under the
caption "The Exchange Offer--Procedures for Tendering Outstanding Notes" in the
Prospectus and in the instructions hereto will constitute a binding agreement
between the undersigned and the Company upon the terms and subject to the
conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the Exchange Notes issued in exchange for the Outstanding Notes accepted
for exchange and return any Outstanding Notes not tendered or not exchanged in
the name(s) of the undersigned. Similarly, unless otherwise indicated under
"Special Delivery Instructions," please mail or deliver the Exchange Notes
issued in exchange for the Outstanding Notes accepted for exchange and any
Outstanding Notes not tendered or not exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Issuance Instructions" and
"Special Delivery Instructions" are completed, please issue the Exchange Notes
issued in exchange for the Outstanding Notes accepted for exchange in the
name(s) of, and return any Outstanding Notes not tendered or not exchanged to,
the person(s) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Outstanding Notes from the name of the registered
holder(s) thereof if the Company does not accept for exchange any of the
Outstanding Notes so tendered for exchange.
- -------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 5 and 6)
To be completed ONLY (i) if Outstanding Notes in a principal amount not
tendered, or Exchange Notes issued in exchange for Outstanding Notes accepted
for exchange, are to be issued in the name of someone other than the
undersigned, or (ii) if Outstanding Notes tendered by book-entry transfer that
are not exchanged are to be returned by credit to an account maintained at the
Book-Entry Transfer Facility. Issue Exchange Notes and/or Outstanding Notes to:
Name(s):_______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address:_______________________________________________________________________
_______________________________________________________________________________
(INCLUDE ZIP CODE)
_______________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(Complete Substitute Form W-9)
/ / Credit unexchanged Outstanding Notes delivered by book-entry transfer to
the Book-Entry Transfer Facility set forth below:
_______________________________________________________________________________
(BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER, IF APPLICABLE)
- -------------------------------------------------------------------------------
5
<PAGE>
- -------------------------------------------------------------------------------
PLEASE SIGN HERE WHETHER OR NOT OUTSTANDING NOTES ARE BEING PHYSICALLY
TENDERED HEREBY
(Complete Accompanying Substitute Form W-9)
_______________________________________________________________________________
Date
_______________________________________________________________________________
Date
_______________________________________________________________________________
Area Code and Telephone Number
The above lines must be signed by the registered Holder(s) of Outstanding
Notes as name(s) appear(s) on the Outstanding Notes or on a security position
listing or by person(s) authorized to become registered Holder(s) by a properly
completed bond power from the registered Holder(s), a copy of which must be
transmitted with this Letter of Transmittal. If Outstanding Notes to which this
Letter of Transmittal relate are held of record by two or more joint Holders,
then all such Holders must sign this Letter of Transmittal. If signature is by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
then such person must (i) set forth his or her full title below and (ii) unless
waived by the Company, submit evidence satisfactory to the Company of such
person's authority so to act. See Instruction 5 regarding the completion of
this Letter of Transmittal, printed below.
Name(s):_______________________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity:______________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
(INCLUDE ZIP CODE)
6
<PAGE>
- -------------------------------------------------------------------------------
MEDALLION SIGNATURE GUARANTEE
(If Required By Instruction 5)
Certain signatures must be Guaranteed by an Eligible Institution.
Signature(s) Guaranteed by an Eligible Institution:
_______________________________________________________________________________
(AUTHORIZED SIGNATURE)
_______________________________________________________________________________
(TITLE)
_______________________________________________________________________________
(NAME OF FIRM)
_______________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
_______________________________________________________________________________
(AREA CODE AND TELEPHONE NUMBER)
Date: _____________________________________________________________, 19________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 5 and 6)
To be completed ONLY if Outstanding Notes in a principal amount not
tendered, or Exchange Notes issued in exchange for Outstanding Notes accepted
for exchange, are to be mailed or delivered to someone other than the
undersigned, or to the undersigned at an address other than that shown below the
undersigned's signature.
Mail or deliver Exchange Notes and/or Outstanding Notes to:
Name:__________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address:_______________________________________________________________________
(INCLUDE ZIP CODE)
_______________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
- -------------------------------------------------------------------------------
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OUTSTANDING NOTES OR
BOOK-ENTRY CONFIRMATIONS. All physically delivered Outstanding Notes or any
confirmation of a book-entry transfer to the Exchange Agent's account at the
Book-Entry Transfer Facility of Outstanding Notes tendered by book-entry
transfer
7
<PAGE>
(a "Book-Entry Confirmation"), as well as a properly completed and duly
executed copy of this Letter of Transmittal or facsimile hereof and any other
documents required by this Letter of Transmittal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date. The method of delivery of the tendered
Outstanding Notes, this Letter of Transmittal and all other required
documents to the Exchange Agent is at the election and risk of the Holder
and, except as otherwise provided below, the delivery will be deemed made
only when actually received or confirmed by the Exchange Agent. Instead of
delivery by mail, it is recommended that the Holder use an overnight or hand
delivery service. In all cases, sufficient time should be allowed to assure
delivery to the Exchange Agent before the Expiration Date. No Letter of
Transmittal or Outstanding Notes should be sent to the Company.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their
Outstanding Notes and (a) whose Outstanding Notes are not immediately available,
(b) who cannot deliver their Outstanding Notes, this Letter of Transmittal or
any other documents required hereby to the Exchange Agent prior to the
Expiration Date or (c) who are unable to complete the procedure for book-entry
transfer on a timely basis, must tender their Outstanding Notes according to the
guaranteed delivery procedures set forth in the Prospectus. Pursuant to such
procedures (i) such tender must be made by or through a firm which is a member
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or a trust company having an
office or correspondent in the United States or an "eligible guarantor
institution" within the meaning of Rule 17 Ad-15 under the Securities Exchange
Act of 1934, as amended (an "Eligible Institution"), (ii) prior to the
Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Holder of the Outstanding Notes, the certificate number(s) of
such Outstanding Notes and the principal amount of Outstanding Notes tendered,
stating that the tender is being made thereby and guaranteeing that, within
three (3) New York Stock Exchange, Inc. ("NYSE") trading days after the
Expiration Date, the Letter of Transmittal (or facsimile hereof) together with
the certificates representing the Outstanding Notes (or a Book-Entry
Confirmation) in proper form for transfer, will be received by the Exchange
Agent and (iii) the properly completed and executed Letter of Transmittal (or
facsimile thereof) as well as the certificates for all physically tendered
Outstanding Notes, in proper form for transfer, or Book-Entry Confirmation, as
the case may be, and all other documents required by this Letter of Transmittal
must be received by the Exchange Agent within three (3) NYSE trading days after
the Expiration Date.
Any Holder of Outstanding Notes who wishes to tender Outstanding Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m,
New York City time, on the Expiration Date. Upon request of the Exchange Agent,
a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their
Outstanding Notes according to the guaranteed delivery procedures set forth
above.
See "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus.
3. TENDER BY HOLDER. Only a Holder of Outstanding Notes may tender such
Outstanding Notes in the Exchange Offer. Any beneficial Holder of Outstanding
Notes who is not the registered Holder and who wishes to tender should arrange
with the registered Holder to execute and deliver this Letter of Transmittal on
his behalf or must, prior to completing and executing this Letter of Transmittal
and delivering his Outstanding Notes, either make appropriate arrangements to
register ownership of the Outstanding Notes in such Holder's name or obtain a
properly completed bond power from the registered Holder.
4. PARTIAL TENDERS. Tenders of Outstanding Notes will be accepted only
in integral multiples of $1,000. If less than the entire principal amount of
any Outstanding Notes is tendered, the tendering Holder should fill in the
principal amount tendered in the fourth column of the box entitled "Description
of Outstanding Notes Tendered" above. The entire principal amount of
Outstanding Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated. If the entire principal amount of all
Outstanding Notes is not tendered, then Outstanding Notes, for the principal
amount of Outstanding Notes not tendered, and Exchange Notes issued in exchange
for any Outstanding Notes accepted will be sent to the Holder at his or her
registered address, unless a different address
8
<PAGE>
is provided in the appropriate box on this Letter of Transmittal, promptly
after the Outstanding Notes are accepted for exchange.
5. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; MEDALLION GUARANTEE OF SIGNATURES. If this Letter of Transmittal
(or facsimile hereof) is signed by the registered Holder(s) of the Outstanding
Notes tendered hereby, the signature must correspond with the name(s) as written
on the face of the Outstanding Notes without alteration, enlargement or any
change whatsoever. If this Letter of Transmittal is signed by a participant in
the Book-Entry Transfer Facility, the signature must correspond with the name as
it appears on the security position listing as the Holder of the Outstanding
Notes.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder or Holders of any Outstanding Notes listed,
such Outstanding Notes must be endorsed or accompanied by appropriate bond
powers, in each case signed as the name of the registered Holder or Holders
appears on the Outstanding Notes.
If this Letter of Transmittal (or facsimile hereof) or any Outstanding
Notes or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, or officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing and, unless waived by the Company, evidence satisfactory to the Company
of their authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Outstanding Notes or signatures on bond powers required by
this Instruction 5 must be guaranteed by an Eligible Institution.
No signature guarantee is required if (i) this Letter of Transmittal is
signed by the registered holder(s) of the Outstanding Notes tendered herewith
(or by a participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of the tendered Outstanding Notes) and
the issuance of Exchange Notes (and any Outstanding Notes not tendered or not
accepted) are to be issued directly to such registered holder(s) (or, if signed
by a participant in the Book-Entry Transfer Facility, any Exchange Notes or
Outstanding Notes not tendered or not accepted are to be deposited to such
participant's account at such Book-Entry Transfer Facility) and neither the box
entitled "Special Delivery Instructions" nor the box entitled "Special Issuance
Instructions" has been completed, or (ii) such Outstanding Notes are tendered
for the account of an Eligible Institution. In all other cases, all signatures
on this Letter of Transmittal must be guaranteed by an Eligible Institution.
6. SPECIAL REGISTRATION AND DELIVERY BY INSTRUCTIONS. Tendering holders
should indicate, in the applicable box or boxes, the name and address (or
account at the Book-Entry Transfer Facility) to which Exchange Notes or
substitute Outstanding Notes for principal amounts not tendered or not accepted
for exchange are to be issued or sent, if different from the name and address of
the person signing this Letter of Transmittal. In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Outstanding Notes pursuant to the Exchange Offer.
If, however, Exchange Notes or Outstanding Notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person, other than the registered
Holder of the Outstanding Notes tendered hereby, or if tendered Outstanding
Notes are registered in the name of any person other than the person signing
this Letter of Transmittal, or if a transfer tax is imposed for any reason other
than the exchange of Outstanding Notes pursuant to the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered Holder or
any other persons) will be payable by the tendering Holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
this Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OUTSTANDING NOTES LISTED IN THIS LETTER
OF TRANSMITTAL.
9
<PAGE>
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a
holder of any Outstanding Notes which are accepted for exchange must provide the
Company (as payor) with its correct taxpayer identification number ("TIN")
which, in the case of a holder who is an individual, is his or her social
security number. If the Company is not provided with the correct TIN, the
Holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
(If withholding results in an over-payment of taxes, a refund may be obtained.)
Certain holders (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
If the Outstanding Notes are registered in more than one name or are not in the
name of the actual owner, see the enclosed "Guidelines for Certification of
Taxpayer Identification Number of Substitute Form W-9" for information on which
TIN to report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance of tendered Outstanding
Notes will be determined by the Company, in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Outstanding Notes not validly tendered or any
Outstanding Notes, the Company's acceptance of which would, in the opinion of
the Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any conditions of the Exchange Offer or defects or irregularities
in tenders of Outstanding Notes as to any ineligibility of any holder who seeks
to tender Outstanding Notes in the Exchange Offer. The interpretation of the
terms and conditions of the Exchange Offer (including this Letter of Transmittal
and the instructions hereto) by the Company shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of Outstanding Notes must be cured within such time as the Company shall
determine. The Company will use reasonable efforts to give notification of
defects or irregularities with respect to tenders of Outstanding Notes, but
shall not incur any liability for failure to give such notification.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
waive, in whole or in part, any of the conditions to the Exchange Offer set
forth in the Prospectus.
11. NO CONDITIONAL TENDER. No alternative conditional, irregular or
contingent tender of Outstanding Notes on transmittal of this Letter of
Transmittal will be accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES. Any Holder
whose Outstanding Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated above for further
instructions. The Holder will then be instructed as to the steps that must be
taken in order to replace the Outstanding Notes. This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost,
destroyed or stolen Outstanding Notes have been followed.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
or for additional copies of the Prospectus or this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover page of this Letter of Transmittal. Holders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED OUTSTANDING NOTES AND ISSUANCE OF EXCHANGE
NOTES; RETURN OF OUTSTANDING NOTES. Subject to the terms and conditions of the
Exchange Offer, the Company will
10
<PAGE>
accept for exchange all validly tendered Outstanding Notes as soon as
practicable after the Exchange Date and will issue Exchange Notes therefor as
soon as practicable thereafter. For purposes of the Exchange Offer, the
Company shall be deemed to have accepted tendered Outstanding Notes when, as
and if the Company has given written or oral notice thereof to the Exchange
Agent. If any tendered Outstanding Notes are not exchanged pursuant to the
Exchange Offer for any reason, such unexchanged Outstanding Notes will be
returned, without expense, to the undersigned at the address shown above (or
credited to the undersigned's account at the Book-Entry Transfer Facility
designated above) or at a different address as may be indicated under the box
entitled "Special Delivery Instructions."
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer--Withdrawal of Tenders."
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
HEREOF TOGETHER WITH THE OUTSTANDING NOTES WHICH MUST BE DELIVERED BY BOOK-ENTRY
TRANSFER OR IN ORIGINAL HARD COPY FORM OR THE NOTICE OF GUARANTEED DELIVERY AND
ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
11
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 8)
PAYOR'S NAME:
<TABLE>
- -------------------------------------------------------------------------------
<S> <C> <C>
Part I: PLEASE PROVIDE Social Security Number
YOUR TIN IN THE BOX AT
RIGHT AND CERTIFY BY OR_____________________
SIGNING AND DATING Employer
SUBSTITUTE BELOW. Identification Number
FORM W-9 -------------------------------------------------
Department of the Treasury Part II: For Payees exempt from backup
Internal Revenue Service withholding, see the enclosed Guidelines for
Certification of Taxpayer Identification Number
Payor's Request for Taxpayer on Substitute Form W-9 and complete as
Identification Number (TIN) instructed.
-------------------------------------------------
Part III: Awaiting TIN / /
- -------------------------------------------------------------------------------
CERTIFICATION. Under penalty of perjury, I certify that:
(1) the number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (IRS) that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
(3) Any other information provided on this form is true, correct and
complete.
CERTIFICATION INSTRUCTIONS. You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because of
underreported interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
Signature __________________________________________ Date ____________________
- -------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING A TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within sixty (60) days, 31%
of all payments with respect to the Outstanding Notes or the Exchange Notes made
to me thereafter will be withheld until I provide a number.
Signature ________________________________________________ Date _____________
12
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
10-1/2% SENIOR SUBORDINATED NOTES DUE 2009, SERIES A
IN EXCHANGE FOR
10-1/2% SENIOR SUBORDINATED NOTES DUE 2009, SERIES B
OF
ATRIUM COMPANIES, INC.
This form, or one substantially equivalent hereto must be used by a
holder to accept the Exchange Offer of Atrium Companies, Inc., a Delaware
corporation (the "Company"), and, in connection therewith, who wishes to
tender 10-1/2% Senior Subordinated Notes due 2009, Series A (the "Outstanding
Notes") to the Exchange Agent pursuant to the guaranteed delivery procedures
described in "The Exchange Offer-- Guaranteed Delivery Procedures" of the
Company's Prospectus, dated August __, 1999 (the "Prospectus") and in
Instruction 2 to the related Letter of Transmittal. Any holder who wishes to
tender Outstanding Notes pursuant to such guaranteed delivery procedures must
ensure that the Exchange Agent receives this Notice of Guaranteed Delivery
prior to the Expiration Date (as defined below) of the Exchange Offer.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
SEPTEMBER __, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). OUTSTANDING
NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO
THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
BY REGISTERED OR CERTIFIED MAIL OR OVERNIGHT COURIER:
State Street Bank and Trust Company
Corporate Trust Division
P.O. Box 778
Boston, MA 02102-0778
Attn: Kellie Mullen
BY FACSIMILE:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(617) 662-1452
CONFIRM BY TELEPHONE:
(617) 662-1523
<PAGE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE BOX
ON THE LETTER OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
This Notice of Guaranteed Delivery must be signed by the Holder(s)
exactly as their name(s) appear on certificates for Outstanding Notes or on a
security position listing as the owner of Outstanding Notes, or by person(s)
authorized to become Holder(s) by endorsements and documents transmitted with
this Notice of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer or other person acting in
a fiduciary or representative capacity, such person must provide the
following information:
PLEASE PRINT NAME(S) AND ADDRESS(ES) AND OTHER INFORMATION
Name(s):
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Capacity:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Address(es):
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by
the Exchange Agent at its address set forth herein prior to the Expiration
Date. The method of delivery of this Notice of Guaranteed Delivery and any
other required documents to the Exchange Agent is at the election and sole
risk of the holder, and the delivery will be deemed made only when actually
received by the Exchange Agent. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended. As an alternative
to delivery by mail, the holders may wish to consider using an overnight or
hand delivery service. In all cases, sufficient time should be allowed
<PAGE>
to assure timely delivery. For a description of the guaranteed delivery
procedures, see Instruction 2 of the Letter of Transmittal.
2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Outstanding
Notes, the signature must correspond with the name(s) written on the face of
the Outstanding Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant
of the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Outstanding Notes, the signature must correspond
with the name shown on the security position listing as the owner of the
Outstanding Notes.
If this Notice of Guaranteed Delivery is signed by a person other than
the registered holder(s) of any Outstanding Notes listed or a
participant of the Book-Entry Transfer Facility, this Notice of
Guaranteed Delivery must be accompanied by appropriate bond powers,
signed as the name of the registered holder(s) appears on the Private
Notes or signed as the name of the participant shown on the Book-Entry
Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or
other person acting in a fiduciary or representative capacity, such
person should so indicate when signing and submit with the Letter of
Transmittal evidence satisfactory to the Company of such person's
authority to so act.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust
company, or other nominee for assistance concerning the Exchange Offer.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the related Letter
of Transmittal, the Outstanding Notes indicated below pursuant to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"Guaranteed Delivery Procedures."
Name(s) of Registered Holder(s):
----------------------------------------------
(PLEASE PRINT OR TYPE)
Signature(s):
-----------------------------------------------------------------
Address(es):
------------------------------------------------------------------
Area Code(s) and Telephone Number(s):
-----------------------------------------
Account Number:
---------------------------------------------------------------
Date:
-------------------------------------------------------------------------
Certificate No(s). Principal Amount of
(if available) Outstanding Notes Tendered*
- ----------------------------- -----------------------------
- ----------------------------- -----------------------------
- ----------------------------- -----------------------------
- ----------------------------- -----------------------------
- ----------------------------- -----------------------------
* Must be integral multiples of $1,000 principal amount at maturity.
GUARANTEES:
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., or is a commercial bank or trust company having an office or
correspondent in the United States, or is otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Securities Exchange
Act of 1934, guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the Outstanding Notes
tendered hereby in proper form for transfer (or confirmation of the
book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility described in the prospectus under
the caption "The Exchange Offer-Guaranteed Delivery Procedures" and in the
Letter of Transmittal and any other documents, all by 5:00 p.m., New York
City time, within three New York Stock Exchange trading days following the
Expiration Date.
Name of Firm
- --------------------------- -----------------------------------
(AUTHORIZED SIGNATURE)
Address: Name:
- --------------------------- -----------------------------------
(INCLUDE ZIP CODE)
<PAGE>
Title: Area Code and Tel. Number
- --------------------------- -----------------------------------
(PLEASE TYPE OR PRINT)
Date: ,19
DO NOT SEND OUTSTANDING NOTES WITH THIS FORM. ACTUAL SURRENDER OF
OUTSTANDING NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED
DOCUMENTS.
