<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1997
REGISTRATION NO.333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
RELIANT BUILDING PRODUCTS, INC.
AND CERTAIN SUBSIDIARIES IDENTIFIED IN FOOTNOTE (1) BELOW
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3442 75-1364873
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
--------------------------
3030 LBJ FREEWAY, SUITE 300
DALLAS, TEXAS 75234
(972) 919-1000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
--------------------------
DAVID G. FIORE
3030 LBJ FREEWAY, SUITE 300
DALLAS, TEXAS 75234
(972) 919-1000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
--------------------------
COPIES TO:
THOMAS W. BRIGGS, ESQ.
KELLY, HART & HALLMAN, P.C.
201 MAIN STREET, SUITE 2500
FORTH WORTH, TEXAS 76102
(817) 332-2500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this 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. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER NOTE OFFERING PRICE(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
10 7/8% Series B Senior Subordinated Notes
due 2004.................................. $70,000,000 100% $70,000,000 $21,213
Senior Subordinated Guarantees (3).......... -- -- --
</TABLE>
(1) The following direct subsidiaries of Reliant Building Products, Inc. are
Co-Registrants, each of which is incorporated in the jurisdiction and has
the I.R.S. Employer Identification Number indicated: LeVan Builders Supply
Company, Inc., an Oklahoma corporation (73-1045184); RBP of Arizona, Inc., a
Delaware corporation (75-2366094); RBP Custom Glass, Inc., a Delaware
corporation (75-2426733); RBP Trans, Inc., a Delaware corporation
(75-1925996); RBP Fenesco, Inc., a Delaware corporation (75-2558759); RBP of
Texas, Inc., a Delaware corporation (75-2593255); and Timber Tech, Inc., a
Mississippi corporation (64-0471452).
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The 10 7/8% Series B Senior Subordinated Notes due 2004 are guaranteed by
the Co-Registrants on a senior subordinated basis. No separate consideration
will be paid in respect of these guarantees.
--------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 OF 1933 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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<PAGE>
SUBJECT TO COMPLETION, DATED JULY 2, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
[LOGO]
RELIANT BUILDING PRODUCTS, INC.
OFFER TO EXCHANGE $1,000 PRINCIPAL AMOUNT OF 10 7/8% SENIOR
SUBORDINATED NOTES DUE 2004 FOR EACH $1,000 PRINCIPAL AMOUNT OF
OUTSTANDING 10 7/8% SENIOR SUBORDINATED NOTES DUE 2004
Reliant Building Products, Inc., a Delaware corporation (a wholly-owned
subsidiary of RBPI Holding Corporation ("Holdings")) (the "Company"), hereby
offers to exchange (the "Exchange Offer") up to $70,000,000 in aggregate
principal amount of its 10 7/8% Series B Senior Subordinated Notes due 2004 (the
"Exchange Notes") for up to $70,000,000 in aggregate principal amount of its
outstanding 10 7/8% Series A Senior Subordinated Notes due 2004 that were issued
and sold in reliance upon an exemption from registration under the Securities
Act of 1933, as amended (the "Senior Subordinated Notes" and, together with the
Exchange Notes, the "Notes").
The terms of the Exchange Notes will be the same in all respects (including
principal amount, interest rate, maturity and ranking) as the terms of the
Senior Subordinated Notes for which they may be exchanged pursuant to the
Exchange Offer, except that the Exchange Notes have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and therefore will
not be subject to certain restrictions on transfer applicable to the Senior
Subordinated Notes. The Exchange Notes will be issued under the Indenture (as
defined) governing the Senior Subordinated Notes, and the Exchange Notes will
not be entitled to registration rights except under certain limited
circumstances. The Senior Subordinated Notes are, and the Exchange Notes will
be, unsecured and will be subordinated to all existing and future Senior
Indebtedness (as defined) of the Company. The Notes will rank PARI PASSU with
any future senior subordinated indebtedness of the Company and will rank senior
to all other Subordinated Indebtedness (as defined) of the Company. The Senior
Subordinated Notes are, and the Exchange Notes will be, guaranteed, on a senior
subordinated basis, by each of the Company's direct and indirect subsidiaries on
the issue date of the Senior Subordinated Notes and by each direct and indirect
subsidiary of the Company (excluding Unrestricted Subsidiaries (as defined))
formed or acquired thereafter (collectively, the "Guarantors"). The Indenture
permits the Company to incur additional indebtedness, including Senior
Indebtedness, subject to certain limitations. See "Description of the Notes." As
of March 28, 1997, on a pro forma basis after giving effect to the Transaction
(as defined) and to the Initial Offering (as defined) and the application of the
net proceeds therefrom, the Company would have had outstanding in the aggregate
$71.0 million of indebtedness, none of which is Senior Indebtedness. For a
description of the terms of the Exchange Notes, see "Description of the Notes."
There will be no cash proceeds to the Company from the Exchange Offer.
The Senior Subordinated Notes were originally issued and sold on May 9, 1997 in
a transaction not registered under the Securities Act, in reliance upon the
exemption provided in Section 4(2) of the Securities Act and Rule 144A of the
Securities Act (the "Initial Offering"). Accordingly, the Senior Subordinated
Notes may not be reoffered, resold or otherwise pledged, hypothecated or
transferred in the United States unless so registered or unless an applicable
exemption from the registration requirements of the Securities Act is available.
Based upon interpretations provided to third parties by the Staff (the "Staff")
of the Securities and Exchange Commission (the "Commission"), the Company
believes that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Senior Subordinated Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any holder which is (i) an
"affiliate" of the Company within the meaning of the Securities Act (an
"Affiliate"), (ii) a broker-dealer who acquired Senior Subordinated Notes
directly from the Company or (iii) a broker-dealer who acquired Senior
Subordinated Notes as a result of market-making or other trading activities)
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 such holders' business and such holders have no arrangement
with any person to participate in a distribution of such Exchange Notes. Each
broker-dealer that receives Exchange Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal that is filed
as an exhibit to the Registration Statement of which this Prospectus is a part
(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 resales of Exchange Notes received in exchange for Senior
Subordinated Notes where such Senior Subordinated Notes were acquired by such
broker-dealer as a result of market-making or other trading activities. The
Company has agreed that, for a period of 180 days after the Expiration Date (as
defined), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. Any holder that cannot rely upon such
interpretations must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. See "Plan of Distribution."
The Senior Subordinated Notes and the Exchange Notes constitute new issues of
securities with no established public trading market. The Company does not
intend to apply for listing of the Exchange Notes on any national securities
exchange or for their quotation through the National Association of Securities
Dealers Automated Quotation System. Therefore, there can be no assurance as to
the development or liquidity of any trading market for the Exchange Notes. Any
Senior Subordinated Notes not tendered and accepted in the Exchange Offer will
remain outstanding. To the extent that Senior Subordinated Notes are tendered
and accepted in the Exchange Offer, a holder's ability to sell untendered, and
tendered but unaccepted, Senior Subordinated Notes could be adversely affected.
Following consummation of the Exchange Offer, the holders of Senior Subordinated
Notes will continue to be subject to the existing restrictions on transfer
thereof and the Company will have no further obligation to register such Senior
Subordinated Notes under the Securities Act except under certain limited
circumstances. See "Description of the Notes--Senior Subordinated Notes
Registration Rights."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Senior Subordinated Notes being tendered or accepted for exchange. The
Exchange Offer will expire at 5:00 p.m., New York City time, on ,
1997, unless extended (the "Expiration Date"). The date of acceptance for
exchange of the Senior Subordinated Notes (the "Exchange Date") will be the
Expiration Date, upon surrender of the Senior Subordinated Notes. Senior
Subordinated Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date. Otherwise such tenders are irrevocable.
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SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OF DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement," which term shall include all amendments,
exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the
rules and regulations promulgated thereunder, covering the Exchange Notes being
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to in the Registration Statement are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in this entirety by such reference.
Upon consummation of the Exchange Offer, the Company will become subject to
the periodic reporting and to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Periodic reports, proxy
statements and other information filed by the Company with the Commission may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its regional
offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies can be obtained by mail at prescribed rates. Requests for
copies should be directed to the Commission's Public Reference Section,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a Web site (http:// www.sec.gov) that contains reports, proxy and
information statements regarding registrants that file electronically with the
Commission. Copies of such material can be obtained from the Company upon
request.
The Company is required by the terms of the indenture dated as of May 9,
1997 between the Company, the Guarantors and Bank One, N.A. (formerly known as
Bank One Columbus, N.A.), as trustee (the "Trustee"), under which the Senior
Subordinated Notes were issued and under which the Exchange Notes are to be
issued (the "Indenture"), to furnish the Trustee and the holders of the Notes
with annual reports containing consolidated financial statements audited by its
independent certified public accountants, with quarterly reports containing
unaudited condensed consolidated financial statements for each of the first
three quarters of each fiscal year and with current reports on Form 8-K.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OF MADE
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF ANY OFFER TO BUY, THE EXCHANGE NOTES IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
MARKET AND INDUSTRY DATA
MARKET DATA USED THROUGHOUT THIS PROSPECTUS WAS OBTAINED THROUGH COMPANY
RESEARCH, SURVEYS OR STUDIES PURCHASED BY THE COMPANY AND CONDUCTED BY THIRD
PARTIES AND FROM INDUSTRY OR GENERAL PUBLICATIONS. THE COMPANY HAS NOT
INDEPENDENTLY VERIFIED MARKET DATA PROVIDED BY THIRD PARTIES OR INDUSTRY
2
<PAGE>
OR GENERAL PUBLICATIONS. SIMILARLY, INTERNAL COMPANY SURVEYS, WHILE BELIEVED BY
THE COMPANY TO BE RELIABLE, HAVE NOT BEEN VERIFIED BY ANY INDEPENDENT SOURCES.
FORWARD LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO
THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY,
INCLUDING STATEMENTS UNDER THE CAPTIONS "SUMMARY," "UNAUDITED PRO FORMA
FINANCIAL STATEMENTS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS." ALL THESE FORWARD LOOKING
STATEMENTS ARE BASED ON ESTIMATES AND ASSUMPTIONS MADE BY MANAGEMENT OF THE
COMPANY WHICH, ALTHOUGH BELIEVED TO BE REASONABLE, ARE INHERENTLY UNCERTAIN.
THEREFORE, UNDUE RELIANCE SHOULD NOT BE PLACED UPON SUCH ESTIMATES AND
STATEMENTS. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH ESTIMATES OR STATEMENTS
WILL BE REALIZED AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH
DIFFERENCES INCLUDE: (1) INCREASED COMPETITION; (2) INCREASED COSTS; (3) LOSS OR
RETIREMENT OF KEY MEMBERS OF MANAGEMENT; (4) CHANGES IN GENERAL ECONOMIC
CONDITIONS IN THE MARKETS IN WHICH THE COMPANY MAY FROM TIME TO TIME COMPETE;
AND (5) CHANGES IN THE NUMBER OF HOUSING STARTS IN THESE MARKETS. MANY OF SUCH
FACTORS WILL BE BEYOND THE CONTROL OF THE COMPANY AND ITS MANAGEMENT. FOR
FURTHER INFORMATION OR OTHER FACTORS WHICH COULD AFFECT THE FINANCIAL RESULTS OF
THE COMPANY AND SUCH FORWARD LOOKING STATEMENTS, SEE "RISK FACTORS."
3
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS,
INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED IN
THIS PROSPECTUS, UNLESS THE CONTEXT REQUIRES OTHERWISE, ALL REFERENCES TO THE
"COMPANY" MEAN RELIANT BUILDING PRODUCTS, INC. AND ITS CONSOLIDATED
SUBSIDIARIES. UNLESS OTHERWISE INDICATED, ALL REFERENCES IN THIS PROSPECTUS TO
WINDOW MARKET UNIT DATA ARE DERIVED FROM THE NEW CONSTRUCTION REPORT--APRIL 1996
AND THE REPAIR AND REMODELING REPORT--APRIL 1996 PREPARED BY F.W. DODGE AND ALL
REFERENCES TO OTHER INDUSTRY DATA (INCLUDING WITH RESPECT TO THE COMPANY'S
MARKET SHARE IN ITS PRIMARY MARKET) ARE DERIVED FROM COMPANY ESTIMATES BELIEVED
TO BE RELIABLE. REFERENCES HEREIN TO (I) THE "NON-WOOD SEGMENT" REFER TO THE NEW
CONSTRUCTION NON-WOOD WINDOW SEGMENT OF THE U.S. RESIDENTIAL WINDOW MARKET; (II)
THE "ALUMINUM SEGMENT" REFER TO THE NEW CONSTRUCTION ALUMINUM WINDOW SEGMENT OF
THE U.S. RESIDENTIAL WINDOW MARKET; AND (III) THE "VINYL SEGMENT" REFER TO THE
NEW CONSTRUCTION VINYL WINDOW SEGMENT OF THE U.S. RESIDENTIAL WINDOW MARKET.
REFERENCES HEREIN TO THE COMPANY'S PRIMARY MARKET REFER TO THE FOLLOWING STATES:
ALABAMA, ARIZONA, CALIFORNIA, COLORADO, FLORIDA, GEORGIA, ILLINOIS, KENTUCKY,
LOUISIANA, NEVADA, NEW MEXICO, NORTH CAROLINA, TENNESSEE, TEXAS AND VIRGINIA.
REFERENCES HEREIN TO "CAGR" MEAN COMPOUND ANNUAL GROWTH RATE. AS USED IN THIS
PROSPECTUS, REFERENCES TO FISCAL YEAR MEAN THE COMPANY'S FISCAL YEAR ENDED THE
FRIDAY CLOSEST TO MARCH 31 OF SUCH YEAR.
THE COMPANY
COMPANY OVERVIEW
The Company is one of the nation's largest manufacturers of aluminum and
vinyl, or non-wood, framed windows for the residential new construction market.
The Company believes that it is the largest competitor in the Non-Wood Segment
of its Primary Market and that it is the largest or second largest such
competitor in each state within its Primary Market. The Company's products are
marketed under well recognized brand names, including ALENCO and GAPCO, across
all major price points. Sales in the Company's Primary Market represented 84.8%
of the Company's fiscal year 1997 window net sales. The Company estimates that
it has a 23% market share in the Non-Wood Segment of its Primary Market. The
Company's Primary Market includes some of the fastest growing residential
housing markets in the United States with a CAGR in housing starts of 7.9% for
the five-year period ended December 31, 1996, compared to 5.3% nationally for
the same period. The Company's net sales increased at a CAGR of 11.6% from
$112.0 million in fiscal year 1993 to $174.4 million in fiscal year 1997.
Historically, the Company has emphasized the sale of aluminum windows, which
are the product of choice in the Company's Primary Market. The Company
attributes the preference for aluminum windows in its Primary Market primarily
to aluminum's lower cost and the reduced need for thermal efficiency in homes in
moderate southern climates. The Company estimates that its market share in the
Aluminum Segment of its Primary Market has increased from approximately 23% in
fiscal year 1993 to 29% in fiscal year 1997.
Over the past four years, the Company has increased its focus on the sale of
vinyl windows. The Vinyl Segment is the fastest growing segment of the new
construction window market, growing at a 39.4% CAGR from 1992 to 1996 on a
national basis and at a 63.0% CAGR in the Company's Primary Market over the same
period. Demand for vinyl windows increased during this period as manufacturers
such as the Company offered more thermally efficient vinyl windows of higher
quality and improved appearance at more competitive prices. Over the 1993 to
1995 period, the Company implemented the first phase of a comprehensive vinyl
market penetration program, which enabled the Company to manufacture
vinyl-framed windows at four of its five residential window manufacturing
facilities. The Company increased its vinyl sales from $2.2 million in fiscal
year 1992 to $29.1 million in fiscal year 1997. The Company believes that it is
well positioned to continue to increase its sales of vinyl windows due to
4
<PAGE>
its broad product line, well established distribution base and strategically
located manufacturing facilities.
INDUSTRY OVERVIEW
The Company primarily competes in the $875 million aluminum and vinyl, or
Non-Wood Segment, of the $7.5 billion U.S. residential window industry. Over the
1992 to 1996 period, the volume of non-wood windows sold in the residential new
construction market grew by a 7.4% CAGR in the Company's Primary Market,
compared to 5.5% for the nation as a whole. The new construction and repair and
remodel markets are highly fragmented and historically have consisted of a large
number of relatively small, independent businesses serving discrete local
markets and a small number of multi-regional operators. Relative to smaller
competitors, larger multi-regional operators such as the Company benefit from
several competitive advantages, including economies of scale in purchasing,
manufacturing and distribution and the ability to attract and retain strong
distributors.
COMPETITIVE STRENGTHS
The Company believes that it benefits from the following competitive
advantages, which have contributed to an increase in net sales and operating
income and to the Company's maintenance of its leading market position in the
Non-Wood Segment:
INDUSTRY LEADERSHIP. The Company believes that it is the largest competitor
in the Non-Wood Segment of its Primary Market and that it is the largest or
second largest such competitor in each state within its Primary Market. The
Company believes that its market leadership position, broad product line across
all major price points and reputation for high quality provide it with several
competitive advantages, including: (i) the ability to attract and retain many of
the strongest distributors within its markets; (ii) the ability to serve a
customer base on a broad geographic basis; and (iii) economies of scale related
to the Company's manufacturing, purchasing and distribution operations. The
Company believes that its industry leadership position may also allow it to
benefit from the consolidation currently occurring within the Non-Wood Segment.
WELL RECOGNIZED BRAND NAMES. The Company's ALENCO and GAPCO brand names
have been well established in the industry for over 40 years. ALENCO has
consistently ranked as the nation's most recognized non-wood window brand name
according to BUILDER and PROFESSIONAL BUILDER magazines, two of the leading
industry trade publications. The GAPCO brand is regionally focused in the
Midwest, Mid-Atlantic and Southeast regions and has achieved a high degree of
recognition in those markets. The Company has established well recognized brand
names primarily by providing high quality products and strong customer service.
The Company has successfully leveraged the strength of its brands to expand its
product offerings, particularly with regard to vinyl products, and to expand its
geographic market coverage. The Company intends to utilize the strength of its
brand names to increase its penetration in its existing markets and pursue
expansion into new markets.
STRONG MANUFACTURING AND DISTRIBUTION NETWORK. The Company's strategically
located manufacturing facilities allow it to provide its customers with one-stop
shopping across all major price points on a cost-effective and timely basis. The
Company operates five residential window manufacturing facilities serving over
200 distributors who generally distribute the Company's products on an exclusive
basis. The Company attributes its ability to establish exclusive relationships
with many of the strongest distributors in its markets to its: (i) broad product
offerings across all major price points; (ii) well recognized brand names; (iii)
reputation for high quality; and (iv) high level of customer service. These
factors have resulted in a loyal distributor base characterized by low turnover.
The average tenure of the Company's relationships with its distributors is in
excess of 24 years.
5
<PAGE>
LOW-COST MANUFACTURING. The Company believes that it is one of the lowest
cost manufacturers of vinyl and aluminum windows. This advantage is primarily
attributable to: (i) centralized purchasing of major raw materials and
equipment; (ii) automation of manufacturing processes such as glass cutting and
the manufacture of insulated glass; and (iii) vertical integration. The Company
believes that it is one of the industry's most vertically integrated non-wood
window manufacturers. In addition to extruding and recycling aluminum, the
Company produces processed glass and window components, which provide it with a
reliable source of high-quality materials.
CUSTOMER SERVICE. The Company's systems, processes and organization are
designed specifically to provide a high level of customer service. The Company
believes that it offers its distributors high quality, competitively priced
products and short lead times while maintaining high order-fill rates. The
Company's lead time is generally between five to ten working days on a
make-to-order basis. Furthermore, on-time delivery and order-fill rates
typically run in the 95-98% range, which the Company believes are among the best
in the industry.
EXPERIENCED MANAGEMENT. The Company has assembled a strong and experienced
management team at the corporate and operating levels. At the corporate level,
the top three members of the senior management team have an average of 15 years
of experience with the Company. The Company's operational managers, who manage
the Company's six window manufacturing facilities, have an average of ten years
of experience with the Company and 25 years of industry experience. Senior
executives of the Company own approximately 4% of the outstanding common stock
of Holdings.
BUSINESS STRATEGY
The Company's strategy for enhancing its market leadership position and
maximizing profitability and cash flow includes: (i) expanding market
penetration in the Vinyl Segment; (ii) expanding into attractive geographic
markets; (iii) achieving cost reductions; (iv) expanding into the repair and
remodel market; and (v) pursuing selected strategic acquisitions.
EXPAND PENETRATION IN THE VINYL SEGMENT. The Company believes that it is
among the largest manufacturers of residential new construction vinyl windows in
the United States, and that no single competitor holds a dominant position in
this market. The Vinyl Segment is the fastest growing segment of the window
market, growing at a 39.4% CAGR from 1992 to 1996 on a national basis, and a
63.0% CAGR in the Company's Primary Market. The Company recognized the potential
for growth in sales of vinyl windows early in the product life cycle and, over
the 1993 to 1995 period, established vinyl manufacturing capabilities at four of
its five residential window manufacturing facilities. As a result, the Company's
sales of vinyl windows increased from $2.2 million in fiscal year 1992 to $29.1
million in fiscal year 1997. The Company believes it is well positioned to
continue its expansion in the Vinyl Segment and intends to leverage its well
recognized brand names, broad product line and established distribution network
in an effort to increase its vinyl window sales. The Company intends to achieve
this growth by increasing sales to existing distributors and by entering new
geographic markets.
EXPAND INTO ATTRACTIVE GEOGRAPHIC MARKETS. The Company intends to continue
to expand its business by entering geographic areas contiguous to the Company's
existing markets, as well as by targeting new markets with attractive growth
characteristics. The Company is actively pursuing expansion opportunities in
regions that exhibit favorable demographic trends, particularly with respect to
population growth, concentration of population base and housing starts. The
Company believes that it has advantages in penetrating new markets due to its
ability to offer customers well recognized brand name windows, a high level of
customer service and one-stop shopping for non-wood windows.
ACHIEVE COST REDUCTIONS. The Company expects to benefit from more than $5.0
million of annual cost reductions over the next three years. Approximately $1.2
million of these cost reductions are associated with previously implemented
initiatives that were completed in the fourth quarter of fiscal year
6
<PAGE>
1997, including the automation of labor intensive operations and strategic
initiatives with key raw material suppliers. The balance of the annual cost
reductions, or approximately $3.8 million, is associated with new initiatives
that the Company intends to implement over the next two years, including: (i)
improvements in manufacturing processes; (ii) materials cost reductions; (iii)
continued improvements in information systems; and (iv) additional factory
automation. However, a large portion of these cost savings will likely not be
achieved until fiscal year 1999 and there can be no assurance that any such cost
savings can be achieved or, specifically, that they can be achieved within three
years.
EXPAND INTO THE REPAIR AND REMODEL MARKET. The Company believes that the
highly fragmented $2.8 billion non-wood repair and remodel market represents a
significant opportunity. The repair and remodel market is generally
counter-cyclical and provides the Company with the ability to diversify its
product mix as well as increase sales. The Company intends to increase its
presence in this market by leveraging its well recognized brand names and
utilizing its existing strong manufacturing and distribution network to
penetrate existing geographic markets and to expand into new markets through
selected acquisitions.
PURSUE SELECTED STRATEGIC ACQUISITIONS. The Company intends to pursue
opportunities to make acquisitions that complement and expand its core business
or enable the Company to enter new markets for its products. The non-wood new
construction and repair and remodel markets are highly fragmented with over 350
manufacturers, the majority of which are small regional manufacturers. The
Company believes that significant opportunities exist to make selected strategic
acquisitions at attractive valuations. Strategic acquisitions could allow the
Company to (i) leverage its well recognized brand names; (ii) achieve cost
reductions through purchasing economies and the application of the Company's
best manufacturing practices; and (iii) further diversify the Company's
geographic, product and market focus, including expansion into the repair and
remodel market. However, no assurance can be given that the Company will be able
to complete strategic acquisitions at attractive valuations.
The Company is a Delaware corporation. Its principal executive offices are
located at 3030 LBJ Freeway, Suite 300, Dallas, Texas 75234, and its telephone
number is (972) 919-1000.
OWNERSHIP AND MANAGEMENT
Reliant Partners, L.P. ("Reliant Partners") and Reliant Partners II, L.P.
("Reliant Partners II") were formed by principals of Keystone, Inc.
("Keystone"), FW Strategic Partners, L.P. ("Strategic Partners") and employees
of George Group Inc. ("George Group") for the purpose of effecting the
Transaction (as defined below). Keystone, formerly Robert M. Bass Group, Inc.,
is the principal investment entity of Robert M. Bass. Since 1987, Keystone and
associated entities have directly and indirectly sponsored over 25 leveraged
acquisitions valued at more than $6.0 billion. These acquisitions have included
American Savings Bank, F.A., Bell & Howell Company, CapStar Hotel Company,
Wometco Cable Corp., Atlanta and Georgia Cable, National Reinsurance
Corporation, Ivex Packaging Corporation and Stage Stores, Inc., among others.
Strategic Partners is a Delaware limited partnership formed to invest in public
and private debt and equity securities and commodities. George Group is an
acquisition and management consulting firm that applies its strategic and
operations management expertise to manufacturing businesses. George Group has
established an exclusive relationship with Keystone to pursue leveraged
acquisitions of companies in which George Group's operational expertise may
significantly increase revenue, cash flow and return on invested capital.
THE TRANSACTION
On May 9, 1997 (the "Transaction Closing Date"), pursuant to a Stock
Purchase Agreement, as amended (together with the related agreements, the "Stock
Purchase Agreement"), Reliant Partners, Reliant Partners II and certain senior
executives of the Company (collectively, the "Purchasers") acquired all the
outstanding common stock of Holdings from Wingate Partners, L.P. and certain
other
7
<PAGE>
selling stockholders (collectively, the "Selling Stockholders"). The aggregate
consideration paid for such acquisition was $90.2 million, consisting of (i)
$30.1 million in cash paid to the Selling Stockholders; (ii) $9.8 million of
notes issued by Holdings (the "Seller Notes") to the Selling Stockholders; (iii)
the repayment of $44.3 million of certain existing indebtedness of the Company;
and (iv) the redemption of $6.2 million of preferred stock of Holdings (the
"Preferred Redemption"). Existing indebtedness of the Company of $1.2 million
remained outstanding upon consummation of the Transaction. The acquisition by
the Purchasers of all the outstanding common stock of Holdings (the
"Acquisition"), the Preferred Redemption and the repayment of certain existing
indebtedness of the Company are referred to hereinafter collectively as the
"Transaction."
The gross proceeds of the Initial Offering, together with cash paid by the
Purchasers and the issuance of the Seller Notes, were used to fund the
Transaction, pay the fees and expenses relating to the Transaction and the
Initial Offering and for working capital and general corporate purposes of the
Company.
The following table sets forth the sources and uses of funds used by the
Purchasers to effect the Transaction:
<TABLE>
<CAPTION>
AMOUNT
-------------------
(DOLLARS IN
MILLIONS)
<S> <C>
SOURCES:
The Notes.................................................................................... $ 70.0
Cash paid by the Purchasers and Seller Notes................................................. 29.8
-------
Total Sources............................................................................ $ 99.8
-------
-------
<CAPTION>
USES:
<S> <C>
Cash paid to Selling Stockholders(a)(b)...................................................... $ 30.1
Seller Notes issued to Selling Stockholders(c)............................................... 9.8
Preferred Redemption(a)...................................................................... 6.2
Repayment of existing indebtedness........................................................... 44.3
Estimated fees and expenses relating to the Transaction and the Initial Offering............. 5.4
Working capital and general corporate purposes of the Company................................ 4.0
-------
Total Uses............................................................................... $ 99.8
-------
-------
</TABLE>
- ---------------------
(a) In connection with the Transaction, the Company paid a dividend to Holdings
in the amount of $16.1 million out of the proceeds of the Initial Offering,
which dividend was used by Holdings for the Preferred Redemption in the
amount of $6.2 million and to fund $10.1 million of the $30.1 million in
cash to be paid to the Selling Stockholders.
(b) Subject to reduction for the following amounts: (i) certain costs of the
Acquisition payable by the Company or Holdings on behalf of the Selling
Stockholders; (ii) $250,000 payable by the Company to David G. Fiore, the
Chairman, President and Chief Executive Officer of the Company, as a special
bonus related to the Transaction; and (iii) the aggregate cash payments
required to be made to holders of stock incentive units (See note (a) under
"Management--SAR Grants in the Last Fiscal Year").
(c) Includes the portion of the Seller Notes issuable to holders of stock
incentive units.
8
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
The Exchange Offer.................. The Company is offering to exchange up to $70,000,000
aggregate principal amount of 10 7/8% Series B Senior
Subordinated Notes due 2004 for up to $70,000,000
aggregate principal amount of its outstanding 10 7/8%
Series A Senior Subordinated Notes due 2004 that were
issued and sold on May 9, 1997 in reliance upon an
exemption from registration under the Securities Act.
The terms of the Exchange Notes will be substantially
identical in all respects (including principal
amount, interest rate, maturity and ranking) to the
terms of the Senior Subordinated Notes for which they
may be exchanged pursuant to the Exchange Offer,
except that the Exchange Notes have been registered
under the Securities Act and therefore will not be
subject to certain restrictions on transfer except as
provided herein (see "The Exchange Offer-- Terms of
the Exchange Offer") and will not be entitled to
registration rights except under certain limited
circumstances.
Exchange Notes issued pursuant to the Exchange Offer
in exchange for the Senior Subordinated Notes may be
offered for resale, resold and otherwise transferred
by holders thereof (other than any holder which is
(i) an Affiliate, (ii) a broker-dealer who acquired
Senior Subordinated Notes directly from the Company
or (iii) a broker-dealer who acquired Senior
Subordinated Notes as a result of market making or
other trading activities) without compliance with the
registration and prospectus delivery provisions of
the Securities Act except as provided herein and
provided that such Exchange Notes are acquired in the
ordinary course of such holders' business and such
holders have no arrangement with any person to
participate in a distribution of such Exchange Notes.
Minimum Condition................... The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Senior
Subordinated Notes being tendered for exchange.
Expiration Date..................... The Exchange Offer will expire at 5:00 p.m., New York
City time, on , 1997 unless extended
(the "Expiration Date").
Exchange Date....................... The first date of acceptance for exchange for the
Senior Subordinated Notes will be the Expiration
Date.
Conditions to the Exchange Offer.... The obligation of the Company to consummate the
Exchange Offer is subject to certain conditions. See
"The Exchange Offer--Certain Conditions to the
Exchange Offer." The Company reserves the right to
terminate or amend the Exchange Offer at any time
prior to the Expiration Date upon the occurrence of
any such condition.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Withdrawal Rights................... Tenders may be withdrawn at any time prior to the
Expiration Date. Any Senior Subordinated Notes not
accepted for any reason will be returned without
expense to the tendering holders thereof as promptly
as practicable after the expiration or termination of
the Exchange Offer.
Procedures for Tendering Senior
Subordinated Notes................ See "The Exchange Offer--How to Tender."
Federal Income Tax Consequences..... The exchange of Senior Subordinated Notes for
Exchange Notes by holders should not constitute an
exchange for federal income tax purposes, and U.S.
holders should not realize any gain or loss upon
receipt of Exchange Notes. See "The Exchange
Offer--Certain Federal Income Tax Considerations."
Effect on Holders of Senior
Subordinated Notes................ As a result of the making of this Exchange Offer, and
upon acceptance for exchange of all validly tendered
Senior Subordinated Notes pursuant to the terms of
this Exchange Offer, the Company will have fulfilled
covenants contained in the terms of the Senior
Subordinated Notes and the Registration Rights
Agreement (the "Registration Rights Agreement") dated
May 9, 1997 between the Company, the Guarantors and
Chase Securities Inc. and CIBC Wood Gundy Securities
Corp., as initial purchasers (collectively, the
"Initial Purchasers") and, accordingly, the holders
of the Senior Subordinated Notes will have no further
registration or other rights under the Registration
Rights Agreement, except under certain limited
circumstances. See "Description of the Notes--Senior
Subordinated Notes Registration Rights." Holders of
the Senior Subordinated Notes who do not tender their
Senior Subordinated Notes in the Exchange Offer will
continue to hold such Senior Subordinated Notes and
will be entitled to all the rights and limitations
applicable thereto under the Indenture. All
untendered, and tendered but unaccepted, Senior
Subordinated Notes will continue to be subject to the
restrictions on transfer provided for in the Senior
Subordinated Notes and the Indenture. To the extent
that Senior Subordinated Notes are tendered and
accepted in the Exchange Offer, the trading market,
if any, for the Senior Subordinated Notes could be
adversely affected. See "Risk Factors--Consequences
of Exchange and Failure to Exchange."
</TABLE>
TERMS OF THE NOTES
The Exchange Offer applies to $70,000,000 aggregate principal amount of the
Senior Subordinated Notes. The form and terms of the Exchange Notes are the same
as the form and terms of the Senior Subordinated Notes except that the Exchange
Notes have been registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof. The Exchange Notes will evidence
the
10
<PAGE>
same debt as the Senior Subordinated Notes and will be entitled to the benefit
of the Indenture. See "Description of the Notes."
<TABLE>
<S> <C>
Securities Offered.................. $70,000,000 aggregate principal amount of 10 7/8%
Senior Subordinated Notes due 2004.
Maturity............................ May 1, 2004.
Interest Payment Dates.............. May 1 and November 1 of each year, commencing on
November 1, 1997.
Sinking Fund........................ None.
Optional Redemption................. Except as described below, the Company may not redeem
the Notes prior to May 1, 2001. On or after such
date, the Company may redeem the Notes, in whole or
in part, at any time at the redemption prices set
forth herein, plus accrued and unpaid interest
thereon, if any, to the date of redemption. In
addition, at any time and from time to time on or
prior to May 1, 2000, the Company may, subject to
certain requirements, redeem in the aggregate up to
35% of the originally issued aggregate principal
amount of the Notes with the net cash proceeds of one
or more Public Equity Offerings by Holdings (to the
extent that the net cash proceeds thereof are
contributed to the equity capital of the Company) or
the Company after which there is a Public Market, at
a redemption price equal to 110.875% of the principal
amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of redemption; PROVIDED,
HOWEVER, that at least 65% of the originally issued
aggregate principal amount of the Notes must remain
outstanding immediately after each such redemption.
See "Description of the Notes--Optional Redemption."
Change of Control................... Upon the occurrence of a Change of Control, (i) the
Company will have the option, at any time, on or
prior
to May 1, 2001 (but in no event more than 90 days
after the occurrence of such Change of Control), to
redeem the Notes, in whole but not in part, at a
redemption price equal to 100% of the principal
amount thereof plus the Applicable Premium (as
defined) as of, and accrued and unpaid interest, if
any, to, the date of redemption, and (ii) if the
Company does not so redeem the Notes or if such
Change of Control occurs after May 1, 2001, the
Company will be required to make an offer to purchase
the Notes at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the date of purchase.
See "Description of the Notes-- Optional Redemption"
and "--Offer to Purchase upon Change of Control."
Subsidiary Guaranties............... The Notes will be guaranteed (the "Guaranties"),
jointly and severally on a senior subordinated basis,
by each of the Company's direct and indirect
Subsidiaries (as defined) on the issue date of the
Notes and by each direct and indirect Subsidiary of
the Company (excluding Unrestricted Subsidiaries)
formed or acquired thereafter. The Guaranties will be
general unsecured obligations of the Guarantors. The
Guarantors also guarantee all obligations of the
Company
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
under the Senior Credit Facility (as defined), and
each Guarantor has granted a security interest in all
or substantially all its assets to secure the
obligations under the Senior Credit Facility. The
obligations of each Guarantor under its Guaranty will
be subordinated in right of payment to the prior
payment in full of all Guarantor Senior Indebtedness
(as defined) of such Guarantor to substantially the
same extent as the Notes are subordinated to all
existing and future Senior Indebtedness of the
Company. See "Description of the Notes--Guaranties of
the Notes."
Ranking............................. The Notes will be unsecured and will be subordinated
to all existing and future Senior Indebtedness of the
Company. The Notes will rank PARI PASSU with any
future senior subordinated indebtedness of the
Company and will rank senior to all other
Subordinated Indebtedness of the Company. As of March
28, 1997, on a pro forma basis after giving effect to
the Transaction and the Initial Offering and the
application of the net proceeds therefrom, the
Company would have had outstanding in the aggregate
$71.0 million of indebtedness, none of which is
Senior Indebtedness. See "Description of the
Notes--Ranking" and "--Subordination of the Notes."
Restrictive Covenants............... The Indenture limits: (i) the incurrence of
additional indebtedness by the Company and its
Restricted Subsidiaries (as defined); (ii) the
payment of dividends on, and the redemption of,
capital stock of the Company and its Restricted
Subsidiaries and the redemption of certain
subordinated obligations of the Company and its
Restricted Subsidiaries; (iii) investments; (iv)
sales of assets; (v) certain transactions with
affiliates; (vi) the sale or issuance of capital
stock of Restricted Subsidiaries; (vii) the creation
of liens; (viii) the lines of business in which the
Company and its Restricted Subsidiaries may operate;
and (ix) consolidations, mergers and transfers of all
or substantially all the Company's assets. The
Indenture also prohibits certain restrictions on
distributions from Restricted Subsidiaries. However,
all these limitations and prohibitions are subject to
a number of important qualifications and exceptions.
See "Description of the Notes--Certain Covenants."
</TABLE>
RISK FACTORS
Holders of the Senior Subordinated Notes should carefully consider all the
information set forth in this Prospectus under "Risk Factors" prior to making a
decision with respect to the Exchange Offer.
12
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following table presents summary historical financial information of the
Company, as of the dates and for the periods indicated, and unaudited pro forma
financial information of the Company, as of the dates and for the periods
indicated, adjusted to give pro forma effect to the Transaction, the Offering
and the application of the net proceeds therefrom and the anticipated closure of
the Company's Houston manufacturing facility.
The historical financial information as of April 2, 1993, April 1, 1994,
March 31, 1995, March 29, 1996 and March 28, 1997 and for each of the five years
in the period ended March 28, 1997 has been derived from the Company's financial
statements, which have been audited by Ernst & Young LLP. The unaudited pro
forma financial information for the year ended March 28, 1997 gives effect to
the Transaction, the Offering and the application of the net proceeds therefrom
and the anticipated closure of the Company's Houston manufacturing facility as
if they had occurred on March 30, 1996. The unaudited pro forma balance sheet
information as of March 28, 1997 gives effect to the Transaction, the Offering
and the application of the net proceeds therefrom and the anticipated closure of
the Company's Houston manufacturing facility as if they had occurred on such
date. The pro forma financial information does not purport to represent what the
Company's results of operations would have been if such events had occurred at
the dates indicated, nor does such information purport to project the results of
the Company for any future period. The summary financial information should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
of the Company and the notes thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------------------------------------------
PRO FORMA
APRIL 2, APRIL 1, MARCH 31, MARCH 29, MARCH 28, MARCH 28,
1993 1994 1995 1996 1997 1997
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net sales.......................................... $ 111,964 $ 123,166 $ 137,184 $ 173,271 $ 174,401 $ 160,483
Cost of products sold.............................. 88,432 96,964 106,760 133,337 131,474 117,513
---------- ---------- ----------- ----------- ----------- -----------
Gross profit..................................... 23,532 26,202 30,424 39,934 42,927 42,970
Selling, general and administrative................ 18,903 20,723 23,620 31,498 32,724 30,280
---------- ---------- ----------- ----------- ----------- -----------
Income from operations........................... 4,629 5,479 6,804 8,436 10,203 12,690
Interest expense, net.............................. 4,053 4,282 4,843 6,125 5,381 8,248
Other expenses (income)............................ 150 150 359 753 577 --
Income tax expense................................. 300 612 833 753 1,892 1,942
Extraordinary loss (a)............................. -- -- 552 -- -- --
---------- ---------- ----------- ----------- ----------- -----------
Net income (loss)................................ $ 126 $ 435 $ 217 $ 805 $ 2,353 $ 2,500
---------- ---------- ----------- ----------- ----------- -----------
---------- ---------- ----------- ----------- ----------- -----------
OTHER FINANCIAL DATA:
EBITDA(b).......................................... $ 8,611 $ 9,555 $ 11,055 $ 12,681 $ 15,069 $ 16,916
Adjusted EBITDA(c)................................. 8,853 9,794 11,536 13,160 15,426 17,273
Depreciation and amortization...................... 3,982 4,076 4,251 4,245 4,866 4,226
Capital expenditures............................... 1,854 2,043 4,628 5,631 3,516 3,516
Cash interest expense(d)........................... 3,626 3,794 4,261 5,467 4,725 7,865
Ratio of Adjusted EBITDA to cash interest
expense.......................................... 2.2x
BALANCE SHEET DATA (AT PERIOD END):
Working capital.................................... $ 15,690 $ 15,481 $ 17,980 $ 14,340 $ 17,301 27,346
Total assets....................................... 60,624 59,504 70,666 76,769 73,077 119,288
Net debt(e)........................................ 40,403 37,850 43,649 44,800 43,145 64,754
Shareholders' equity(f)............................ 1,962 1,960 1,740 1,953 3,913 27,010
</TABLE>
See Notes to Summary Historical and Pro Forma Financial Information
13
<PAGE>
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
(a) The Company recorded an extraordinary loss of $552,000 which is net of a tax
benefit of $297,000, related to the write-off of debt issuance costs and an
original issue discount in connection with its September 1994 debt
refinancing.
(b) The Company defines EBITDA as income from operations before depreciation and
amortization. The Company includes information concerning EBITDA because it
is used by certain investors as a measure of the Company's ability to
service debt. EBITDA should not be considered in isolation or as a
substitute for net income or cash flows from operating activities presented
in accordance with generally accepted accounting principles or as a measure
of a company's profitability or liquidity.
(c) The following items were included in the results of operations and have been
eliminated to calculate "Adjusted EBITDA:"
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------------
APRIL 2, APRIL 1, MARCH 31, MARCH 29, MARCH 28,
1993 1994 1995 1996 1997
----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Closed distribution facilities (i)................... $ 242 $ 239 $ 481 $ 416 $ --
Interruption of operations at joint venture (ii)..... -- -- -- 63 357
----- ----- ----- ----- -----
Total adjustments.................................. $ 242 $ 239 $ 481 $ 479 $ 357
----- ----- ----- ----- -----
----- ----- ----- ----- -----
<CAPTION>
PRO FORMA
MARCH 28,
1997
-------------
<S> <C>
Closed distribution facilities (i)................... $
Interruption of operations at joint venture (ii)..... 357
-----
Total adjustments.................................. $ 357
-----
-----
</TABLE>
(i) Represents EBITDA losses for six distribution facilities that the
Company no longer operates.
(ii) Represents the incremental cost of purchasing aluminum raw materials
from outside suppliers and the Company's lost earnings recorded under
the equity method of accounting during an interruption in operations
due to a fire at the Company's aluminum reprocessing joint venture. The
Company's aluminum joint venture has resumed operations at production
levels similar to those prior to the fire.
(d) Cash interest expense represents total interest expense less the
amortization of debt issuance costs.
(e) Net debt represents total debt less cash.
(f) In connection with the closing of the Transaction, the Company will record
an extraordinary charge of approximately $720,000 which is net of a tax
benefit of approximately $423,000, relating to the extinguishment of debt
with proceeds of the Initial Offering. In addition, the Company will record
a charge of approximately $2,004,000 which is net of a tax benefit of
approximately $1,177,000, relating to incentive stock units. The incentive
stock unit holders will receive approximately $2,227,000 in cash and
$954,000 in Seller Notes.
14
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, BEFORE
TENDERING THEIR SENIOR SUBORDINATED NOTES FOR THE EXCHANGE NOTES OFFERED HEREBY,
HOLDERS OF THE SENIOR SUBORDINATED NOTES SHOULD CONSIDER CAREFULLY THE FOLLOWING
FACTORS, WHICH (OTHER THAN "CONSEQUENCES OF EXCHANGE AND FAILURE TO EXCHANGE")
ARE GENERALLY APPLICABLE TO THE SENIOR SUBORDINATED NOTES AS WELL AS THE
EXCHANGE NOTES.
SUBSTANTIAL LEVERAGE
As a result of the Transaction and the Initial Offering, the Company is
highly leveraged and has substantial outstanding indebtedness. As of March 28,
1997, on a pro forma basis after giving effect to the Transaction and the
Initial Offering and the application of the proceeds therefrom, the Company and
its consolidated subsidiaries had outstanding in the aggregate $71.0 million of
indebtedness. The Indenture permits the Company to incur additional
indebtedness, including Senior Indebtedness (which may be secured), subject to
certain limitations. See "Capitalization" and "Description of the Notes."
The Company's high degree of leverage could have important consequences to
the holders of the Notes, including the following: (i) the Company's ability to
obtain additional financing for working capital, capital expenditures,
acquisitions, general corporate purposes or other purposes may be impaired; (ii)
a substantial portion of the Company's cash flow from operations must be
dedicated to the payment of principal and interest on its indebtedness, thereby
reducing the funds available to the Company for other purposes; (iii) certain of
the Company's borrowings may be at variable rates of interest, including
borrowings under the Senior Credit Facility (as hereinafter defined), which will
expose the Company to the risk of increased interest rates; (iv) indebtedness
under the Senior Credit Facility is secured and will mature prior to the
maturity of the Notes; (v) the Company may be substantially more leveraged than
certain of its competitors, which may place the Company at a competitive
disadvantage; and (vi) the Company's substantial degree of leverage may limit
its flexibility to adjust to changing market conditions, reduce its ability to
withstand competitive pressures and make it more vulnerable to a downturn in
general economic conditions or its business. See "Description of the Senior
Credit Facility" and "Description of the Notes."
ABILITY TO SERVICE DEBT; REFINANCING OF INDEBTEDNESS
The Company's ability to satisfy its interest payment obligations under its
indebtedness will depend largely on its future performance, which, in turn, is
subject to prevailing economic conditions and to financial, business and other
factors beyond its control. In addition, any amounts owing under the Senior
Credit Facility will become due before any principal payments on the Notes are
scheduled to become due and such amounts may need to be refinanced. Furthermore,
the Company may not be able to repay the principal amount of the Notes at
maturity and accordingly will need to refinance the Notes, or repay the Notes
with the proceeds of an equity offering, at or prior to their maturity. There
can be no assurance that the Company will be able to generate sufficient cash
flow to service its interest payment obligations under its indebtedness or that
cash flows, future borrowings or equity financing will be available for the
payment or refinancing of the Company's indebtedness. To the extent that the
Company is not successful in repaying or negotiating renewals of its borrowings
or in arranging new financing, it may have to sell significant assets, which
would have a material adverse effect on the Company's business and results of
operations. Among the factors that will affect the Company's ability to effect
an offering of its capital stock or refinance the Notes are financial market
conditions and the value and performance of the Company at the time of such
offering or refinancing. There can be no assurance that any such offering or
refinancing can be successfully completed. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Description of the Senior Credit Facility."
15
<PAGE>
FLUCTUATIONS IN RAW MATERIALS COST AND SUPPLY
The Company purchases aluminum, vinyl, glass and other raw materials from
various suppliers. While all such materials are available from numerous
independent suppliers, commodity raw materials are subject to fluctuations in
price and there can be no assurance that severe shortages of such materials will
not occur in the future, which could increase the cost of or delay the shipment
of the Company's products and have a material adverse effect on the Company's
operating results. Because such materials in the aggregate constitute
significant components of the Company's cost of goods sold, fluctuations in
price could have a material adverse effect on the Company's results of
operations. There have been historical periods of rapid and significant
movements in the price of aluminum, both upward and downward. Historically, the
Company has been successful in passing on these increases to its customers after
a period of 60 to 90 days. However, there can be no assurance that the Company
will continue to be able to do so in the future. See "Business--Raw Materials."
ENVIRONMENTAL MATTERS
The past and present business operations of the Company and the past and
present ownership and operation of real property by the Company are subject to
extensive and changing federal, state, local and foreign environmental laws and
regulations pertaining to the discharge of certain 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. As such, the nature of the Company's operations and previous
operations by others at real property currently or formerly owned or operated by
the Company expose the Company to the risk of claims under such environmental
laws and regulations, and there can be no assurance that material costs or
liabilities will not be incurred in connection with such claims. Based on its
experience to date, the Company does not expect such claims, or the costs of
compliance with environmental laws and regulations, to have a material impact on
its capital expenditures, earnings or competitive position. No assurance can be
given, however, that the discovery of presently unknown environmental
conditions, changes in environmental laws and regulations or their
interpretation, or other unanticipated events will not give rise to expenditures
or liabilities that may have such an effect. See "Business--Government
Regulation and Environmental Matters" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
GEOGRAPHIC CONCENTRATION
The Company currently sells its products principally in the 15 states
constituting its Primary Market. In fiscal year 1997, 84.8% of the Company's
window net sales were derived from customers in this market. As a result of this
geographic concentration, unfavorable changes in economic conditions (including,
but not limited to, household and job formation rates) affecting these states,
which are primarily within the southern half of the United States, could have a
materially adverse effect on the Company's business, financial condition or
results of operations. See "Business."
CYCLICALITY
Demand for the Company's products is based primarily on the level of new
home construction activity. Factors that impact the housing sector of the
economy, especially those that impact the level of housing start activity in the
Company's Primary Market, may have a direct impact on the financial performance
of the Company. The overall strength of the United States economy, interest
rates, rate of job formation, consumer confidence and availability of consumer
credit, as well as demographic factors such as the rate of household formation
and population shifts, have a direct bearing on the Company. Housing start
declines would adversely impact the Company's business, financial condition and
results of operations and no assurance can be given that any such adverse effect
would not be material.
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DEPENDENCE ON KEY PERSONNEL
The success of the Company's business is materially dependent upon the
continued services of its President and Chief Executive Officer, David G. Fiore,
and other key officers and employees. The loss of Mr. Fiore or such other key
personnel due to death, disability or termination of employment could have a
material adverse effect on the results of operations or financial condition, or
both, of the Company.
CONTROLLING STOCKHOLDERS
Approximately 96% of the common stock of Holdings is owned by Reliant
Partners and Reliant Partners II. As a result of this ownership, Reliant
Partners and Reliant Partners II are able to direct the election of the members
of the Board of Directors of Holdings and therefore direct the management and
policies of the Company. The interests of Reliant Partners and Reliant Partners
II may differ from the interests of holders of the Notes. See "Ownership of
Capital Stock" and "Certain Transactions."
COMPETITION
The Company competes with other national and regional manufacturers. Certain
of the Company's principal competitors are less highly leveraged than the
Company and have greater financial resources than the Company. Accordingly, such
competitors may be better able to withstand changes in conditions within the
window industry and have significantly greater operating and financial
flexibility than the Company. As a result of the competitive environment in the
markets in which the Company operates, the Company faces (and will continue to
face) pressure on sales prices of its products from competitors, as well as from
large customers. As a result of such pricing pressures, the Company may in the
future experience reductions in the profit margins on its sales, or may be
unable to pass future raw material price or labor cost increases on to its
customers (which would also reduce profit margins). There can be no assurance
that the Company will not encounter increased competition in the future, which
could have a material adverse effect on the Company's business. See
"Business--Competition."
SUBORDINATION OF THE NOTES
The Notes are unsecured, senior subordinated obligations of the Company and
are subordinated in right of payment to all existing and future Senior
Indebtedness of the Company, including all indebtedness under the Senior Credit
Facility. As of March 28, 1997, on a pro forma basis after giving effect to the
Transaction and the Initial Offering and the application of the net proceeds
therefrom, the Company would have had no Senior Indebtedness outstanding. The
Company can incur Senior Indebtedness under the terms of the Indenture, subject
to certain limitations. By reason of such subordination, in the event of a
bankruptcy, insolvency, liquidation or other reorganization of the Company, the
assets of the Company will be available to pay obligations on the Notes only
after all Senior Indebtedness has been paid in full, and there may not be
sufficient assets remaining to pay amounts due on all or any of the Notes then
outstanding. In addition, under certain circumstances, no payments may be made
with respect to the Notes if a payment default exists with respect to certain
Senior Indebtedness until such payment default shall have been cured or waived.
Upon the occurence of a covenant event of default with respect to certain Senior
Indebtedness permitting the immediate acceleration thereof and receipt by the
Trustee of written notice of such occurrence, no payment may be made with
respect to the Notes for a maximum of 179 days. See "Description of the
Notes--Subordination of the Notes."
The indebtedness evidenced by the Guaranties of the Notes by the Guarantors
is subordinated in right of payment to the prior payment in full of all existing
and future Guarantor Senior Indebtedness of each such Guarantor, including all
amounts owing pursuant to their guarantees of the Senior Credit Facility, to
substantially the same extent as the Notes are subordinated to all existing and
future Senior Indebtedness of the Company. See "Description of the
Notes--Subordination of the Notes" and
"--Guaranties of the Notes."
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The Notes are not secured by any of the Company's or the Guarantors' assets.
Under the Senior Credit Facility, the obligations of the Company and the
Guarantors are secured by substantially all the assets of the Company and the
Guarantors. If the Company becomes insolvent or is liquidated, or if payment
under the Senior Credit Facility is accelerated, the lenders under the Senior
Credit Facility would be entitled to exercise the remedies available to a
secured lender under applicable law and pursuant to the terms of the Senior
Credit Facility. Accordingly, any claims of such lenders with respect to such
assets will be prior to any claim of the holders of the Notes with respect to
such assets. There can be no assurance that the Company's assets could be sold
quickly enough, or for sufficient amounts, to enable the company to meet its
obligations (including its obligations with respect to the Notes). See
"Description of the Senior Credit Facility."
As of March 28, 1997, on a pro forma basis after giving effect to the
Transaction and the Initial Offering and the application of the net proceeds
therefrom, certain Guarantors would have had outstanding $1.0 million of the
Company's total of $71.0 million of outstanding indebtedness. Of such $1.0
million of indebtedness, $260,000 is secured by the assets and inventory of the
Guarantor that operates the Company's manufacturing facility in Houston, Texas.
By reason of such security, if an event of default under the instrument
evidencing such indebtedness occurs or such indebtedness is accelerated, the
holder of such indebtedness would be entitled to exercise the remedies available
to a secured creditor. Accordingly, any claims of such holder with respect to
the assets of such Guarantor will be prior to any claim of the holders of the
Notes with respect to such assets. The Company anticipates closing its Houston
manufacturing facility and anticipates repaying such $260,000 of indebtedness
prior to any such closing.
FRAUDULENT CONVEYANCE CONSIDERATIONS
The incurrence by the Company of indebtedness such as the Notes to finance
the Transaction and the incurrence by the Guarantors of indebtedness such as the
Guaranties may be subject to review under Federal bankruptcy law or relevant
state fraudulent conveyance laws if a bankruptcy case is commenced with respect
to the Company or any Guarantor, or a lawsuit is commenced by or on behalf of
unpaid creditors of the Company or any such Guarantor, as the case may be. Under
these laws, if a court were to find that, after giving effect to the sale of the
Notes and the application of the net proceeds therefrom and the issuance of the
Guaranties by the Guarantors, either (a) the Company or any such Guarantor, as
the case may be, incurred such indebtedness with the intent of hindering,
delaying or defrauding creditors or (b) the Company or such Guarantor, as the
case may be, received less than reasonably equivalent value or consideration for
incurring such indebtedness and (i) was insolvent or was rendered insolvent by
reason of such transactions, (ii) was engaged in a business or transaction for
which the assets remaining with the Company or such Guarantor, as the case may
be, constituted unreasonably small capital, or (iii) intended to incur, or
believed that it would incur, debts beyond its ability to pay as they matured,
such court might subordinate such indebtedness to presently existing and future
indebtedness of the Company or such Guarantor, as the case may be, or void the
issuance of such indebtedness and direct the repayment of any amounts paid
thereunder to the creditors of the Company or such Guarantor, as the case may
be, or take other action detrimental to the holders of such indebtedness.
The measure of insolvency for purposes of determining whether a transfer is
avoidable as a fraudulent transfer varies depending upon the law of the
jurisdiction that is being applied. Generally, however, a debtor would be
considered insolvent if the sum of all its debts, including contingent
liabilities, was greater than the value of all its assets at a fair valuation,
or if the present fair saleable value of the debtor's assets was less than the
amount required to repay its probable liability on its debts, including
contingent liabilities, as they become absolute and mature.
To the extent that proceeds from the Initial Offering were used to make the
payments required to effect the Transaction, a court might find that the Company
did not receive fair consideration or reasonably equivalent value for the
incurrence of the indebtedness represented thereby. In addition, if a court
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were to find that any of the components of the Transaction constituted a
fraudulent transfer, to the extent that proceeds from the Initial Offering were
used to finance or refinance such components, a court might find that the
Company did not receive fair consideration or reasonably equivalent value for
the incurrence of the indebtedness represented by the Notes.
To the extent that the Guaranty of any Guarantor is avoided as a fraudulent
conveyance or found unenforceable for any other reason, holders of the Notes
would cease to have any claim in respect of such Guarantor. In such event, the
claims of the holders of the Notes against such Guarantor would be subject to
the prior payment of all liabilities and preferred stock claims, if any, of such
Guarantor. There can be no assurance that, after providing for all prior claims
and preferred stock interests, if any, there would be sufficient assets to
satisfy the claims of the holders of the Notes relating to any voided portion of
the Guaranty of such Guarantor.
The Company and the Guarantors believe that it and they, respectively,
received equivalent value at the time the indebtedness under the Notes was
incurred. In addition, after giving effect to the consummation of the
Transaction and the Initial Offering and the application of the proceeds
therefrom, the Company does not: (i) believe that it or any Guarantor was
insolvent or rendered insolvent; (ii) believe that it or any Guarantor was
engaged in a business or transaction for which its remaining assets constituted
unreasonably small capital; or (iii) intend for it or any Guarantor to incur, or
believe that it or any Guarantor will incur, debts beyond its ability to pay as
they mature. These beliefs are based on the Company's analysis of internal cash
flow projections and estimated values of assets and liabilities of the Company
and the Guarantors at the time of the Transaction and the Initial Offering.
There can be no assurance, however, that a court passing on these issues would
make the same determination.
RESTRICTIVE COVENANTS IN SENIOR CREDIT FACILITY
The Senior Credit Facility contains a number of significant covenants that,
among other things, restrict the ability of the Company and its subsidiaries to
dispose of assets, incur additional indebtedness, pay dividends and make other
payments in respect of its capital stock, make investments, engage in mergers or
consolidations, engage in certain transactions with subsidiaries and affiliates
and otherwise restrict corporate activities. In addition, under the Senior
Credit Facility, the Company is required to comply with specified financial
ratios and tests, including minimum interest coverage ratios and maximum
leverage ratios. See "Description of the Senior Credit Facility."
The Company is currently in compliance with the covenants and restrictions
contained in the Senior Credit Facility and in the Indenture. However, its
ability to continue to comply may be affected by events beyond its control,
including prevailing economic, financial and industry conditions. The breach of
any of such covenants or restrictions could result in an event of default under
the Senior Credit Facility, which would permit the senior lenders thereunder to
declare all amounts borrowed thereunder to be due and payable, together with
accrued and unpaid interest, and the commitments of the senior lenders to make
further extensions of credit under the Senior Credit Facility would be
terminated. In such event, all other indebtedness of the Company represented by
instruments that contain cross-acceleration or cross-default provisions
(including the Notes) may be declared immediately due and payable. However, the
subordination provisions of the Indenture would likely restrict payments to the
holders of the Notes until the Senior Credit Facility and all other Senior
Indebtedness is repaid in full. If the Company were unable to repay its
indebtedness to its lenders under the Senior Credit Facility, such lenders could
proceed against the collateral securing such indebtedness as described under
"Description of the Senior Credit Facility." There can be no assurance that the
Company will have sufficient cash to repay the principal and accrued interest of
the Notes in the event of any such acceleration.
LIMITATION ON CHANGE OF CONTROL
Upon a Change of Control, unless the Company shall have redeemed the Notes
if the Change of Control occurred on or prior to May 1, 2001, the Company will
be required to make an offer to purchase all the outstanding Notes at a price
equal to 101% of the principal amount thereof, plus accrued and
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unpaid interest thereon, if any, to the date of purchase. A Change of Control
constitutes an event of default under the Senior Credit Facility, permitting the
lenders thereunder to accelerate the repayment of indebtedness thereunder, in
which case the subordination provisions of the Indenture would require the
repayment in full of the Senior Credit Facility and all other Senior
Indebtedness before the Company could distribute cash to purchase the Notes. The
inability to repay such indebtedness, if accelerated, and to purchase all the
tendered Notes constitutes an event of default under the Indenture. Finally,
there can be no assurance that the Company will have funds available to
repurchase the Notes upon the occurrence of a Change of Control. See
"Description of the Senior Credit Facility" and "Description of the Notes--Offer
to Purchase upon Change of Control."
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFERABILITY
The Exchange Notes are new securities for which there is no market. Although
the Initial Purchasers have informed the Company that they currently intend to
make a market in the Exchange Notes, the Initial Purchasers are not obligated to
do so and any such market making may be discontinued at any time without notice.
In addition, such market making activity may be limited during the pendency of
the Exchange Offer. Accordingly, there can be no assurance as to the development
or liquidity of any market for the Exchange Notes. If a trading market does not
develop or is not maintained, holders of the Exchange Notes may experience
difficulty in reselling the Exchange Notes or may be unable to sell them at all.
If a market for the Exchange Notes develops, any such market may be discontinued
at any time. The Company does not intend to apply for listing of the Exchange
Notes on any securities exchange or for quotation of the Exchange Notes through
the National Association of Securities Dealers Automated Quotation System.
The Exchange Notes generally will be permitted to be resold or otherwise
transferred by each holder without the requirement of further registration. The
Exchange Offer will not be conditioned upon any minimum or maximum aggregate
principal amount of Senior Subordinated Notes being tendered for exchange. In
the case of non-exchanging holders of Senior Subordinated Notes, no assurance
can be given as to the liquidity of the trading market for the Senior
Subordinated Notes following the Exchange Offer. See "Plan of Distribution."
The liquidity of, and trading market for, the Senior Subordinated Notes or
the Exchange Notes also may be adversely affected by general declines in the
market or by declines in the market for similar securities. Such declines may
adversely affect such liquidity and trading markets independent of the financial
performance of, and prospects for, the Company.
CONSEQUENCES OF EXCHANGE AND FAILURE TO EXCHANGE
Holders of Senior Subordinated Notes who do not exchange their Senior
Subordinated Notes for Exchange Notes pursuant to the Exchange Offer will
continue to be subject to the restrictions on transfer of such Senior
Subordinated Notes as set forth in the legend thereon as a consequence of the
issuance of the Senior Subordinated Notes pursuant to exemption from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Senior Subordinated Notes
may not be offered or sold unless registered under the Securities Act and
applicable state securities laws or pursuant to an exemption therefrom. Except
under certain limited circumstances, the Company does not intend to register the
Senior Subordinated Notes under the Securities Act. In addition, any holder of
Senior Subordinated Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. To the extent Senior Subordinated Notes
are tendered and accepted in the Exchange Offer, the trading market, if any, for
the Senior Subordinated Notes not tendered could be adversely affected. See "The
Exchange Offer" and "Senior Subordinated Notes Registration Rights."
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USE OF PROCEEDS
There will be no net proceeds to the Company from the exchange pursuant to
the Exchange Offer. The Company used the gross proceeds from the issuance of the
Senior Subordinated Notes in the Initial Offering to (i) repay all outstanding
indebtedness under the Company's then existing credit facility (the "Old Credit
Facility") in the amount of $38.7 million and to repay certain other
indebtedness of the Company in the amount of $5.6 million; (ii) pay a dividend
to Holdings in the amount of $16.1 million, which dividend was used by Holdings,
(x) for the Preferred Redemption in the amount of $6.0 million and (y) to fund
$10.1 million of the $30.1 million in cash paid to the Selling Stockholders in
connection with the Acquisition; (iii) provide $4.2 million to the Company for
working capital and general corporate purposes; and (iv) pay estimated fees and
expenses relating to the Transaction and the Initial Offering of approximately
$5.4 million.
The Old Credit Facility (which has been replaced by the Senior Credit
Facility) would have matured on September 8, 2001 and, at April 15, 1997, the
average interest rate on borrowings under the Old Credit Facility was
approximately 10.25% per annum. The $5.6 million of other indebtedness repaid
consisted of three notes, each due March 15, 2002, in principal amounts of $1.0
million, $1.0 million and $2.6 million with interest rates of 11.0%, 11.0% and
12.9%, respectively, and one note due April 1, 2001 in principal amount of $1.0
million with an interest rate of 7.0%.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The sole purpose of the Exchange Offer is to fulfill the obligations of the
Company with respect to the Registration Rights Agreement.
The Senior Subordinated Notes were originally issued and sold on May 9, 1997
(the "Issue Date"). Such sales were not registered under the Securities Act in
reliance upon the exemption provided by Section 4(2) of the Securities Act and
Rule 144A under the Securities Act. In connection with the sale of the Senior
Subordinated Notes, the Company agreed to file with the Commission a
registration statement relating to an exchange offer (the "Exchange Offer
Registration Statement") pursuant to which Exchange Notes covered by such
registration statement and containing the same terms as the Senior Subordinated
Notes, except as set forth in this Prospectus, would be offered in exchange for
Senior Subordinated Notes tendered at the option of the holders thereof. Each
broker-dealer that receives Exchange Notes for its own account in exchange for
Senior Subordinated Notes, where such Senior Subordinated 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 in connection
with any resale of such Exchange Notes. See "Senior Subordinated Notes
Registration Rights."
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING SENIOR SUBORDINATED NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Senior Subordinated Notes
that are properly tendered on or prior to the Expiration Date and not withdrawn
as permitted below. As used herein, the term "Expiration Date" means 5:00 p.m.,
New York City time, on , 1997; provided, however, that if the
Company, in its sole discretion, has extended the period of time for which the
Exchange Offer is open, the term "Expiration Date" means the latest time and
date to which the Exchange Offer has been extended.
As of the date of this Prospectus, $70 million aggregate principal amount of
Senior Subordinated Notes is outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about the date of this
Prospectus, to all Holders of Senior Subordinated Notes known to the Company.
The Company's obligation to accept Senior Subordinated Notes for exchange
pursuant to the Exchange Offer is subject to certain conditions as set forth
under "--Certain Conditions to the Exchange Offer" below.
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The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Senior Subordinated Notes, by
giving oral or written notice of such extension to the Holders thereof as
described below. During any such extension, all Senior Subordinated Notes
previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by the Company. Any Senior Subordinated Notes not accepted
for exchange for any reason will be returned without expense to the tendering
Holder thereof as promptly as practicable after the expiration or termination of
the Exchange Offer.
Senior Subordinated Notes tendered in the Exchange Offer must be in
denominations of principal amount of $1,000 or any integral multiple thereof.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Senior Subordinated Notes not
theretofore accepted for exchange, upon the occurrence of any of the conditions
of the Exchange Offer specified below under "--Certain Conditions to the
Exchange Offer." The Company will give oral or written notice of any extension,
amendment, non-acceptance or termination to the Holders of the Senior
Subordinated Notes as promptly as practicable, such notice in the case of any
extension to be issued by means of a press release or other public announcement
no later than 9:00 a.m., New York City time, on the next business day following
the previously scheduled Expiration Date.
HOW TO TENDER
The tender to the Company of Senior Subordinated Notes by a Holder thereof
as set forth below and the acceptance thereof by the Company will constitute a
binding agreement between the tendering Holder and the Company upon the terms
and subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal. Except as set forth below, a Holder who
wishes to tender Senior Subordinated Notes for exchange pursuant to the Exchange
Offer must transmit a properly completed and duly executed Letter of
Transmittal, including all other documents required by such Letter of
Transmittal, to Bank One, N.A. (the "Exchange Agent") at the address set forth
below under "Exchange Agent" on or prior to the Expiration Date. In addition,
either (i) certificates for such Senior Subordinated Notes must be received by
the Exchange Agent along with the Letter of Transmittal, or (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Senior Subordinated Notes, if such procedure is available, into the Exchange
Agent's account at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described below,
must be received by the Exchange Agent prior to the Expiration Date, or (iii)
the Holder must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SENIOR SUBORDINATED NOTES, LETTERS OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR SENIOR
SUBORDINATED NOTES SHOULD BE SENT TO THE COMPANY.
Any beneficial owner whose Senior Subordinated 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. If such
beneficial owner wishes to tender on his own behalf, such beneficial owner must,
prior to completing and executing the Letter of Transmittal and delivering
Senior Subordinated Notes, either make appropriate arrangements to register
ownership of the Senior Subordinated Notes in such beneficial owner's name or
obtain a properly completed bond power from the registered Holder. The transfer
of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Senior Subordinated Notes surrendered for
exchange are tendered (i) by a
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registered Holder of the Senior Subordinated Notes who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery Instructions" on
the Letter of Transmittal or (ii) for the account of an Eligible Institution (as
defined below). In the event that signatures on a Letter of Transmittal or a
notice of withdrawal, as the case may be, are required to be guaranteed, such
guarantees must be by a member of the Securities Agents Medallion Program, The
New York Stock Exchanges Medallion Signature Program or The Stock Exchanges
Medallion Program (collectively, "Eligible Institutions"). If Senior
Subordinated Notes are registered in the name of a person other than a signer of
the Letter of Transmittal, the Senior Subordinated Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its sole discretion, duly executed by the registered Holder with the
signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Senior Subordinated Notes tendered for exchange will
be determined by the Company in its sole discretion, which determination shall
be final and binding. The Company reserves the absolute right to reject any and
all tenders of any particular Senior Subordinated Notes not properly tendered or
to not accept any particular Senior Subordinated Notes which acceptance might,
in the judgment of the Company or its counsel, be unlawful. The Company also
reserves the right to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Senior Subordinated Notes either before or
after the Expiration Date (including the right to waive the ineligibility of any
Holder who seeks to tender Senior Subordinated Notes in the Exchange Offer). The
interpretation of the terms and conditions of the Exchange Offer as to any
particular Senior Subordinated Notes either before or after the Expiration Date
(including the Letter of Transmittal and the instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Senior Subordinated Notes for
exchange must be cured within such reasonable period of time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Senior Subordinated Notes for exchange, nor shall any
of them incur any liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than the
registered Holder or Holders of Senior Subordinated Notes, such Senior
Subordinated Notes must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
Holder or Holders appear on the Senior Subordinated Notes.
If the Letter of Transmittal or any Senior Subordinated Notes or powers of
attorney are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, 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, proper evidence satisfactory to the Company of
their authority to so act must be submitted.
By tendering, each Holder will represent to the Company that, among other
things, the Exchange Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such
Exchange Notes, whether or not such person is the Holder, and that neither the
Holder nor such other person has any arrangement or understanding with any
person to participate in the distribution of the Exchange Notes. In the case of
a Holder that is not a broker-dealer, each such Holder, by tendering, will also
represent to the Company that such Holder is not engaged in and does not intend
to engage in, a distribution of the Exchange Notes. If any Holder or any such
other person is an "affiliate," as defined in Rule 405 under the Securities Act,
of the Company, or is engaged in or intends to engage in or has an arrangement
or understanding with any person to participate in a distribution of such
Exchange Notes to be acquired pursuant to the Exchange Offer, such Holder or any
such other person (i) cannot rely on the applicable interpretations of the Staff
of the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. Each broker-dealer that receives Exchange Notes for its own
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account in exchange for Senior Subordinated Notes, where such Senior
Subordinated 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 Exchange Notes. See "Plan of Distribution."
The Letter of Transmittal states that by so acknowledging and by delivering such
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
ACCEPTANCE OF SENIOR SUBORDINATED NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all conditions to the Exchange Offer, the
Company will accept, promptly after the Expiration Date, all Senior Subordinated
Notes properly tendered and will issue the Exchange Notes promptly after
acceptance of the Senior Subordinated Notes. See "--Certain Conditions to the
Exchange Offer" below. For purposes of the Exchange Offer, the Company shall be
deemed to have accepted properly tendered Senior Subordinated Notes for exchange
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent, with written confirmation of any oral notice to be given
promptly thereafter.
For each Senior Subordinated Note accepted for exchange, the Holder will
receive an Exchange Note having a principal amount equal to that of the
surrendered Senior Subordinated Note. The Exchange Notes will bear interest from
the most recent date to which interest has been paid on the Senior Subordinated
Notes or, if no interest has been paid on the Senior Subordinated Notes, from
May 9, 1997. Accordingly, registered Holders of Exchange Notes on the relevant
record date for the first interest payment date following the consummation of
the Exchange Offer will receive interest accruing from the most recent date to
which interest has been paid or, if no interest has been paid, from May 9, 1997.
Senior Subordinated Notes accepted for exchange will cease to accrue interest
from and after the date of consummation of the Exchange Offer. Holders of Senior
Subordinated Notes whose Senior Subordinated Notes are accepted for exchange
will not receive any payment in respect of accrued interest on such Senior
Subordinated Notes otherwise payable on any interest payment date the record
date for which occurs on or after the date of consummation of the Exchange
Offer.
In all cases, issuance of Exchange Notes for Senior Subordinated Notes that
are accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Senior
Subordinated Notes (or a timely Book-Entry Confirmation of such Senior
Subordinated Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), a properly completed and duly executed Letter of Transmittal and all
other required documents. If any tendered Senior Subordinated Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Senior Subordinated Notes are submitted for a greater principal
amount than the Holder desires to exchange, such unaccepted or non-exchanged
Senior Subordinated Notes will be returned without expense to the tendering
Holder (or, in the case of Senior Subordinated Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry procedures described below, such non-exchanged Senior
Subordinated Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Senior Subordinated Notes at the Book-Entry Transfer Facility for
purposes of the Exchange Offer within two business days after the date of this
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of Senior
Subordinated Notes by causing the Book-Entry Transfer Facility to transfer such
Senior Subordinated Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures for transfer. However, although delivery of Senior Subordinated Notes
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal or facsimile
24
<PAGE>
thereof, with any required signature guarantees and any other required
documents, must, in any case, be transmitted to and received by the Exchange
Agent at the address set forth below under
"--Exchange Agent" on or prior to the Expiration Date or the guaranteed delivery
procedures described
below must have been complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered Holder of the Senior Subordinated Notes desires to tender
such Senior Subordinated Notes and the Senior Subordinated Notes are not
immediately available, or time will not permit such Holder's Senior Subordinated
Notes or other required documents to reach the Exchange Agent before the
Expiration Date, or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if (i) the tender is made through an
Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent
received from such Eligible Institution a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by facsimile
transmission, mail or hand delivery), setting forth the name and address of the
Holder of Senior Subordinated Notes and the amount of Senior Subordinated Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the Expiration
Date, the certificates for all physically tendered Senior Subordinated Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be, and
any other documents required by the Letter of Transmittal will be deposited by
the Eligible Institution with the Exchange Agent, and (iii) the certificates for
all physically tendered Senior Subordinated Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
three NYSE trading days after the Expiration Date.
WITHDRAWAL RIGHTS
Tenders of Senior Subordinated Notes may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address or, in the case of Eligible
Institutions, at the facsimile number, set forth below under "--Exchange Agent"
prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice
of withdrawal must (i) specify the name of the person having tendered the Senior
Subordinated Notes to be withdrawn (the "Depositor"), (ii) identify the Senior
Subordinated Notes to be withdrawn (including the certificate number or numbers
and principal amount of such Senior Subordinated Notes), (iii) contain a
statement that such person is withdrawing his election to have such Senior
Subordinated Notes exchanged, (iv) be signed by the person in the same manner as
the original signature on the Letter of Transmittal by which such Senior
Subordinated Notes were tendered (including any required signature guarantees)
or be accompanied by documents of transfer to have the Trustee with respect to
the Senior Subordinated Notes register the transfer of such Senior Subordinated
Notes in the name of the person withdrawing the tender and (v) specify the name
in which such Senior Subordinated Notes are registered, if different from that
of the Depositor. If Senior Subordinated Notes have been tendered pursuant to
the procedure for book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Senior Subordinated Notes and
otherwise comply with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Senior Subordinated Notes so withdrawn will be deemed not to
have been validly tendered for exchange for purposes of the Exchange Offer and
no Exchange Notes will be issued with respect thereto unless the Senior
Subordinated Notes so withdrawn are validly re-tendered. Any Senior Subordinated
Notes that have been tendered for exchange but that are not exchanged for any
reason will be returned to the tendering Holder without cost to such Holder (or,
in the case of Senior Subordinated Notes tendered by book-entry
25
<PAGE>
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described above, such Senior
Subordinated Notes will be credited to an account maintained with the Book-Entry
Transfer Facility for the Senior Subordinated Notes) as soon as practicable
after withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Senior Subordinated Notes may be re-tendered by following the
procedures described under "--How to Tender" above at any time on or prior to
5:00 p.m., New York City time, on the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue Exchange Notes in exchange
for, any Senior Subordinated Notes and may terminate or amend the Exchange
Offer, if at any time before the acceptance of such Senior Subordinated Notes
for exchange or the exchange of the Exchange Notes for such Senior Subordinated
Notes, any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been issued
by, any court or governmental agency or other governmental regulatory or
administrative agency or commission, (i) seeking to restrain or prohibit the
making or consummation of the Exchange Offer or any other transaction
contemplated by the Exchange Offer, or assessing or seeking any damages as a
result thereof, or (ii) resulting in a material delay in the ability of the
Company to accept for exchange or exchange some or all of the Senior
Subordinated Notes pursuant to the Exchange Offer; or any statute, rule,
regulation, order or injunction shall be sought, proposed, introduced,
enacted, promulgated or deemed applicable to the Exchange Offer or any of
the transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have been
taken, proposed or threatened, by any government, governmental authority,
agency or court, domestic or foreign, that in the reasonable judgment of the
Company might directly or indirectly result in any of the consequences
referred to in clauses (i) or (ii) above or, in the reasonable judgment of
the Company, might result in the holders of Exchange Notes having
obligations with respect to resales and transfers of Exchange Notes that are
greater than those described in the interpretation of the Commission
referred to on the cover page of this Prospectus, or would otherwise make it
inadvisable to proceed with the Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by a governmental agency or authority that may adversely affect the ability
of the Company to complete the transactions contemplated by the Exchange
Offer, (iii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation by any
governmental agency or authority that adversely affects the extension of
credit or (iv) a commencement of a war, armed hostilities or other similar
international calamity directly or indirectly involving the United States,
or, in the case of any of the foregoing existing at the time of the
commencement of the Exchange Offer, a material acceleration or worsening
thereof; or
(c) any change (or any development involving a prospective change) shall
have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company and its subsidiaries taken as a whole that, in the
reasonable judgment of the Company, is or may be adverse to the Company, or
the Company shall have become aware of facts that, in the reasonable
judgment of the Company, have or may have adverse significance with respect
to the value of the Senior Subordinated Notes or the Exchange Notes; that in
the reasonable judgment of the Company in any case, and regardless of the
circumstances (including any action by the Company) giving rise to any such
condition, makes it inadvisable to proceed with the Exchange Offer and/or
with such acceptance for exchange or with such exchange.
26
<PAGE>
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The Company's failure at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right that may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Senior
Subordinated Notes tendered, and no Exchange Notes will be issued in exchange
for any such Senior Subordinated Notes, if at such time any stop order shall be
threatened or in effect with respect to the Registration Statement of which this
Prospectus constitutes a part or the qualification of the Indenture under the
Trust Indenture Act of 1939.
EXCHANGE AGENT
Bank One, N.A. has been appointed as the Exchange Agent for the Exchange
Offer. All executed Letters of Transmittal should be directed to the Exchange
Agent at the address set forth below. Questions and requests for assistance,
requests for additional copies of this Prospectus or of the Letter of
Transmittal and requests for Notices of Guaranteed Delivery should be directed
to the Exchange Agent addressed as follows:
BANK ONE, N.A., EXCHANGE AGENT
<TABLE>
<S> <C>
BY MAIL OR HAND DELIVERY: BY FACSIMILE TRANSMISSION:
Bank One, N.A. (FOR ELIGIBLE INSTITUTIONS ONLY):
c/o First Chicago Trust (212) 240-8988
Company of New York
Attention: Corporate Trust
Department CONFIRM BY TELEPHONE:
14 Wall Street (212) 240-8862
8th Floor, Window 2
New York, New York 10005
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Company will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The estimated cash expenses to be
incurred in connection with the Exchange Offer will be paid by the Company and
are estimated in the aggregate to be $250,000.
TRANSFER TAXES
Holders who tender their Senior Subordinated Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith, except that Holders
who instruct the Company to register Exchange Notes in the name of, or request
that Senior Subordinated Notes not tendered or not accepted in the Exchange
Offer be returned to, a person other than the registered tendering Holder will
be responsible for the payment of any applicable transfer tax.
CONSEQUENCES OF EXCHANGING SENIOR SUBORDINATED NOTES
Holders of Senior Subordinated Notes who do not exchange their Senior
Subordinated Notes for Exchange Notes pursuant to the Exchange Offer will
continue to be subject to the provisions in the
27
<PAGE>
Indenture regarding transfer and exchange of the Senior Subordinated Notes and
the restrictions on transfer of such Senior Subordinated Notes as set forth in
the legend thereon as a consequence of the issuance of the Senior Subordinated
Notes pursuant to exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. In general, the Senior Subordinated Notes may not be offered or sold
unless registered under, pursuant to an exemption from or in a transaction not
subject to, the Securities Act and applicable state securities laws. The Company
does not currently anticipate that it will register Senior Subordinated Notes
under the Securities Act. Based on interpretations by the Staff of the
Commission, as set forth in no-action letters issued to third parties, the
Company believes that Exchange Notes issued pursuant to the Exchange Offer in
exchange for Senior Subordinated Notes may be offered for resale, resold or
otherwise transferred by Holders thereof (other than any such Holder that 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 were acquired in the
ordinary course of such Holders' business and such Holders have no arrangement
or understanding with any person to participate in the distribution of such
Exchange Notes. However, the Staff of the Commission has not rendered a
no-action letter with respect to the Exchange Offer, and there can be no
assurance that the Staff would make a similar determination for the Exchange
Offer as in such other circumstances. Each Holder, other than a broker-dealer,
must acknowledge that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes and has no arrangement or understanding to
participate in a distribution of Exchange Notes. If any Holder is an affiliate
of the Company, is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the Exchange Notes to be
acquired pursuant to the Exchange Offer, such Holder (i) cannot rely on the
applicable interpretations of the staff of the Commission and (ii) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Senior Subordinated Notes
must acknowledge that such Senior Subordinated Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities and that it will deliver a prospectus in connection with any resale
of such Exchange Notes. See "Plan of Distribution."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
consequences associated with the exchange of Senior Subordinated Notes for
Exchange Notes and the ownership and disposition of the Exchange Notes by
holders who acquired the Exchange Notes pursuant to the Exchange Offer. The
summary is based upon current laws, regulations, rulings and judicial decisions,
all of which are subject to change. The discussion below does not address all
aspects of United States federal income taxation that may be relevant to
particular holders in the context of their specific investment circumstances or
certain types of holders subject to special treatment under such laws (for
example, financial institutions, banks, tax-exempt organizations and insurance
companies). In addition, the discussion does not address any aspect of state,
local or foreign taxation and assumes that a holder of the Exchange Notes (i)
will hold them as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code"), and (ii) will not own, directly or indirectly, 10% or more
of the total combined voting power of all classes of stock of the Company
entitled to vote.
For purposes of the discussion, a "United States holder" is an individual
who is a citizen or resident of the United States, a corporation, partnership or
other entity created under the laws of the United States or any political
subdivision thereof, or an estate or trust that is subject to United States
federal income taxation without regard to the source of income and a "Non-United
States holder" is any holder who is not a United States holder.
PROSPECTIVE PURCHASERS OF THE EXCHANGE NOTES ARE URGED TO CONSULT THEIR TAX
ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
28
<PAGE>
OF ACQUIRING, OWNING AND DISPOSING OF THE EXCHANGE NOTES AS WELL AS THE
APPLICATION OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
EXCHANGE OFFER. The exchange of Senior Subordinated Notes for Exchange
Notes pursuant to the Exchange Offer should not be treated as an exchange or
other taxable event for U.S. federal income tax purposes because under Treasury
regulations, the Exchange Notes should not be considered to differ materially in
kind or extent from the Senior Subordinated Notes. Rather, the Exchange Notes
received by a holder should be treated as a continuation of the Senior
Subordinated Notes in the hands of such holder. As a result, there should be no
U.S. federal income tax consequences to holders who exchange Senior Subordinated
Notes for Exchange Notes pursuant to the Exchange Offer and any such holder
should have the same tax basis and holding period in the Exchange Notes as it
had in the Senior Subordinated Notes immediately before the exchange.
UNITED STATES HOLDERS. Interest payable on the Exchange Notes will be
includible in the income of a United States holder in accordance with such
holder's regular method of accounting. If an Exchange Note is redeemed, sold or
otherwise disposed of, a United States holder generally will recognize gain or
loss equal to the difference between the amount realized on the sale or other
disposition of such Exchange Note (to the extent such amount does not represent
accrued but unpaid interest) and such holder's tax basis in the Exchange Note.
Subject to the market discount rules discussed below, such gain or loss will be
capital gain or loss, assuming that the holder has held the Exchange Note as a
capital asset, and will be long-term if the holder has held the Exchange Note
for more than one year at the time of disposition (including the holding period
of the Senior Subordinated Notes).
Under the market discount rules of the Code, a holder (other than a holder
who made the election described below) who purchased a Senior Subordinated Note
with "market discount" (generally defined as the amount by which the stated
redemption price at maturity exceeds the holder's purchase price) will be
required to treat any gain recognized on the redemption, sale or other
disposition of the Exchange Note received in the disposition as ordinary income
to the extent of the market discount that accrued during the holding period of
such Exchange Note (which would include the holding period of the Senior
Subordinated Note). A holder who has elected under applicable Code provisions to
include market discount in income annually as such discount accrues will not,
however, be required to treat any gain recognized as ordinary income under these
rules. Holders should consult their tax advisors as to the portion of any gain
that would be taxable as ordinary income under these provisions.
NON-UNITED STATES HOLDERS. An investment in the Exchange Notes by a
Non-United States holder generally will not give rise to any United States
federal income tax consequences if the interest received or any gain recognized
on the sale, redemption or other disposition of the Exchange Notes by such
holder is not treated as effectively connected with the conduct by such holder
of a trade or business in the United States, and in the case of gains derived by
an individual, such individual is not present in the United States for 183 days
or more and certain other requirements are met. Under current Treasury
regulations, in order to avoid back-up withholding of 31% on payments of
interest (i) a Non-United States holder of the Exchange Notes generally must
certify to the issuer or its agent, under penalties of perjury, that it is not a
United States person and complete and provide the payor with a U.S. Treasury
Form W-8 (or a suitable substitute form), which includes its name and address,
or (ii) a securities clearing organization, bank or other financial organization
that holds customers' securities in the ordinary course of business (a
"financial institution") and holds the Exchange Note, must certify under
penalties of perjury that such a Form W-8 (or suitable substitute form) has been
received from the beneficial owner of the Exchange Notes by it or by a financial
institution between it and the beneficial owner, and must furnish the payor with
a copy thereof.
On April 22, 1996, the Internal Revenue Service proposed regulations (the
"Proposed Regulations") that, if enacted in their current form, could affect the
procedures to be followed by a Non-United States holder in establishing such
holder's status as a Non-United States holder for purposes of the backup
29
<PAGE>
withholding rules discussed above. The Proposed Regulations, if adopted in their
current form, generally would be effective for payments made after December 31,
1997. Prospective investors should consult their tax advisors concerning the
potential adoption of the Proposed Regulations and the potential effect of such
regulations on an investment in the Exchange Notes.
CAPITALIZATION
The following table sets forth the pro forma capitalization of the Company
at March 28, 1997 after giving effect to the Transaction and the Initial
Offering and the application of the net proceeds therefrom as if they occurred
on such date. This table should be read in conjunction with "Use of Proceeds,"
"Selected Historical and Pro Forma Financial Information," "Unaudited Pro Forma
Financial Statements," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
of the Company and the notes thereto, all included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA AS OF
MARCH 28, 1997
----------------------
<S> <C>
(DOLLARS IN THOUSANDS)
Cash...................................................................................... $ 6,281
--------
--------
Long-term debt (including current portion):
Senior Credit Facility(a)............................................................... $ --
Senior Subordinated Notes due 2004...................................................... 70,000
Other debt and capital lease obligations(b)............................................. 1,035
--------
Total long-term debt.................................................................. 71,035
Shareholders' equity(c):
Common stock............................................................................ 1
Additional paid-in capital.............................................................. 27,009
Retained earnings....................................................................... --
--------
Total shareholders' equity.......................................................... 27,010
--------
Total capitalization................................................................ $ 98,045
--------
--------
</TABLE>
- ---------------------
(a) The Senior Credit Facility provides for borrowings of up to $25.0 million
subject to availability under a borrowing base. No revolving credit loans
were drawn at the closing of the Transaction. See "Description of the Senior
Credit Facility."
(b) Includes current portion of long-term debt of $464,000.
(c) Shareholders' equity reflects cash paid by the Purchasers of $20.0 million
and the issuance of the Seller Notes of $9.8 million in connection with the
Transaction, less certain costs of the Transaction of $2.8 million.
30
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following table presents selected historical and pro forma financial
information of the Company, as of the dates and for the periods indicated. The
historical financial information as of April 2, 1993, April 1, 1994, March 31,
1995, March 29, 1996 and March 28, 1997 and for each of the five years in the
period ended March 28, 1997 has been derived from the Company's financial
statements, which have been audited by Ernst & Young LLP. The unaudited pro
forma financial information for the year ended March 28, 1997 gives effect to
the Transaction, the Initial Offering and the application of the net proceeds
therefrom and the anticipated closure of the Company's Houston manufacturing
facility as if they had occurred on March 30, 1996. The unaudited pro forma
balance sheet information as of March 28, 1997 gives effect to the Transaction,
the Initial Offering and the application of the net proceeds therefrom and the
anticipated closure of the Company's Houston manufacturing facility as if they
had occurred on such date. The pro forma financial information does not purport
to represent what the Company's results of operations would have been if such
events had occurred at the dates indicated, nor does such information purport to
project the results of the Company for any future period. The selected financial
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements of the Company and the notes thereto included elsewhere in
this Offering Memorandum.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------------
APRIL 2, APRIL 1, MARCH 31, MARCH 29, MARCH 28,
1993 1994 1995 1996 1997
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net sales:
Aluminum window sales................................... $ 89,581 $ 96,348 $ 100,985 $ 130,299 $ 126,083
Vinyl window sales...................................... 3,509 7,758 15,259 22,938 29,055
Other sales............................................. 18,874 19,060 20,940 20,034 19,263
---------- ---------- ----------- ----------- -----------
Total net sales......................................... 111,964 123,166 137,184 173,271 174,401
Cost of products sold..................................... 88,432 96,964 106,760 133,337 131,474
---------- ---------- ----------- ----------- -----------
Gross profit............................................ 23,532 26,202 30,424 39,934 42,927
Selling, general and administrative....................... 18,903 20,723 23,620 31,498 32,724
---------- ---------- ----------- ----------- -----------
Income from operations.................................. 4,629 5,479 6,804 8,436 10,203
Interest expense, net..................................... 4,053 4,282 4,843 6,125 5,381
Other expenses (income)................................... 150 150 359 753 577
---------- ---------- ----------- ----------- -----------
Income (loss) before income taxes & extraordinary
items................................................. 426 1,047 1,602 1,558 4,245
Income tax expense........................................ 300 612 833 753 1,892
Extraordinary loss(a)..................................... -- -- 552 -- --
---------- ---------- ----------- ----------- -----------
Net income (loss)....................................... $ 126 $ 435 $ 217 $ 805 $ 2,353
---------- ---------- ----------- ----------- -----------
---------- ---------- ----------- ----------- -----------
OTHER FINANCIAL DATA:
EBITDA(b)................................................. $ 8,611 $ 9,555 $ 11,055 $ 12,681 $ 15,069
Adjusted EBITDA(c)........................................ 8,853 9,794 11,536 13,160 15,426
Depreciation and amortization............................. 3,982 4,076 4,251 4,245 4,866
Capital expenditures...................................... 1,854 2,043 4,628 5,631 3,516
Cash interest expense(d).................................. 3,626 3,794 4,261 5,467 4,725
Ratio of Adjusted EBITDA to cash interest expense.........
Ratio of earnings to fixed charges(e)..................... 1.1x 1.2x 1.3x 1.2x 1.6x
BALANCE SHEET DATA (AT PERIOD END):
Working capital........................................... $ 15,690 $ 15,481 $ 17,980 $ 14,340 $ 17,301
Total assets.............................................. 60,624 59,504 70,666 76,769 73,077
Net debt(f)............................................... 40,403 37,850 43,649 44,800 43,145
Shareholders' equity(g)................................... 1,962 1,960 1,740 1,953 3,913
<CAPTION>
PRO FORMA
MARCH 28,
1997
-----------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales:
Aluminum window sales................................... $ 112,165
Vinyl window sales...................................... 29,055
Other sales............................................. 19,263
-----------
Total net sales......................................... 160,483
Cost of products sold..................................... 117,513
-----------
Gross profit............................................ 42,970
Selling, general and administrative....................... 30,280
-----------
Income from operations.................................. 12,690
Interest expense, net..................................... 8,248
Other expenses (income)................................... --
-----------
Income (loss) before income taxes & extraordinary
items................................................. 4,442
Income tax expense........................................ 1,942
Extraordinary loss(a)..................................... --
-----------
Net income (loss)....................................... $ 2,500
-----------
-----------
OTHER FINANCIAL DATA:
EBITDA(b)................................................. $ 16,916
Adjusted EBITDA(c)........................................ 17,273
Depreciation and amortization............................. 4,226
Capital expenditures...................................... 3,516
Cash interest expense(d).................................. 7,865
Ratio of Adjusted EBITDA to cash interest expense......... 2.2x
Ratio of earnings to fixed charges(e)..................... 1.5x
BALANCE SHEET DATA (AT PERIOD END):
Working capital........................................... $ 27,346
Total assets.............................................. 119,288
Net debt(f)............................................... 64,754
Shareholders' equity(g)................................... 27,010
</TABLE>
See Notes to Selected Historical and Pro Forma Financial Information
31
<PAGE>
NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
(a) The Company recorded an extraordinary loss of $552,000 which is net of a tax
benefit of $297,000, related to the write-off of debt issuance costs and an
original issue discount in connection with its September 1994 debt
refinancing.
(b) The Company defines EBITDA as income from operations before depreciation and
amortization. The Company includes information concerning EBITDA because it
is used by certain investors as a measure of the Company's ability to
service debt. EBITDA should not be considered in isolation or as a
substitute for net income or cash flows from operating activities presented
in accordance with generally accepted accounting principles or as a measure
of a company's profitability or liquidity.
(c) The following items were included in the results of operations and have been
eliminated to calculate "Adjusted EBITDA:"
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------------
APRIL 2, APRIL 1, MARCH 31, MARCH 29, MARCH 28,
1993 1994 1995 1996 1997
----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Closed distribution facilities(i).................... $ 242 $ 239 $ 481 $ 416 $ --
Interruption of operations at joint venture(ii)...... -- -- -- 63 357
----- ----- ----- ----- -----
Total adjustments.................................. $ 242 $ 239 $ 481 $ 479 $ 357
----- ----- ----- ----- -----
----- ----- ----- ----- -----
<CAPTION>
PRO FORMA
MARCH 28,
1997
-------------
<S> <C>
Closed distribution facilities(i).................... $ --
Interruption of operations at joint venture(ii)...... 357
-----
Total adjustments.................................. $ 357
-----
-----
</TABLE>
(i) Represents EBITDA losses for six distribution facilities that the
Company no longer operates.
(ii) Represents the incremental costs of puchasing aluminum raw materials
from outside suppliers and the Company's lost earnings recorded under
the equity method of accounting during an interruption in operations
due to a fire at the Company's aluminum reprocessing joint venture.
The Company's aluminum joint venture has resumed operations at
production levels similar to those prior to the fire.
(d) Cash interest expense represents total interest expense less the
amortization of debt issuance costs.
(e) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent income before extraordinary loss plus fixed charges.
"Fixed charges" consist of interest on all indebtedness, amortization of
deferred financing costs, accretion of redeemable put warrants issued by
Holdings, and the portion of rent expense that management believes is
representative of the interest component of rent expense on operating leases
(approximately one-third of total rent expense).
(f) Net debt represents total debt less cash.
(g) In connection with the closing of the Transaction, the Company will record
an extraordinary charge of approximately $720,000 which is net of a tax
benefit of approximately $423,000, relating to the extinguishment of debt
with proceeds of the Initial Offering. In addition, the Company will record
a charge of approximately $2,004,000 which is net of a tax benefit of
approximately $1,177,000, relating to incentive stock units. The incentive
stock unit holders will receive approximately $2,227,000 in cash and
$954,000 in Seller Notes.
32
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements of the Company are
based on the Consolidated Financial Statements of the Company and the notes
thereto included elsewhere in this Offering Memorandum, as adjusted to give pro
forma effect to the Transaction, the Offering and the application of the net
proceeds therefrom and the anticipated closure of the Company's Houston
manufacturing facility.
The unaudited pro forma income statements of the Company for the year ended
March 28, 1997 give pro forma effect to the Transaction, the Initial Offering
and the application of the net proceeds therefrom and the anticipated closure of
the Company's Houston manufacturing facility as if they had occurred on March
30, 1996. The unaudited pro forma balance sheet as of March 28, 1997 gives pro
forma effect to the Transaction, the Initial Offering and the application of the
net proceeds therefrom and the anticipated closure of the Company's Houston
manufacturing facility as if they had occurred on such date. The pro forma
adjustments are based upon available information and certain assumptions that
the Company believes are reasonable. The Transaction was accounted for using the
purchase method of accounting. The unaudited pro forma financial statements do
not purport to represent what the Company's results of operations would have
been if such events had occurred at the dates indicated, nor do such statements
purport to project the results of the Company for any future period. The
unaudited pro forma financial statements should be read in conjunction with the
Consolidated Financial Statements of the Company and the notes thereto included
elsewhere in this Offering Memorandum.
33
<PAGE>
RELIANT BUILDING PRODUCTS, INC.
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 28, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ------------ -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash................................................................. $ 182 $ 6,099(a) $ 6,281
Accounts and notes receivable........................................ 17,732 -- 17,732
Inventories:
Raw materials...................................................... 9,883 -- 9,883
Finished products and work-in-process.............................. 5,107 817(b) 5,924
----------- ------------ -------------
14,990 817 15,807
Deferred tax assets.................................................. 1,434 -- 1,434
Prepaid expenses and other current assets............................ 1,008 -- 1,008
----------- ------------ -------------
Total current assets............................................. 35,346 6,916 42,262
Property, plant, and equipment, at cost:
Land and buildings................................................... 17,020 (6,238) 10,782
Machinery and equipment.............................................. 33,086 (13,461) 19,625
----------- ------------ -------------
50,106 (19,699) 30,407
Accumulated depreciation and amortization............................ (26,054) 26,054 --
----------- ------------ -------------
24,052 6,355(b) 30,407
Intangible assets...................................................... 9,943 31,483(b) 41,426
Debt issuance costs.................................................... 1,177 (1,143)(b) 2,634
2,600(c)
Other assets........................................................... 2,559 -- 2,559
----------- ------------ -------------
Total assets..................................................... $ 73,077 $ 46,211 $ 119,288
----------- ------------ -------------
----------- ------------ -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $ 7,503 $ (1,674)(b) $ 5,829
Accrued expenses..................................................... 6,703 1,920 )(g 8,623
Current portion of long-term debt and capital lease obligations...... 3,464 (3,000)(b) 464
Current portion of subordinated debt................................. 375 (375)(b) --
----------- ------------ -------------
Total current liabilities........................................ 18,045 (3,129) 14,916
Long-term debt and capital lease obligations........................... 34,108 (33,537)(b) 571
Deferred income taxes.................................................. 3,906 2,351(b) 6,257
Other liabilities...................................................... 334 200(b) 534
Subordinated debt...................................................... 5,380 (5,380)(b) 70,000
70,000(c)
----------- ------------ -------------
Total liabilities................................................ 61,773 30,505 92,278
Redeemable securities:
Redeemable preferred stock........................................... 6,119 (6,119)(b) --
Redeemable common stock warrants..................................... 1,272 (1,272)(b) --
----------- ------------ -------------
Total redeemable securities...................................... 7,391 (7,391) --
Shareholders' equity:
Common stock......................................................... 1 -- 1
Additional paid-in capital........................................... 6,670 29,799(d) 27,009
(2,790)(e)
(6,670)(f)
Accumulated deficit.................................................. (2,758) 2,758(f) --
----------- ------------ -------------
Total shareholders' equity....................................... 3,913 23,097 27,010
----------- ------------ -------------
Total liabilities and shareholders' equity....................... $ 73,077 $ 46,211 $ 119,288
----------- ------------ -------------
----------- ------------ -------------
</TABLE>
34
<PAGE>
RELIANT BUILDING PRODUCTS, INC
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(a) Reflects the excess operating cash generated in connection with the Initial
Offering calculated as follows (dollars in thousands):
<TABLE>
<S> <C>
Proceeds from sale of all outstanding shares of Holdings......... $ 20,000
Proceeds from Seller Notes of Holdings........................... 9,800
Gross proceeds from the Initial Offering......................... 70,000
Less: Transaction costs.......................................... (5,390)
Less: Total purchase price--see Note (b)......................... (88,311)
---------
Excess cash from the Transaction and Initial Offering........ $ 6,099
---------
---------
</TABLE>
(b) The Transaction will be accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16, "Business Combinations." The
purchase price is being allocated first to tangible and identifiable
intangible assets and liabilities of the Company based upon preliminary
estimates of their fair market values, with the remainder allocated to
goodwill. The allocation of the increase in basis is as follows (dollars in
thousands):
<TABLE>
<S> <C>
Purchase of all outstanding shares of Holdings.................... $ 39,900
Repayment of debt................................................. 42,292
Redemption of Preferred Stock..................................... 6,119
---------
Purchase price.................................................... 88,311
Book value of net assets acquired................................. (3,913)
---------
Increase in basis............................................. $ 84,398
---------
---------
Allocation of increase in basis:
Increase in net realizable value of inventories................. $ 817
Increase in fair value of property, plant and equipment......... 6,355
Increase in goodwill............................................ 31,483
Elimination of old debt issuance costs.......................... (1,143)
Tax benefit in connection with the elimination of old debt
issuance costs and compensation expenses (primarily incentive
units held by employees) to be recorded upon the closing of
the Transaction............................................... 1,674
Establishment of reserves in connection with the anticipated
closure of the Company's Houston manufacturing facility--see
Note (g)...................................................... (1,920)
Elimination of debt with proceeds of the Initial Offering....... 42,292
Increase in deferred tax liabilities............................ (2,351)
Increase in other liabilities................................... (200)
Elimination of redeemable preferred stock....................... 6,119
Elimination of redeemable common stock warrants................. 1,272
---------
$ 84,398
---------
---------
</TABLE>
(c) Reflects the issuance of the Notes and the deferred debt financing fees and
expenses incurred in connection with the Senior Credit Facility and the
Notes.
(d) Reflects cash paid by the Purchasers of $20.0 million and the issuance of
the Seller Notes of $9.8 million in connection with the Transaction.
(e) Reflects certain estimated costs of the Transaction.
(f) Reflects elimination of additional paid-in capital and the accumulated
deficit in connection with the Transaction.
(g) In connection with the Transaction, the Company anticipates closing its
Houston manufacturing facility. The Company has estimated the costs related
to the anticipated closure of this manufacturing facility to be
approximately $1.92 million. These costs primarily relate to estimated
future lease costs, property taxes, and insurance to be incurred after
manufacturing operations cease; severance to be offered to employees; the
write-off of inventory; the disposal and removal of manufacturing equipment;
and the write-off of accounts receivable.
35
<PAGE>
RELIANT BUILDING PRODUCTS, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 28, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ------------ -----------
<S> <C> <C> <C>
Net sales............................................................ $ 174,401 $ (13,918)(a) $ 160,483
Cost of products sold................................................ 131,474 (13,086)(a) 117,513
(875)(b)
----------- ------------ -----------
Gross profit......................................................... 42,927 43 42,970
Selling, general and administrative.................................. 32,724 (2,867)(a) 30,280
423(c)
----------- ------------ -----------
Income from operations............................................... 10,203 2,487 12,690
Interest expense, net................................................ 5,381 2,867(d) 8,248
Other expenses....................................................... 577 (350)(e) --
(227)(f)
----------- ------------ -----------
Income before income taxes........................................... 4,245 197 4,442
Income tax expense................................................... 1,892 50(g) 1,942
----------- ------------ -----------
Net income (loss).................................................... $ 2,353 $ 147 $ 2,500
----------- ------------ -----------
----------- ------------ -----------
Adjusted EBITDA(h)................................................... $ 15,426 $ 1,847 $ 17,273
----------- ------------ -----------
----------- ------------ -----------
</TABLE>
36
<PAGE>
RELIANT BUILDING PRODUCTS, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(a) Reflects the elimination of the historical results of operations for the
Company's Houston manufacturing facility, which the Company anticipates
closing in connection with the Transaction. The elimination of the
historical cost of products sold includes $188,000 historical depreciation
expense recorded for the Company's Houston manufacturing facility for the
year ended March 28, 1997.
(b) Reflects decrease in depreciation as a result of the adjustments to
property, plant, and equipment to reflect the allocation of the estimated
fair value.
(c) Reflects net increase in amortization resulting from the additional goodwill
created as a result of the Transaction and the adjustment of the
amortization period related to historical goodwill. A life of 40 years has
been assigned to goodwill.
(d) Reflects net increase in interest expense resulting from the Offering and
the Transaction as follows (dollars in thousands):
<TABLE>
<CAPTION>
FISCAL
YEAR ENDED
MARCH 28, 1997
---------------
<S> <C>
Elimination of historical interest expense related to debt that will be repaid as a result of
the Initial Offering....................................................................... $ (5,264)
Interest resulting from the issuance of the Notes at 10.875%................................. 7,613
Amortization of the $2,600 of debt issuance costs related to the Notes and Senior Credit
Facility................................................................................... 393
Estimated line of credit fees related to the Senior Credit Facility.......................... 125
-------
$ 2,867
-------
-------
</TABLE>
(e) Represents management fees charged to the Company by the former owners that
will cease with the Transaction.
(f) To reflect elimination of accretion of redeemable common stock warrants
that are being redeemed with proceeds of the Initial Offering.
(g) Net change in provision for income taxes as a result of notes (a)-(f) and
additional goodwill amortization which is not deductible for tax purposes.
(h) The following items were included in the results of operations and have been
eliminated to calculate "Adjusted EBITDA" (see Notes to Summary Historical
and Pro Forma Financial Information for a definition of EBITDA) (dollars in
thousands):
<TABLE>
<CAPTION>
FISCAL
YEAR ENDED
MARCH 28, 1997
-----------------
<S> <C>
Interruption of operations at joint venture(i).............................................. $ 357
-----
Total Adjustments....................................................................... $ 357
-----
-----
(i) Represents the incremental costs of puchasing aluminum raw materials from outside suppliers and the
Company's lost earnings recorded under the equity method of accounting during an interruption in operations
due to a fire at the Company's aluminum reprocessing joint venture. The Company's aluminum joint venture
has resumed operations at production levels similar to those prior to the fire.
Adjusted EBITDA should not be considered in isolation or as a substitute for net income or cash flows from
operating activities presented in accordance with generally accepted accounting principles or as a measure of a
company's profitability or liquidity.
</TABLE>
37
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is one of the nation's largest manufacturers of aluminum and
vinyl-framed windows for the residential new construction market. Accordingly,
its market is influenced by demographic, as well as regional and national
economic trends, such as household and job formation rates, interest rates,
population shifts, consumer credit availability and consumer confidence. The
Company's products are marketed under well recognized brand names, including
ALENCO and GAPCO, and are sold through over 200 distributors. Total window net
sales accounted for 89.0% of the Company's total net sales in fiscal year 1997,
of which aluminum and vinyl window net sales accounted for 72.3% and 16.7%,
respectively. Aluminum window net sales increased at a CAGR of 9.2% from $81.3
million in fiscal year 1992 to $126.1 million in fiscal year 1997. For the same
period, vinyl window net sales increased at a CAGR of 67.6% from $2.2 million in
fiscal year 1992 to $29.1 million in fiscal year 1997.
Management attributes growth in its vinyl window sales to the improvement in
the appearance and quality of vinyl windows, more competitively priced product
designs and increased demand for energy efficient products in many markets. The
Company recognized the potential for growth in sales of vinyl windows early in
the product life cycle and established vinyl window manufacturing capabilities
at four of its five residential window manufacturing facilities. The Company
believes that it is well positioned to continue its expansion in the Vinyl
Segment and intends to leverage its well recognized brand names, broad product
line and established distribution network in an effort to increase its sales of
vinyl windows. The Company intends to achieve this growth by increasing sales to
existing distributors and by entering new geographic markets.
The Company supplements its window business through the manufacture of
related products such as processed glass, custom aluminum extrusion and window
components for the Company's internal needs and for sale to third parties. The
Company believes that these products provide it with a low-cost, reliable source
of parts and components and reduce working capital requirements. The sale of
processed glass, custom aluminum extrusion and window components to third
parties accounted for 11.0% of total net sales in fiscal year 1997. Sales of the
Company's supplemental products to third parties increased at a CAGR of 13.2%
from $10.4 million in fiscal year 1992 to $19.3 million in fiscal year 1997.
The Company's net sales increased at a CAGR of 13.2% from $93.8 million in
fiscal year 1992 to $174.4 million in fiscal year 1997. The Company attributes
this growth primarily to an increase in product demand and market share gains in
its Primary Market as well as the Company's expansion into new geographic
markets. The Company attributes its increase in market share to the expansion of
its vinyl window product line, its well recognized brand names and enhanced
customer service.
COST REDUCTION INITIATIVES
The Company expects to benefit from more than $5.0 million of annual cost
reductions over the next three years. Approximately $1.2 million of these cost
reductions are associated with previously implemented initiatives that were
completed in the fourth quarter of fiscal year 1997, including the automation of
labor intensive operations and strategic initiatives with key raw material
suppliers. The balance of the annual cost reductions, or approximately $3.8
million, is associated with new initiatives that the Company intends to
implement over the next two years, including: (i) improvements in manufacturing
processes; (ii) materials cost reductions; (iii) continued improvements in
information systems; and (iv) additional factory automation. However, a large
portion of these cost savings will likely not be achieved until fiscal year 1999
and there can be no assurance that any such additional cost savings can be
achieved or, specifically, that they can be achieved within three years.
38
<PAGE>
HOUSTON OPERATIONS
The Houston facility was acquired in April 1995 to penetrate the value
priced segment of the market, further penetrate the multi-family housing market
and provide capacity in support of the Company's marketing initiatives in the
retail channel of distribution. At the time of the acquisition, the facility was
experiencing operating losses and has continued to do so since its acquisition.
As a result, it is currently anticipated that the facility will be closed
and its production will be consolidated into the Company's other operating
facilities. For fiscal year 1997, the Houston facility had net sales of $13.9
million and an EBITDA loss of $1.8 million. The Company's goal is to serve all
the Houston facility's current customers out of its other manufacturing
facilities. The Company believes that the combined operations will better serve
its customers and achieve reductions in operating expenses as overhead expenses
from the Houston facility are consolidated, duplicate functions are eliminated
and other savings are realized. However, there can be no assurance that the
Company will be able to consolidate successfully the Houston facility's
operations into the Company's other operating facilities and achieve such
reductions in operating expenses.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain historical
income statement data derived from the Company's consolidated statements of
income expressed in dollars and as a percentage of net sales:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
----------------------------------------------------------------
MARCH 31, 1995 MARCH 29, 1996 MARCH 28, 1997
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net sales................................................ $ 137,184 100.0% $ 173,271 100.0% $ 174,401 100.0%
Cost of products sold.................................... 106,760 77.8 133,337 77.0 131,474 75.4
--------- --------- --------- --------- --------- ---------
Gross profit............................................. 30,424 22.2 39,934 23.0 42,927 24.6
Selling, general and administrative...................... 23,620 17.2 31,498 18.2 32,724 18.8
--------- --------- --------- --------- --------- ---------
Income from operations................................... 6,804 5.0 8,436 4.8 10,203 5.8
Interest expense, net.................................... 4,843 3.5 6,125 3.5 5,381 3.1
Other expenses........................................... 359 0.3 753 0.4 577 .3
--------- --------- --------- --------- --------- ---------
Income before income taxes & extraordinary items......... 1,602 1.2 1,558 0.9 4,245 2.4
Income tax expense....................................... 833 0.6 753 0.4 1,892 1.1
--------- --------- --------- --------- --------- ---------
Income before extraordinary loss......................... 769 0.6 805 0.5 2,353 1.3
Extraordinary loss, net of tax........................... 552 0.4 -- -- -- --
--------- --------- --------- --------- --------- ---------
Net income............................................... $ 217 0.2% $ 805 0.5% $ 2,353 1.3%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Adjusted EBITDA.......................................... $ 11,536 8.4% $ 13,160 7.6% $ 15,426 8.8%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
FISCAL YEAR ENDED MARCH 28, 1997 COMPARED TO FISCAL YEAR ENDED MARCH 29,
1996
NET SALES. Net sales increased $1.1 million, or .7%, from $173.3 in fiscal
year 1996 to $174.4 in fiscal year 1997. This increase resulted primarily from a
$1.8 million increase in window sales partially offset by a decrease in
third-party extrusion sales. Aluminum window sales reflected a decrease of $4.2
million, or 3.2%, from $130.3 million in fiscal year 1996 to $126.1 in fiscal
1997, primarily the result of customers' converting to vinyl windows at the
Company's Gallatin facility and the loss of single glazed business at Living
Windows. Vinyl window sales increased $6.2 million, or 27.1%, from $22.9 in
fiscal year 1996 to $29.1 million in fiscal year 1997. This increase in vinyl
window sales was primarily the result of improved market penetration in the
Company's existing markets, including California, Georgia, Tennessee and
Alabama, expansion in new geographic markets and aluminum customers' converting
to vinyl windows.
39
<PAGE>
COST OF PRODUCTS SOLD. Cost of products sold decreased $1.9 million from
$133.3 million in fiscal year 1996 to $131.5 million in fiscal year 1997.
Expressed as a percentage of net sales, cost of products sold decreased from
77.0% in fiscal year 1996 to 75.4% in fiscal year 1997. This improvement was
primarily due to the (i) reduction in aluminum costs and (ii) reduction in
material and labor costs associated with automated glass cutting and insulated
glass manufacturing at certain of the Company's manufacturing facilities. In
addition, fiscal year 1996 included an inventory write-down of approximately
$1.1 million.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $1.2 million from $31.5 million in fiscal year
1996 to $32.7 million in fiscal year 1997. Expressed as a percentage of net
sales, selling, general and administrative expenses increased from 18.2% in
fiscal year 1996 to 18.8% in fiscal year 1997. This increase was primarily
related to health and medical insurance expenses of $1.1 million due to
increased enrollment and large claims associated with a few employees, and
expenses associated with the on-going program to upgrade and fully integrate the
Company's information system at all its facilities. These increases were
partially offset by a reduction in workers' compensation expense.
INTEREST EXPENSE. Net interest expense decreased $0.7 million from $6.1
million for fiscal year 1996 to $5.4 million in fiscal year 1997 as a result of
a lower debt level and lower interest rates under the Old Credit Facility.
INCOME TAX EXPENSE. The Company's effective income tax rate was 48.3% for
fiscal year 1996 compared to 44.6% in fiscal year 1997. This decrease reflects a
decrease in non-deductible expenses (primarily amortization of goodwill) as a
percentage of taxable income.
FISCAL YEAR ENDED MARCH 29, 1996 COMPARED TO FISCAL YEAR ENDED MARCH 31,
1995
NET SALES. Net sales increased $36.1 million, or 26.3%, from $137.2 million
in fiscal year 1995 to $173.3 million in fiscal year 1996. This increase
resulted from a $36.9 million increase in window sales, which was partially
offset by a decline in sales of custom aluminum extrusion to third parties due
to an increase in internal demand. Aluminum window sales increased $29.3
million, or 29.0%, from $101.0 million in fiscal year 1995 to $130.3 million in
fiscal year 1996 primarily as a result of the acquisition of Living Windows in
April 1995, an increase in sales at the Company's Fresno, California facility
(which began operations in April 1994) and an increase in the price of aluminum
windows charged by the Company. Vinyl window sales increased $7.6 million, or
49.7%, from $15.3 million in fiscal year 1995 to $22.9 million in fiscal year
1996. This increase was primarily related to an increase in demand for the
Company's GAPCO vinyl windows and a full year of operations at the Company's
Fresno facility.
COST OF PRODUCTS SOLD. Cost of products sold increased $26.5 million from
$106.8 million during fiscal year 1995 to $133.3 million in fiscal year 1996.
Expressed as a percentage of sales, cost of products sold decreased from 77.8%
in fiscal year 1995 to 77.0% in fiscal year 1996. This improvement was primarily
the result of (i) a decrease in labor costs resulting from efficiency
improvements at two of the Company's manufacturing facilities, (ii) a reduction
in material and labor costs associated with the Company's automation of glass
cutting and insulated glass manufacturing at certain of the Company's
manufacturing facilities, and (iii) a decrease in workers' compensation costs
after the initiation of a safety program in late fiscal year 1995.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $7.9 million from $23.6 million in fiscal year
1995 to $31.5 million in fiscal year 1996. Expressed as a percentage of net
sales, selling, general and administrative expenses increased from 17.2% in
fiscal year 1995 to 18.2% in fiscal year 1996. This increase primarily reflects
the April 1995 acquisition of Living Windows, which had higher distribution
costs as a percentage of net sales than the Company as a whole in fiscal year
1996, and losses incurred in connection with the expansion of
40
<PAGE>
operations at the Company's Fresno facility. In addition, fiscal year 1996
included a charge of $0.5 million consisting of settlement costs associated with
a product liability case and expenses related to the Company's ongoing program
to upgrade and fully integrate the Company's information systems in all its
manufacturing facilities.
INTEREST EXPENSE. Net interest expense increased $1.3 million from $4.8
million in fiscal year 1995 to $6.1 million in fiscal year 1996 as a result of a
higher debt level and higher interest rates under the Old Credit Facility.
INCOME TAX EXPENSE. The Company's effective income tax rate was 52.0% in
fiscal year 1995 compared to 48.3% in fiscal year 1996. The decrease in the
effective tax rate reflects lower state taxes and a decrease in nondeductible
expenses (primarily amortization of goodwill) as a percentage of taxable income
in fiscal year 1996.
CYCLICALITY
Demand for the Company's products is based on the level of new home
construction activity. Factors that impact the housing sector of the economy,
especially those that impact the level of housing start activity in the
Company's Primary Market, may have a direct effect on the financial performance
of the Company. The overall strength of the United States economy, interest
rates, rate of job formation, consumer confidence and availability of consumer
credit, as well as demographic factors such as the rate of household formation
and population shifts, have direct bearing on the Company. Housing start
declines can adversely impact the Company and no assurance can be given that any
such adverse impact would not be material.
SEASONALITY
Markets for the Company's products are seasonal, with peak activity in the
second and third quarters of the year due to increased construction during those
periods. The Company expects to use the Senior Credit Facility to meet seasonal
variations in its working capital requirements. There can be no assurance,
however, that the Senior Credit Facility will be sufficient under all
circumstances to meet seasonal variations in the Company's working capital
requirements.
RAW MATERIAL COSTS AND INFLATION
The rate of inflation over recent years has been relatively low and has not
had a significant effect on the Company's results. The Company purchases
aluminum, vinyl, glass and other raw materials from various suppliers. While all
such materials are available from numerous independent suppliers, commodity raw
materials are subject to fluctuations in price. There have been historical
periods of rapid and significant movements in the price of aluminum, both upward
and downward. Historically, the Company has been successful in passing on these
increases to its customers after a period of 60 to 90 days. However, there can
be no assurance that the Company will continue to be able to do so in the
future.
LIQUIDITY AND CAPITAL RESOURCES
Interest payments on the Notes represent significant obligations of the
Company. The Notes require semiannual interest payments commencing November 1,
1997.
In addition to its debt service obligations, the Company's remaining
liquidity demands relate to capital expenditures and working capital needs. For
the fiscal year ended March 28, 1997, the Company spent $3.6 million relating to
manufacturing automation, vinyl manufacturing equipment, computer systems and
maintenance projects. In fiscal year 1998, the Company anticipates that
maintenance capital expenditures will total approximately $2.0 million. In
addition, expenditures primarily for vinyl manufacturing capacity expansion and
manufacturing automation will likely total $2.5 million. The
41
<PAGE>
Company's working capital needs are seasonal, and historically have peaked
during the second and third quarters. See "--Seasonality."
The Company's primary sources of liquidity are cash flows from operations
and borrowings under the Company's Senior Credit Facility. The Senior Credit
Facility provides the Company with a $25.0 million revolving credit loan
facility, subject to availability under the borrowing base. At May 30, 1997, the
Company was able to borrow $20.9 million under the Senior Credit Facility. See
"Description of the Senior Credit Facility." No borrowings under the Senior
Credit Facility were outstanding at June 27, 1997. The Company believes that,
based on current and anticipated financial performance, cash flow from
operations and borrowings under the Senior Credit Facility will be adequate to
meet anticipated requirements for capital expenditures, working capital and
scheduled interest payments (including interest payments on the Notes and any
amounts outstanding under the Senior Credit Facility). However, certain capital
expenditure requirements may change, particularly if the Company should complete
any acquisitions. The ability of the Company to satisfy its capital requirements
will be dependent upon the future financial performance of the Company, which in
turn will be subject to general economic conditions and to financial, business
and other factors, including factors beyond the Company's control.
The Company's future operating performance and ability to repay or refinance
the Notes will also be subject to future economic conditions and to financial,
business and other factors, many of which are beyond the Company's control. See
"Risk Factors--Ability to Service Debt; Refinancing of Indebtedness."
ENVIRONMENTAL
The Company has been named as a potentially responsible party ("PRP") in two
superfund sites pursuant to the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended ("CERCLA") (the Chemical
Recycling, Inc. site in Wylie, Texas, and the SAAD Trousdale Road Site in
Nashville, Tennessee). See "Business--Government Regulation and Environmental
Matters." The Company believes that based on the information currently
available, including the substantial number of other PRPs 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 condition or its results of operations.
ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation," which the Company adopted in
1997. SFAS No. 123 establishes optional alternative accounting methods for
stock-based compensation as well as new required disclosures. The Company
intends to account for stock-based compensation under previously existing
accounting guidance. As such, SFAS No. 123 was adopted for disclosure purposes
only and does not impact the Company's financial position, operating results or
cash flows.
In March 1995 the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed. As required,
the Company adopted Statement 121 in fiscal year 1997 and such adoption did not
impact the Company's financial position, operating results or cash flows.
42
<PAGE>
BUSINESS
COMPANY OVERVIEW
The Company is one of the nation's largest manufacturers of aluminum and
vinyl, or non-wood, framed windows for the residential new construction market.
The Company believes that it is the largest competitor in the Non-Wood Segment
of its Primary Market and that it is the largest or second largest such
competitor in each state within its Primary Market. The Company's products are
marketed under well recognized brand names, including ALENCO and GAPCO, across
all major price points. Sales in the Company's Primary Market represented 84.8%
of the Company's fiscal year 1997 window net sales. The Company estimates that
it has a 23% market share in the Non-Wood Segment of its Primary Market. The
Company's Primary Market includes some of the fastest growing residential
housing markets in the United States with a CAGR in housing starts of 7.9% for
the five-year period ended December 31, 1996, compared to 5.3% nationally for
the same period. The Company's net sales increased at a CAGR of 11.6% from
$112.0 million in fiscal year 1993 to $174.4 million in fiscal year 1997.
Historically, the Company has emphasized the sale of aluminum windows, which
are the product of choice in the Company's Primary Market. The Company
attributes the preference for aluminum windows in its Primary Market primarily
to aluminum's lower cost and the reduced need for thermal efficiency in homes in
moderate southern climates. The Company estimates that its market share in the
Aluminum Segment of its Primary Market has increased from approximately 23% in
fiscal year 1993 to 29% in fiscal year 1997.
Over the past four years, the Company has increased its focus on the sale of
vinyl windows. The Vinyl Segment is the fastest growing segment of the new
construction window market, growing at a 39.4% CAGR from 1992 to 1996 on a
national basis and at a 63.0% CAGR in the Company's Primary Market over the same
period. Demand for vinyl windows increased during this period as manufacturers
such as the Company offered more thermally efficient vinyl windows of higher
quality and improved appearance at more competitive prices. Over the 1993 to
1995 period, the Company implemented the first phase of a comprehensive vinyl
market penetration program, which enabled the Company to manufacture
vinyl-framed windows at four of its five residential window manufacturing
facilities. The Company increased its vinyl sales from $2.2 million in fiscal
year 1992 to $29.1 million in fiscal year 1997. The Company believes that it is
well positioned to continue to increase its sales of vinyl windows due to its
broad product line, well established distribution base and strategically located
manufacturing facilities.
COMPETITIVE STRENGTHS
The Company believes that it benefits from the following competitive
advantages, which have contributed to an increase in net sales and operating
income and to the Company's maintenance of its leading market position in the
Non-Wood Segment:
INDUSTRY LEADERSHIP. The Company believes that it is the largest competitor
in the Non-Wood Segment of its Primary Market and that it is the largest or
second largest such competitor in each state within its Primary Market. The
Company believes that its market leadership position, broad product line across
all major price points and reputation for high quality provide it with several
competitive advantages, including: (i) the ability to attract and retain many of
the strongest distributors within its markets; (ii) the ability to serve a
customer base on a broad geographic basis; and (iii) economies of scale related
to the Company's manufacturing, purchasing and distribution operations. The
Company believes that its industry leadership position may also allow it to
benefit from the consolidation currently occurring within the Non-Wood Segment.
WELL RECOGNIZED BRAND NAMES. The Company's ALENCO and GAPCO brand names
have been well established in the industry for over 40 years. ALENCO has
consistently ranked as the nation's most recognized non-wood window brand name
according to BUILDER and PROFESSIONAL BUILDER magazines, two of the leading
industry trade publications. The GAPCO brand is regionally focused in the
Midwest, Mid-Atlantic and Southeast regions and has achieved a high degree of
recognition in those markets. The
43
<PAGE>
Company has established well recognized brand names primarily by providing
high-quality products and strong customer service. The Company has successfully
leveraged the strength of its brands to expand its product offerings,
particularly with regard to vinyl products, and to expand its geographic market
coverage. The Company intends to utilize the strength of its brand names to
increase its penetration in its existing markets and pursue expansion into new
markets.
STRONG MANUFACTURING AND DISTRIBUTION NETWORK. The Company's strategically
located manufacturing facilities allow it to provide its customers with one-stop
shopping across all major price points on a cost-effective and timely basis. The
Company operates five residential window manufacturing facilities serving over
200 distributors who generally distribute the Company's products on an exclusive
basis. The Company attributes its ability to establish exclusive relationships
with many of the strongest distributors in its markets to its: (i) broad product
offerings across all major price points; (ii) well recognized brand names; (iii)
reputation for high quality; and (iv) high level of customer service. These
factors have resulted in a loyal distributor base characterized by low turnover.
The average tenure of the Company's relationships with its distributors is in
excess of 24 years.
LOW-COST MANUFACTURING. The Company believes that it is one of the lowest
cost manufacturers of vinyl and aluminum windows. This advantage is primarily
attributable to: (i) centralized purchasing of major raw materials and
equipment; (ii) automation of manufacturing processes such as glass cutting and
the manufacture of insulated glass; and (iii) vertical integration. The Company
believes that it is one of the industry's most vertically integrated non-wood
window manufacturers. In addition to extruding and recycling aluminum, the
Company produces processed glass and window components, which provide it with a
reliable source of high-quality materials.
CUSTOMER SERVICE. The Company's systems, processes and organization are
designed specifically to provide a high level of customer service. The Company
believes that it offers its distributors high-quality, competitively priced
products and short lead times while maintaining high order-fill rates. The
Company's lead time is generally between five to ten working days on a
make-to-order basis. Furthermore, on-time delivery and order-fill rates
typically run in the 95-98% range, which the Company believes are among the best
in the industry.
EXPERIENCED MANAGEMENT. The Company has assembled a strong and experienced
management team at the corporate and operating levels. At the corporate level,
the top three members of the senior management team have an average of 15 years
of experience with the Company. The Company's operational managers, who manage
the Company's six window manufacturing facilities, have an average of ten years
of experience with the Company and 25 years of industry experience. Senior
executives of the Company own approximately 4% of the outstanding common stock
of Holdings.
BUSINESS STRATEGY
The Company's strategy for enhancing its market leadership position and
maximizing profitability and cash flow includes: (i) expanding market
penetration in the Vinyl Segment; (ii) expanding into attractive geographic
markets; (iii) achieving cost reductions; (iv) expanding into the repair and
remodel market; and (v) pursuing selected strategic acquisitions.
EXPAND PENETRATION IN THE VINYL SEGMENT. The Company believes that it is
among the largest manufacturers of residential new construction vinyl windows in
the United States, and that no single competitor holds a dominant position in
this market. The Vinyl Segment is the fastest growing segment of the window
market, growing at a 39.4% CAGR from 1992 to 1996 on a national basis, and a
63.0% CAGR in the Company's Primary Market. The Company recognized the potential
for growth in sales of vinyl windows early in the product life cycle and, over
the 1993 to 1995 period, established vinyl manufacturing capabilities at four of
its five residential window manufacturing facilities. As a result, the Company's
sales of vinyl windows increased from $2.2 million in fiscal year 1992 to $29.1
million in fiscal year 1997. The Company believes it is well positioned to
continue its expansion in the Vinyl Segment and intends to leverage its well
recognized brand names, broad product line and established distribution
44
<PAGE>
network in an effort to increase its vinyl window sales. The Company intends to
achieve this growth by increasing sales to existing distributors and by entering
new geographic markets.
EXPAND INTO ATTRACTIVE GEOGRAPHIC MARKETS. The Company intends to continue
to expand its business by entering geographic areas contiguous to the Company's
existing markets, as well as by targeting new markets with attractive growth
characteristics. The Company is actively pursuing expansion opportunities in
regions that exhibit favorable demographic trends, particularly with respect to
population growth, concentration of population base and housing starts. The
Company believes that it has advantages in penetrating new markets due to its
ability to offer customers well recognized brand name windows, a high level of
customer service and one-stop shopping for non-wood windows.
ACHIEVE COST REDUCTIONS. The Company expects to benefit from more than $5.0
million of annual cost reductions over the next three years. Approximately $1.2
million of these cost reductions are associated with previously implemented
initiatives that were completed in the fourth quarter of fiscal year 1997,
including the automation of labor intensive operations and strategic initiatives
with key raw material suppliers. The balance of the annual cost reductions, or
approximately $3.8 million, is associated with new initiatives that the Company
intends to implement over the next two years, including: (i) improvements in
manufacturing processes; (ii) materials cost reductions; (iii) continued
improvements in information systems; and (iv) additional factory automation.
However, a large portion of these cost savings will likely not be achieved until
fiscal year 1999 and there can be no assurance that any such cost savings can be
achieved or, specifically, that they can be achieved within three years.
EXPAND INTO THE REPAIR AND REMODEL MARKET. The Company believes that the
highly fragmented $2.8 billion non-wood repair and remodel market represents a
significant opportunity. The repair and remodel market is generally
counter-cyclical and provides the Company with the ability to diversify its
product mix as well as increase sales. The Company intends to increase its
presence in this market by leveraging its well recognized brand names and
utilizing its existing strong manufacturing and distribution network to
penetrate existing geographic markets and to expand into new markets through
selected acquisitions.
PURSUE SELECTED STRATEGIC ACQUISITIONS. The Company intends to pursue
opportunities to make acquisitions that complement and expand its core business
or enable the Company to enter new markets for its products. The non-wood new
construction and repair and remodel markets are highly fragmented with over 350
manufacturers, the majority of which are small regional manufacturers. The
Company believes that significant opportunities exist to make selected strategic
acquisitions at attractive valuations. Strategic acquisitions could allow the
Company to (i) leverage its well recognized brand names; (ii) achieve cost
reductions through purchasing economies and the application of the Company's
best manufacturing practices; and (iii) further diversify the Company's
geographic, product and market focus, including expansion into the repair and
remodel market. However, no assurance can be given that the Company will be able
to complete strategic acquisitions at attractive valuations.
INDUSTRY
The U.S. window industry consists of two segments, residential and
commercial. The residential window segment consists of both the new construction
and the repair and remodel markets. Total residential window sales in the United
States in 1996 were estimated at $7.5 billion, consisting of $1.6 billion in the
new construction market and $5.9 billion in the repair and remodel market. The
Company primarily competes in the residential new construction market.
The residential new construction window market is divided into three primary
segments according to type of frame material: aluminum, vinyl and wood. The
Company primarily competes in the $875 million aluminum and vinyl, or Non-Wood
Segment, of the residential new construction window market. The Non-Wood Segment
is highly fragmented and historically has consisted of a large number of
relatively small, independent businesses serving discrete local markets and a
small number of multi-
45
<PAGE>
regional operators. Relative to smaller competitors, larger multi-regional
operators such as the Company benefit from several competitive advantages,
including economies of scale in purchasing, manufacturing and distribution and
the ability to attract and retain strong distributors. The Company believes that
larger operators such as the Company are less impacted by cyclical downturns in
the industry. For example, in its Primary Market, the Company believes it has
historically experienced increases in market share during periods of declining
market demand.
The market share of wood, aluminum and vinyl windows in the new construction
market varies by region. A homebuilder's or homeowner's choice of frame material
is often based upon such considerations as cost, thermal efficiency,
maintenance, aesthetic preferences and regional norms. Wood windows are
generally the most expensive and are more popular in the colder climates of the
northern states. Aluminum windows are generally the least expensive and
thermally efficient and are the product of choice in the southern half of the
United States. Vinyl windows are generally less expensive and slightly less
thermally efficient than wood and more expensive and thermally efficient than
aluminum, and compete with low-end wood products and high-end aluminum products.
Over the past five years, the new construction and repair and remodel vinyl
segment has grown significantly at the expense of both wood and aluminum. The
Company attributes this growth primarily to the improvement in the quality of
vinyl windows during this time.
The chart below outlines certain principal characteristics of aluminum,
vinyl and wood windows:
U.S. RESIDENTIAL WINDOW MARKET
<TABLE>
<CAPTION>
% OF 1996 RESIDENTIAL WINDOW UNITS
ILLUSTRATIVE ------------------------------------------
PRICE TOTAL NEW
RANGE(A) RESIDENTIAL(B) CONSTRUCTION(B) STRENGTHS WEAKNESSES
--------------- ----------------- ----------------------- -------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Aluminum............ $30-$100 32.4% 43.7% -Low cost -Low perceived
-Strong builder value
acceptance -Low thermal
- High durability efficiency
-Low maintenance
Vinyl............... $70-$125 36.6% 23.4% -High perceived -Moderate
value builder
-Low maintenance acceptance
-High thermal
efficiency
Wood................ $150-$250 28.7% 32.7% -Strong builder -High cost
acceptance -High maintenance
-High perceived -Long delivery
appearance lead time
-High thermal
efficiency
</TABLE>
- ---------------------
SOURCE: F.W. DODGE AND MANAGEMENT ESTIMATES
(a) Illustrative prices for a standard size window (3'x5') sold to the new
construction market.
(b) Totals do not add to 100% due to the exclusion of windows of other material
types.
The U.S. residential window industry segment as a whole has experienced
stable growth over the 1992 to 1996 period. Over this period, sales of vinyl
units grew at a 12.9% CAGR, compared to CAGRs of (0.7%) for aluminum, 8.0% for
wood and 6.0% for the U.S. residential window segment as a whole. Unit volume in
the new construction market has increased at a 4.7% CAGR compared to a 6.6% CAGR
for the repair and remodel market and a 6.0% CAGR for the U.S. residential
window segment as a whole over this period.
46
<PAGE>
The following chart sets forth the unit data for the aluminum, vinyl and
wood segments of the U.S. residential window segment:
UNITED STATES RESIDENTIAL WINDOW SALES(A)
<TABLE>
<CAPTION>
1992 1993 1994
----- ----- -----
<S> <C> <C> <C>
(UNITS IN MILLIONS)
Aluminum
Aluminum new construction...................................................... 8.3 7.4 8.0
Aluminum repair and remodel.................................................... 11.1 10.4 11.2
Total aluminum................................................................. 19.3 17.9 19.2
Aluminum share of total market................................................. 42.1% 37.5% 35.9%
Vinyl
Vinyl new construction......................................................... 1.1 1.7 3.2
Vinyl repair and remodel....................................................... 12.0 14.4 11.6
Total vinyl.................................................................... 13.1 16.1 14.8
Vinyl share of total market.................................................... 28.5% 33.7% 27.7%
Wood
Wood new construction.......................................................... 5.0 5.6 6.0
Wood repair and remodel........................................................ 7.3 7.0 12.0
Total wood..................................................................... 12.3 12.6 18.0
Wood share of total market..................................................... 26.7% 26.5% 33.6%
Total new construction(b)........................................................ 14.4 14.7 17.2
Total repair and remodel(b)...................................................... 31.6 33.0 36.3
--- --- ---
Total United States(b)..................................................... 46.0 47.7 53.5
--- --- ---
--- --- ---
<CAPTION>
1992-1996
1995 1996 CAGR
----- ----- -----------
<S> <C> <C> <C>
Aluminum
Aluminum new construction...................................................... 6.7 7.6 (2.3%)
Aluminum repair and remodel.................................................... 11.0 11.3 0.5%
Total aluminum................................................................. 17.8 18.8 (0.7%)
Aluminum share of total market................................................. 33.5% 32.4% --
Vinyl
Vinyl new construction......................................................... 3.8 4.0 39.4%
Vinyl repair and remodel....................................................... 12.4 17.2 9.4%
Total vinyl.................................................................... 16.1 21.3 12.9%
Vinyl share of total market.................................................... 30.4% 36.6% --
Wood
Wood new construction.......................................................... 5.9 5.7 3.0%
Wood repair and remodel........................................................ 12.4 11.0 11.0%
Total wood..................................................................... 18.3 16.7 8.0%
Wood share of total market..................................................... 34.5% 28.7% --
Total new construction(b)........................................................ 16.5 17.3 4.7%
Total repair and remodel(b)...................................................... 36.6 40.8 6.6%
--- --- -----------
Total United States(b)..................................................... 53.1 58.1 6.0%
--- --- -----------
--- --- -----------
</TABLE>
- ---------------------
SOURCE: F.W. DODGE
(a) Calculations based on actual data.
(b) Totals may be higher than the sum of the above due to the exclusion of
windows of other material types.
Unit growth rates in the Company's Primary Market exceeded the growth rates
for the nation as a whole for residential aluminum, vinyl and wood windows for
the 1992 to 1996 period. Residential new construction vinyl and aluminum CAGRs
were 63.0% and 0.5%, respectively, in the Company's Primary Market compared to
39.4% and (2.3%), respectively, for the nation as a whole over the same period.
Overall, residential new construction units in the Company's Primary Market grew
at a CAGR of 7.5%, compared to 4.7% for the nation as a whole. In the Company's
Primary Market, aluminum is the window material of choice, with an estimated
44.7% market share in 1996.
The following chart sets forth the unit data for the aluminum, vinyl and
wood segments of the residential window segment in the Company's Primary Market:
PRIMARY MARKET RESIDENTIAL WINDOW SALES(A)
<TABLE>
<CAPTION>
1992 1993 1994 1995
----- ----- ----- -----
<S> <C> <C> <C> <C>
(UNITS IN MILLIONS)
Aluminum
Aluminum new construction..................................................... 5.6 5.0 5.7 5.0
Aluminum repair and remodel................................................... 4.9 5.2 4.7 4.8
Total aluminum................................................................ 10.6 10.2 10.4 9.8
Aluminum share of Primary Market.............................................. 58.6% 53.8% 47.1% 43.8%
Vinyl
Vinyl new construction........................................................ 0.3 0.7 1.5 2.0
Vinyl repair and remodel...................................................... 3.2 3.6 3.8 3.9
Total vinyl................................................................... 3.6 4.3 5.2 5.9
Vinyl share of Primary Market................................................. 19.7% 22.6% 23.8% 26.5%
Wood
Wood new construction......................................................... 1.8 2.3 2.5 2.5
Wood repair and remodel....................................................... 1.7 1.7 3.4 3.9
Total wood.................................................................... 3.4 4.1 6.0 6.3
Wood share of Primary Market.................................................. 19.1% 21.5% 27.0% 28.3%
Total new construction(b)....................................................... 7.7 8.0 9.7 9.5
Total repair and remodel(b)..................................................... 10.3 10.9 12.4 12.9
--- --- --- ---
Total Primary Market(b)................................................... 18.0 18.9 22.1 22.4
--- --- --- ---
--- --- --- ---
<CAPTION>
1992-1996
1996 CAGR
--------- -----------
<S> <C> <C>
Aluminum
Aluminum new construction..................................................... 5.7 0.5%
Aluminum repair and remodel................................................... 5.5 2.9%
Total aluminum................................................................ 11.3 1.6%
Aluminum share of Primary Market.............................................. 44.7% --
Vinyl
Vinyl new construction........................................................ 2.1 63.0%
Vinyl repair and remodel...................................................... 5.6 14.5%
Total vinyl................................................................... 7.7 21.4%
Vinyl share of Primary Market................................................. 30.6% --
Wood
Wood new construction......................................................... 2.4 7.9%
Wood repair and remodel....................................................... 3.3 18.3%
Total wood.................................................................... 5.7 13.3%
Wood share of Primary Market.................................................. 22.5% --
Total new construction(b)....................................................... 10.3 7.5%
Total repair and remodel(b)..................................................... 14.9 9.6%
--------- -----------
Total Primary Market(b)................................................... 25.2 8.7%
--------- -----------
--------- -----------
</TABLE>
- ---------------------
SOURCE: F.W. DODGE AND MANAGEMENT ESTIMATES
(a) Calculations based on actual data.
(b) Totals may be higher than the sum of the above due to the exclusion of
windows of other material types.
47
<PAGE>
Over the 1992 to 1996 period, housing starts in the Company's Primary Market
grew at an 7.9% CAGR compared to 5.3% for the nation as a whole. These higher
levels of housing starts contributed to the stronger growth in window unit
volumes in the Primary Market compared to the nation as a whole. Furthermore,
the Company's Primary Market represented 58.2% of the total U.S. housing starts
in 1996 compared to 52.7% in 1992.
HOUSING STARTS
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNITS IN THOUSANDS)
Total United States....................................................... 1,201 1,288 1,457 1,354 1,476
% Growth................................................................ -- 7.2% 13.1% (7.1%) 9.0%
Primary Market............................................................ 633 699 812 786 859
% Growth................................................................ -- 10.5% 16.1% (3.2%) 9.3%
<CAPTION>
1992-1996
CAGR
-------------
<S> <C>
Total United States....................................................... 5.3%
% Growth................................................................ --
Primary Market............................................................ 7.9%
% Growth................................................................ --
</TABLE>
- ---------------------
SOURCE: U.S. CENSUS BUREAU
PRODUCTS
WINDOWS. The Company manufactures and distributes a broad line of both
aluminum and vinyl window products, including insulated and thermal break
windows, garden windows, storm windows and doors, single- and double-hung
windows, casement windows and sliding doors primarily for use in the new single-
and multi-family residential housing market. The Company's products are
primarily sold under the ALENCO and GAPCO brand names through a network of
independent distributors. ALENCO has consistently ranked as the nation's most
recognized non-wood window brand name, according to BUILDER and PROFESSIONAL
BUILDER magazines. The GAPCO brand is regionally focused in the Midwest,
Mid-Atlantic and Southeast regions and has achieved a high degree of recognition
in those markets. In addition to ALENCO and GAPCO, the Company also offers the
Living Windows brand to the value-priced segment and the Builders View brand to
the retail home center market. The Company provides its customers with a broad
range of vinyl and aluminum windows across all major price points.
The following chart summarizes the Company's window products:
<TABLE>
<CAPTION>
MAJOR BRAND PRICE RANGE BRAND STRATEGY
- ------------------ ----------------------- -------------------------------------------
<S> <C> <C>
ALENCO Aluminum $35-$80 Offer aluminum and vinyl products across
Vinyl $70-$95 good, better and best price points on a
multi-regional basis.
GAPCO Aluminum $60-$100 Offer aluminum and vinyl products across
Vinyl $85-$125 the better and best price points in
selected Midwestern, Mid-Atlantic and
Southeastern regional markets.
Living Windows Aluminum $30-$65 Offer aluminum windows to the value-priced
market segment.
Builders View Aluminum $50-$80 Offer aluminum and vinyl windows to the
Vinyl $70-$95 retail home center market.
</TABLE>
ALUMINUM EXTRUSION. The Company produces aluminum extrusion to satisfy
virtually all its manufacturing needs. To optimize manufacturing efficiency at
the Company's aluminum extrusion operation, the Company also sells excess
production to third parties. The Company sold approximately 17.1% of its
aluminum extrusion output to third parties in fiscal year 1997.
48
<PAGE>
PROCESSED GLASS. The Company purchases glass from independent suppliers and
processes custom glass for its three manufacturing facilities in Texas and for
sale to third parties. The Company sells cut, beveled, grooved and tempered
glass to manufacturers, glass shops, glazing contractors and retailers,
primarily in Texas. The Company sold approximately 80.4% of its processed glass
output to third parties in fiscal year 1997.
OTHER PRODUCTS. The Company also manufactures and sells hinged doors and
skylights. These products complement the Company's broad vinyl and aluminum
window product lines.
DISTRIBUTION
The Company's extensive distribution network includes over 200 distributors
who generally distribute the Company's products on an exclusive basis. The
Company believes it has established relationships with many of the strongest
distributors in its markets as a result of its broad product offerings across
all major price points, well recognized brand names, reputation for high quality
products and commitment to providing the highest levels of service in the
industry. These factors have resulted in a loyal distributor base characterized
by low turnover. The average tenure of the Company's relationships with its
distributors is in excess of 24 years. No single distributor accounted for more
than 5% of the Company's total net sales during fiscal year 1997. The Company
also owns and operates four distribution facilities, which accounted for
approximately 3.6% of the Company's net sales in fiscal year 1997.
Orders are generally filled within five to ten days of order receipt, with
the exception of commercial orders, which have lead times of 90-150 days.
Generally, customer orders are delivered to contractors and independent building
supply distributors by the Company's fleet of over 85 tractors and 200 trailers.
The ALENCO line is typically shipped in truck-load quantities to larger
distributors. GAPCO products are typically shipped in smaller lots to local
building supply companies and lumber yards.
SALES AND MARKETING
The Company's highly experienced, commissioned sales force consists of 35
factory sales representatives who provide distributors with ongoing technical,
marketing and sales support. These sales representatives have an average of ten
years of experience with the Company and generally have long-standing
relationships with customers, which the Company believes contributes to customer
loyalty. These sales representatives are regionally focused and report to five
regional managers in California, Texas, Georgia and Tennessee and a national
accounts manager.
The Company's advertising and promotional efforts consist of a national
advertising program in recognized industry publications such as BUILDER,
PROFESSIONAL BUILDER and BUILDING PRODUCTS, as well as regional, cooperative
advertising with its distributors in local, state and regional publications. The
Company also participates in national trade shows, such as the National
Association of Home Builders and National Sash and Door Jobbers Association
shows. Additionally, the Company participates in prominent regional trade shows
such as the Pacific Coast Builder's Congress, as well as other regional shows on
a cooperative basis with its distributors.
MANUFACTURING
The Company is a vertically integrated manufacturer of aluminum and vinyl
windows, with six window manufacturing facilities (including the Company's
Houston facility) located in four states. The Company believes that its ability
to satisfy many of its manufacturing needs, including extruded aluminum, vinyl
component parts, screen frames, muntin bars and tempered glass, provides it with
an enhanced ability to serve its customers, significant manufacturing
flexibility and a reliable supply of low-cost components. The Company also
operates an aluminum scrap recasting facility on a joint venture basis,
providing approximately one-third of the Company's aluminum billet requirements.
49
<PAGE>
The Company produces aluminum extrusion to meet virtually all its
manufacturing needs. The Company sold approximately 17.1% of its aluminum
extrusion to third parties in fiscal year 1997. In the extrusion process,
aluminum billets are hydraulically pressed through tooling dies to form the
shapes necessary to build window products. The extruded length is then cooled
and cut to stock length, tempered and painted, and is then ready to be used in
window manufacturing. The extrusion used in the Company's vinyl windows is
purchased from a third-party extruder.
The extrusions (aluminum or vinyl) are then cut down from the stock lengths
to shorter lengths for the exterior frame and sash parts of the window products.
These parts are fabricated or processed in order to assemble the window.
Aluminum window parts are mechanically fastened together for the rectangular
frame and sash components. Vinyl window parts are heat-fusion welded to form the
comparable frame and sash components.
While the stock lengths of aluminum and vinyl extrusion are being cut down
and processed, glass is cut with the aid of computer controlled glass cutting
optimizers and is assembled into the insulating glass units necessary to glaze
the window sashes. The insulating glass units are adhered to the sash frames,
and hardware and other components are added. The window unit is then complete
and ready for shipment.
COMPETITION
The non-wood new construction and repair and remodel markets are highly
fragmented with over 350 manufacturers, the majority of which are small regional
manufacturers. No one company holds a dominant position on a national basis. The
Company's competitors include Caradon/Better Bilt and Metal Industries, as well
as numerous other smaller regional competitors. Competition is generally
regional and is based on price, product quality, brand name reputation and
customer service.
RAW MATERIALS
The Company purchases aluminum, vinyl, glass and other raw materials from
various suppliers. While all such materials are available from numerous
independent suppliers, commodity raw materials are subject to fluctuations in
price. There have been historical periods of rapid and significant movements in
the price of aluminum, both upward and downward. Historically, the Company has
been successful in passing on these increases to its customers after a period of
60 to 90 days. However, there can be no assurance that the Company will continue
to be able to do so in the future.
EMPLOYEES
As of March 28, 1997, the Company employed approximately 2,123 full-time
employees, of which approximately 146 were represented by a union (all of whom
are employed at the Company's Bryan, Texas facilities). The contract covering
the Company's unionized employees expires in December 1998. The Company also
hires approximately 300 seasonal employees during the peak season, which lasts
from April to October. The Company believes its relationship with its employees
is good.
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<PAGE>
PROPERTIES
The Company's operations are principally conducted at nine owned or leased
facilities. The Company believes that its plants and equipment are modern and
well-maintained and provide adequate production capacity to meet the expected
demand for its products.
Listed below are the principal manufacturing facilities operated by the
Company.
<TABLE>
<CAPTION>
LOCATION PRINCIPAL PRODUCT OWNED/LEASED
- --------------------------------------------- --------------------------------------------- --------------------
<S> <C> <C>
Bryan, Texas................................. Residential windows Owned/leased(a)
Bryan, Texas................................. Commercial windows Owned
Dallas, Texas................................ Residential doors Leased
Dallas, Texas................................ Processed glass Leased
Fresno, California........................... Residential windows Leased
Gallatin, Tennessee.......................... Residential windows Owned
Houston, Texas(b)............................ Residential windows Leased
Peachtree City, Georgia...................... Residential windows Owned
Peachtree City, Georgia...................... Window components Owned
</TABLE>
- ---------------------------
(a) A portion of the facility is owned and a portion of the facility is leased.
(b) The Company anticipates closing this facility. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Houston
Operations."
In addition, the Company leases space in New Orleans, Louisiana and Phoenix,
Arizona for use as distribution facilities and maintains its corporate
headquarters in a leased facility in Dallas, Texas.
LEGAL PROCEEDINGS
The Company is involved from time to time in litigation arising in the
ordinary course of its business, none of which is expected to have a material
adverse effect on the Company.
INTELLECTUAL PROPERTY
The Company holds no licenses, patents or copyrights. However, ALENCO is a
registered trademark of the Company, and GAPCO, ALENCO, Living Windows, and
Builders View are trade names used in and associated with the Company's
business. The Company believes that its ALENCO trademark is important to the
Company because it is well recognized and associated with quality and value in
the Non-Wood Segment. The Company aggressively protects this trademark.
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS
The Company is subject to extensive and changing environmental laws and
regulations pertaining to the discharge of certain 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. As such, the nature of the Company's operations and previous
operations by others at real property currently or formerly owned or operated by
the Company expose the Company to the risk of claims under environmental, health
and safety laws and regulations. Based on its experience to date, the Company
does not expect such claims, or the costs of compliance with environmental,
health and safety laws and regulations, to have a material impact on its capital
expenditures, earnings or competitive position. The Company believes it is in
compliance in all material respects with such environmental laws and
regulations. Capital expenditures for environmental matters were not material
for fiscal year 1997 and are not expected to be material for fiscal year 1998.
The Company has been named as a PRP in two superfund sites pursuant to CERCLA
(the Chemical Recycling, Inc. site in Wylie, Texas, and the SAAD Trousdale Road
Site in Nashville, Tennessee). The Company believes that, based on the
information currently available, including the substantial number of other PRPs
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 condition or its results of operations.
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<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table provides information concerning the directors and
executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
David G. Fiore....................................... 49 Chairman, President and Chief Executive Officer
Virgil D. Lowe....................................... 54 Chief Financial Officer, Vice President, Director
Charles E. Still..................................... 55 Vice President
Bradford E. Bernstein................................ 30 Director
Michael L. George.................................... 56 Director
Steven B. Gruber..................................... 39 Director
Robert B. Henske..................................... 35 Director
</TABLE>
DAVID G. FIORE is Chairman of the Board of Directors and has served as
President and Chief Executive Officer of the Company since January 1994. From
when he joined the Company in October 1992 until January 1994, he served as
Executive Vice President responsible for the Company's operating divisions in
the western United States. Prior to joining the Company, Mr. Fiore served two
years as President of Cal-Tex Industries, the parent company of three aluminum
window manufacturers based in San Diego, California, as well as three years as
President of General Aluminum, a Cal-Tex Industries subsidiary. Mr. Fiore
received a Bachelor of Science degree from the State University of New York at
Buffalo and a Master of Business Administration degree from Syracuse University.
CHARLES E. STILL has served as the Company's Vice President of Engineering
since June 1982. During his 34-year career with the Company, Mr. Still has held
positions including Designer, Graphics Supervisor, Design Engineer, Manager and
Design Engineer and Director of Product Engineering. Mr. Still received a
Bachelor of Science degree in Architecture from Texas A&M University.
VIRGIL D. LOWE has served as Secretary and Treasurer of the Company since
November 1994 and became a director of the Company in 1997. Mr. Lowe joined the
Company as Controller in June 1988. Prior to joining the Company, Mr. Lowe was
employed by Continental Can Company for 17 years. During his employment with
Continental Can Company, he progressed from Cost Accountant to Director of
Accounting for Beverage Operations. Mr. Lowe received a Bachelor of Science
degree in Accounting from East Texas Baptist University.
BRADFORD E. BERNSTEIN became a director of the Company in 1997. Mr.
Bernstein has served as a Principal, Vice President and Associate of Oak Hill
Partners, Inc., a private investment company, since 1992. From 1991 until 1992,
Mr. Bernstein worked at Patricof & Co. Ventures. Prior to that, from 1989 to
1991, he worked at Merrill Lynch & Co. Mr. Bernstein is a director of Pinnacle
Brands, Inc., Payroll Transfers, Inc., Caliber Collision Centers, Inc. and
CapStar Hotel Company.
MICHAEL L. GEORGE became a director of the Company in 1997. Since 1984, Mr.
George has been Chairman of the Board of the George Group, an acquisition and
management consulting firm based in Dallas, Texas. Mr. George holds a Bachelor
of Science degree in Physics from the University of California and a Master of
Science degree in Physics from the University of Illinois.
STEVEN B. GRUBER became a director of the Company in 1997. From March 1992
to the present, Mr. Gruber has been a Managing Director of Oak Hill Partners,
Inc. From May 1990 to March 1992, he
52
<PAGE>
was a Managing Director of Rosecliff, Inc. Since February 1994, Mr. Gruber has
also been an officer of Insurance Partners Advisors, L.P., an investment advisor
to Insurance Partners, L.P. Since October 1992, he has been a Vice President of
Keystone. From 1981 to 1990, Mr. Gruber was a managing director and co-head of
High Yield Securities and held various other positions at Lehman Brothers, Inc.
He is also a director of Superior National Insurance Group, Inc., Unionamerica
Holdings, plc, MVE HOLDINGS, INC., and several private companies related to
Keystone, Insurance Partners and Oak Hill Partners.
ROBERT B. HENSKE became a director of the Company in 1997. From January 1997
to the present, Mr. Henske has been a Vice President of Keystone and a principal
at Arbor Investors, L.L.C., a private investment firm. From January 1996 to
December 1996, he was Executive Vice President and Chief Financial Officer of
American Savings Bank, F.A., a federally-chartered thrift. From 1986 to January
1996, he was a partner and held various other positions with Bain & Company, a
management consulting firm.
BOARD COMMITTEES AND FEES
The Board of Directors of the Company has an executive committee, an audit
committee, a compensation committee, a finance and acquisition committee, and an
operating committee. None of such committees have held any meetings in fiscal
year 1997. The Directors of the Company are not compensated for their services
as such nor for their participation on any Board committees.
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the compensation paid during
fiscal year 1997 for services rendered in all capacities to the Company and its
subsidiaries by certain of the Company's executive officers (collectively, the
"Named Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND FISCAL -------------------------- -------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(A) SARS COMPENSATION
- -------------------------------------------- ----------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
David G. Fiore.............................. 1997 $ 175,000 $ 166,873 $ 265,600 $ 6,626(b)
President and Chief Executive Officer
Virgil D. Lowe.............................. 1997 87,750 83,437 53,120 7,184(c)
Secretary, Treasurer and Controller
Charles E. Still............................ 1997 71,583 58,962 -- 7,042(d)
Vice President
</TABLE>
- ------------------------
(a) Bonuses are based on operating performance. For corporate employees with
Company-wide responsibility, the bonus is based on the operating income of
the entire Company.
(b) Consists of $3,126 paid by the Company for health and life insurance and
$3,500 in contributions to the Company's 401(k) plans.
(c) Consists of $4,301 paid by the Company for health and life insurance, $250
in reimbursements for taxes attributable to such health and life insurance
payments and $2,633 in contributions to the Company's 401(k) plans.
(d) Consists of $4,894 paid by the Company for health and life insurance and
$2,148 in contributions to the Company's 401(k) plans.
53
<PAGE>
SAR GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information relating to stock appreciation
rights ("SARs") granted during fiscal year 1997 to the Named Executive Officers.
<TABLE>
<CAPTION>
% OF TOTAL SARS
GRANTED TO EMPLOYEES
NAME NUMBER OF SARS GRANTED(A) IN FISCAL YEAR
- ------------------------------------------------------------ ------------------------------- -------------------------
<S> <C> <C>
David G. Fiore.............................................. 10 84%
Virgil D. Lowe.............................................. 2 16
Charles E. Still............................................ -- --
</TABLE>
- ------------------------
(a) Certain employees of the Company and Holdings were granted Incentive Units
(the "Units") giving them the right to receive incentive compensation in
connection with certain defined events. The Acquisition was such an event
and triggered the redemption of the Units. The value of the ten Units
granted to Mr. Fiore in fiscal year 1997 and the value of the two Units
granted to Mr. Lowe in fiscal year 1997 is unascertainable as of March 28,
1997. However, the value of Mr. Fiore's ten Units upon closing of the
Transaction on May 9, 1997 was $265,000, and the value of Mr. Lowe's two
Units upon closing of the Transaction on May 9, 1997 was $53,100.
AGGREGATED SAR EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END SAR VALUES
The following table provides information relating to the number and value of
unexercisable SARs held by the Named Executive Officers at March 28, 1997. No
SARs were exercised during fiscal year 1997 and none were exercisable as of
March 28, 1997.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SARS IN-THE-MONEY SARS
NAME AT FISCAL YEAR-END AT FISCAL YEAR-END
- ----------------------------------------------------------------------- ------------------- ---------------------
<S> <C> <C>
David G. Fiore......................................................... 40 $ 1,062,400(a)
Virgil D. Lowe......................................................... 7 185,920(a)
Charles E. Still....................................................... 2.5 66,400(a)
</TABLE>
- ------------------------
(a) The value of the Units (which are more fully described in note (a) to the
table above entitled "SAR Grants in the Last Fiscal Year") as of March 28,
1997 is unascertainable. However, the value of Mr. Fiore's Units upon
closing of the Transaction on May 9, 1997 was $1,062,400, the value of Mr.
Lowe's Units upon closing of the Transaction was $185,920 and the value of
Mr. Still's Units upon closing of the Transaction was $66,400.
BONUS PLAN AND OTHER BENEFIT PROGRAMS
The Company maintains a bonus plan providing for annual bonus awards to
executives and certain other key general managers. Such bonus amounts are based
on meeting Company-wide and divisional performance goals established by the
Company's Board of Directors. These employees also participate in employee
benefit programs including health insurance, group life insurance and a savings
and supplemental retirement plan (401(k) plan) on the same basis as other
employees of the Company.
NONQUALIFIED STOCK OPTION PLAN
Upon consummation of the Acquisition, Holdings adopted a Nonqualified Stock
Option Plan (the "Plan") in order to provide incentives to certain officers and
employees of Holdings and the Company by granting them options to purchase
common stock of Holdings. The Plan is administered by the Board of Directors of
Holdings, which has broad authority in administering and interpreting the Plan.
Options granted under the Plan ("Options") are nonqualified stock options which
do not qualify under Section 422A of the Code. Unless the award granting an
Option provides otherwise, upon the termination of an employee for other than
Cause (as defined in the Plan), vested options may be exercised at any time
until three months after the date of termination (one year if due to death or
disability of the employee). In
54
<PAGE>
the event the employee is terminated for Cause, all Options terminate
immediately. In addition, for a period of one year after an employee's
termination of employment for any reason, Holdings has the option to purchase
such Options at a price equal to the difference between the fair market value of
the shares of common stock for which such Options are exercisable by such
employee and the exercise price of such Options.
The Options vest upon such terms as the Board of Directors determines,
provided that in the event of a change of control of Holdings, Options which are
not exercisable at such time become immediately exercisable. The exercise price
for each Option is the fair market value of the common stock of Holdings on the
date of grant. Subsequent to the Agreement, Holdings granted options to purchase
33,261 shares of its common stock to certain members of the Company's senior
management. Holdings may issue options to purchase an additional 15,408 of its
shares of common stock under the Plan.
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company currently has employment agreements with David G. Fiore and
Virgil D. Lowe. Mr. Fiore's agreement is for a three-year term, provided,
however, that each year after the end of the first year of the agreement, the
term will be extended for an additional year unless either the Company or Mr.
Fiore gives notice of its or his intention to terminate the agreement as of the
then effective termination date. Mr. Fiore is to receive an annual base salary
of at least $175,000 and standard benefits available to other executives of the
Company. If his employment is terminated for cause, Mr. Fiore is entitled to
receive his salary and benefits through the date of termination. In the event of
a termination other than for cause, Mr. Fiore is entitled to his full base
salary during the remainder of the term plus the bonus, if any, earned by, but
not paid to, Mr. Fiore prior to the termination date. The Company must also
maintain in effect for the remainder of the term all employee benefit plans
relating to hospitalization, medical, life insurance and disability programs in
which Mr. Fiore was enrolled immediately prior to termination. Mr. Fiore is also
subject to a non-competition agreement during the term of the agreement and for
a period of one year after termination.
Under Mr. Lowe's agreement, he is to receive an annual base salary of at
least $77,500 and standard benefits available to other executives of the
Company. Upon termination of his employment by the Company for cause, Mr. Lowe
is to receive his salary and benefits through the date of termination. In the
event of a termination other than for cause Mr. Lowe is entitled to 12 months of
base pay, plus a pro rata share of the bonus, if any, which he otherwise would
have been entitled to for the then current fiscal year. The Company must also
maintain in effect for a period of 12 months after termination all employee
benefit plans relating to hospitalization, medical, life insurance and
disability programs in which Mr. Lowe was enrolled immediately prior to
termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors had no compensation committee or other
committee performing similar functions during the last fiscal year. The
Company's President, Mr. Fiore, is the only executive officer of the Company or
its subsidiaries or former officer of the same, who has participated in
deliberations of the Board during the last fiscal year concerning executive
compensation.
The Company's Board of Directors formed a compensation committee during
fiscal year 1998, which consists of Messrs. Bernstein, George and Henske.
55
<PAGE>
OWNERSHIP OF CAPITAL STOCK
The Company is a wholly owned subsidiary of Holdings. Holdings' address is
3030 LBJ Freeway, Suite 300, Dallas, Texas 75234. The following table sets forth
certain information regarding the beneficial ownership of the shares of common
stock of Holdings by each person who owns more than five percent of the
outstanding shares of common stock of Holdings and by the directors and
executive officers of the Company, individually and as a group.
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
OF SHARES OF SHARES
----------- -------------
<S> <C> <C>
FIVE PERCENT STOCKHOLDERS:
Reliant Partners, L.P.(a)........................................................ 286,921 47.8%
201 Main Street, Suite 3100
Fort Worth, Texas 76102
Reliant Partners II, L.P. (b).................................................... 286,921 47.8%
201 Main Street, Suite 3100
Forth Worth, Texas 76102
OFFICERS AND DIRECTORS:
David G. Fiore................................................................... 12,905 2.2%
Virgil D. Lowe................................................................... 3,001 0.5%
Charles E. Still................................................................. 1,501 0.3%
All executive officers and directors as a group (3 persons)........................ 17,407 2.9%
</TABLE>
- ---------------------
(a) The general partner of Reliant Partners is Group 31, Inc. ("Group 31"). J.
Taylor Crandall is the sole stockholder of Group 31. Accordingly, Mr.
Crandall may be deemed to be the beneficial owner of these shares. Mr.
Crandall disclaims beneficial ownership of these shares.
(b) The general partner of Reliant Partners II is FW Group Genpar, Inc. ("Group
Genpar"). David G. Brown is the sole stockholder of Group Genpar.
Accordingly, Mr. Brown may be deemed to be the beneficial owner of these
shares. Mr. Brown disclaims beneficial ownership of these shares.
STOCKHOLDERS AGREEMENT AND REGISTRATION RIGHTS AGREEMENT
In connection with the Transaction, Holdings entered into an agreement (the
"Stockholders Agreement") with Reliant Partners, Reliant Partners II, and the
employees of the Company who own shares of common stock of Holdings (the
"Management Investors"). Holdings also entered into a Registration Rights
Agreement (the "Registration Rights Agreement") with the Management Investors.
The following is a summary description of the principal terms of the
Stockholders Agreement and the Registration Rights Agreement, and is subject to
and qualified in its entirety by reference to the Stockholders Agreement and
Registration Rights Agreement, copies of which have been filed as exhibits to
the Registration Statement of which this Prospectus is a part.
GENERAL PROHIBITION ON TRANSFERS. The Stockholders Agreement prohibits
transfers of common stock of Holdings, except for transfers in compliance with
the Stockholders Agreement.
RIGHT OF FIRST REFUSAL. Sales of shares of common stock of Holdings by a
Management Investor are subject to a right of first refusal in favor of
Holdings, Reliant Partners, Reliant Partners II, and the other Management
Investors.
TAG-ALONG AND DRAG-ALONG RIGHTS. If Reliant Partners and Reliant Partners II
propose to transfer common stock of Holdings representing more than 50% of the
aggregate number of shares of common stock of Holdings owned by them, other than
in a registered public offering or other permitted transaction, the Management
Investors will, under certain circumstances, have the option to sell to the same
offeree their common stock on the same terms on a pro rata basis. If Reliant
Partners and Reliant Partners II propose to sell or otherwise transfer for value
to an unaffiliated third party 85% or more of the
56
<PAGE>
common stock of Holdings owned by them, they will have the right under certain
circumstance to require the Management Investors to sell or transfer a pro rata
portion of their common stock to such party on the same terms.
MANAGEMENT REPURCHASE. All shares of common stock of Holdings held by a
Management Investor are subject to repurchase by Holdings, Reliant Partners and
Reliant Partners II for a specified period of time following the termination of
employment of such Management Investor for any reason.
REGISTRATION RIGHTS. The Management Investors are each entitled to an
unlimited number of "piggyback" registration rights at any time following any
initial public offering by Holdings of its common stock. In addition, at such
time as Holdings becomes eligible to register securities on Form S-3 under the
Securities Act, Management Investors holding at least 50% of the shares of
common stock then held by all Management Investors will be entitled to make one
demand to require Holdings to register under the Securities Act their shares of
common stock of Holdings. The exercise of the demand and piggyback rights are
subject to other limitations and conditions that are customary in registration
rights agreements.
CERTAIN TRANSACTIONS
AGREEMENTS WITH GEORGE GROUP
The Company paid George Group an advisory fee of approximately $1.0 million
at the closing of the Transaction as compensation for its services as an advisor
in connection with the Transaction.
The Company has entered into a consulting agreement with George Group
whereby George Group will provide consulting services to the Company, including
services with respect to strategic planning, operations and financial matters.
For such services, George Group will be paid a cash fee in an amount of $1.2
million and will be reimbursed for its out-of-pocket expenses. George Group has
advised the Company that it estimates its engagement will be completed within 18
months from the date of closing of the Transaction. In addition, upon the
Company's meeting certain performance targets agreed upon between Reliant
Partners, Reliant Partners II and George Group, certain employees of George
Group will receive an increased limited partnership interest in each of Reliant
Partners and Reliant Partners II. The Company has agreed to indemnify George
Group, its owners, employees and agents from liabilities and claims relating to
or arising from the engagement of George Group, other than those resulting from
negligence or willful misconduct of George Group. Michael L. George, a director
of the Company, is the Chairman of the Board of George Group.
CHANGE OF CONTROL ARRANGEMENT WITH MR. FIORE
Upon consummation of the Transaction, Mr. Fiore, pursuant to a Transaction
Incentive Agreement dated as of January 1, 1997 with the Company, received a
transaction bonus of $250,000 in cash and will also receive $200,000 payable on
a deferred basis over five years.
DESCRIPTION OF THE SENIOR CREDIT FACILITY
The Company entered into a credit agreement dated as of May 9, 1997 (the
"Senior Credit Facility") among the Company, the several lenders from time to
time parties thereto (collectively, the "Lenders"), and The Chase Manhattan
Bank, as administrative agent (the "Agent"). Chase Securities Inc. acted as
advisor and arranger for the Senior Credit Facility. The following is a summary
description of the principal terms of the Senior Credit Facility. The
description set forth below does not purport to be complete and is qualified in
its entirety by reference to the Senior Credit Facility, a copy of which has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part.
57
<PAGE>
STRUCTURE. The Lenders have committed, subject to compliance with borrowing
base limitations and customary conditions, to provide the Company with revolving
credit loans of up to $25.0 million, of which $5.0 million is available for the
issuance of letters of credit.
No amounts were borrowed on the closing date of the Transaction under the
Senior Credit Facility. At June 27, 1997, no borrowings were outstanding under
the Senior Credit Facility. The Senior Credit Facility may be utilized to fund
the Company's working capital requirements, including issuance of stand-by and
trade letters of credit, to fund acquisitions (subject to compliance with
certain covenants) and for other general corporate purposes.
The Senior Credit Facility is a senior secured revolving credit facility
providing for revolving loans to the Company and the issuance of U.S.
dollar-denominated letters of credit for the account of the Company in an
aggregate principal amount and an amount in respect of letters of credit
(including the aggregate stated amount thereof and the aggregate reimbursement
and other obligations in respect thereof) at any time not to exceed the lesser
of (i) $25.0 million and (ii) the Company's borrowing base, which is the sum of
up to 85% of the Company's eligible domestic accounts receivable plus the lesser
of $10.0 million and up to 50% of the Company's eligible raw materials and
finished goods inventory. Eligible accounts receivable include substantially all
the Company's accounts receivable after deducting accounts outstanding for more
than 90 days after the invoice date, certain foreign accounts, and accounts of
certain other obligors. Eligible raw materials and finished goods inventory do
not include obsolete or slow-moving inventory, foreign inventory and certain
other items. At March 28, 1997, on a pro forma basis after giving effect to the
Transaction and the Initial Offering and the application of the net proceeds
therefrom, the Company's borrowing base would have been approximately $20.5
million, and at May 30, 1997 the borrowing base was $20.9 million.
The availability of the Senior Credit Facility will be subject to certain
conditions. Loans and letters of credit will be available at any time during the
five-year term of the Senior Credit Facility subject to the fulfillment of
customary conditions precedent including the absence of a material adverse
change in the condition of the Company, the absence of a default under the
Senior Credit Facility and compliance with the borrowing base limitation
described above.
SECURITY; GUARANTY. The Company's obligations under the Senior Credit
Facility are guaranteed by each existing and subsequently acquired or organized
subsidiary of the Company. The Senior Credit Facility and the guarantees thereof
are secured by a perfected first priority security interest in substantially all
accounts receivable, inventory and other property included in the borrowing base
and proceeds of the foregoing of the Company and the guarantors.
INTEREST; MATURITY. Borrowings under the Senior Credit Facility bear
interest at a rate per annum equal (at the Company's option) to: (i) the Agent's
Eurodollar rate plus an applicable margin or (ii) an alternate base rate (equal
to the highest of the Agent's prime rate, a certificate of deposit rate plus 1%,
or the Federal Funds effective rate plus 1/2 of 1%) plus an applicable margin.
Initially, the applicable margin was 2.5% per annum for Eurodollar rate loans
and 1.5% per annum for alternate base rate loans. After fiscal year 1997, the
applicable margin may reduce to 1.5% per annum for Eurodollar rate loans and
0.5% per annum for alternate base rate loans depending upon the Company's
interest coverage ratio. The Senior Credit Facility will mature on May 9, 2002.
FEES. The Company is required to pay the Lenders, on a quarterly basis, a
commitment fee equal to 1/2 of 1% per annum (which may be reduced to 0.375% per
annum after fiscal year 1998 based on the Company's interest coverage ratio) on
the undrawn portion of the Senior Credit Facility. The Company is also obligated
to pay (i) a per annum letter of credit fee equal to the applicable margin for
Eurodollar rate loans on the aggregate amount of outstanding letters of credit;
(ii) a fronting bank fee for the letter of credit issuing bank equal to 1/4 of
1% per annum; and (iii) agent, arrangement and other similar fees.
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<PAGE>
COVENANTS. The Senor Credit Facility contains a number of covenants that,
among other things, restrict the ability of the Company and its subsidiaries to
dispose of assets, incur additional indebtedness, prepay other indebtedness
(including the Notes) or amend certain debt instruments (including the
Indenture), pay dividends, create liens on assets, enter into sale and leaseback
transactions, make investments, loans or advances, make acquisitions, engage in
mergers or consolidations, change the business conducted by the Company or its
subsidiaries, make capital expenditures or engage in certain transactions with
affiliates and otherwise restrict certain corporate activities. In addition,
under the Senior Credit Facility, the Company is required to maintain specified
financial ratios and tests, including minimum interest coverage ratios and
maximum leverage ratios.
EVENTS OF DEFAULT. The Senior Credit Facility contains customary events of
default, including non-payment of principal, interest or fees, material
inaccuracy of representations and warranties, violation of covenants,
cross-default and cross-acceleration to certain other indebtedness, certain
events of bankruptcy and insolvency, certain events under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), material
judgments, actual or asserted invalidity of any guarantee or security interest,
the occurrence of a material adverse change and a change of control in certain
circumstances as set forth therein.
59
<PAGE>
DESCRIPTION OF THE NOTES
The Exchange Notes will be issued, and the Senior Subordinated Notes were
issued, under an Indenture (the "INDENTURE") dated as of May 9, 1997 among the
Company, the Guarantors and Bank One, N.A. (formerly known as Bank One,
Columbus, NA) as trustee (the "TRUSTEE"). The following summary of certain
provisions of the Indenture and the Registration Rights Agreement does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE
ACT"), and to all of the provisions of the Indenture, a copy of which has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part, including the definitions of certain terms therein and those terms made a
part of the Indenture by reference to the Trust Indenture Act, as in effect on
the date of the Indenture. The definitions of certain capitalized terms used in
the following summary are set forth below under "--Certain Definitions."
References in this "Description of the Notes" section to "the Company" mean only
Reliant Building Products, Inc. and not any of its Subsidiaries.
GENERAL
The Exchange Notes will be issued, and the Senior Subordinated Notes were
issued, only in registered form, without coupons, in denominations of $1,000 and
integral multiples of $1,000. The Company appointed the Trustee to serve as
registrar and paying agent under the Indenture at its offices in the Borough of
Manhattan, the City of New York. No service charge was made, or will be made,
for any registration of transfer or exchange of Senior Subordinated Notes or
Exchange Notes, as the case may be, except for any tax or other governmental
charge that may be imposed in connection therewith.
RANKING
The Notes rank junior to, and are subordinated in right of payment to, all
existing and future Senior Indebtedness of the Company, PARI PASSU in right of
payment with all senior subordinated Indebtedness of the Company and senior in
right of payment to all Subordinated Indebtedness of the Company. At March 28,
1997, on a PRO FORMA basis after giving effect to the Transaction and the
issuance of the Senior Subordinated Notes and the application of the net
proceeds therefrom, the Company had no Senior Indebtedness outstanding
(exclusive of unused commitments). See "Summary--The Transaction" and "Use of
Proceeds." All debt incurred under the Senior Credit Facility is Senior
Indebtedness of the Company, is guaranteed by each of the Guarantors on a senior
basis and is secured by substantially all of the assets of the Company and the
Guarantors.
MATURITY, INTEREST AND PRINCIPAL OF THE NOTES
The Notes are limited to $70.0 million aggregate principal amount and mature
on May 1, 2004. Cash interest on the Notes accrues at a rate of 10 7/8% PER
ANNUM and is payable semi-annually in arrears on each May 1 and November 1,
commencing November 1, 1997, to the holders of record of Notes at the close of
business on April 15 and October 15, respectively, immediately preceding such
interest payment date. Cash interest accrues from the most recent interest
payment date to which interest has been paid or, if no interest has been paid,
from May 9, 1997. Interest is computed on the basis of a 360-day year of twelve
30-day months.
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OPTIONAL REDEMPTION
The Notes are redeemable at the option of the Company, in whole or in part,
at any time on or after May 1, 2001, at the redemption prices (expressed as a
percentage of principal amount) set forth below, plus accrued and unpaid
interest thereon, if any, to the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date), if redeemed during the 12-month period
beginning on May 1 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---------------------------------------------------------------------------------------------------- ------------
<S> <C>
2001................................................................................................ 105.438%
2002................................................................................................ 102.719%
2003 and thereafter................................................................................. 100.000%
</TABLE>
In addition, at any time and from time to time on or prior to May 1, 2000,
the Company may redeem in the aggregate up to 35% of the originally issued
aggregate principal amount of the Notes with the net cash proceeds of one or
more Public Equity Offerings by Holdings (to the extent that the net cash
proceeds thereof are contributed to the equity capital of the Company) or the
Company after which there is a Public Market, at a redemption price in cash
equal to 110.875% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the date of redemption (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); PROVIDED, HOWEVER, that at least 65% of the
originally issued aggregate principal amount of the Notes must remain
outstanding immediately after giving effect to each such redemption (excluding
any Notes held by the Company or any of its Affiliates). Notice of any such
redemption must be given within 60 days after the date of the closing of the
relevant Public Equity Offering of Holdings or the Company.
At any time on or prior to May 1, 2001, the Notes may also be redeemed as a
whole at the option of the Company upon the occurrence of a Change of Control
(but in no event more than 90 days after the occurrence of such Change of
Control) at a redemption price equal to 100% of the principal amount thereof,
plus the Applicable Premium as of, and accrued but unpaid interest, if any, to,
the date of redemption (the "REDEMPTION DATE") (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant
interest payment date).
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any time
pursuant to an optional redemption, selection of such Notes for redemption will
be made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not then listed on a national securities exchange, on a PRO RATA
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
PROVIDED, HOWEVER, that no Notes of a principal amount of $1,000 or less shall
be redeemed in part; PROVIDED, FURTHER, HOWEVER, that if a partial redemption is
made with the net cash proceeds of a Public Equity Offering by Holdings or the
Company, selection of the Notes or portions thereof for redemption shall be made
by the Trustee only on a PRO RATA basis or on as nearly a PRO RATA basis as is
practicable (subject to the procedures of The Depository Trust Company), unless
such method is otherwise prohibited. 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 Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the redemption date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Company
has deposited with the paying agent for the Notes funds in satisfaction of the
applicable redemption price pursuant to the Indenture.
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SUBORDINATION OF THE NOTES
The payment of the principal of, premium, if any, and interest on the Notes
is subordinated in right of payment, to the extent and in the manner provided in
the Indenture, to the prior payment in full in cash of all Senior Indebtedness.
Upon any payment or distribution of assets or securities of the Company of
any kind or character, whether in cash, property or securities (excluding any
payment or distribution of Permitted Junior Securities and excluding any payment
from the trust described under "--Satisfaction and Discharge of Indenture;
Defeasance" (a "DEFEASANCE TRUST PAYMENT")), upon any dissolution or winding-up
or total liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
Senior Indebtedness shall first be paid in full in cash before the Holders of
the Notes or the Trustee on behalf of such Holders shall be entitled to receive
any payment by the Company of the principal of, premium, if any, or interest on
the Notes, or any payment by the Company to acquire any of the Notes for cash,
property or securities, or any distribution by the Company with respect to the
Notes of any cash, property or securities (excluding any payment or distribution
of Permitted Junior Securities and excluding any Defeasance Trust Payment).
Before any payment may be made by, or on behalf of, the Company of the principal
of, premium, if any, or interest on the Notes upon any such dissolution or
winding-up or total liquidation or reorganization, any payment or distribution
of assets or securities of the Company of any kind or character, whether in
cash, property or securities (excluding any payment or distribution of Permitted
Junior Securities and excluding any Defeasance Trust Payment), to which the
Holders of the Notes or the Trustee on their behalf would be entitled, but for
the subordination provisions of the Indenture, shall be made by the Company or
by any receiver, trustee in bankruptcy, liquidation trustee, agent or other
Person making such payment or distribution, directly to the holders of the
Senior Indebtedness (PRO RATA to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders) or their representatives or
to the trustee or trustees or agent or agents under any agreement or indenture
pursuant to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay all such Senior
Indebtedness in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such Senior
Indebtedness.
No direct or indirect payment (excluding any payment or distribution of
Permitted Junior Securities and excluding any Defeasance Trust Payment) by or on
behalf of the Company of principal of, premium, if any, or interest on the
Notes, whether pursuant to the terms of the Notes, upon acceleration, pursuant
to an Offer to Purchase or otherwise, will be made if, at the time of such
payment, there exists a default in the payment of all or any portion of the
obligations on any Designated Senior Indebtedness, whether at maturity, on
account of mandatory redemption or prepayment, acceleration or otherwise, and
such default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of such Designated Senior
Indebtedness. In addition, during the continuance of any non-payment event of
default with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be immediately accelerated, and upon receipt by the Trustee
of written notice (a "PAYMENT BLOCKAGE NOTICE") from the holder or holders of
such Designated Senior Indebtedness or the trustee or agent acting on behalf of
the holders of such Designated Senior Indebtedness, then, unless and until such
event of default has been cured or waived or has ceased to exist or such
Designated Senior Indebtedness has been discharged or repaid in full in cash or
the benefits of these provisions have been waived by the holders of such
Designated Senior Indebtedness, no direct or indirect payment (excluding any
payment or distribution of Permitted Junior Securities and excluding any
Defeasance Trust Payment) will be made by or on behalf of the Company of
principal of, premium, if any, or interest on the Notes, to such Holders, during
a period (a "PAYMENT BLOCKAGE PERIOD") commencing on the date of receipt of such
notice by the Trustee and ending 179 days thereafter. Notwithstanding anything
in the subordination provisions of the Indenture or the Notes to the contrary,
(x) in no event will a Payment Blockage Period extend beyond 179 days from the
date the Payment Blockage Notice in respect thereof was given, (y) there shall
be a period of at least 181 consecutive days in each 360-day period when no
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Payment Blockage Period is in effect and (z) not more than one Payment Blockage
Period may be commenced with respect to the Notes during any period of 360
consecutive days. No event of default that existed or was continuing on the date
of commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period (to the extent the
holder of Designated Senior Indebtedness, or trustee or agent, giving notice
commencing such Payment blockage Period had knowledge of such existing or
continuing event of default) may be, or be made, the basis for the commencement
of any other Payment Blockage Period by the holder or holders of such Designated
Senior Indebtedness or the trustee or agent acting on behalf of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such event of default has been cured or waived for a period of not less
than 90 consecutive days.
The failure to make any payment or distribution for or on account of the
Notes by reason of the provisions of the Indenture described under this
"Subordination of the Notes" heading will not be construed as preventing the
occurrence of any Event of Default in respect of the Notes. See "-- Events of
Default" below.
By reason of the subordination provisions described above, in the event of
insolvency of the Company, funds which would otherwise be payable to Holders of
the Notes will be paid to the holders of Senior Indebtedness to the extent
necessary to pay the Senior Indebtedness in full in cash, and the Company may be
unable to meet fully its obligations with respect to the Notes.
At the time of the issuance of the Exchange Notes, the Senior Credit
Facility is expected to be the only outstanding Senior Indebtedness. Subject to
the restrictions set forth in the Indenture, in the future the Company may issue
additional Senior Indebtedness to refinance existing Indebtedness or for other
corporate purposes.
GUARANTIES OF THE NOTES
The Indenture provides that each of the Guarantors unconditionally
guarantees on a joint and several basis (the "GUARANTIES") all of the Company's
obligations under the Notes, including its obligations to pay principal,
premium, if any, and interest with respect to the Notes. The Guarantors also
guarantee all obligations of the Company under the Senior Credit Facility, and
each Guarantor has granted a security interest in all or substantially all of
its assets to secure the obligations under the Senior Credit Facility. The
obligations of each Guarantor are limited to the maximum amount which, after
giving effect to all other contingent and fixed liabilities of such Guarantor
and after giving effect to any collections from or payments made by or on behalf
of any other Guarantor in respect of the obligations of such other Guarantor
under its Guaranty or pursuant to its contribution obligations under the
Indenture, results in the obligations of such Guarantor under its Guaranty not
constituting a fraudulent conveyance or fraudulent transfer under Federal or
state law. Each Guarantor that makes a payment or distribution under a Guaranty
is entitled to a contribution from each other Guarantor in a PRO RATA amount,
based on the net assets of each Guarantor determined in accordance with GAAP.
Except as provided in "--Certain Covenants" below, the Company is not restricted
from selling or otherwise disposing of any of the Equity Interests of the
Guarantors.
The Indenture provides that each of the Company's Subsidiaries on the Issue
Date and each of the Company's Subsidiaries (excluding Unrestricted
Subsidiaries) formed or acquired thereafter are required to be Guarantors. The
Company shall cause each Restricted Subsidiary issuing a Guaranty after the
Issue Date to (i) execute and deliver to the Trustee a supplemental indenture in
form reasonably satisfactory to the Trustee pursuant to which such Restricted
Subsidiary shall become a party to the Indenture and thereby unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms set forth therein and (ii) deliver to the Trustee an opinion of
counsel that such supplemental indenture has been duly authorized, executed and
delivered by such Restricted Subsidiary and constitutes a legal, valid, binding
and enforceable obligation of such Restricted Subsidiary (which opinion may be
subject to customary assumptions and qualifications). Thereafter, such
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Restricted Subsidiary shall (unless released in accordance with the terms of
this Indenture) be a Guarantor for all purposes of the Indenture. Separate
financial statements of the Guarantors and other disclosures are not included
herein because management has determined that they are not material to
investors.
The Indenture provides that if the Notes thereunder are defeased in
accordance with the terms of the Indenture, or if, subject to the requirements
of the first paragraph under "Certain Covenants-- Merger, Sale of Assets, etc.,"
all or substantially all of the assets of any Guarantor or all of the Equity
Interests of any Guarantor are sold (including by issuance or otherwise) by the
Company in a transaction constituting an Asset Sale, and if (x) the Net Cash
Proceeds from such Asset Sale are used in accordance with the covenant described
under "--Certain Covenants--Disposition of Proceeds of Asset Sales" or (y) the
Company delivers to the Trustee an Officers' Certificate to the effect that the
Net Cash Proceeds from such Asset Sale shall be used in accordance with the
covenant described under "-- Certain Covenants--Disposition of Proceeds of Asset
Sales" and within the time limits specified by such covenant, then such
Guarantor (in the event of a sale or other disposition of all of the Equity
Interests of such Guarantor) or the corporation acquiring such assets (in the
event of a sale or other disposition of all or substantially all of the assets
of such Guarantor) shall be released and discharged of its Guaranty obligations
in respect of the Indenture and the Notes.
The Guaranties are general unsecured obligations of the Guarantors. The
obligations of each Guarantor under its Guaranty is subordinated and junior in
right of payment to the prior payment in full of all existing and future
Guarantor Senior Indebtedness of such Guarantor to substantially the same extent
as the Notes are subordinated to all existing and future Senior Indebtedness of
the Company.
Any Guarantor that is designated an Unrestricted Subsidiary pursuant to and
in accordance with "--Designation of Unrestricted Subsidiaries" below shall upon
such Designation be released and discharged of its Guaranty obligations in
respect of the Indenture and the Notes and any Unrestricted Subsidiary whose
Designation is revoked pursuant to "--Designation of Unrestricted Subsidiaries"
below will be required to become a Guarantor in accordance with the procedure
described in the third preceeding paragraph.
OFFER TO PURCHASE UPON CHANGE OF CONTROL
Following the occurrence of a Change of Control (the date of such occurrence
being the "CHANGE OF CONTROL DATE"), the Company shall notify the Holders of the
Notes of such occurrence in the manner prescribed by the Indenture and shall,
unless the Company shall have elected to redeem the Notes prior to May 1, 2001
upon a Change of Control as permitted by the third paragraph "--Optional
Redemption" above, within 20 days after the Change of Control Date, make an
Offer to Purchase all Notes then outstanding at a purchase price in cash equal
to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Purchase Date (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant
interest payment date).
If a Change of Control occurs which also constitutes an event of default
under the Senior Credit Facility, the lenders under the Senior Credit Facility
would be entitled to exercise the remedies available to a secured lender under
applicable law and pursuant to the terms of the Senior Credit Facility.
Accordingly, any claims of such lenders with respect to the assets of the
Company will be prior to any claim of the Holders of the Notes with respect to
such assets.
If an Offer to Purchase is made, there can be no assurance that the Company
will have available funds sufficient to pay for all of the Notes that might be
tendered by Holders of Notes seeking to accept the Offer to Purchase. If the
Company fails to repurchase all of the Notes tendered for purchase, such failure
will constitute an Event of Default under the Indenture. See "--Events of
Default" below. If the Company makes an Offer to Purchase, the Company will
comply with all applicable tender offer laws and regulations, including, to the
extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act,
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and any other applicable Federal or state securities laws and regulations and
any applicable requirements of any securities exchange on which the Notes are
listed, and any violation of the provisions of the Indenture relating to such
Offer to Purchase occurring as a result of such compliance shall not be deemed
an Event of Default or an event that, with the passing of time or giving of
notice, or both, would constitute an Event of Default.
Except as described above with respect to a Change of Control, the Indenture
does not contain provisions that permit the Holders of the Notes to require that
the Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
CERTAIN COVENANTS
LIMITATION ON RESTRICTED PAYMENTS. The Company shall not, and shall not
cause or permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend or any other distribution on any Equity
Interests of the Company or any Restricted Subsidiary or make any payment or
distribution to the direct or indirect holders (in their capacities as such)
of Equity Interests of the Company or any Restricted Subsidiary (other than
any dividends, distributions and payments made to the Company or any
Restricted Subsidiary and dividends or distributions payable to any Person
solely in Qualified Equity Interests of the Company or in options, warrants
or other rights to purchase Qualified Equity Interests of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any Restricted Subsidiary (other than any
such Equity Interests owned by the Company or any Restricted Subsidiary);
(iii) purchase, redeem, defease or retire for value, or make any
principal payment on, prior to any scheduled maturity, scheduled repayment
or scheduled sinking fund payment, any Subordinated Indebtedness (other than
any Subordinated Indebtedness held by the Company or any Wholly Owned
Restricted Subsidiary); or
(iv) make any Investment (other than Permitted Investments) in any
Person (other than in the Company, any Restricted Subsidiary or a Person
that becomes a Restricted Subsidiary, or is merged with or into or
consolidated with the Company or a Restricted Subsidiary (provided the
Company or a Restricted Subsidiary is the survivor), as a result of or in
connection with such Investment)
(any such payment or any other action (other than any exception thereto)
described in (i), (ii), (iii) or (iv) each, a "RESTRICTED PAYMENT"), unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time or immediately after giving effect to such Restricted
Payment;
(b) immediately after giving effect to such Restricted Payment, the
Company would be able to Incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the Consolidated Coverage Ratio of the first
paragraph of "-- Limitation on Indebtedness" below; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after the
Issue Date does not exceed an amount equal to the sum of (1) 50% of
cumulative Consolidated Net Income determined for the period (taken as one
period) from the beginning of the first fiscal quarter commencing after the
Issue Date and ending on the last day of the most recent fiscal quarter
immediately preceding the date of such Restricted Payment for which
consolidated financial information of the Company is available (or if such
cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss), PLUS (2) the aggregate net cash proceeds received by the Company
either (x) as capital contributions to the Company after the Issue Date or
(y) from the issue and sale (other than to a Restricted Subsidiary) of its
Qualified Equity Interests after the Issue Date (excluding the net proceeds
from any issuance and sale of Qualified Equity Interests financed, directly
or indirectly, using funds borrowed from the
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Company or any Restricted Subsidiary until and to the extent such borrowing
is repaid), PLUS (3) the principal amount (or accreted amount (determined in
accordance with GAAP), if less) of any Indebtedness of the Company or any
Restricted Subsidiary Incurred after the Issue Date which has been converted
into or exchanged for Qualified Equity Interests of the Company, PLUS (4) in
the case of the disposition or repayment of any Investment constituting a
Restricted Payment made after the Issue Date, an amount (to the extent not
included in the computation of Consolidated Net Income) equal to the lesser
of: (x) the return of capital with respect to such Investment and (y) the
amount of such Investment which was treated as a Restricted Payment, in
either case, less the cost of the disposition of such Investment and net of
taxes, PLUS (5) so long as the Designation thereof was treated as a
Restricted Payment made after the Issue Date, with respect to any
Unrestricted Subsidiary that has been redesignated as a Restricted
Subsidiary after the Issue Date in accordance with "--Designation of
Unrestricted Subsidiaries" below, the Company's proportionate interest in
the net worth of such Subsidiary in an amount equal to the excess of (x) the
total assets of such Subsidiary, valued on an aggregate basis at Fair Market
Value, over (y) the total liabilities of such Subsidiary, determined in
accordance with GAAP (and provided that such amount shall not in any case
exceed the Designation Amount with respect to such Restricted Subsidiary
upon its Designation), PLUS (6) (to the extent not included in the
computation of Consolidated Net Income) the amount of cash dividends or cash
distributions (other than to pay taxes) received from any Unrestricted
Subsidiary since the Issue Date, MINUS (7) the greater of (x) $0 and (y) the
Designation Amount (measured as of the date of Designation) with respect to
any Subsidiary of the Company which has been designated as an Unrestricted
Subsidiary after the Issue Date in accordance with "--Designation of
Unrestricted Subsidiaries" below.
The foregoing provisions will not prevent (i) the payment of any dividend or
distribution on, or redemption of, Equity Interests within 60 days after the
date of declaration of such dividend or distribution or the giving of formal
notice of such redemption, if at the date of such declaration or giving of such
formal notice such payment or redemption would comply with the provisions of the
Indenture; (ii) the purchase, redemption, retirement or other acquisition of any
Equity Interests of the Company in exchange for, or out of the net cash proceeds
of the substantially concurrent issue and sale (other than to a Restricted
Subsidiary) of, Qualified Equity Interests of the Company; PROVIDED, HOWEVER,
that any such net cash proceeds and the value of any Qualified Equity Interests
issued in exchange for such retired Equity Interests are excluded from clause
(c)(2) of the preceding paragraph (and were not included therein at any time);
(iii) the purchase, redemption, retirement, defeasance or other acquisition of
Subordinated Indebtedness, or any other payment thereon, made in exchange for,
or out of the net cash proceeds of, a substantially concurrent issue and sale
(other than to a Restricted Subsidiary) of (x) Qualified Equity Interests of the
Company; PROVIDED, HOWEVER, that any such net cash proceeds and the value of any
Qualified Equity Interests issued in exchange for Subordinated Indebtedness are
excluded from clauses (c)(2) and (c)(3) of the preceding paragraph (and were not
included therein at any time) or (y) other Subordinated Indebtedness having no
stated maturity for the payment of principal thereof prior to the final stated
maturity of the Notes; (iv) any Investment to the extent that the consideration
therefor consists of the net cash proceeds of the substantially concurrent issue
and sale (other than to a Restricted Subsidiary) of Qualified Equity Interests
of the Company; PROVIDED, HOWEVER, that any such net cash proceeds are excluded
from clause (c)(2) of the preceding paragraph (and were not included therein at
any time); (v) the purchase, redemption or other acquisition, cancellation or
retirement for value of Equity Interests, or options, warrants, equity
appreciation rights or other rights to purchase or acquire Equity Interests, of
the Company or any Restricted Subsidiary, or similar securities, held by
officers or employees or former officers or employees of the Company or any
Restricted Subsidiary (or their estates or beneficiaries under their estates),
upon death, disability, retirement or termination of employment, or dividends by
the Company to Holdings to effect the same in respect of its Equity Interests,
not to exceed $3.0 million in the aggregate since the Issue Date; (vi)
Restricted Payments not to exceed $2.0 million in the aggregate since the Issue
Date; (vii) payments to Holdings to pay general and administrative expenses of
Holdings not to exceed $500,000 in any fiscal year; or (viii) dividends by
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the Company to Holdings in an amount not to exceed $16.1 million to effect the
Transaction; PROVIDED, HOWEVER, that in the case of each of clauses (ii), (iii),
(iv), (v), (vi) and (vii) no Default or Event of Default shall have occurred and
be continuing or would arise therefrom.
In determining the amount of Restricted Payments permissible under this
covenant, amounts expended pursuant to clauses (i), (v), (vi) and (vii) of the
immediately preceding paragraph shall be included as Restricted Payments and
amounts expended pursuant to clauses (ii), (iii), (iv) and (viii) shall be
excluded. The amount of any non-cash Restricted Payment shall be deemed to be
equal to the Fair Market Value thereof at the date of the making of such
Restricted Payment.
LIMITATION ON INDEBTEDNESS. The Company shall not, and shall not cause or
permit any Restricted Subsidiary to, directly or indirectly, Incur any
Indebtedness (including Acquired Indebtedness) or issue any Disqualified Equity
Interests, except for Permitted Indebtedness; PROVIDED, HOWEVER, that the
Company and any Restricted Subsidiary that is a Guarantor may Incur Indebtedness
and the Company may issue Disqualified Equity Interests if, at the time of and
immediately after giving PRO FORMA effect to such Incurrence of Indebtedness or
issuance of Disqualified Equity Interests and the application of the proceeds
therefrom, the Consolidated Coverage Ratio would be greater than 2.0 to 1.0.
The foregoing limitations will not apply to the Incurrence by the Company or
any Restricted Subsidiary that is a Guarantor of any of the following
(collectively, "PERMITTED INDEBTEDNESS"), each of which shall be given
independent effect:
(a) Indebtedness under the Notes;
(b) Existing Indebtedness;
(c) Indebtedness pursuant to the Senior Credit Facility in an aggregate
principal amount at any one time outstanding not to exceed the sum of (A)
the greater of (i) $25.0 million and (ii) the sum of (a) 85% of Net Amount
of Eligible Receivables (as defined in the Senior Credit Facility as in
effect on the Issue Date whether or not the Senior Credit Facility is in
effect on the date of determination), PLUS (b) 50% of Eligible Inventory (as
defined in the Senior Credit Facility as in effect on the Issue Date whether
or not the Senior Credit Facility is in effect on the date of
determination), PLUS (B) any amounts outstanding under the Senior Credit
Facility that utilize subparagraph (i) of this paragraph of this covenant;
(d) Indebtedness of any Restricted Subsidiary owed to and held by the
Company or any Wholly Owned Restricted Subsidiary, and Indebtedness of the
Company owed to and held by any Wholly Owned Restricted Subsidiary which is
unsecured and subordinated in right of payment to the payment and
performance of the Company's obligations under any Senior Indebtedness, the
Indenture and the Notes; PROVIDED, HOWEVER, that an Incurrence of
Indebtedness that is not permitted by this clause (d) shall be deemed to
have occurred upon (i) any sale or other disposition of any Indebtedness of
the Company or any Restricted Subsidiary referred to in this clause (d) to a
Person (other than the Company or any Wholly Owned Restricted Subsidiary),
(ii) any sale or other disposition of Equity Interests of any Wholly Owned
Restricted Subsidiary which holds Indebtedness of the Company or another
Restricted Subsidiary such that such Wholly Owned Restricted Subsidiary
ceases to be a Wholly Owned Restricted Subsidiary and (iii) the designation
of a Wholly Owned Restricted Subsidiary which holds Indebtedness of the
Company or any other Restricted Subsidiary as an Unrestricted Subsidiary;
(e) the Guaranties and guarantees by any Guarantor of Indebtedness of
the Company; PROVIDED, HOWEVER, that if such guarantee is of Subordinated
Indebtedness, then the Guaranty of such Guarantor shall be senior to such
Guarantor's guarantee of Subordinated Indebtedness;
(f) Interest Rate Protection Obligations of the Company relating to
Indebtedness of the Company (which Indebtedness (i) bears interest at
fluctuating interest rates and (ii) is otherwise permitted to be Incurred
under this covenant); PROVIDED, HOWEVER, that the notional principal amount
of such Interest Rate Protection Obligations does not exceed the principal
amount of the Indebtedness to which such Interest Rate Protection
Obligations relate;
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(g) Purchase Money Indebtedness and Capitalized Lease Obligations which
do not exceed $10.0 million in the aggregate at any one time outstanding;
(h) Indebtedness or Disqualified Equity Interests to the extent
representing a replacement, renewal, refinancing or extension (collectively,
a "REFINANCING") of outstanding Indebtedness or Disqualified Equity
Interests Incurred in compliance with the Consolidated Coverage Ratio of the
first paragraph of this covenant or clause (a) or (b) of this paragraph of
this covenant; PROVIDED, HOWEVER, that (i) any such refinancing shall not
exceed the sum of the principal amount (or accreted amount (determined in
accordance with GAAP), if less) of the Indebtedness or Disqualified Equity
Interests being refinanced, PLUS the amount of accrued interest or dividends
thereon, PLUS the amount of any reasonably determined prepayment premium
necessary to accomplish such refinancing and such reasonable fees and
expenses incurred in connection therewith, (ii) Indebtedness representing a
refinancing of Indebtedness other than Senior Indebtedness shall have a
Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being refinanced; (iii)
Indebtedness that is PARI PASSU with the Notes may only be refinanced with
Indebtedness that is made PARI PASSU with or subordinate in right of payment
to the Notes and Subordinated Indebtedness or Disqualified Equity Interests
may only be refinanced with Subordinated Indebtedness or Disqualified Equity
Interests and (iv) no Restricted Subsidiary that is not a Guarantor may
Incur Indebtedness to refinance Indebtedness of the Company; and
(i) in addition to the items referred to in clauses (a) through (h)
above, Indebtedness of the Company (including any Indebtedness under the
Senior Credit Facility that utilizes this subparagraph (i)) having an
aggregate principal amount not to exceed $15.0 million at any time
outstanding.
LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS. The Company shall not,
directly or indirectly, Incur any Indebtedness that by its terms would expressly
rank senior in right of payment to the Notes and expressly rank subordinate in
right of payment to any Senior Indebtedness.
The Company shall not permit any Guarantor to, and no Guarantor shall,
directly or indirectly, Incur any Indebtedness that by its terms would expressly
rank senior in right of payment to the Guaranty of such Guarantor and expressly
rank subordinate in right of payment to any Guarantor Senior Indebtedness of
such Guarantor.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions to the Company or any other Restricted Subsidiary on its Equity
Interests or with respect to any other interest or participation in, or measured
by, its profits, or pay any Indebtedness owed to the Company or any other
Restricted Subsidiary, (b) make loans or advances to, or guarantee any
Indebtedness or other obligations of, the Company or any other Restricted
Subsidiary or (c) transfer any of its properties or assets to the Company or any
other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) the Senior Credit Facility, or any other
agreement of the Company or the Restricted Subsidiaries outstanding on the Issue
Date, in each case as in effect on the Issue Date, and any amendments,
restatements, renewals, replacements or refinancings thereof; PROVIDED, HOWEVER,
that any such amendment, restatement, renewal, replacement or refinancing is no
more restrictive in the aggregate with respect to such encumbrances or
restrictions than those contained in the Senior Credit Facility on the Issue
Date; (ii) applicable law; (iii) any instrument governing Indebtedness or Equity
Interests of an Acquired Person acquired by the Company or any Restricted
Subsidiary as in effect at the time of such acquisition (except to the extent
such Indebtedness was Incurred by such Acquired Person in connection with, as a
result of or in contemplation of such acquisition); PROVIDED, HOWEVER, that such
encumbrances and restrictions are not applicable to the Company or any
Restricted Subsidiary, or the
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properties or assets of the Company or any Restricted Subsidiary, other than the
Acquired Person; (iv) customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with past practices; (v)
Purchase Money Indebtedness for property acquired in the ordinary course of
business that only imposes encumbrances and restrictions on the property so
acquired; (vi) any agreement for the sale or disposition of the Equity Interests
or assets of any Restricted Subsidiary; PROVIDED, HOWEVER, that such
encumbrances and restrictions described in this clause (vi) are only applicable
to such Restricted Subsidiary or assets, as applicable, and any such sale or
disposition is made in compliance with "--Disposition of Proceeds of Asset
Sales" below to the extent applicable thereto; (vii) refinancing Indebtedness
permitted under clause (h) of the second paragraph of "-- Limitation on
Indebtedness" above; PROVIDED, HOWEVER, that such encumbrances and restrictions
contained in the agreements governing such Indebtedness are no more restrictive
in the aggregate than those contained in the agreements governing the
Indebtedness being refinanced immediately prior to such refinancing; (viii) the
Indenture; or (ix) any such customary encumbrance or restriction existing under
any other security agreement, instrument or document hereafter in effect;
PROVIDED, HOWEVER, that the terms and conditions of any such encumbrance or
restriction are not more restrictive than those contained in the Senior Credit
Facility as in effect on the Issue Date.
DESIGNATION OF UNRESTRICTED SUBSIDIARIES. The Company may designate any
Subsidiary of the Company as an "Unrestricted Subsidiary" under the Indenture (a
"DESIGNATION") only if:
(i) no Default or Event of Default shall have occurred and be continuing
at the time of or after giving effect to such Designation;
(ii) at the time of and after giving effect to such Designation, the
Company could Incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the Consolidated Coverage Ratio of the first paragraph
of "--Limitation on Indebtedness" above; and
(iii) the Company would be permitted to make an Investment (other than a
Permitted Investment) at the time of Designation (assuming the effectiveness
of such Designation) pursuant to the first paragraph of "--Limitation on
Restricted Payments" above in an amount (the "DESIGNATION AMOUNT") equal to
the Fair Market Value of the Company's proportionate interest in the net
worth of such Subsidiary on such date in an amount equal to the excess of
(x) the total assets of such Subsidiary, valued on an aggregate basis at
Fair Market Value, over (y) the total liabilities of such Subsidiary,
determined in accordance with GAAP.
Neither the Company nor any Restricted Subsidiary shall at any time (x)
provide credit support for, subject any of its property or assets (other than
the Equity Interests of any Unrestricted Subsidiary) to the satisfaction of, or
guarantee, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary or (z) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary, except for any
non-recourse guarantee given solely to support the pledge by the Company or any
Restricted Subsidiary of the capital stock of any Unrestricted Subsidiary. All
subsidiaries of Unrestricted Subsidiaries shall be automatically deemed to be
Unrestricted Subsidiaries.
The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "REVOCATION") if:
(i) no Default or Event of Default shall have occurred and be continuing
at the time of and after giving effect to such Revocation;
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(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at such
time, have been permitted to be Incurred for all purposes of the Indenture;
and
(iii) any transaction (or series of related transactions) between such
Subsidiary and any of its Affiliates that occurred while such Subsidiary was
an Unrestricted Subsidiary would be permitted by "--Transactions with
Affiliates" below as if such transaction (or series of related transactions)
had occurred at the time of such Revocation.
All Designations and Revocations must be evidenced by resolutions of the
Board of Directors of the Company, delivered to the Trustee certifying
compliance with the foregoing provisions.
LIMITATION ON LIENS. The Company shall not, and shall not cause or permit
any Restricted Subsidiary to, directly or indirectly, Incur any Liens of any
kind against or upon any of their respective properties or assets now owned or
hereafter acquired, or any proceeds therefrom or any income or profits
therefrom, to secure any Indebtedness unless contemporaneously therewith
effective provision is made, in the case of the Company, to secure the Notes and
all other amounts due under the Indenture, and in the case of a Restricted
Subsidiary which is a Guarantor, to secure such Restricted Subsidiary's Guaranty
of the Notes and all other amounts due under the Indenture, equally and ratably
with such Indebtedness (or, in the event that such Indebtedness is subordinated
in right of payment to the Notes or such Restricted Subsidiary's Guaranty, prior
to such Indebtedness) with a Lien on the same properties and assets securing
such Indebtedness for so long as such Indebtedness is secured by such Lien,
except for (i) Liens securing any Senior Indebtedness or any guarantee of Senior
Indebtedness by any Restricted Subsidiary that is a Guarantor and (ii) Permitted
Liens.
DISPOSITION OF PROCEEDS OF ASSET SALES. The Company shall not, and shall
not cause or permit any Restricted Subsidiary to, directly or indirectly, make
any Asset Sale, unless (i) the Company or such Restricted Subsidiary, as the
case may be, receives consideration at the time of such Asset Sale at least
equal to the Fair Market Value of the assets sold or otherwise disposed of and
(ii) at least 75% of such consideration consists of (A) cash or Cash
Equivalents, (B) properties and capital assets to be owned by the Company or any
Restricted Subsidiary and to be used in a Related Business or (C) Equity
Interests in any Person which thereby becomes a Wholly Owned Restricted
Subsidiary whose assets consist primarily of properties and capital assets used
in a Related Business. The amount of any (i) Indebtedness (other than any
Subordinated Indebtedness) of the Company or any Restricted Subsidiary that is
actually assumed by the transferee in such Asset Sale and from which the Company
and the Restricted Subsidiaries are fully released shall be deemed to be cash
for purposes of determining the percentage of cash consideration received by the
Company or the Restricted Subsidiaries and (ii) notes or other similar
obligations received by the Company or the Restricted Subsidiaries from such
transferee that are immediately converted, sold or exchanged (or are converted,
sold or exchanged within thirty days of the related Asset Sale) by the Company
or the Restricted Subsidiaries into cash shall be deemed to be cash, in an
amount equal to the net cash proceeds realized upon such conversion, sale or
exchange for purposes of determining the percentage of cash consideration
received by the Company or the Restricted Subsidiaries.
The Company or such Restricted Subsidiary, as the case may be, may (i) apply
the Net Cash Proceeds of any Asset Sale within 365 days of receipt thereof to
repay Senior Indebtedness and permanently reduce any related commitment, or (ii)
commit in writing to acquire, construct or improve properties and capital assets
to be owned by the Company or any Restricted Subsidiary and to be used in a
Related Business and so apply such Net Cash Proceeds within 365 days after the
receipt thereof.
To the extent all or part of the Net Cash Proceeds of any Asset Sale are not
applied within 365 days of such Asset Sale as described in clause (i) or (ii) of
the immediately preceding paragraph (such Net Cash Proceeds, the "UNUTILIZED NET
CASH PROCEEDS"), the Company shall, within 20 days after such 365th day, make an
Offer to Purchase all outstanding Notes up to a maximum principal amount
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(expressed as a multiple of $1,000) of Notes equal to such Unutilized Net Cash
Proceeds, at a purchase price in cash equal to 100% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date;
PROVIDED, HOWEVER, that the Offer to Purchase may be deferred until there are
aggregate Unutilized Net Cash Proceeds equal to or in excess of $5.0 million, at
which time the entire amount of such Unutilized Net Cash Proceeds, and not just
the amount in excess of $5.0 million, shall be applied as required pursuant to
this paragraph.
With respect to any Offer to Purchase effected pursuant to this covenant,
among the Notes, to the extent the aggregate principal amount of Notes tendered
pursuant to such Offer to Purchase exceeds the Unutilized Net Cash Proceeds to
be applied to the repurchase thereof, such Notes shall be purchased PRO RATA
based on the aggregate principal amount of such Notes tendered by each Holder.
To the extent the Unutilized Net Cash Proceeds exceed the aggregate amount of
Notes tendered by the Holders of the Notes pursuant to such Offer to Purchase,
the Company may retain and utilize any portion of the Unutilized Net Cash
Proceeds not applied to repurchase the Notes for any purpose consistent with the
other terms of the Indenture.
In the event that the Company makes an Offer to Purchase the Notes, the
Company shall comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1 under,
the Exchange Act, and any violation of the provisions of the Indenture relating
to such Offer to Purchase occurring as a result of such compliance shall not be
deemed an Event of Default or an event that with the passing of time or giving
of notice, or both, would constitute an Event of Default.
Each Holder shall be entitled to tender all or any portion of the Notes
owned by such Holder pursuant to the Offer to Purchase, subject to the
requirement that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount and subject to any proration among tendering
Holders as described above.
MERGER, SALE OF ASSETS, ETC. The Company shall not consolidate with or
merge with or into (whether or not the Company is the Surviving Person) any
other entity and the Company shall not and shall not cause or permit any
Restricted Subsidiary to, sell, convey, assign, transfer, lease or otherwise
dispose of all or substantially all of the Company's and the Restricted
Subsidiaries' properties and assets (determined on a consolidated basis for the
Company and the Restricted Subsidiaries) to any entity in a single transaction
or series of related transactions, unless: (i) either (x) the Company shall be
the Surviving Person or (y) the Surviving Person (if other than the Company)
shall be a corporation organized and validly existing under the laws of the
United States of America or any State thereof or the District of Columbia, and
shall, in any such case, expressly assume by a supplemental indenture, the due
and punctual payment of the principal of, premium, if any, and interest on all
the Notes and the performance and observance of every covenant of the Indenture
and the Registration Rights Agreement to be performed or observed on the part of
the Company; (ii) immediately thereafter, no Default or Event of Default shall
have occurred and be continuing; and (iii) immediately after giving effect to
any such transaction involving the Incurrence by the Company or any Restricted
Subsidiary, directly or indirectly, of additional Indebtedness (and treating any
Indebtedness not previously an obligation of the Company or any Restricted
Subsidiary in connection with or as a result of such transaction as having been
Incurred at the time of such transaction), the Surviving Person could Incur, on
a PRO FORMA basis after giving effect to such transaction as if it had occurred
at the beginning of the four quarter period immediately preceding such
transaction for which consolidated financial statements of the Company are
available, at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the Consolidated Coverage Ratio of the first paragraph of
"--Limitation on Indebtedness" above.
Notwithstanding the foregoing clause (iii) of the immediately preceding
paragraph, any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company.
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For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Restricted
Subsidiaries the Equity Interest of which constitutes all or substantially all
the properties and assets of the Company shall be deemed to be the transfer of
all or substantially all the properties and assets of the Company.
No Guarantor (other than a Guarantor whose Guaranty is to be released in
accordance with the terms of its Guaranty and the Indenture as provided in the
third paragraph under "--Guaranties of the Notes" above) shall 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 (i) the Surviving Person (if other than such Guarantor) is a corporation
organized and validly existing under the laws of the United States, any State
thereof or the District of Columbia; (ii) the Surviving Person (if other than
such Guarantor) expressly assumes by a supplemental indenture all the
obligations of such Guarantor under its Guaranty of the Notes and the
performance and observance of every covenant of the Indenture and the
Registration Right Agreement to be performed or observed by such Guarantor,
(iii) at the time of and immediately after such Disposition, no Default or Event
of Default shall have occurred and be continuing; and (iv) immediately after
giving effect to any such transaction involving the Incurrence by such
Guarantor, directly or indirectly, of additional Indebtedness (and treating any
Indebtedness not previously an obligation of such Guarantor in connection with
or as a result of such transaction as having been Incurred at the time of such
transaction), the Company could Incur, on a PRO FORMA basis after giving effect
to such transaction as if it had occurred at the beginning of the four quarter
period immediately following such transaction for which consolidated financial
statements of the Company are available, at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the Consolidated Coverage
Ratio of the first paragraph of "--Limitation of Indebtedness" above; PROVIDED,
HOWEVER, that clause (iv) of this paragraph shall not be a condition to a merger
or consolidation of a Guarantor if such merger or consolidation only involves
the Company and/or one or more other Guarantors.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraphs in
which the Company or a Guarantor, as the case may be, is not the Surviving
Person and the Surviving Person is to assume all the Obligations of the Company
under the Notes, the Indenture and the Registration Rights Agreement or of such
Guarantor under its Guaranty, the Indenture and the Registration Rights
Agreement, as the case may be, pursuant to a supplemental indenture, such
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Guarantor, as the case may be, and
the Company shall be discharged from its Obligations under the Indenture and the
Notes or such Guarantor shall be discharged from its Obligations under the
Indenture and its Guaranty, as the case may be.
TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not cause or
permit any Restricted Subsidiary to, directly or indirectly, conduct any
business or enter into any transaction (or series of related transactions) with
or for the benefit of any of their respective Affiliates or any officer,
director or employee of the Company or any Restricted Subsidiary (each an
"AFFILIATE TRANSACTION"), unless (i) such Affiliate Transaction is on terms
which are no less favorable to the Company or such Restricted Subsidiary, as the
case may be, than would be available in a comparable transaction with an
unaffiliated third party and (ii) if such Affiliate Transaction (or series of
related Affiliate Transactions) involves aggregate payments or other
consideration having a Fair Market Value in excess of $1.0 million, such
Affiliate Transaction is in writing and a majority of the disinterested members
of the Board of Directors of the Company shall have approved such Affiliate
Transaction and determined that such Affiliate Transaction complies with the
foregoing provisions. In addition, any Affiliate Transaction involving aggregate
payments or other consideration having a Fair Market Value in excess of $5.0
million will also require a written opinion from an Independent Financial
Advisor (filed with the Trustee) stating that the terms of
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such Affiliate Transaction are fair, from a financial point of view, to the
Company or the Restricted Subsidiary involved in such Affiliate Transaction, as
the case may be.
Notwithstanding the foregoing, the restrictions set forth in this covenant
shall not apply to (i) transactions with or among the Company and any Wholly
Owned Restricted Subsidiary or between or among Wholly Owned Restricted
Subsidiaries; (ii) customary directors' fees, indemnification and similar
arrangements, consulting fees, employee salaries, bonuses or employment
agreements, compensation or employee benefit arrangements and incentive
arrangements with any officer, director or employee of the Company or any
Restricted Subsidiary entered into in the ordinary course of business (including
customary benefits thereunder) and payments under any indemnification
arrangements permitted by applicable law; (iii) any transactions undertaken
pursuant to any contractual obligations in existence on the Issue Date (as in
effect on the Issue Date); (iv) the issue and sale by the Company to its
stockholders of Qualified Equity Interests; (v) any Restricted Payments made in
compliance with "--Limitation on Restricted Payments" above; (vi) loans and
advances to officers, directors and employees of the Company or any Restricted
Subsidiary for travel, entertainment, moving and other relocation expenses, in
each case made in the ordinary course of business; (vii) the Incurrence of
intercompany Indebtedness permitted pursuant to clause (d) of the second
paragraph of "--Limitation on Indebtedness" above; (viii) the pledge of Equity
Interests of Unrestricted Subsidiaries to support the Indebtedness thereof; (ix)
the Tax Sharing Agreement, as in effect on the Issue Date; and (x) any
transaction with the George Group pursuant to the Consulting Agreement, as in
effect on the Issue Date, not to exceed $2.0 million in any fiscal year
(exclusive of reimbursement of expenses).
LIMITATION ON THE SALE OR ISSUANCE OF EQUITY INTERESTS OF RESTRICTED
SUBSIDIARIES. The Company shall not sell any Equity Interest of a Restricted
Subsidiary, and shall not cause or permit any Restricted Subsidiary, directly or
indirectly, to issue or sell any Equity Interests, except: (i) to the Company or
a Wholly Owned Restricted Subsidiary; or (ii) if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary. Notwithstanding the foregoing, the Company
is permitted to sell all the Equity Interests of a Restricted Subsidiary as long
as the Company is in compliance with the terms of the covenant described under
"--Disposition of Proceeds of Asset Sales" above.
LIMITATION ON LINES OF BUSINESS. The Company shall not, and shall not cause
or permit any Restricted Subsidiary, directly or indirectly to, engage in any
business outside the building products business other than a Related Business.
PROVISION OF FINANCIAL INFORMATION. Whether or not the Company is subject
to Section 13(a) or 15(d) of the Exchange Act, or any successor provision
thereto, the Company shall file with the SEC (if permitted by SEC practice and
applicable law and regulations) the annual reports, quarterly reports and other
documents which the Company would have been required to file with the SEC
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
the Company were so subject, such documents to be filed with the SEC on or prior
to the respective dates (the "REQUIRED FILING DATES") by which the Company would
have been required so to file such documents if the Company were so subject. The
Company shall also in any event (a) within 15 days of each Required Filing Date
(whether or not permitted or required to be filed with the SEC) (i) transmit (or
cause to be transmitted) by mail to all Holders, as their names and addresses
appear in the Note register, without cost to such Holders, and (ii) file with
the Trustee copies of the annual reports, quarterly reports and other documents
which the Company is required to file with the SEC pursuant to the preceding
sentence, or, if such filing is not so permitted, information and data of a
similar nature, and (b) if, notwithstanding the preceding sentence, filing such
documents by the Company with the SEC is not permitted by SEC practice or
applicable law or regulations, promptly upon written request supply copies of
such documents to any Holder. In addition, for so long as any Notes remain
outstanding, the Company will furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, and, to any
beneficial holder of Notes, if not obtainable from the SEC, information of the
type that would be filed with the SEC pursuant to the foregoing provisions, upon
the request of any such holder.
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PAYMENTS FOR CONSENT. Neither the Company nor any of its Subsidiaries may,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of a Note for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Notes, the Indenture or the Registration Rights Agreement unless such
consideration is offered to be paid or agreed to be paid to all Holders of the
Notes that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
EVENTS OF DEFAULT
The occurrence of any of the following is defined as an "EVENT OF DEFAULT"
under the Indenture: (a) failure to pay principal of (or premium, if any, on)
any Note when due (whether or not prohibited by the provisions of the Indenture
described under "--Subordination of the Notes" above); (b) failure to pay any
interest on any Note when due, continued for 30 days or more (whether or not
prohibited by the provisions of the Indenture described under "-- Subordination
of the Notes" above); (c) default in the payment of principal of or interest on
any Note required to be purchased pursuant to any Offer to Purchase required by
the Indenture when due and payable or failure to pay on the Purchase Date the
Purchase Price for any Note validly tendered pursuant to any Offer to Purchase
(whether or not prohibited by the provisions of the Indenture described under
"--Subordination of the Notes" above); (d) failure to perform or comply with any
of the provisions described under "--Certain Covenants -- Merger, Sale of
Assets, etc." above; (e) failure to perform any other covenant, warranty or
agreement of the Company under the Indenture or in the Notes or of the
Guarantors under the Indenture or in the Guaranties continued for 30 days or
more after written notice to the Company by the Trustee or Holders of at least
25% in aggregate principal amount of the outstanding Notes; (f) default or
defaults under the terms of one or more instruments evidencing or securing
Indebtedness of the Company or any of its Significant Restricted Subsidiaries
having an outstanding principal amount of $5.0 million or more individually or
in the aggregate that has resulted in the acceleration of the payment of such
Indebtedness or failure by the Company or any of its Significant Restricted
Subsidiaries to pay principal when due at the stated maturity of any such
Indebtedness; PROVIDED, HOWEVER, that it shall not be an Event of Default if
such Indebtedness shall have been repaid in full or such acceleration shall have
been rescinded within 20 days of the payment default in respect thereof or such
acceleration, as the case may be; (g) the rendering of a final judgment or
judgments (not subject to appeal) against the Company or any of its Significant
Restricted Subsidiaries in an amount of $5.0 million or more (net of any amounts
covered by reputable and creditworthy insurance companies) which remains
undischarged or unstayed for a period of 60 days after the date on which the
right to appeal has expired; (h) certain events of bankruptcy, insolvency or
reorganization affecting the Company or any of its Significant Restricted
Subsidiaries; or (i) other than as provided in or pursuant to any Guaranty or
the Indenture, any Guaranty ceases to be in full force and effect or is declared
null and void and unenforceable or found to be invalid or any Guarantor denies
its liability under its Guaranty (other than by reason of a release of such
Guarantor from its Guaranty in accordance with the terms of the Indenture and
such Guaranty). Subject to the provisions of the Indenture relating to the
duties of the Trustee, in case an Event of Default shall occur and be
continuing, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of the
Holders of Notes, unless such Holders shall have offered to the Trustee
reasonable indemnity. Subject to such provisions for the indemnification of the
Trustee, the Holders of a majority in aggregate principal amount of the
outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on such Trustee.
If an Event of Default with respect to the Notes (other than an Event of
Default with respect to the Company described in clause (h) of the preceding
paragraph) occurs and is continuing, the Trustee or the Holders of at least 25%
in aggregate principal amount of the outstanding Notes, by notice in writing to
the Company may declare the unpaid principal of (and premium, if any) and
accrued interest to the date of acceleration on all the outstanding Notes to be
due and payable immediately and, upon any such
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declaration, such principal amount (and premium, if any) and accrued interest,
notwithstanding anything contained in the Indenture or the Notes to the contrary
will become immediately due and payable; PROVIDED, HOWEVER, that so long as the
Senior Credit Facility shall be in full force and effect, if an Event of Default
shall have occurred and be continuing (other than an Event of Default with
respect to the Company described in clause (h) of the preceding paragraph), the
Notes shall not become due and payable until the earlier to occur of (x) five
Business Days following delivery of written notice of such acceleration of the
Notes to the agent under the Senior Credit Facility and (y) the acceleration
(IPSO FACTO or otherwise) of any Indebtedness under the Senior Credit Facility.
If an Event or Default specified in clause (h) of the preceding paragraph with
respect to the Company occurs under the Indenture, the Notes will IPSO FACTO
become immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder of the Notes.
Any such declaration with respect to the Notes may be annulled by the
Holders of a majority in aggregate principal amount of the outstanding Notes
upon the conditions provided in the Indenture. For information as to waiver of
defaults, see "--Modification and Waiver" below.
The Indenture provides that the Trustee shall, within 30 days after the
occurrence of any Default or Event of Default with respect to the Notes
outstanding, give the Holders of the Notes thereof notice of all uncured
Defaults or Events of Default thereunder known to it; PROVIDED, HOWEVER, that,
except in the case of a Default or an Event of Default in payment with respect
to the Notes or a Default or Event of Default in complying with "--Certain
Covenants-- Merger, Sale of Assets, etc." above, the Trustee shall be protected
in withholding such notice if and so long as a committee of its trust officers
in good faith determines that the withholding of such notice is in the interest
of the Holders of the Notes.
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default thereunder and unless the Holders of at least 25% of the aggregate
principal amount of the outstanding Notes shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as the
Trustee, and the Trustee shall have not have received from the Holders of a
majority in aggregate principal amount of such outstanding Notes a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. However, such limitations do not apply to a suit
instituted by a Holder of such a Note for enforcement of payment of the
principal of and premium, if any, or interest on such Note on or after the
respective due dates expressed in such Note.
The Company is required to furnish to the Trustee annually a statement as to
the performance by it of certain of its obligations under the Indenture and as
to any default in such performance.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATOR AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any of its Affiliates, as such, shall have any liability for any obligations
of the Company or any of its Affiliates under the Notes or the Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
The Company may terminate its and the Guarantors' substantive obligations in
respect of the Notes by delivering all outstanding Notes to the Trustee for
cancellation and paying all sums payable by it on account of principal of,
premium, if any, and interest on all Notes or otherwise. In addition to the
foregoing, the Company may, provided that no Default or Event of Default has
occurred and is continuing or would arise therefrom (or, with respect to a
Default or Event of Default specified in clause (h) of "--
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Events of Default" above, occurs at any time on or prior to the 91st calendar
day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until after such 91st day)) under the Indenture
and provided that no default under any Senior Indebtedness would result
therefrom, terminate the applicability of the covenants under "--Certain
Covenants" or any Event of Default under clauses (d) and (e) of "--Events of
Default" by (i) depositing with the Trustee, under the terms of an irrevocable
trust agreement, money or United States Government Obligations sufficient
(without reinvestment) to pay all remaining Indebtedness on such Notes; (ii)
delivering to the Trustee either an Opinion of Counsel or a ruling directed to
the Trustee from the Internal Revenue Service to the effect that the Holders of
the Notes will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit and termination of obligations; (iii)
delivering to the Trustee an Opinion of Counsel to the effect that the Company's
exercise of its option under this paragraph will not result in any of the
Company, the Trustee or the trust created by the Company's deposit of funds
pursuant to this provision becoming or being deemed to be an "investment
company" under the Investment Company Act of 1940, as amended (the "INVESTMENT
ACT"); and (iv) complying with certain other requirements set forth in the
Indenture. In addition, the Company may, provided that no Default or Event of
Default has occurred and is continuing or would arise therefrom (or, with
respect to a Default or Event of Default specified in clause (h) of "--Events of
Default" above, occurs at any time on or prior to the 91st calendar day after
the date of such deposit (it being understood that this condition shall not be
deemed satisfied until after such 91st day)) under the Indenture and provided
that no default under any Senior Indebtedness would result therefrom, terminate
all of its and the Guarantors' substantive obligations in respect of the Notes
(including its obligations to pay the principal of (and premium, if any, on) and
interest on the Notes and the Guarantors' Guaranty thereof) by (i) depositing
with the Trustee, under the terms of an irrevocable trust agreement, money or
United States Government Obligations sufficient (without reinvestment) to pay
all remaining Indebtedness on the Notes; (ii) delivering to the Trustee either a
ruling directed to the Trustee from the Internal Revenue Service to the effect
that the Holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and termination of
obligations or an Opinion of Counsel addressed to the Trustee based upon such a
ruling or based on a change in the applicable Federal tax law since the date of
the Indenture to such effect; (iii) delivering to the Trustee an Opinion of
Counsel to the effect that the Company's exercise of its option under this
paragraph will not result in any of the Company, the Trustee or the trust
created by the Company's deposit of funds pursuant to this provision becoming or
being deemed to be an "investment company" under the Investment Act; and (iv)
complying with certain other requirements set forth in the Indenture.
The Company may make an irrevocable deposit pursuant to this provision only
if at such time it is not prohibited from doing so under the subordination
provisions of the Indenture or certain covenants in the Senior Indebtedness and
the Company has delivered to the Trustee and any Paying Agent an Officers'
Certificate to that effect.
GOVERNING LAW
The Indenture, the Notes and the Guaranties are governed by the laws of the
State of New York without regard to principles of conflicts of laws.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company,
the Guarantors, and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the outstanding Notes (including consents obtained
in connection with a tender offer or exchange offer for the Notes); PROVIDED,
HOWEVER, that no such modification or amendment to the Indenture may, without
the consent of the Holder of each Note affected thereby, (a) change the maturity
of the principal of or any installment of interest on any such Note or alter the
optional redemption or repurchase provisions of any such Note or the Indenture
in a manner adverse to the Holders of the Notes; (b) reduce the principal
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amount of (or the premium) of any such Note; (c) reduce the rate of or extend
the time for payment of interest on any such Note; (d) change the place or
currency of payment of principal of (or premium) or interest on any such Note;
(e) modify any provisions of the Indenture relating to the waiver of past
defaults (other than to add sections of the Indenture or the Notes subject
thereto) or the right of the Holders of Notes to institute suit for the
enforcement of any payment on or with respect to any such Note or any Guaranty
in respect thereof or the modification and amendment provisions of the Indenture
and the Notes (other than to add sections of the Indenture or the Notes which
may not be amended, supplemented or waived without the consent of each Holder
therein affected); (f) reduce the percentage of the principal amount of
outstanding Notes necessary for amendment to or waiver of compliance with any
provision of the Indenture or the Notes or for waiver of any Default in respect
thereof; (g) waive a default in the payment of principal of, interest on, or
redemption payment with respect to, the Notes (except a rescission of
acceleration of the Notes by the Holders thereof as provided in the Indenture
and a waiver of the payment default that resulted from such acceleration); (h)
modify the ranking or priority of any Note or the Guaranty in respect thereof of
any Guarantor or modify the definition of Senior Indebtedness or Guarantor
Senior Indebtedness or amend or modify the subordination provisions of the
Indenture in any manner adverse to the Holders of the Notes; (i) modify the
provisions of any covenant (or the related definitions) in the Indenture
requiring the Company to make an Offer to Purchase in a manner materially
adverse to the Holders of Notes affected thereby otherwise than in accordance
with the Indenture; or (j) release any Guarantor from any of its obligations
under its Guaranty or the Indenture otherwise than in accordance with the
Indenture.
The Holders of a majority in aggregate principal amount of the outstanding
Notes, on behalf of all Holders of Notes, may waive compliance by the Company
and the Guarantors with certain restrictive provisions of the Indenture. Subject
to certain rights of the Trustee, as provided in the Indenture, the Holders of a
majority in aggregate principal amount of the Notes, on behalf of all Holders,
may waive any past Default under the Indenture (including any such waiver
obtained in connection with a tender offer or exchange offer for the Notes),
except a Default in the payment of principal, premium or interest or a Default
arising from failure to purchase any Notes tendered pursuant to an Offer to
Purchase or a Default in respect of a provision that under the Indenture cannot
be modified or amended without the consent of the Holder of each Note that is
affected.
THE TRUSTEE
Except during the continuance of a Default, the Trustee will perform only
such duties as are specifically set forth in the Indenture. During the existence
of a Default, the Trustee will exercise such rights and powers vested in it
under the Indenture and use the same degree of care and skill in its exercise as
a prudent person would exercise under the circumstances in the conduct of such
person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company, any Guarantor or any other obligor upon the
Notes, to obtain payment of claims in certain cases or to realize on certain
property received by it in respect of any such claim as security or otherwise.
The Trustee is permitted to engage in other transactions with the Company or an
Affiliate of the Company; PROVIDED, HOWEVER, that if it acquires any conflicting
interest (as defined in the Indenture or in the Trust Indenture Act), it must
eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full definition of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
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"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person (a) assumed in
connection with an Acquisition from such Person or (b) existing at the time such
Person becomes a Restricted Subsidiary or is merged or consolidated with or into
the Company or any Restricted Subsidiary.
"ACQUIRED PERSON" means, with respect to any specified Person, any other
Person which merges with or into or becomes a Subsidiary of such specified
Person.
"ACQUISITION" means (i) any capital contribution (by means of transfers of
cash or other property to others or payments for property or services for the
account or use of others, or otherwise) by the Company or any Restricted
Subsidiary to any other Person, or any acquisition or purchase of Equity
Interests of any other Person by the Company or any Restricted Subsidiary, in
either case pursuant to which such Person shall become a Restricted Subsidiary
or shall be consolidated with or merged with or into the Company or any
Restricted Subsidiary or (ii) any acquisition by the Company or any Restricted
Subsidiary of the assets of any Person which constitute substantially all of an
operating unit or line of business of such Person or which is otherwise outside
of the ordinary course of business.
"ADDITIONAL INTEREST" has the meaning provided in Section 4(a) of the
Registration Rights Agreement.
"AFFILIATE" of any specified person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, 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 or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER,
that (i) beneficial ownership of 10.0% or more of the then outstanding Equity
Interests of a Person shall be deemed to be control for purposes of compliance
with the covenant described under "--Certain Covenants--Transactions with
Affiliates"; and (ii) no individual, other than a director of the Company or an
officer of the Company with a policy making function, shall be deemed an
Affiliate of the Company or any of its Subsidiaries, solely by reason of such
individual's employment, position or responsibilities by or with respect to the
Company or any of its Subsidiaries.
"APPLICABLE PREMIUM" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at May 1, 2001 (such redemption price being described under "--Optional
Redemption"), PLUS (2) all required interest payments (excluding accrued but
unpaid interest) due on such Note through May 1, 2001, computed using a discount
rate equal to the Treasury Rate plus 75 basis points, over (B) the
then-outstanding principal amount of such Note.
"ASSET SALE" means any direct or indirect sale, conveyance, transfer, lease
(that has the effect of a disposition) or other disposition (including, without
limitation, any merger, consolidation or sale-leaseback transaction) to any
Person other than the Company or a Wholly Owned Restricted Subsidiary, in one
transaction or a series of related transactions, of (i) any Equity Interest of
any Restricted Subsidiary; (ii) any material license, franchise or other
authorization of the Company or any Restricted Subsidiary; (iii) any assets of
the Company or any Restricted Subsidiary which constitute substantially all of
an operating unit or line of business of the Company or any Restricted
Subsidiary; or (iv) any other property or asset of the Company or any Restricted
Subsidiary outside of the ordinary course of business (including the receipt of
proceeds paid on account of the loss of or damage to any property or asset and
awards of compensation for any asset taken by condemnation, eminent domain or
similar proceedings). For the purposes of this definition, the term "Asset Sale"
shall not include (a) any transaction consummated in compliance with "-- Certain
Covenants--Merger, Sale of Assets, etc." above and the creation of any Lien not
prohibited by "--Certain Covenants--Limitation on Liens" above; PROVIDED,
HOWEVER, that any transaction consummated in compliance with "---Certain
Covenants--Merger, Sale of Assets,
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etc." above involving a sale, conveyance, assignment, transfer, lease or other
disposition of less than all of the properties or assets of the Company shall be
deemed to be an Asset Sale with respect to the properties or assets of the
Company and the Restricted Subsidiaries that are not so sold, conveyed,
assigned, transferred, leased or otherwise disposed of in such transaction; (b)
sales of property or equipment that has become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary, as the case may be; (c) any transaction consummated
in compliance with "--Certain Covenants--Limitation on Restricted Payments"
above; and (d) sales of accounts receivable for cash at fair market value. In
addition, solely for purposes of "-- Certain Covenants --Disposition of Proceeds
of Asset Sales" above, any sale, conveyance, transfer, lease or other
disposition of any property or asset, whether in one transaction or a series of
related transactions, involving assets with a Fair Market Value not in excess of
$1.0 million in any fiscal year shall be deemed not to be an Asset Sale.
"ATEMCO" means the joint venture created by the ATEMCO Joint Venture
Agreement.
"ATEMCO JOINT VENTURE AGREEMENT" means the Joint Venture Agreement of
ATEMCO dated March 3, 1982 among the Company, Tower Extrusions, Inc. and MEB
Enterprises, Inc., as amended and in effect from time to time.
"BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person, at the time
any determination thereof is to be made, the amount of the liability in respect
of a capital lease that would at such time be so required to be capitalized on
the balance sheet of such Person in accordance with GAAP.
"CASH EQUIVALENTS" means: (a) U.S. dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition; (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) above entered into with any financial institution meeting the
qualifications specified in clause (c) above; and (e) commercial paper rated
P-1, A-1 or the equivalent thereof by Moody's Investors Service, Inc. or
Standard & Poor's Corporation, respectively, and in each case maturing within
six months after the date of acquisition.
"CHANGE OF CONTROL" means the occurrence of any of the following events
(whether or not approved by the Board of Directors of the Company or Holdings):
(i) prior to the first public offering of Voting Equity Interests of Holdings or
the Company, either (x) the Permitted Holders cease to be the "beneficial owner"
or "beneficial owners" (as defined in Rule 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of at least a majority of the total voting power
of the then outstanding Voting Equity Interests of Holdings or of the Company,
or (y) the Permitted Holders cease to be entitled by voting power, contract or
otherwise to elect or cause the election of directors of Holdings or the Company
having a majority of the total voting power of the Board of Directors of
Holdings or the Company, as the case may be, in each case, whether as a result
of issuance of securities of Holdings or the Company, as the case may be, any
merger, consolidation, liquidation or dissolution of Holdings or the Company, as
the case may be, any direct or indirect transfer of securities by any Permitted
Holder or otherwise; (ii) following the first public offering of Voting Equity
Interests of Holdings or the Company, any Person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act, including any group acting for the
purpose of acquiring, holding or disposing of securities within the meaning of
Rule 13d-5(b)(1) under the Exchange Act), other than one or more Permitted
Holders, is or becomes the beneficial owner (as defined in clause (i) above,
except that a Person shall be deemed to have "beneficial ownership" of all
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shares that any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time, upon the happening of
an event or otherwise), directly or indirectly, of more than 35% of the total
voting power of the then outstanding Voting Equity Interests of Holdings or the
Company; PROVIDED, HOWEVER, that the Permitted Holders beneficially own (as
defined in clause (i) above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the then outstanding Voting Equity
Interests of Holdings or the Company, as the case may be, than such other Person
and do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of Holdings
or the Company, as the case may be; (iii) Holdings or the Company consolidates
with, or merges with or into, another Person (other than the Company or any
Wholly Owned Restricted Subsidiary) or Holdings or any of its Subsidiaries
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of the assets of Holdings and its Subsidiaries (determined on
a consolidated basis) to any Person (other than the Company or any Wholly Owned
Restricted Subsidiary) or the Company or the Restricted Subsidiaries sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of the assets of the Company and the Restricted Subsidiaries (determined on a
consolidated basis) to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary), other than any such transaction where immediately after
such transaction the Person or Persons that beneficially owned (as defined in
clause (i) above, except that a Person shall be deemed to have beneficial
ownership of all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time, upon
the happening of an event or otherwise) immediately prior to such transaction,
directly or indirectly, the then outstanding Voting Equity Interests of Holdings
or the Company, as the case may be, "beneficially own" (as so determined),
directly or indirectly, a majority of the total voting power of the then
outstanding Voting Equity Interests of the surviving or transferee Person; or
(iv) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Holdings or the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of Holdings or
the Company, as the case may be, was approved by a vote of a majority of the
directors of Holdings or the Company, as the case may be, then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of Holdings or the Company, as
the case may be, then in office. For purposes of clause (i) and clause (ii)
above, Permitted Holders shall be deemed to beneficially own any Voting Equity
Interests of an entity (the "specified entity") held by any other entity (the
"parent entity") so long as the Permitted Holders beneficially own, directly or
indirectly, a majority of the voting power of the then outstanding Voting Equity
Interests of the parent entity.
"CHANGE OF CONTROL DATE" has the meaning set forth under "--Offer to
Purchase upon Change of Control" above.
"CONSOLIDATED COVERAGE RATIO" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated EBITDA for the four quarter
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination (the "FOUR QUARTER PERIOD") to (ii) Consolidated
Interest Expense for such Four Quarter Period; PROVIDED, HOWEVER, that (1) if
the Company or any Restricted Subsidiary has incurred any Indebtedness since the
beginning of such Four Quarter Period that remains outstanding on such date of
determination or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated
EBITDA and Consolidated Interest Expense for such Four Quarter Period shall be
calculated after giving effect on a PRO FORMA basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such Four Quarter Period
and the discharge of any other Indebtedness repaid, repurchased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such Four Quarter Period, (2) if since the
beginning of such Four Quarter Period the Company or any Restricted Subsidiary
shall have made any Asset Sale, the Consolidated EBITDA for such Four Quarter
Period shall be reduced by an amount equal to the Consolidated EBITDA (if
positive) directly
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attributable to the assets that are the subject of such Asset Sale for such Four
Quarter Period or increased by an amount equal to the Consolidated EBITDA (if
negative) directly attributable thereto for such Four Quarter Period and
Consolidated Interest Expense for such Four Quarter Period shall be reduced by
an amount equal to the Consolidated Interest Expense directly attributable to
any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased
or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Sale for such Four Quarter
Period (or, if the Equity Interests of any Restricted Subsidiary are sold, the
Consolidated Interest Expense for such Four Quarter Period directly attributable
to the Indebtedness of such Restricted Subsidiary to the extent the Company and
its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (3) if since the beginning of such Four Quarter
Period the Company or any Restricted Subsidiary (by merger or otherwise) shall
have made an Investment in any Restricted Subsidiary (or any Person that becomes
a Restricted Subsidiary) or an acquisition of assets, including any acquisition
of assets occurring in connection with a transaction causing a calculation to be
made hereunder, which constitutes all or substantially all of an operating unit
of a business, Consolidated EBITDA and Consolidated Interest Expense for such
Four Quarter Period shall be calculated after giving PRO FORMA effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such Four Quarter Period, and (4) if
since the beginning of such Four Quarter Period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such Four Quarter Period) shall
have made any Asset Sale or any Investment or acquisition of assets that would
have required an adjustment pursuant to clause (2) or (3) above if made by the
Company or a Restricted Subsidiary during such Four Quarter Period, Consolidated
EBITDA and Consolidated Interest Expense for such Four Quarter Period shall be
calculated after giving PRO FORMA effect thereto as if such Asset Sale,
Investment or acquisition of assets occurred on, with respect to any Investment
or acquisition, the first day of such Four Quarter Period and, with respect to
any Asset Sale, the day prior to the first day of such Four Quarter Period. For
purposes of this definition, whenever PRO FORMA effect is to be given to an
acquisition of assets, 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 good faith by a responsible financial or accounting officer of the Company.
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 agreement under which Interest
Rate Protection Obligations are outstanding applicable to such Indebtedness if
such agreement under which such Interest Rate Protection Obligations are
outstanding has a remaining term as at the date of determination in excess of 12
months).
"CONSOLIDATED EBITDA" means, for any period, the Consolidated Net Income
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Income Tax Expense for such period;
(ii) Consolidated Interest Expense for such period; (iii) depreciation and
depletion expense for such period; (iv) amortization expense for such period;
and (v) all other non-cash items reducing Consolidated Net Income for such
period (other than any non-cash item requiring an accrual or a reserve for cash
disbursements in any future period).
"CONSOLIDATED INCOME TAX EXPENSE" means, with respect to the Company for
any period, the provision for Federal, state, local and foreign income taxes
payable by the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to the Company for any
period, without duplication, the sum of (i) the interest expense of the Company
and the Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Interest Rate Protection
Obligations (including any amortization of discounts), (c) the interest portion
of any deferred payment obligation, (d) all
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commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and (e) all capitalized interest and
all accrued interest, (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP and (iii) dividends and distributions
in respect of Disqualified Equity Interests actually paid in cash by the Company
during such period as determined on a consolidated basis in accordance with
GAAP; PROVIDED, HOWEVER, that there shall be excluded therefrom the amortization
of deferred financing costs in connection with the Transaction.
"CONSOLIDATED NET INCOME" means, for any period, the consolidated net
income (loss) of the Company and the Restricted Subsidiaries; PROVIDED, HOWEVER,
that there shall not be included in such Consolidated Net Income: (i) any net
income (loss) of any Person if such person is not a Restricted Subsidiary,
except that (A) the Company's equity in the net income of any such Person for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Person during such period
to the Company or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause (iii) below) and (B) the
Company's equity in a net loss of any such Person (other than an Unrestricted
Subsidiary) for such period shall be included in determining such Consolidated
Net Income; (ii) any net income (loss) of any person acquired by the Company or
a Restricted Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition; (iii) any net income (loss) of any
Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or indirectly, to the
Company except that (A) the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash that could have been distributed by
such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend (subject, in the case of a dividend that
could have been made to another Restricted Subsidiary, to the limitation
contained in this clause) and (B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in determining such
Consolidated Net Income; (iv) any gain or loss realized upon the sale or other
disposition of any asset of the Company or the Restricted Subsidiaries
(including pursuant to any sale/leaseback transaction) that is 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 Equity Interests of any
Person; (v) any extraordinary gain or loss; and (vi) the cumulative effect of a
change in accounting principles.
"CONSULTING AGREEMENT" means the Consulting Agreement dated as of May 9,
1997 by and between the Company and George Group, as amended and in effect from
time to time.
"DEFAULT" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"DESIGNATED SENIOR INDEBTEDNESS" means (a) any Indebtedness outstanding
under the Senior Credit Facility and (b) any other Senior Indebtedness which, at
the time of determination, has an aggregate principal amount outstanding,
together with any commitments to lend additional amounts, of at least $15.0
million, if the instrument governing such Senior Indebtedness expressly states
that such Indebtedness is "Designated Senior Indebtedness" for purposes of the
Indenture and a Board Resolution setting forth such designation by the Company
has been filed with the Trustee.
"DESIGNATION" has the meaning set forth under "--Certain
Covenants--Designation of Unrestricted Subsidiaries" above.
"DESIGNATION AMOUNT" has the meaning set forth under "--Certain
Covenants--Designation of Unrestricted Subsidiaries" above.
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"DISPOSITION" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such Person
is the Surviving Person) or the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of such Person's assets.
"DISQUALIFIED EQUITY INTEREST" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable at the option of the holder thereof), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable, at the option of the holder thereof, in
whole or in part, or exchangeable into Indebtedness on or prior to the earlier
of the maturity date of the Notes or the date on which no Notes remain
outstanding.
"EQUITY INTEREST" in any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"EXISTING INDEBTEDNESS" means any Indebtedness of the Company and its
Restricted Subsidiaries in existence on the Issue Date until such amounts are
repaid.
"EXPIRATION DATE" has the meaning set forth in the definition of "Offer to
Purchase" below.
"FAIR MARKET VALUE" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; PROVIDED, HOWEVER, that the Fair Market
Value of any such asset or assets shall be determined conclusively by the Board
of Directors of the Company acting in good faith, and shall be evidenced by
resolutions of the Board of Directors of the Company delivered to the Trustee.
"FOUR QUARTER PERIOD" has the meaning set forth in the definition of
"Consolidated Coverage Ratio" above.
"GAAP" means, at any date of determination, generally accepted accounting
principles in effect in the United States which are applicable at the date of
determination and which are consistently applied for all applicable periods.
"GEORGE GROUP" means George Group Inc., a Texas corporation, and its
successors.
"GUARANTEE" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. A guarantee shall include,
without limitation, any agreement to maintain or preserve any other person's
financial condition or to cause any other Person to achieve certain levels of
operating results.
"GUARANTOR" means (i) each of RBP of Arizona, Inc., a Delaware corporation,
RBP Custom Glass, Inc., a Delaware corporation, Timber Tech, Inc., a Mississippi
corporation, RBP Trans, Inc., a Delaware corporation, RBP Fenesco, Inc., a
Delaware corporation, LeVan Builders Supply Company, Inc., an Oklahoma
corporation, and RBP of Texas, Inc., a Delaware corporation, and their
respective successors,
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and (ii) each other Restricted Subsidiary, formed, created or acquired before or
after the Issue Date, required to become a Guarantor after the Issue Date
pursuant to "--Guaranties of the Notes" above.
"GUARANTOR SENIOR INDEBTEDNESS" means, with respect to any Guarantor, at
any date, (a) all Obligations of such Guarantor under the Senior Credit
Facility; (b) all Interest Rate Protection Obligations of such Guarantor; (c)
all Obligations of such Guarantor under stand-by letters of credit; and (d) all
other Indebtedness of such Guarantor for borrowed money, including principal,
premium, if any, and interest (including Post-Petition Interest) on such
Indebtedness unless the instrument under which such Indebtedness of such
Guarantor for money borrowed is Incurred expressly provides that such
Indebtedness for money borrowed is not senior or superior in right of payment to
such Guarantor's Guaranty of the Notes, and all renewals, extensions,
modifications, amendments or refinancings thereof. Notwithstanding the
foregoing, Guarantor Senior Indebtedness shall not include (a) to the extent
that it may constitute Indebtedness, any Obligation for Federal, state, local or
other taxes; (b) any Indebtedness among or between such Guarantor and any
Subsidiary of the Company; (c) to the extent that it may constitute
Indebtedness, any Obligation in respect of any trade payable Incurred for the
purchase of goods or materials, or for services obtained, in the ordinary course
of business; (d) that portion of any Indebtedness that is Incurred in violation
of the Indenture; PROVIDED, HOWEVER, that such Indebtedness shall be deemed not
to have been Incurred in violation of the Indenture for purposes of this clause
(d) if (I) the holder(s) of such Indebtedness or their representative or the
Company shall have furnished to the Trustee an opinion of independent legal
counsel unqualified in all material respects, addressed to the Trustee (which
legal counsel may, as to matters of fact, rely upon an Officers' Certificate of
the Company) to the effect that the Incurrence of such Indebtedness does not
violate the provisions of the Indenture or (II) in the case of any Obligations
under the Senior Credit Facility, the holder(s) of such Obligations or their
agent or representative shall have received a representation from the Company to
the effect that the Incurrence of such Indebtedness does not violate the
provisions of the Indenture; (e) Indebtedness evidenced by such Guarantor's
Guaranty of the Notes; (f) Indebtedness of such Guarantor that is expressly
subordinate or junior in right of payment to any other Indebtedness of such
Guarantor; (g) to the extent that it may constitute Indebtedness, any obligation
owing under leases (other than Capitalized Lease Obligations) or management
agreements; (h) any obligation that by operation of law is subordinate to any
general unsecured obligations of such Guarantor; and (i) any Existing
Indebtedness.
"GUARANTY" means the guarantee of the Notes by each Guarantor under the
Indenture.
"HOLDERS" means the registered holder of any Note.
"HOLDINGS" means RBPI Holding Corporation, a Delaware corporation, and its
successors.
"INCUR" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "INCURRENCE," "INCURRED" and "INCURRING" shall have meanings
correlative to the foregoing). Indebtedness of any Acquired Person or any of its
Subsidiaries existing at the time such Acquired Person becomes a Restricted
Subsidiary (or is merged into or consolidated with the Company or any Restricted
Subsidiary), whether or not such Indebtedness was Incurred in connection with,
as a result of, or in contemplation of, such Acquired Person becoming a
Restricted Subsidiary (or being merged into or consolidated with the Company or
any Restricted Subsidiary), shall be deemed Incurred at the time any such
Acquired Person becomes a Restricted Subsidiary or merges into or consolidates
with the Company or any Restricted Subsidiary.
"INDEBTEDNESS" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (a) every obligation of such Person for money borrowed; (b)
every obligation of such Person evidenced by bonds, debentures,
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notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (d)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable incurred in the
ordinary course of business and payable in accordance with industry practices,
or other accrued liabilities arising in the ordinary course of business which
are not overdue or which are being contested in good faith); (e) every Capital
Lease Obligation of such Person; (f) every net obligation under interest rate
swap or similar agreements or foreign currency hedge, exchange or similar
agreements of such Person; (g) every obligation of the type referred to in
clauses (a) through (f) of another Person and all dividends of another Person
the payment of which, in either case, such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor, guarantor or
otherwise; and (h) any and all deferrals, renewals, extensions and refundings
of, or amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (a) through (g) above. Indebtedness
(a) shall never be calculated taking into account any cash and cash equivalents
held by such Person; (b) shall not include obligations of any Person (x) arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently drawn against insufficient funds in the
ordinary course of business, provided that such obligations are extinguished
within two Business Days of their incurrence, (y) resulting from the endorsement
of negotiable instruments for collection in the ordinary course of business and
consistent with past business practices and (z) under stand-by letters of credit
to the extent collateralized by cash or cash equivalents; (c) which provides
that an amount less than the principal amount thereof shall be due upon any
declaration of acceleration thereof shall be deemed to be incurred or
outstanding in an amount equal to the accreted value thereof at the date of
determination; (d) shall include the liquidation preference and any mandatory
redemption payment obligations in respect of any Disqualified Equity Interests
of the Company or any Restricted Subsidiary; and (e) shall not include
obligations under performance bonds, performance guarantees, surety bonds and
appeal bonds, letters of credit or similar obligations, incurred in the ordinary
course of business.
"INDEPENDENT FINANCIAL ADVISOR" means a nationally recognized, accounting,
appraisal, investment banking firm or consultant that is, in the judgment of the
Company's Board of Directors, qualified to perform the task for which it has
been engaged (i) which does not, and whose directors, officers and employees or
Affiliates do not, have a direct or indirect financial interest in the Company
and (ii) which, in the judgment of the Board of Directors of the Company, is
otherwise independent and qualified to perform the task for which it is to be
engaged.
"INSOLVENCY OR LIQUIDATION PROCEEDING" means, with respect to any Person,
any liquidation, dissolution or winding up of such Person, or any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"INTEREST" means, with respect to the Notes, the sum of any cash interest
and any Additional Interest on the Notes.
"INTEREST RATE PROTECTION OBLIGATIONS" means, with respect to any Person,
the Obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"INVESTMENT" means, with respect to any Person, any direct or indirect
loan, advance, guarantee or other extension of credit or capital contribution to
(by means of transfers of cash or other property or assets to others or payments
for property or services for the account or use of others, or otherwise), or
purchase or acquisition of capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by, any other Person. The amount
of any Investment shall be the original cost of such Investment, PLUS the cost
of all additions thereto, and MINUS the amount of any portion of such
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Investment repaid to such Person in cash as a repayment of principal or a return
of capital, as the case may be, but without any other adjustments for increases
or decreases in value, or write-ups, write-downs or write-offs with respect to
such Investment. In determining the amount of any Investment involving a
transfer of any property or asset other than cash, such property shall be valued
at its fair market value at the time of such transfer, as determined in good
faith by the Board of Directors (or comparable body) of the Person making such
transfer.
"ISSUE DATE" means the original issue date of the Notes.
"LIEN" means any lien, mortgage, charge, security interest, hypothecation,
assignment for security or encumbrance of any kind (including any conditional
sale or capital lease or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
"MATURITY DATE" means the date, which is set forth on the face of the
Notes, on which the Notes will mature.
"NET CASH PROCEEDS" means the aggregate proceeds in the form of cash or
Cash Equivalents received by the Company or any Restricted Subsidiary in respect
of any Asset Sale, including all cash or Cash Equivalents received upon any
sale, liquidation or other exchange of proceeds of Asset Sales received in a
form other than cash or Cash Equivalents, net of (a) the direct costs relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof; (b) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements); (c) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale; (d) amounts deemed, in good faith, appropriate by the Board of
Directors of the Company to be provided as a reserve, in accordance with GAAP,
against any liabilities associated with such assets which are the subject of
such Asset Sale (provided that the amount of any such reserves shall be deemed
to constitute Net Cash Proceeds at the time such reserves shall have been
released or are not otherwise required to be retained as a reserve); and (e)
with respect to Asset Sales by Restricted Subsidiaries, the portion of such cash
payments attributable to Persons holding a minority interest in such Restricted
Subsidiary.
"OBLIGATIONS" means any principal, interest (including, without limitation,
Post-Petition Interest), penalties, fees, indemnifications, reimbursement
obligations, damages and other liabilities payable under the documentation
governing any Indebtedness.
"OFFER" has the meaning set forth in the definition of "Offer to Purchase"
below.
"OFFER TO PURCHASE" means a written offer (the "OFFER") sent by or on
behalf of the Company by first-class mail, postage prepaid, to each holder at
his address appearing in the register for the Notes on the date of the Offer
offering to purchase up to the principal amount of Notes specified in such Offer
at the purchase price specified in such Offer (as determined pursuant to the
Indenture). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the "EXPIRATION DATE") of the Offer to Purchase, which shall
be not less than 20 Business Days nor more than 60 days after the date of such
Offer, and a settlement date (the "PURCHASE DATE") for purchase of Notes to
occur no later than five Business Days after the Expiration Date. The Company
shall notify the Trustee at least 15 Business Days (or such shorter period as is
acceptable to the Trustee) prior to the mailing of the Offer of the Company's
obligation to make an Offer to Purchase, and the Offer shall be mailed by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company. The Offer shall contain all the information required by
applicable law to be included therein. The Offer shall also contain information
concerning the business of the Company and its Subsidiaries which the Company in
good faith believes will enable such Holders to make an informed decision with
respect to the Offer to Purchase (which at a minimum will include (i) the most
recent annual and quarterly financial statements
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and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained in the documents required to be filed with the Trustee
pursuant to the Indenture (which requirements may be satisfied by delivery of
such documents together with the Offer), (ii) a description of material
developments in the Company's business subsequent to the date of the latest of
such financial statements referred to in clause (i) (including a description of
the events requiring the Company to make the Offer to Purchase) and (iii) if
applicable, appropriate PRO FORMA financial information concerning the Offer to
Purchase and the events requiring the Company to make the Offer to Purchase. The
Offer shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Offer to Purchase. The Offer shall also
state:
(1) the Section of the Indenture pursuant to which the Offer to Purchase is
being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the outstanding Notes offered to be
purchased by the Company pursuant to the Offer to Purchase (including, if
less than 100%, the manner by which such amount has been determined
pursuant to the Section of the Indenture requiring the Offer to Purchase)
(the "PURCHASE AMOUNT");
(4) the purchase price to be paid by the Company for each $1,000 aggregate
principal amount of Notes accepted for payment (as specified pursuant to
the Indenture) (the "PURCHASE PRICE");
(5) that the Holder may tender all or any portion of the Notes registered in
the name of such Holder and that any portion of a Note tendered must be
tendered in an integral multiple of $1,000 principal amount;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not purchased by
the Company pursuant to the Offer to Purchase will continue to accrue;
(8) that on the Purchase Date the Purchase Price will become due and payable
upon each Note being accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date;
(9) that each Holder electing to tender all or any portion of a Note
pursuant to the Offer to Purchase will be required to surrender such Note
at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Note being, if the Company or the
Trustee so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing);
(10) that Holders will be entitled to withdraw all or any portion of Notes
tendered if the Company (or its Paying Agent) receives, not later than
the close of business on the fifth Business Day next preceding the
Expiration Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note
the Holder tendered, the certificate number of the Note the Holder
tendered and a statement that such Holder is withdrawing all or a portion
of his tender;
(11) that (a) if Notes in an aggregate principal amount less than or equal
to the Purchase Amount are duly tendered and not withdrawn pursuant to
the Offer to Purchase, the Company shall purchase all such Notes and (b)
if Notes in an aggregate principal amount in excess of the Purchase
Amount are tendered and not withdrawn pursuant to the Offer to Purchase,
the Company shall purchase Notes having an aggregate principal amount
equal to the Purchase Amount on a PRO RATA basis (with such adjustments
as may be deemed appropriate so that only
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Notes in denominations of $1,000 principal amount or integral multiples
thereof shall be purchased); and
(12) that in the case of any Holder whose Note is purchased only in part,
the Company shall execute and the Trustee shall authenticate and deliver
to the Holder of such Note without service charge, a new Note or Notes,
of any authorized denomination as requested by such Holder, in an
aggregate principal amount equal to and in exchange for the unpurchased
portion of the Note so tendered.
An Offer to Purchase shall be governed by and effected in accordance with
the provisions above pertaining to any Offer.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"PERMITTED HOLDER" means (i) any of Keystone, Inc., Oak Hill Partners,
Inc., Arbor Investors, L.L.C., Group 31, Inc. and their respective Affiliates on
the Issue Date; (ii) any of the Permitted Transferees of the persons referred to
in clause (i); and (iii) any person or group controlled by each or any of the
Persons referred to in clauses (i) and (ii).
"PERMITTED INDEBTEDNESS" has the meaning set forth in the second paragraph
of "--Certain Covenants--Limitation on Indebtedness" above.
"PERMITTED INVESTMENTS" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits; (c) loans and
advances to employees made in the ordinary course of business not to exceed $1.0
million in the aggregate at any one time outstanding; (d) Interest Rate
Protection Obligations; (e) bonds, notes, debentures or other securities
received as a result of Asset Sales permitted under "-- Certain Covenants--
Disposition of Proceeds of Asset Sales" above not to exceed 25% of the total
consideration for such Asset Sales; (f) transactions with officers, directors
and employees of the Company or any Restricted Subsidiary entered into in
ordinary course of business (including compensation or employee benefit
arrangements with any such director or employee) and consistent with past
business practices; (g) Investments existing as of the Issue Date and any
amendment, extension, renewal or modification thereof to the extent that any
such amendment, extension, renewal or modification does not require the Company
or any Restricted Subsidiary to make any additional cash or non-cash payments or
provide additional services in connection therewith; (h) any Investment to the
extent that the consideration therefor consists of Qualified Equity Interests of
the Company; (i) any Investment consisting of a guarantee permitted under clause
(e) of the second paragraph of "--Limitation on Indebtedness" above; and (j) any
Investment in ATEMCO required pursuant to the ATEMCO Joint Venture Agreement not
to exceed the Company's PRO RATA share of capital contributions based on its
ownership of Equity Interests in ATEMCO and in any event not to exceed $100,000
in any fiscal year (provided that all other holders of Equity Interests in
ATEMCO are also simultaneously making Investments in ATEMCO pursuant to the
ATEMCO Joint Venture Agreement based on their PRO RATA share of required capital
contributions based on their ownership of Equity Interests in ATEMCO).
"PERMITTED JUNIOR SECURITIES" means any securities of the Company or any
other Person that are (i) equity securities without special covenants or (ii)
subordinated in right of payment to all Senior Indebtedness that may at the time
be outstanding, to substantially the same extent as, or to a greater extent
than, the Notes are subordinated as provided in the Indenture, in any event
pursuant to a court order so providing and as to which (a) the rate of interest
on such securities shall not exceed the effective rate of interest on the Notes
on the date of the Indenture, (b) such securities shall not be entitled to the
benefits of covenants or defaults materially more beneficial to the holders of
such securities than those in effect with respect to the Notes on the date of
the Indenture and (c) such securities shall not provide for amortization
(including sinking fund and mandatory prepayment provisions) commencing prior to
the
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date six months following the final scheduled maturity date of the Senior
Indebtedness (as modified by the plan of reorganization of readjustment pursuant
to which such securities are issued).
"PERMITTED LIENS" means (a) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company 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 the Company or any Restricted Subsidiary other than the
property or assets subject to the Liens prior to such merger or consolidation;
(b) Liens imposed by law such as carriers', warehousemen's and mechanics' Liens
and other similar Liens arising in the ordinary course of business which secure
payment of obligations not more than 60 days past due or which are being
contested in good faith and by appropriate proceedings; (c) Liens existing on
the Issue Date; (d) Liens securing only the Notes; (e) Liens in favor of the
Company or any Restricted Subsidiary; (f) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded; PROVIDED, HOWEVER, that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have been made
therefor; (g) easements, reservation of rights of way, restrictions and other
similar easements, licenses, restrictions on the use of properties, or minor
imperfections of title that in the aggregate are not material in amount and do
not in any case materially detract from the properties subject thereto or
interfere with the ordinary conduct of the business of the Company and the
Restricted Subsidiaries; (h) Liens resulting from the deposit of cash or notes
in connection with contracts, tenders or expropriation proceedings, or to secure
workers' compensation, surety or appeal bonds, costs of litigation when required
by law and public and statutory obligations or obligations under franchise
arrangements entered into in the ordinary course of business; (i) Liens securing
Indebtedness consisting of Capitalized Lease Obligations, Purchase Money
Indebtedness, mortgage financings, industrial revenue bonds or other monetary
obligations, in each case incurred solely 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 the Company or the Restricted Subsidiaries, or repairs,
additions or improvements to such assets, PROVIDED, HOWEVER, that (I) such Liens
secure Indebtedness in an amount not in excess of the original purchase price or
the original cost of any such assets or repair, addition or improvement thereto
(plus an amount equal to the reasonable fees and expenses in connection with the
incurrence of such Indebtedness), (II) such Liens do not extend to any other
assets of the Company or the Restricted Subsidiaries (and, in the case of
repair, addition or improvements to any such assets, such Lien extends only to
the assets (and improvements thereto or thereon) repaired, added to or
improved), (III) the Incurrence of such Indebtedness is permitted by "--Certain
Covenants--Limitation on Indebtedness" above and (IV) such Liens attach within
90 days of such purchase, construction, installation, repair, addition or
improvement; (j) Liens to secure any refinancings, renewals, extensions,
modifications or replacements (collectively, "refinancing") (or successive
refinancings), 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); (k) Liens securing letters of
credit entered into in the ordinary course of business and consistent with past
business practice; and (l) Liens on and pledges of the Equity Interests of any
Unrestricted Subsidiary securing any Indebtedness of such Unrestricted
Subsidiary.
"PERMITTED TRANSFEREE" means, with respect to any Person: (a) in the case
of any Person who is a natural person, such individual's spouse or children, any
trust for such individual's benefit or the benefit of such individual's spouse
or children, or any corporation or partnership in which the direct and
beneficial owner of all of the equity interest is such Person or such
individual's spouse or children or any trust for the benefit of such persons;
and (b) in the case of any Person who is a natural person, the heirs, executors,
administrators or personal representatives upon the death of such Person or upon
the incompetency or disability of such Person for purposes of the protection and
management of such individual's assets.
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"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
limited partnership, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"POST-PETITION INTEREST" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.
"PREFERRED EQUITY INTEREST," in any Person, means an Equity Interest of any
class or classes (however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.
"PRINCIPAL" of a debt security means the principal of the security plus,
when appropriate, the premium, if any, on the security.
"PUBLIC EQUITY OFFERING" means, with respect to the Company or Holdings, an
underwritten public offering of Qualified Equity Interest of the Company or
Holdings, as the case may be, pursuant to an effective registration statement
filed under the Securities Act (excluding registration statements filed on Form
S-8).
"PUBLIC MARKET" means any time after (x) a Public Equity Offering has been
consummated and (y) at least 15% of the total issued and outstanding Qualified
Equity Interests of the Company or Holdings, as the case may be, has been
distributed by means of an effective registration statement under the Securities
Act.
"PURCHASE AMOUNT" has the meaning set forth in the definition of "Offer to
Purchase" above.
"PURCHASE DATE" has the meaning set forth in the definition of "Offer to
Purchase" above.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price or the cost of construction or improvement of any property,
provided that the aggregate principal amount of such Indebtedness does not
exceed the lesser of the Fair Market Value of such property or such purchase
price or cost, including any refinancing of such Indebtedness that does not
increase the aggregate principal amount (or accreted amount, if less) thereof as
of the date of refinancing.
"PURCHASE PRICE" has the meaning set forth in the definition of "Offer to
Purchase" above.
"QUALIFIED EQUITY INTEREST" in any Person means any Equity Interest in such
Person other than any Disqualified Equity Interest.
"REDEMPTION DATE" has the meaning set forth in the third paragraph of
"--Optional Redemption" above.
"RELATED BUSINESS" means those businesses in which the Company or any of
the Restricted Subsidiaries is engaged on the date of the Indenture, or that are
reasonably related or incidental thereto.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company that has not
been designated by the Board of Directors of the Company, by a resolution of the
Board of Directors of the Company delivered to the Trustee, as an Unrestricted
Subsidiary pursuant to "--Certain Covenants--Designation
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of Unrestricted Subsidiaries" above. Any such designation may be revoked by a
resolution of the Board of Directors of the Company delivered to the Trustee,
subject to the provisions of such covenant.
"SEC" means the Securities and Exchange Commission.
"SENIOR CREDIT FACILITY" means the Credit Agreement, dated as of May 9,
1997, between the Company, the lenders named therein, and The Chase Manhattan
Bank, as Administrative Agent, including any deferrals, renewals, extensions,
replacements, refinancings or refundings thereof, or amendments, modifications
or supplements thereto and any agreement providing therefor, whether by or with
the same or any other lender, creditor, group of lenders or group of creditors,
and including related notes, guarantee and note agreements and other instruments
and agreements executed in connection therewith.
"SENIOR INDEBTEDNESS" means, at any date, (a) all Obligations of the
Company under the Senior Credit Facility; (b) all Interest Rate Protection
Obligations of the Company; (c) all Obligations of the Company under stand-by
letters of credit; and (d) all other Indebtedness of the Company for borrowed
money, including principal, premium, if any, and interest (including
Post-Petition Interest) on such Indebtedness, unless the instrument under which
such Indebtedness of the Company for money borrowed is Incurred expressly
provides that such Indebtedness for money borrowed is not senior or superior in
right of payment to the Notes, and all renewals, extensions, modifications,
amendments or refinancings thereof. Notwithstanding the foregoing, Senior
Indebtedness shall not include (a) to the extent that it may constitute
Indebtedness, any Obligation for Federal, state, local or other taxes; (b) any
Indebtedness among or between the Company and any Subsidiary of the Company; (c)
to the extent that it may constitute Indebtedness, any Obligation in respect of
any trade payable Incurred for the purchase of goods or materials, or for
services obtained, in the ordinary course of business; (d) that portion of any
Indebtedness that is Incurred in violation of the Indenture; PROVIDED, HOWEVER,
that such Indebtedness shall be deemed not to have been Incurred in violation of
the Indenture for purposes of this clause (d) if (I) the holder(s) of such
Indebtedness or their representative or the Company shall have furnished to the
Trustee an opinion of independent legal counsel, unqualified in all material
respects, addressed to the Trustee (which legal counsel may, as to matters of
fact, rely upon an Officers' Certificate of the Company) to the effect that the
Incurrence of such Indebtedness does not violate the provisions of the Indenture
or (II) in the case of any Obligations under the Senior Credit Facility, the
holder(s) of such Obligations or their agent or representative shall have
received a representation from the Company to the effect that the Incurrence of
such Indebtedness does not violate the provisions of this Indenture; (e)
Indebtedness evidenced by the Notes; (f) Indebtedness of the Company that is
expressly subordinate or junior in right of payment to any other Indebtedness of
the Company; (g) to the extent that it may constitute Indebtedness, any
obligation owing under leases (other than Capitalized Lease Obligations) or
management agreements; (h) any obligation that by operation of law is
subordinate to any general unsecured obligations of the Company; and (i) any
Existing Indebtedness.
"SIGNIFICANT RESTRICTED SUBSIDIARY" means, at any date of determination,
(a) any Restricted Subsidiary that, together with its Subsidiaries that
constitute Restricted Subsidiaries (i) for the most recent fiscal year of the
Company accounted for more than 5.0% of the consolidated revenues of the Company
and the Restricted Subsidiaries or (ii) as of the end of such fiscal year, owned
more than 5.0% of the consolidated assets of the Company and the Restricted
Subsidiaries, all as set forth on the consolidated financial statements of the
Company and the Restricted Subsidiaries for such year prepared in conformity
with GAAP, and (b) any Restricted Subsidiary which, when aggregated with all
other Restricted Subsidiaries that are not otherwise Significant Restricted
Subsidiaries and as to which any event described in clause (f), (g) or (h) of
"--Events of Default" above has occurred, would constitute a Significant
Restricted Subsidiary under clause (a) of this definition.
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"STATED MATURITY," when used with respect to any Note or any installment of
interest thereon, means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.
"SUBORDINATED INDEBTEDNESS" means, with respect to the Company or any
Guarantor, any Indebtedness of the Company or such Guarantor, as the case may
be, which is expressly subordinated in right of payment to the Notes or such
Guarantor's Guaranty, as the case may be.
"SUBSIDIARY" means, with respect to any Person, (a) any corporation of
which the outstanding Voting Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, by such Person, or (b) any other Person of which
at least a majority of Voting Equity Interests are at the time, directly or
indirectly, owned by such first named Person.
"SURVIVING PERSON" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of May 9,
1997 by and between Holdings, the Company and certain of the Company's
Subsidiaries, as amended and in effect from time to time.
"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 Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source or similar market data)) most nearly equal to the period from
the Redemption Date to May 1, 2001; PROVIDED, HOWEVER, that if the period from
the Redemption Date to May 1, 2001 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 the Redemption Date to May 1, 2001 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.
"UNITED STATES GOVERNMENT OBLIGATIONS" means direct non-callable
obligations of the United States for the payment of which the full faith and
credit of the United States is pledged.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company designated as
such pursuant to "--Certain Covenants--Designation of Unrestricted Subsidiaries"
above. Any such designation may be revoked by a resolution of the Board of
Directors of the Company delivered to the Trustee, subject to the provisions of
such covenant.
"UNUTILIZED NET CASH PROCEEDS" has the meaning set forth in the third
paragraph under "--Certain Covenants--Disposition of Proceeds of Asset Sales"
above.
"VOTING EQUITY INTERESTS" means Equity Interests in a corporation or other
Person with voting power under ordinary circumstances entitling the holders
thereof to elect the Board of Directors or other governing body of such
corporation or Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to
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the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (b) the then outstanding aggregate principal amount of such
Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary all of
the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company.
BOOK-ENTRY, DELIVERY AND FORM
The Exchange Notes initially will be represented by one or more permanent
global certificates in definitive, fully registered form (the "Global Notes").
The Global Notes will be deposited with, or on behalf of, The Depository Trust
Company ("DTC") and registered in the name of a nominee of DTC.
THE GLOBAL NOTES. The Company expects that pursuant to procedures
established by DTC (a) upon the issuance of the Global Notes, DTC or its
custodian will credit, on its internal system, the principal amount of Exchange
Notes of the individual beneficial interests represented by the Global Notes to
the respective accounts of persons who have accounts with DTC and (b) ownership
of beneficial interests in the Global Notes will be shown on, and the transfer
of such ownership will be effected only through, records maintained by DTC or
its nominee (with respect to interests of Participants (as defined herein)) and
the records of Participants (with respect to interests of persons other than
Participants). Ownership of beneficial interests in the Global Notes will be
limited to persons who have accounts with DTC ("Participants") or persons who
hold interests through Participants. Interests in the Global Notes may be held
directly through DTC, by Participants, or indirectly through organizations which
are Participants.
So long as DTC, or its nominee, is the registered owner or holder of the
Global Notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Exchange Notes represented by such Global Notes for
all purposes under the Indenture. No beneficial owner of an interest in the
Global Notes will be able to transfer that interest except in accordance with
DTC's procedures, in addition to those provided for under the Indenture.
Payments of the principal of, premium, if any, and interest on the Global
Notes will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any paying agent 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 Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of the Global Notes, will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Notes as
shown on the records of DTC or its nominee. The Company also expects that
payments by Participants to owners of beneficial interests in the Global Notes
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 payments
will be the responsibility of such Participants.
Transfers between Participants will be effected in the ordinary way in
accordance with DTC rules and will be settled in clearinghouse funds. If a
Holder requires physical delivery of a Certificated Note for any reason,
including to sell Exchange Notes to persons in states which require physical
delivery of the Exchange Notes, or to pledge such securities, such Holder must
transfer its interest in a Global Note in accordance with the normal procedures
of DTC and with the procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Exchange Notes (including the presentation of Exchange
Notes for exchange) only at the direction of one or more Participants to whose
account the DTC interests in the Global Notes are credited and only in
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respect of such portion of the aggregate principal amount of Exchange Notes as
to which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Indenture, DTC will exchange
the Global Notes in whole for Certificated Notes (as defined below), which it
will distribute to the Participants.
DTC has advised the Company 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 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 that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Notes among Participants, it is under no
obligation to perform such procedures, and such procedures may be discontinued
at any time. Neither the Company nor the Trustee will have any responsibility
for the performance by DTC or the Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations.
CERTIFICATED NOTES. If DTC is at any time unwilling or unable to continue
as a depositary for the Global Notes and a successor depositary is not appointed
by the Company within 90 days, certificated notes in definitive, fully
registered form will be issued in exchange for the Global Notes.
SENIOR SUBORDINATED NOTES REGISTRATION RIGHTS
DEFINITIONS. As used in this section, the following terms shall have the
following meanings:
CLOSING DATE: The closing date of the offering of the Senior Subordinated
Notes (May 9, 1997).
EFFECTIVENESS DATE: The 120th day after the Closing Date; PROVIDED,
HOWEVER, that, with respect to the Initial Shelf Registration Statement, (i) if
the Filing Date in respect thereof is fewer than 60 days prior to the 120th day
after the Closing Date, then the Effectiveness Date in respect thereof shall be
the 60th day after such Filing Date and (ii) if the Filing Date is after the
filing of the Exchange Offer Registration Statement with the SEC, then the
Effectiveness Date in respect thereof shall be the 60th day after such Filing
Date.
EXPIRATION DATE: The 30th day after the Effectiveness Date; PROVIDED,
HOWEVER, that if the Exchange Offer is required by applicable law to be open for
a period of more than 30 days, the Expiration Date shall mean the last date of
such period.
FILING DATE: The 60th day after the Closing Date; PROVIDED, HOWEVER, that,
with respect to the Initial Shelf Registration Statement, (i) if a Shelf
Registration Event shall have occurred fewer than 30 days prior to the 60th day
after the Closing Date, then the Filing Date in respect thereof shall be the
30th day after such Shelf Registration Event and (ii) if a Shelf Registration
Event shall have occurred after the filing of the Exchange Offer Registration
Statement with the SEC, then the Filing Date in respect thereof shall be the
30th day after such Shelf Registration Event.
REGISTRABLE SECURITIES: The Senior Subordinated Notes upon original
issuance thereof and at all times subsequent thereto, each Exchange Note (as
defined below) as to which clause (v) of paragraph (b) of "--Exchange Offer"
below is applicable upon original issuance and at all times subsequent thereto
and, if issued, the Private Exchange Notes (as defined in the Registration
Rights Agreement),
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until in the case of any such Notes, Exchange Notes or Private Exchange Notes,
as the case may be, (i) a Registration Statement (other than, with respect to
any Exchange Note as to which clause (v) of paragraph (b) of "--Exchange Offer"
below is applicable, the Exchange Offer Registration Statement) covering such
Notes, Exchange Notes or Private Exchange Notes has been declared effective by
the SEC and such Senior Subordinated Notes, Exchange Notes or Private Exchange
Notes, as the case may be, have been disposed of in accordance with such
effective Registration Statement, (ii) such Senior Subordinated Notes, Exchange
Notes or Private Exchange Notes, as the case may be, are sold in compliance with
Rule 144 under the Securities Act, (iii) such Senior Subordinated Note has been
exchanged for an Exchange Note pursuant to the Exchange Offer and clause (v) of
paragraph (b) of "-- Exchange Offer" below is not applicable thereto, or (iv)
such Senior Subordinated Notes, Exchange Notes or Private Exchange Notes, as the
case may be, cease to be outstanding.
EXCHANGE OFFER. The Company, each of the Guarantors and the Initial
Purchasers entered into the Registration Rights Agreement on the Closing Date
pursuant to which the Company and each of the Guarantors (a) agreed to file with
the SEC, on or before the Filing Date, the Exchange Offer. The Exchange Offer
will be registered under the Securities Act on the appropriate form (the
"EXCHANGE OFFER REGISTRATION STATEMENT") and will comply with all applicable
tender offer rules and regulations under the Exchange Act. The Company and each
of the Guarantors agreed to use their respective best efforts to (i) cause the
Exchange Offer Registration Statement to become effective and commence the
Exchange Offer on or prior to the Effectiveness Date, (ii) keep the Exchange
Offer open until the Expiration Date and (iii) exchange Exchange Notes for all
Senior Subordinated Notes validly tendered and not withdrawn pursuant to the
Exchange Offer on or prior to the fifth day following the Expiration Date.
The Company and each of the Guarantors shall use their respective best
efforts to keep the Exchange Offer Registration Statement effective and to amend
and supplement the prospectus contained therein in order to permit such
prospectus to be lawfully delivered by all persons subject to the prospectus
delivery requirements of the Securities Act for at least 180 days (or such
shorter time as such persons must comply with such requirements in order to
resell the Exchange Notes) (the "APPLICABLE PERIOD").
(b) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Company is not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not commenced on or prior to the
Effectiveness Date, (iii) the Exchange Offer is not, for any reason, consummated
on or prior to the fifth day after the Expiration Date, (iv) any Holder of
Private Exchange Notes so requests, or (v) in the case of any Holder that
participates in the Exchange Offer, such Holder does not receive Exchange Notes
on the date of the exchange that may be sold without restriction under state and
Federal securities laws (the occurrence of any such event, a "SHELF REGISTRATION
EVENT"), then, in the case of each of clauses (i) through (v) of this sentence,
the Company shall promptly deliver to the Holders and the Trustee notice thereof
(the "SHELF NOTICE") and thereafter the Company and each of the Guarantors shall
file an Initial Shelf Registration Statement pursuant to the terms of the
Registration Rights Agreement.
SHELF REGISTRATION. If a Shelf Registration Event has occurred (and whether
or not an Exchange Offer Registration Statement has been filed with the SEC or
has become effective, or the Exchange Offer has been consummated), then:
(a) INITIAL SHELF REGISTRATION STATEMENT. The Company and each of the
Guarantors shall promptly prepare and file with the SEC a Registration Statement
for an offering to be made on a continuous basis pursuant to Rule 415 covering
all of the Registrable Securities (the "INITIAL SHELF REGISTRATION STATEMENT").
The Company and each of the Guarantors shall file with the SEC the Initial Shelf
Registration Statement on or prior to the Filing Date. The Initial Shelf
Registration Statement shall be on Form S-1 or another appropriate form if
available, permitting registration of such Registrable Securities for resale by
such holders in the manner designated by them (including, without limitation, in
one or more underwritten
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offerings). The Company and each of the Guarantors shall not permit any
securities other than the Registrable Securities to be included in the Initial
Shelf Registration Statement or any Subsequent Shelf Registration Statement. The
Company and each of the Guarantors shall use their respective best efforts to
cause the Initial Shelf Registration Statement to be declared effective under
the Securities Act on or prior to the Effectiveness Date, and to keep the
Initial Shelf Registration Statement continuously effective under the Securities
Act until the date which is 24 months from the Closing Date or such shorter
period ending when (i) all Registrable Securities covered by the Initial Shelf
Registration Statement have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration Statement or (ii) a Subsequent
Shelf Registration Statement covering all of the Registrable Securities has been
declared effective under the Securities Act (such 24 month or shorter period,
the "EFFECTIVENESS PERIOD").
(b) SUBSEQUENT SHELF REGISTRATION STATEMENTS. If the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement ceases to
be effective for any reason at any time during the Effectiveness Period (other
than because of the sale of all of the securities registered thereunder), the
Company and each of the Guarantors shall use their respective best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event the Company and each of the Guarantors shall within 45 days of
such cessation of effectiveness amend the Shelf Registration Statement in a
manner reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Securities (a "SUBSEQUENT
SHELF REGISTRATION STATEMENT"). If a Subsequent Shelf Registration Statement is
filed, the Company and each of the Guarantors shall use their respective best
efforts to cause the Subsequent Shelf Registration Statement to be declared
effective as soon as reasonably practicable after such filing and to keep such
Registration Statement continuously effective until the end of the Effectiveness
Period. As used herein the term "Shelf Registration Statement" means the Initial
Shelf Registration Statement and any Subsequent Shelf Registration Statement.
(c) SUPPLEMENTS AND AMENDMENTS. The Company and each of the Guarantors shall
promptly supplement and amend the Shelf Registration Statement if required by
the rules, regulations or instructions applicable to the registration form used
for such Shelf Registration Statement, if required by the Securities Act, or if
reasonably requested by the Holders of a majority in aggregate principal amount
of the Registrable Securities covered by such Registration Statement or by any
underwriter of such Registrable Securities.
ADDITIONAL INTEREST. The Company has agreed to pay, as liquidated damages,
additional interest on the Senior Subordinated Notes ("ADDITIONAL INTEREST")
under the circumstances and to the extent set forth below (each of which shall
be given independent effect):
(i) if either the Exchange Offer Registration Statement or the Initial
Shelf Registration Statement has not been filed on or prior to the Filing
Date (unless, with respect to the Exchange Offer Registration Statement, a
Shelf Event described in clause (i) of paragraph (b) of "--Exchange Offer"
above shall have occurred prior to the Filing Date), Additional Interest
shall accrue on the Senior Subordinated Notes over and above the stated
interest in an amount equal to $0.05 per week (or any part thereof) per
$1,000 principal amount of the Senior Subordinated Notes for the first 90
days immediately following such date, such Additional Interest increasing by
an additional $0.05 per week (or any part thereof) per $1,000 principal
amount of the Notes at the beginning of each subsequent 90-day period;
(ii) if either the Exchange Offer Registration Statement or the Initial
Shelf Registration Statement is not declared effective by the SEC on or
prior to the Effectiveness Date (unless, with respect to the Exchange Offer
Registration Statement, a Shelf Event described in clause (i) of paragraph
(b) of "--Exchange Offer" above shall have occurred), Additional Interest
shall accrue on the Senior Subordinated Notes over and above the stated
interest in an amount equal to $0.05 per week (or any part thereof) per
$1,000 principal amount of Senior Subordinated Notes for the first 90 days
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immediately following such date, such Additional Interest increasing by an
additional $0.05 per week (or any part thereof) per $1,000 principal amount
of the Senior Subordinated Notes at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Company has not exchanged Exchange Notes for all Senior
Subordinated Notes validly tendered and not withdrawn in accordance with the
terms of the Exchange Offer on or prior to the fifth day after the
Expiration Date, or (B) the Exchange Offer Registration Statement ceases to
be effective at any time prior to the Expiration Date, or (C) if applicable,
any Shelf Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time during the
Effectiveness Period, then Additional Interest shall accrue on the Senior
Subordinated Notes over and above the stated interest in an amount equal to
$0.05 per week (or any part thereof) per $1,000 principal amount of the
Senior Subordinated Notes for the first 90 days commencing on the (x) sixth
day after the Expiration Date, in the case of (A) above, or (y) the day the
Exchange Offer Registration Statement ceases to be effective in the case of
(B) above, or (z) the day such Shelf Registration Statement ceases to be
effective in the case of (C) above, such Additional Interest increasing by
an additional $0.05 per week (or any part thereof) per $1,000 principal
amount of the Senior Subordinated Notes at the beginning of each such
subsequent 90-day period;
PROVIDED, HOWEVER, that the Additional Interest on the Notes may not exceed at
any one time in the aggregate $0.50 per week per $1,000 principal amount of the
Senior Subordinated Notes; PROVIDED, FURTHER, HOWEVER, that (1) upon the filing
of the Exchange Offer Registration Statement or a Shelf Registration Statement
as required hereunder (in the case of clause (i) of this paragraph), (2) upon
the effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement as required hereunder (in the case of clause (ii) of this
paragraph) or (3) upon the exchange of Exchange Notes for all Senior
Subordinated Notes validly tendered and not withdrawn (in the case of clause
(iii)(A) of this paragraph), or upon the effectiveness of the Exchange Offer
Registration Statement which had ceased to remain effective (in the case of
(iii)(B) of this paragraph), or upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of (iii)(C) of
paragraph), Additional Interest on the Senior Subordinated Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accrue (but any accrued amount shall be payable).
The foregoing summary of certain provisions of the Registration Rights
Agreement does not purport to be complete and is qualified in its entirety by
reference to all provisions of the Registration Rights Agreement, a copy of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
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PLAN OF DISTRIBUTION
Based on interpretations by the Staff set forth in no-action letters issued
to third parties, the Company believes that Exchange Notes issued pursuant to
the Exchange Offer in exchange for Senior Subordinated Notes may be offered for
resale, resold and otherwise transferred by holders thereof (other than any
holder which is (i) an "Affiliate," (ii) a broker-dealer who acquired Senior
Subordinated Notes directly from the Company or (iii) broker-dealers who
acquired Senior Subordinated Notes as a result of market-making or other trading
activities) 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 such holders' business and such holders have no
arrangement with any person to participate in a distribution of such Exchange
Notes; provided that broker-dealers receiving Exchange Notes in the Exchange
Offer will be subject to a prospectus delivery requirement with respect to
resales of such Exchange Notes.
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Senior
Subordinated Notes where Senior Subordinated Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 1997, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. 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 at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the 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 commissions 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, 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 after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Notes) other than commissions or concessions of any brokers or
dealers and will indemnify such holders (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
The Initial Purchasers may engage in stabilizing transactions in accordance
with Rule 104 under the Exchange Act. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Such stabilization transactions may cause the price of the
Notes to be higher than it would otherwise be in the absence of such
transactions.
98
<PAGE>
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
the Company by Kelly, Hart & Hallman, Fort Worth, Texas.
EXPERTS
The consolidated financial statements of Reliant Building Products, Inc. and
subsidiaries as of March 28, 1997 and March 29, 1996, and for each of the three
years in the period ended March 28, 1997, included in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
99
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
<TABLE>
<S> <C>
Report of Independent Auditors........................................................ F-2
Consolidated Financial Statements
Consolidated Balance Sheets as of March 29, 1996 and March 28, 1997................... F-3
Consolidated Statements of Income for each of the three years in the period ended
March 28, 1997........................................................................ F-4
Consolidated Statements of Changes in Shareholders' Equity for each of the three years
in the period ended March 28, 1997.................................................... F-5
Consolidated Statements of Cash Flows for each of the three years in the period ended
March 28, 1997........................................................................ F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
Reliant Building Products, Inc.
We have audited the accompanying consolidated balance sheets of Reliant
Building Products, Inc. (formerly Redman Building Products, Inc.) and
subsidiaries as of March 28, 1997 and March 29, 1996, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended March 28, 1997. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Reliant
Building Products, Inc. and subsidiaries at March 28, 1997 and March 29, 1996,
and the consolidated results of their operations and cash flows for each of the
three years in the period ended March 28, 1997, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Dallas, Texas
June 19, 1997
F-2
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 29, MARCH 28,
1996 1997
----------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash................................................................................ $ 133 $ 182
Accounts and notes receivable....................................................... 18,690 17,732
Inventories:
Raw materials..................................................................... 9,941 9,883
Finished products and work-in-process............................................. 4,843 5,107
----------- --------------
14,784 14,990
Deferred tax assets................................................................. 1,369 1,434
Prepaid expenses and other current assets........................................... 1,296 1,008
----------- --------------
Total current assets.................................................................. 36,272 35,346
Property, plant, and equipment, at cost:
Land and buildings.................................................................. 17,245 17,020
Machinery and equipment............................................................. 30,140 33,086
----------- --------------
47,385 50,106
Accumulated depreciation and amortization........................................... (22,354) (26,054)
----------- --------------
25,031 24,052
Intangible assets, less accumulated amortization of $2,888 and $3,502, respectively... 10,557 9,943
Debt issuance costs................................................................... 1,843 1,177
Other assets.......................................................................... 3,066 2,559
----------- --------------
Total assets.......................................................................... $ 76,769 $ 73,077
----------- --------------
----------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................................... $ 11,187 $ 7,503
Accrued expenses.................................................................... 7,895 6,703
Current portion of long-term debt................................................... 2,475 3,464
Current portion of subordinated debt................................................ 375 375
----------- --------------
Total current liabilities............................................................. 21,932 18,045
Long-term debt........................................................................ 38,986 34,108
Deferred income taxes................................................................. 4,017 3,906
Other liabilities..................................................................... 426 334
Subordinated debt..................................................................... 3,097 5,380
Redeemable securities:
Redeemable preferred stock.......................................................... 5,312 6,119
Redeemable common stock warrants.................................................... 1,046 1,272
----------- --------------
Total redeemable securities........................................................... 6,358 7,391
Contingencies (NOTE 11)
Shareholders' equity
Common stock, $1.00 par value:
Authorized shares--10,000
Issued and outstanding shares--1,000.............................................. 1 1
Additional paid-in capital.......................................................... 7,063 6,670
Accumulated deficit................................................................. (5,111) (2,758)
----------- --------------
Total shareholders' equity............................................................ 1,953 3,913
----------- --------------
Total liabilities and shareholders' equity............................................ $ 76,769 $ 73,077
----------- --------------
----------- --------------
</TABLE>
See accompanying notes.
F-3
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 29, MARCH 28,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net sales................................................................ $ 137,184 $ 173,271 $ 174,401
Cost of products sold.................................................... 106,760 133,337 131,474
----------- ----------- -----------
Gross profit............................................................. 30,424 39,934 42,927
Selling, general and administrative...................................... 23,620 31,498 32,724
----------- ----------- -----------
Income from operations................................................... 6,804 8,436 10,203
Interest expense, net.................................................... 4,843 6,125 5,381
Other expenses........................................................... 359 753 577
----------- ----------- -----------
Income before income taxes & extraordinary items......................... 1,602 1,558 4,245
Income tax expense....................................................... 833 753 1,892
----------- ----------- -----------
Income before extraordinary loss......................................... 769 805 2,353
Extraordinary loss, net of tax benefit of $297........................... 552 -- --
----------- ----------- -----------
Net income............................................................... $ 217 $ 805 $ 2,353
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes.
F-4
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
----------- ----------- ------------- ---------
<S> <C> <C> <C> <C>
Balance at April 1, 1994........................................ $ 1 $ 8,092 $ (6,133) $ 1,960
Net income.................................................... 217 217
Accrual of redeemable preferred stock dividend................ (400) (400)
Other......................................................... (37) (37)
----- ----------- ------------- ---------
Balance at March 31, 1995....................................... 1 7,655 (5,916) 1,740
Net income.................................................... 805 805
Accrual of redeemable preferred stock dividend................ (400) (400)
Other......................................................... (192) (192)
----- ----------- ------------- ---------
Balance at March 29, 1996....................................... 1 7,063 (5,111) 1,953
Net Income.................................................... 2,353 2,353
Accrual of redeemable preferred stock dividend................ (371) (371)
Other......................................................... (22) (22)
----- ----------- ------------- ---------
Balance at March 28, 1997....................................... $ 1 $ 6,670 $ (2,758) $ 3,913
----- ----------- ------------- ---------
----- ----------- ------------- ---------
</TABLE>
See accompanying notes.
F-5
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 29, MARCH 28,
1995 1996 1997
----------- ----------- ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................................... $ 217 $ 805 $ 2,353
Adjustments to reconcile net income to net cash provided by operations:
Extraordinary loss......................................................... 552 -- --
Depreciation and amortization.............................................. 4,251 4,245 4,866
Noncash interest expense................................................... 595 678 666
Deferred income tax expense................................................ (197) (480) (176)
Provision for doubtful accounts............................................ (186) 1,345 331
Other...................................................................... 112 (257) 224
----------- ----------- ------------
5,344 6,336 8,264
Changes in operating assets and liabilities:
Accounts and notes receivable............................................ (2,787) (2,529) 627
Inventories.............................................................. (5,657) 4,560 (206)
Prepaid expenses and other current assets................................ 181 (701) 49
Accounts payable and accrued expenses.................................... 4,793 697 (4,803)
Other.................................................................... (925) (15) 469
----------- ----------- ------------
Net cash provided by operating activities.................................... 949 8,348 4,400
INVESTING ACTIVITIES
Purchases of property, plant, and equipment.................................. (4,628) (5,631) (3,516)
Proceeds from sales of property, plant, and equipment........................ 206 93 282
Proceeds from sales of warehouse operations.................................. (93) 1,797 --
Acquisitions................................................................. -- (5,544) --
----------- ----------- ------------
Net cash used in investing activities........................................ (4,515) (9,285) (3,234)
FINANCING ACTIVITIES
Proceeds from revolver borrowings............................................ 190,785 189,141 192,059
Principal payments on borrowings............................................. (185,777) (193,242) (196,119)
Payment of debt issue costs.................................................. (1,863) (90) (72)
Proceeds from long-term debt................................................. -- 4,197 2,600
Redemption of preferred stock................................................ -- -- (5,386)
Proceeds from sale of preferred stock by parent.............................. -- -- 5,969
Other borrowings............................................................. 500 1,000 --
Payment of preferred stock dividend.......................................... (200) -- (168)
----------- ----------- ------------
Net cash provided by (used in) financing activities.......................... 3,445 1,006 (1,117)
----------- ----------- ------------
Increase/(decrease) in cash.................................................. (121) 69 49
Cash at beginning of year.................................................... 185 64 133
----------- ----------- ------------
Cash at end of year.......................................................... $ 64 $ 133 $ 182
----------- ----------- ------------
----------- ----------- ------------
SUPPLEMENTARY INFORMATION
Cash payments for interest................................................... $ 3,098 $ 5,767 $ 5,243
----------- ----------- ------------
----------- ----------- ------------
Cash payment for income taxes................................................ $ 1,003 $ 1,594 $ 1,470
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
See accompanying notes.
F-6
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Reliant Building Products, Inc. (formerly Redman Building Products, Inc.) and
its subsidiaries (the Company). In connection with an initial public offering of
Redman Industries, Inc. (Industries) common stock, the Company was spun-off to
previous Industries shareholders as of September 23, 1993. As of that date, the
Company was a wholly owned subsidiary of RBPI Holding Corporation (RBPI
Holding). All significant intercompany accounts and transactions have been
eliminated upon consolidation.
The Company utilizes a 52 or 53 week accounting period which ends on the
Friday closest to March 31. Each of the years in the three years ended March 28,
1997 includes 52 weeks.
ACQUISITION
On April 28, 1995, the Company acquired all the assets and certain
liabilities of Living Windows Corporation, a wholly-owned subsidiary of THJ
Investments, Inc. Living Windows Corporation manufactures and distributes
aluminum framed windows. The Living Windows acquisition was accounted for under
the purchase method of accounting and accordingly, the Company consolidated the
operations of Living Windows from the date of acquisition. The total purchase
price for the Living Windows Acquisition included cash payments of approximately
$4,796,000, a note in the amount of $400,000 and assumed liabilities of
approximately $1,493,000. The Company also recorded $748,000 of goodwill from
the acquisition which is being amortized over 15 years.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
ACCOUNTS RECEIVABLE
The Company is principally an aluminum and vinyl window fabricator and
supplier to new residential construction and home remodeling markets throughout
the United States. Credit is extended in the normal course of business under
normal trade terms. The Company has established an allowance for doubtful
accounts of $1,637,000 at March 29, 1996 and $1,309,000 at March 28, 1997, based
upon the expected collectibility of its receivables. The Company wrote off
accounts receivable, net of recoveries, of $666,000, $361,000, and $542,000 in
fiscal years 1995, 1996, and 1997, respectively.
LONG-LIVED ASSETS
In March 1995 the Financial Accounting Standards Board issued Statement No.
121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF, which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed. The Company
adopted Statement 121 effective March 30, 1996, and the effect of adoption was
not material.
F-7
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined on
the LIFO method, which is essentially the same as using the FIFO method, for 57%
in 1996 and 53% in 1997 of total inventories.
DEPRECIATION AND AMORTIZATION
Buildings and machinery and equipment are depreciated using the
straight-line method over the estimated useful lives of the assets
(buildings--15 to 20 years; machinery and equipment--3 to 10 years). Capital
leases are amortized over the shorter of the useful life of the leased asset or
the lease term. Capital lease amortization is included in depreciation and
amortization expenses.
INTANGIBLE ASSETS
Intangible assets, consisting of goodwill and other intangible assets, are
stated on the basis of cost. Goodwill is being amortized on a straight-line
basis over a 40-year period with the exception of goodwill resulting from the
Living Windows acquisition which is being amortized over 15 years. Other
Intangible assets consisting primarily of a covenant not to compete are being
amortized over 5 years. Recoverability of carrying value of intangible assets is
evaluated on a recurring basis with consideration toward recovery through future
operating results on an undiscounted basis.
RECLASSIFICATIONS
Certain amounts have been reclassified to conform to the 1997 presentation.
F-8
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. LONG-TERM DEBT
<TABLE>
<CAPTION>
MARCH 29, MARCH 28,
1996 1997
----------- -----------
<S> <C> <C>
(IN THOUSANDS)
Secured senior credit facility:
Senior term loan; principal due in quarterly installments through January 2000; interest
at reference rate plus 1.75% (approximately 10% at March 28, 1997).................... $ 20,000 $ 17,327
Capital expenditure loan; principal due January 2000; interest at reference rate plus
2.0% (Approximately 10.25% at March 28, 1997)......................................... 3,766 4,600
Revolving loan; interest payable monthly at reference rate plus 1.75%; due January 2000
(Approximately 10% at March 28, 1997)................................................. 14,066 14,610
Acquisition loan; principal due January 2000; interest at reference rate plus 2.0%
(Approximately 10.25% at March 28, 1997).............................................. 2,200 --
----------- -----------
40,032 36,537
Note payable, net of discount of $80,000, interest monthly at prevailing prime rate less
1%; principal due in quarterly installments of $90,000 through June 1998 (effective rate
13.07%)................................................................................. 1,029 749
Other notes payable....................................................................... 400 286
----------- -----------
$ 41,461 $ 37,572
----------- -----------
----------- -----------
</TABLE>
On September 8, 1994, the Company refinanced its old secured senior credit
facility with Heller Financial, Inc. and other lenders. As a result of the
refinancing, debt issue costs and an original issue discount were written off
which resulted in an extraordinary loss of $552,000, net of tax benefit of
$297,000.
The loans under the secured senior credit facility are collateralized by all
the assets of the Company and are guaranteed by all of the Company's wholly
owned subsidiaries. The secured senior credit facility is subject to covenants
that, among other things, impose limitations on capital expenditures and
investments, restrict certain payments and distributions and require the Company
to maintain certain financial ratios.
Under the credit facility, at March 28, 1997, the Company had additional
borrowing availability, which is limited by the lesser of the maximum revolving
loan or amounts of collateral, of $5.9 million under the revolving loan. The
Company must pay an annual commitment fee of 1/2 of 1% of the unused portion of
the revolving loan. The Company also had letters of credit outstanding totaling
$0.5 million, which generally guarantee various insurance liabilities.
The reference rate on the secured senior credit facility, the capital
expenditure loan, the revolving loan and the acquisition loan is defined as the
higher of the rate published by the Board of Governors of the Federal Reserve
System as the "Bank Prime Loan" rate in Federal Reserve statistical release H.15
(519) or the Federal Funds Effective rate. At March 28, 1997, this reference
rate was 8.25%.
F-9
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. LONG-TERM DEBT (CONTINUED)
The annual maturities of long-term debt at March 28, 1997, are (in
thousands):
<TABLE>
<S> <C>
1998.............................................................. $ 3,464
1999.............................................................. 4,221
2000.............................................................. 4,580
2001.............................................................. 4,520
2002.............................................................. 20,787
---------
$ 37,572
---------
---------
</TABLE>
The Company's secured senior credit facility is guaranteed by all of the
Company's wholly owned subsidiaries. The combined summarized information of
these subsidiaries is as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 29, MARCH 28,
1996 1997
----------- ----------
<S> <C> <C>
Cash..................................................................................... $ 106 $ 44
Receivables, net......................................................................... 7,087 7,121
Raw materials............................................................................ 3,174 3,402
Finished product and work in process..................................................... 1,493 2,200
Other current assets..................................................................... 692 3,169
Property, plant, and equipment, net...................................................... 3,912 3,937
Other assets............................................................................. 1,432 1,101
----------- ----------
Total assets......................................................................... $ 17,896 $ 20,974
----------- ----------
----------- ----------
Accounts payable......................................................................... $ 2,113 $ 1,278
Accrued expenses......................................................................... 913 971
Current portion of long-term debt and capital lease obligation........................... 445 410
Long term debt and capital lease obligation.............................................. 930 566
Other liabilities........................................................................ 327 421
Intercompany payable..................................................................... 17,647 26,567
Contributed capital...................................................................... 6,536 6,536
Retained earnings (deficit).............................................................. (11,015) (15,775)
----------- ----------
Total liabilities and shareholder's equity........................................... $ 17,896 $ 20,974
----------- ----------
----------- ----------
</TABLE>
F-10
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------
MARCH 31, MARCH 29, MARCH 28,
1995 1996 1997
--------- ----------- -----------
<S> <C> <C> <C>
Net sales................................................. $ 30,997 $ 58,700 $ 61,913
Cost of products sold..................................... 26,618 49,986 53,809
Selling, general, and administrative...................... 5,976 13,823 13,889
Interest expense.......................................... 603 1,372 1,413
Income tax benefit........................................ 722 2,276 2,438
--------- ----------- -----------
Net loss.................................................. $ (1,478) $ (4,205) $ (4,760)
--------- ----------- -----------
--------- ----------- -----------
Net cash used in operating activities..................... $ (5,112) $ (2,175) $ (7,917)
Net cash used in investing activities..................... (1,104) (5,042) (922)
Net cash provided by financing activities................. 6,217 7,413 8,776
--------- ----------- -----------
Increase in cash...................................... $ 1 $ 196 $ (63)
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
3. SUBORDINATED DEBT
<TABLE>
<CAPTION>
MARCH 29, MARCH 28,
1996 1997
----------- -----------
<S> <C> <C>
(IN THOUSANDS)
Subordinated note payable to shareholder; interest at 11% payable
quarterly; principal due in March, 2002............................. $ 2,000 $ 2,000
Subordinated note payable to shareholder; interest at 12.9% payable
quarterly; principal due March 2002................................. -- 2,600
Promissory note payable to Redman Industries, Inc.; interest at 7%
payable semi-annually; principal due in semi-annual installments of
$125,000............................................................ 1,472 1,155
----------- -----------
$ 3,472 $ 5,755
----------- -----------
----------- -----------
</TABLE>
In connection with the additional subordinated note, RBPI Holding issued
54,259 common stock warrants to the shareholder to purchase additional shares of
RBPI Holding common stock.
In connection with the Transaction (see footnote 12), certain exisitng
indebtedness of the Company was repaid including the senior term loan, capital
expenditure loan, revolving loan, subordinated note payables, and promissory
note payable. The repayment was financed through the offering of $70,000,000
10 7/8 senior subordinated notes.
4. REDEEMABLE PREFERRED STOCK AND COMMON STOCK WARRANTS
At March 29, 1996, the Company had outstanding 4,000 shares (10,000 shares
authorized) of its 10% cumulative, nonvoting, $.01 par value Preferred Stock
recorded at $1,000 per share. The Preferred Stock was mandatorily redeemable 10
years from the date of issuance at a price of $1,000 per share plus accrued and
unpaid dividends. At March 29, 1996, there were $1.3 million of unpaid but
accrued dividends. In connection with the sale of the Preferred Stock, the
Company agreed to purchase from the
F-11
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. REDEEMABLE PREFERRED STOCK AND COMMON STOCK WARRANTS (CONTINUED)
holder of the Preferred Stock certain material requirements at competitive
market rates, terms, and conditions. Under certain circumstances, the preferred
shareholder can require the Company to redeem the Preferred Stock at its
liquidation value of $1,000 per share plus unpaid dividends in advance of its
scheduled redemption dates. On May 14, 1996 the Company redeemed all of the
Preferred Stock outstanding at March 29,1996 for approximately $5.3 million
including unpaid dividends.
On April 29, 1996, RBPI Holding entered into a Preferred Stock Purchase
Agreement with an outside glass supplier for the issuance and sale to the
Investor of 6,000 shares of its authorized but unissued 10% cumulative non
voting Preferred Stock (New Preferred Stock), $.01 par value, for a purchase
price of $1,000 per New Preferred Share. The New Preferred Stock is mandatorily
redeemable by RBPI Holding under certain circumstances, including a transaction
that results in a change in control of RBPI Holding. The proceeds from the
purchase were used to redeem its existing Preferred Stock, including all accrued
but unpaid dividends, and provide the Company with additional funds and credit
support for the acquisition of stock and/or assets of other companies engaged in
the window industry. In conjunction with the Preferred Stock Purchase Agreement,
RBPI has entered into an agreement with the outside glass supplier to purchase
not less than 75% of the total dollar amount of all purchases of glass by RBPI
during the two year term of the agreement at prices that are competitive with
other glass suppliers.
The Company accrued dividends under the redeemable preferred stock of
$400,000 in each of the three years ended March 29, 1997, and paid preferred
stock dividends of $200,000 in fiscal year 1995, and none in fiscal years 1996,
and 1997, respectively.
In connection with the issuance of the senior credit facility (See Note 2),
the Company's parent, RBPI Holding, issued redeemable warrants to the senior
lenders to purchase 30,928 shares of RBPI Holding's common stock. The warrants
are exercisable at $1 per share and expire on September 8, 1999. The warrants
contain a put provision that would require RBPI Holding to repurchase the
warrants at a price based upon various formulas. The redeemable warrants have
been recorded at their original stated value of approximately $770,000 plus
accretion from their original stated value.
As RBPI Holding has no source of funds other than the Company, any mandatory
redemption of the New Preferred Stock issued by RBPI Holding, or a put exercise
under the redemable warrants could only be funded from dividends by the Company
to RBPI Holding. As such, the Company has reflected the New Preferred Stock and
the redeemable warrants at the Company level as redeemable securities.
5. LEASES
At March 28, 1997, the Company had noncancelable commitments under operating
leases through fiscal 2001 as follows (in thousands):
<TABLE>
<S> <C>
1998............................................................... $ 3,108
1999............................................................... 2,237
2000............................................................... 1,601
2001............................................................... 895
2002............................................................... 444
Thereafter......................................................... 1,156
---------
Total Minimum Payments............................................. $ 9,441
---------
---------
</TABLE>
F-12
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. LEASES (CONTINUED)
Rent expense was $3.1 million, $3.7 million, and $4.1 million for the fiscal
years 1995, 1996, and 1997, respectively.
6. INCOME TAXES
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------
MARCH 31, MARCH 29, MARCH 28,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
(IN THOUSANDS)
Current:
Federal................................................ $ 911 $ 1,021 $ 1,668
State.................................................. 119 212 400
----------- ----------- -----------
1,030 1,233 2,068
Deferred:
Federal................................................ (243) (385) (158)
State.................................................. 46 (95) (18)
----------- ----------- -----------
(197) (480) (176)
----------- ----------- -----------
$ 833 $ 753 $ 1,892
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
From April 3, 1993 through September 23, 1993, the Company was part of a
consolidated tax group. Income taxes for that period of time were computed as if
the Company were filing a separate return.
Deferred income taxes are determined using the liability approach, which
considers the future tax consequences of differences between financial
accounting and tax bases of assets and liabilities. The temporary differences
that comprise deferred income tax assets (liabilities) are as follows (in
thousands):
<TABLE>
<CAPTION>
MARCH 29, MARCH 28,
1996 1997
----------- -----------
<S> <C> <C>
Current:
Book-over-tax basis of inventory........................................................ $ (598) $ (355)
Insurance reserves...................................................................... 489 338
Tax-over-book basis of receivables...................................................... 577 449
Tax credits............................................................................. 36 36
Employee benefits....................................................................... 510 557
Other, net.............................................................................. 355 409
----------- -----------
Total current............................................................................. $ 1,369 $ 1,434
----------- -----------
----------- -----------
Noncurrent:
Book-over-tax basis of fixed assets..................................................... $ (3,651) $ (3,480)
Other, net.............................................................................. (366) (426)
----------- -----------
Total noncurrent.......................................................................... $ (4,017) $ (3,906)
----------- -----------
----------- -----------
</TABLE>
F-13
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES (CONTINUED)
Principal reconciling items from income tax computed at the U.S. Statutory
rate of 34% are as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31, MARCH 29, MARCH 28,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Provision at statutory rate.................................................. $ 545 $ 530 $ 1,443
Amortization of goodwill..................................................... 96 96 96
Business meals and entertainment............................................. 63 34 30
State taxes, net of federal benefit.......................................... 109 77 264
Other........................................................................ 20 16 59
----- ----- -----------
Total........................................................................ $ 833 $ 753 $ 1,892
----- ----- -----------
----- ----- -----------
</TABLE>
7. ACCRUED EXPENSES
<TABLE>
<CAPTION>
MARCH 29, MARCH 28,
1996 1997
----------- -----------
<S> <C> <C>
(IN THOUSANDS)
Employee compensation and benefits.................................... $ 3,658 $ 3,774
Insurance............................................................. 1,437 995
Interest.............................................................. 1,168 443
Product warranty...................................................... 97 244
Sales incentives...................................................... 367 304
Other................................................................. 1,168 943
----------- -----------
$ 7,895 $ 6,703
----------- -----------
----------- -----------
</TABLE>
8. PENSION PLANS
The Company sponsors a defined contribution retirement plan (401k) and a
supplemental retirement plan covering substantially all its employees. Eligible
employees may contribute up to 10% of their compensation, and the Company
matches 50% of the first 6% deferred by the employees. Employees are eligible to
participate in the 401k plan after one year of employment and vest in the
Company's matching contribution ratably over five years. Defined contribution
expense for the two plans was $473,000, $572,000, and $599,000 for fiscal years
1995, 1996, and 1997, respectively.
9. INCENTIVE STOCK UNITS
The Company and certain officers and key executives of the Company and of
Industries (the Unit Holders) have entered into separate Incentive Stock Units
Agreements (the Units) whereby, upon the occurrence of certain transactions or
events, the Unit Holders are entitled to receive compensation based upon a
prescribed formula. At March 28,1997, there were 16 Unit Holders who had been
granted Units, and all such Unit Holders are fully vested. Until a transaction
or event occurs that would result in the payment of the Units, the compensation
to be recognized cannot be reasonably estimated. (See Note 12).
F-14
<PAGE>
RELIANT BUILDING PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. RELATED PARTY TRANSACTIONS
The Company was charged $285,000, $178,000 and $0 by Industries in fiscal
years 1995, 1996, and 1997, respectively, for various management services
performed by Industries for the benefit of the Company. The Company was also
charged $262,500, $350,000, and $350,000 by Wingate Partners in fiscal years
1995, 1996, and 1997, respectively, for management services.
11. CONTINGENCIES
Various claims, suits, and complaints have been filed or are pending against
the Company. In the opinion of management, adequate provision has been made for
those matters not covered by insurance.
12. SUBSEQUENT EVENT
On May 9, 1997, Wingate Partners, L.P. and certain selling stockholders sold
the common stock of Holdings to Reliant Partners. The selling stockholders
received $30.1 million cash and $9.8 million of seller notes. In addition, the
$6.0 million of outstanding preferred stock was redeemed. In connection with
this transaction the Company will recognize $2,004,000 of compensation expense
which is net of a tax benefit of approximately $1,177,000 related to the
incentive stock units (See Note 9). In addition, the Company will recognize an
extraordinary charge of approximately $720,000 which is net of a tax benefit of
approximately $423,000 relating to the extinguishment of debt with proceeds of
the Offering.
F-15
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS 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. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
- -------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary................................ 4
Risk Factors........................... 15
Use of Proceeds........................ 21
The Exchange Offer..................... 21
Capitalization......................... 30
Selected Historical and Pro Forma
Financial Information................ 31
Unaudited Pro Forma Financial
Statements........................... 33
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 38
Business............................... 43
Management............................. 52
Ownership of Capital Stock............. 56
Certain Transactions................... 57
Description of the Senior Credit
Facility............................. 57
Description of the Notes............... 60
Plan of Distribution................... 98
Legal Matters.......................... 99
Experts................................ 99
Index to Consolidated Financial
Statements........................... F-1
</TABLE>
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NOTES OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
PROSPECTUS
$70,000,000
RELIANT BUILDING
PRODUCTS, INC.
10 7/8% SENIOR SUBORDINATED NOTES
DUE 2004
[LOGO]
, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated in Delaware. Under section 145 of the Delaware
General Corporation Law (the "DGCL"), a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents in connection with actions, suits or proceedings brought against them
by a third party or in the right of the corporation, by reason of the fact that
they were or are such directors, officers, employees or agents, against expenses
and liabilities incurred in any such action, suit or proceeding so long as they
acted in good faith and in a manner that they reasonably believed to be in, or
not opposed to, the best interests of such corporation, and with respect to any
criminal action, that they have no reasonable cause to believe their conduct was
unlawful. With respect to suits by or in the right of such corporation, however,
indemnification is generally limited to attorneys fees and other expenses and is
not available if such person is adjudged to be liable to such corporation unless
the court determines that indemnification is appropriate. A Delaware corporation
also has the power to purchase and maintain insurance for such persons. The
Company has acquired such directors' and officers' insurance, which includes
coverage for liability under the federal securities laws.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------
<C> <S> <C>
2.1 -- Stock Purchase Agreement dated as of March 27, 1997 by and between the Stockholders named
therein and Reliant Partners, L.P.
2.2 -- First Amendment to Stock Purchase Agreement dated as of May 9, 1997 by and between Reliant
Partners, L.P., Reliant Partners II, L.P., David G. Fiore, Virgil D. Lowe, Jack L. Morris,
Rodney Vickers, Charles E. Still and James R. Trigg, Jr. and the Stockholders named herein
3.1 -- Restated Certificate of Incorporation of Reliant Building Products, Inc.
3.2 -- Certificate of Amendment to Certificate of Incorporation of Reliant Building Products,
Inc. filed September 7, 1993
3.3 -- Certificate of Amendment to Certificate of Incorporation of Reliant Building Products,
Inc. filed May 8, 1997
3.4 -- Bylaws of Redman Building Products, Inc.
3.5 -- Articles of Incorporation of LeVan Builders Supply Company, Inc.
3.6 -- Certificate of Amendment to Articles of Incorporation of LeVan Builders Supply Company,
Inc. filed September 7, 1993
3.7 -- Bylaws of LeVan Builders Supply Company, Inc.
3.8 -- Certificate of Incorporation of RBP of Arizona, Inc.
3.9 -- Certificate of Amendment to Certificate of Incorporation of RBP of Arizona, Inc. filed
September 7, 1993
3.10 -- Bylaws of RBP of Arizona, Inc.
3.11 -- Certificate of Incorporation of RBP Custom Glass, Inc.
3.12 -- Certificate of Amendment to Certificate of Incorporation of RBP Custom Glass, Inc. filed
September 7, 1993
3.13 -- Bylaws of RBP Custom Glass, Inc.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------
<C> <S> <C>
3.14 -- Certificate of Incorporation of RBP Trans, Inc.
3.15 -- Certificate of Amendment to Certificate of Incorporation of RBP Trans, Inc. filed
September 7, 1993
3.16 -- Bylaws of RBP Trans, Inc.
3.17 -- Certificate of Incorporation of RBP Fenesco, Inc.
3.18 -- Bylaws of RBP Fenesco, Inc.
3.19 -- Certificate of Incorporation of RBP of Texas, Inc.
3.20 -- Bylaws of RBP of Texas, Inc.
3.21 -- Articles of Incorporation of Timber Tech, Inc.
3.22 -- Articles of Amendment to Articles of Incorporation of Timber Tech, Inc. filed May 25, 1983
3.23 -- Bylaws of Timber Tech, Inc.
4.1 -- Indenture dated as of May 9, 1997, between the Company, the Guarantors and Bank One,
Columbus NA, as Trustee, relating to the Notes.
4.2 -- Registration Rights Agreement dated as of May 9, 1997 between the Company, the Guarantors
and Chase Securities Inc. and CIBC Wood Gundy Securities Corp.
4.3 -- Form of 10 7/8% Senior Subordinated Notes due 2004, Series A (included in Exhibit 4.1)
4.4 -- Form of 10 7/8% Senior Subordinated Notes due 2004, Series B (included in Exhibit 4.1)
5.1 -- Opinion of Kelly, Hart & Hallman, P.C.
10.1 -- Stockholders Agreement dated as of May 9, 1997 by and among RBPI Holding Corporation and
the Stockholders named therein
10.2 -- Registration Rights Agreement dated as of May 9, 1997 by and among RBPI Holding
Corporation and the Stockholders named therein
10.3 -- Credit Agreement dated as of May 9, 1997 by and among the Company, each of the Lenders
named therein and The Chase Manhattan Bank, as agent.
10.4 -- Consulting Agreement dated as of May 9, 1997 by and between the Company and George Group
Inc.
10.5 -- Acquisition Advisory Services Fee Letter dated March 27, 1997 between RBPI Holding
Corporation and George Group Inc.
10.6 -- Employment Agreement dated as of April 1, 1997 by and between the Company and David G.
Fiore
10.7 -- Employment Agreement dated as of March 31, 1994 by and between the Company and Virgil D.
Lowe
10.8 -- Transaction Incentive Agreement dated as of January 1, 1997 by and between RBPI Holding
Corporation, the Company and David G. Fiore
10.9 -- RBPI Holding Corporation Nonqualified Stock Option Plan
12.1 -- Statement re Computation of Ratios
23.1 -- Consent of Kelly, Hart & Hallman, P.C. (included in Exhibit 5.1).
23.2 -- Consent of Ernst & Young LLP, Independent Auditors
24.1 -- Power of Attorney (included on signature page to this Registration Statement).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------
<C> <S> <C>
25.1 -- Statement of Eligibility and Qualification of Trustee on Form T-1.
27.1 -- Financial Data Schedule
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
</TABLE>
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post effective
amendment hereof) which, individually or in the aggregate, represents a
fundamental change in the information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering rage may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in this Registration Statement;
(2) That, for the purpose 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
thereto;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant 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 registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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 this Registration Statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on July 2, 1997.
RELIANT BUILDING PRODUCTS, INC.
By: /s/ DAVID G. FIORE
-----------------------------------------
David G. Fiore
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
We, the undersigned directors and officers of RELIANT BUILDING PRODUCTS,
INC., hereby appoint David G. Fiore and Virgil D. Lowe, or either of them, our
true and lawful attorneys and agents, to do any and all acts and things in our
name and on our behalf in our capacities indicated below, which said attorneys
and agents, or each of them, may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including, without limitation,
power and authority to sign for us, or any of us, in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys and agents, or
each of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the 2nd day
of July, 1997, in the capacities indicated.
SIGNATURE TITLE OR CAPACITY
- ------------------------------ ---------------------------------------------
/s/ DAVID G. FIORE Chairman of the Board, President and Chief
- ------------------------------ Executive Officer (Principal Executive
David G. Fiore Officer)
/s/ VIRGIL D. LOWE Vice President, Chief Financial Officer and
- ------------------------------ Director (Principal Financial and
Virgil D. Lowe Accounting Officer)
/s/ BRADFORD E. BERNSTEIN
- ------------------------------ Director
Bradford E. Bernstein
/s/ MICHAEL L. GEORGE
- ------------------------------ Director
Michael L. George
/s/ STEVEN B. GRUBER
- ------------------------------ Director
Steven B. Gruber
/s/ ROBERT B. HENSKE
- ------------------------------ Director
Robert B. Henske
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on July 2, 1997.
RBP OF ARIZONA, INC.
By: /s/ DAVID G. FIORE
-----------------------------------------
David G. Fiore
PRESIDENT
POWER OF ATTORNEY
We, the undersigned directors and officers of RBP OF ARIZONA, INC., hereby
appoint David G. Fiore and Virgil D. Lowe, or either of them, our true and
lawful attorneys and agents, to do any and all acts and things in our name and
on our behalf in our capacities indicated below, which said attorneys and
agents, or each of them, may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including, without limitation,
power and authority to sign for us, or any of us, in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys and agents, or
each of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the 2nd day
of July, 1997, in the capacities indicated.
SIGNATURE TITLE OR CAPACITY
- ------------------------------ ---------------------------------------------
/s/ DAVID G. FIORE
- ------------------------------ President and Director (Principal Executive
David G. Fiore Officer)
/s/ VIRGIL D. LOWE Vice President, Chief Financial Officer and
- ------------------------------ Director (Principal Financial and
Virgil D. Lowe Accounting Officer)
/s/ MICHAEL L. GEORGE
- ------------------------------ Director
Michael L. George
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on July 2, 1997.
LEVAN BUILDERS SUPPLY COMPANY, INC.
By: /s/ DAVID G. FIORE
-----------------------------------------
David G. Fiore
PRESIDENT
POWER OF ATTORNEY
We, the undersigned directors and officers of LEVAN BUILDERS SUPPLY COMPANY,
INC., hereby appoint David G. Fiore and Virgil D. Lowe, or either of them, our
true and lawful attorneys and agents, to do any and all acts and things in our
name and on our behalf in our capacities indicated below, which said attorneys
and agents, or each of them, may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including, without limitation,
power and authority to sign for us, or any of us, in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys and agents, or
each of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the 2nd day
of July, 1997, in the capacities indicated.
SIGNATURE TITLE OR CAPACITY
- ------------------------------ ---------------------------------------------
/s/ DAVID G. FIORE
- ------------------------------ President and Director (Principal Executive
David G. Fiore Officer)
/s/ VIRGIL D. LOWE Vice President, Chief Financial Officer and
- ------------------------------ Director (Principal Financial and
Virgil D. Lowe Accounting Officer)
/s/ MICHAEL L. GEORGE
- ------------------------------ Director
Michael L. George
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on July 2, 1997.
RBP CUSTOM GLASS, INC.
By: /s/ DAVID G. FIORE
-----------------------------------------
David G. Fiore
PRESIDENT
POWER OF ATTORNEY
We, the undersigned directors and officers of RBP CUSTOM GLASS, INC., hereby
appoint David G. Fiore and Virgil D. Lowe, or either of them, our true and
lawful attorneys and agents, to do any and all acts and things in our name and
on our behalf in our capacities indicated below, which said attorneys and
agents, or each of them, may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including, without limitation,
power and authority to sign for us, or any of us, in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys and agents, or
each of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the 2nd day
of July, 1997, in the capacities indicated.
SIGNATURE TITLE OR CAPACITY
- ------------------------------ ---------------------------------------------
/s/ DAVID G. FIORE
- ------------------------------ President and Director (Principal Executive
David G. Fiore Officer)
/s/ VIRGIL D. LOWE Vice President, Chief Financial Officer and
- ------------------------------ Director (Principal Financial and
Virgil D. Lowe Accounting Officer)
/s/ MICHAEL L. GEORGE
- ------------------------------ Director
Michael L. George
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on July 2, 1997.
RBP TRANS, INC.
By: /s/ DAVID G. FIORE
-----------------------------------------
David G. Fiore
PRESIDENT
POWER OF ATTORNEY
We, the undersigned directors and officers of RBP TRANS, INC., hereby
appoint David G. Fiore and Virgil D. Lowe, or either of them, our true and
lawful attorneys and agents, to do any and all acts and things in our name and
on our behalf in our capacities indicated below, which said attorneys and
agents, or each of them, may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including, without limitation,
power and authority to sign for us, or any of us, in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys and agents, or
each of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the 2nd day
of July, 1997, in the capacities indicated.
SIGNATURE TITLE OR CAPACITY
- ------------------------------ ---------------------------------------------
/s/ DAVID G. FIORE
- ------------------------------ President and Director (Principal Executive
David G. Fiore Officer)
/s/ VIRGIL D. LOWE Vice President, Chief Financial Officer and
- ------------------------------ Director (Principal Financial and
Virgil D. Lowe Accounting Officer)
/s/ MICHAEL L. GEORGE
- ------------------------------ Director
Michael L. George
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on July 2, 1997.
RBP FENESCO, INC.
By: /s/ DAVID G. FIORE
-----------------------------------------
David G. Fiore
PRESIDENT
POWER OF ATTORNEY
We, the undersigned directors and officers of RBP FENESCO, INC., hereby
appoint David G. Fiore and Virgil D. Lowe, or either of them, our true and
lawful attorneys and agents, to do any and all acts and things in our name and
on our behalf in our capacities indicated below, which said attorneys and
agents, or each of them, may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including, without limitation,
power and authority to sign for us, or any of us, in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys and agents, or
each of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the 2nd day
of July, 1997, in the capacities indicated.
SIGNATURE TITLE OR CAPACITY
- ------------------------------ ---------------------------------------------
/s/ DAVID G. FIORE
- ------------------------------ President and Director (Principal Executive
David G. Fiore Officer)
/s/ VIRGIL D. LOWE Vice President, Chief Financial Officer and
- ------------------------------ Director (Principal Financial and
Virgil D. Lowe Accounting Officer)
/s/ MICHAEL L. GEORGE
- ------------------------------ Director
Michael L. George
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on July 2, 1997.
RBP OF TEXAS, INC.
By: /s/ DAVID G. FIORE
-----------------------------------------
David G. Fiore
PRESIDENT
POWER OF ATTORNEY
We, the undersigned directors and officers of RBP OF TEXAS, INC., hereby
appoint David G. Fiore and Virgil D. Lowe, or either of them, our true and
lawful attorneys and agents, to do any and all acts and things in our name and
on our behalf in our capacities indicated below, which said attorneys and
agents, or each of them, may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including, without limitation,
power and authority to sign for us, or any of us, in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys and agents, or
each of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the 2nd day
of July, 1997, in the capacities indicated.
SIGNATURE TITLE OR CAPACITY
- ------------------------------ ---------------------------------------------
/s/ DAVID G. FIORE
- ------------------------------ President and Director (Principal Executive
David G. Fiore Officer)
/s/ VIRGIL D. LOWE Vice President, Chief Financial Officer and
- ------------------------------ Director (Principal Financial and
Virgil D. Lowe Accounting Officer)
/s/ MICHAEL L. GEORGE
- ------------------------------ Director
Michael L. George
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on July 2, 1997.
TIMBER TECH, INC.
By: /s/ DAVID G. FIORE
-----------------------------------------
David G. Fiore
PRESIDENT
POWER OF ATTORNEY
We, the undersigned directors and officers of TIMBER TECH, INC., hereby
appoint David G. Fiore and Virgil D. Lowe, or either of them, our true and
lawful attorneys and agents, to do any and all acts and things in our name and
on our behalf in our capacities indicated below, which said attorneys and
agents, or each of them, may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including, without limitation,
power and authority to sign for us, or any of us, in our names in the capacities
indicated below, any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys and agents, or
each of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the 2nd day
of July, 1997, in the capacities indicated.
SIGNATURE TITLE OR CAPACITY
- ------------------------------ ---------------------------------------------
/s/ DAVID G. FIORE
- ------------------------------ President and Director (Principal Executive
David G. Fiore Officer)
/s/ VIRGIL D. LOWE Vice President, Chief Financial Officer and
- ------------------------------ Director (Principal Financial and
Virgil D. Lowe Accounting Officer)
/s/ MICHAEL L. GEORGE
- ------------------------------ Director
Michael L. George
II-11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------
<C> <S> <C>
2.1 -- Stock Purchase Agreement dated as of March 27, 1997 by and between the Stockholders named
therein and Reliant Partners, L.P.
2.2 -- First Amendment to Stock Purchase Agreement dated as of May 9, 1997 by and between Reliant
Partners, L.P., Reliant Partners II, L.P., David G. Fiore, Virgil D. Lowe, Jack L. Morris,
Rodney Vickers, Charles E. Still and James R. Trigg, Jr. and the Stockholders named herein
3.1 -- Restated Certificate of Incorporation of Reliant Building Products, Inc.
3.2 -- Certificate of Amendment to Certificate of Incorporation of Reliant Building Products,
Inc. filed September 7, 1993
3.3 -- Certificate of Amendment to Certificate of Incorporation of Reliant Building Products,
Inc. filed May 8, 1997
3.4 -- Bylaws of Redman Building Products, Inc.
3.5 -- Articles of Incorporation of LeVan Builders Supply Company, Inc.
3.6 -- Certificate of Amendment to Articles of Incorporation of LeVan Builders Supply Company,
Inc. filed September 7, 1993
3.7 -- Bylaws of LeVan Builders Supply Company, Inc.
3.8 -- Certificate of Incorporation of RBP of Arizona, Inc.
3.9 -- Certificate of Amendment to Certificate of Incorporation of RBP of Arizona, Inc. filed
September 7, 1993
3.10 -- Bylaws of RBP of Arizona, Inc.
3.11 -- Certificate of Incorporation of RBP Custom Glass, Inc.
3.12 -- Certificate of Amendment to Certificate of Incorporation of RBP Custom Glass, Inc. filed
September 7, 1993
3.13 -- Bylaws of RBP Custom Glass, Inc.
3.14 -- Certificate of Incorporation of RBP Trans, Inc.
3.15 -- Certificate of Amendment to Certificate of Incorporation of RBP Trans, Inc. filed
September 7, 1993
3.16 -- Bylaws of RBP Trans, Inc.
3.17 -- Certificate of Incorporation of RBP Fenesco, Inc.
3.18 -- Bylaws of RBP Fenesco, Inc.
3.19 -- Certificate of Incorporation of RBP of Texas, Inc.
3.20 -- Bylaws of RBP of Texas, Inc.
3.21 -- Articles of Incorporation of Timber Tech, Inc.
3.22 -- Articles of Amendment to Articles of Incorporation of Timber Tech, Inc. filed May 25, 1983
3.23 -- Bylaws of Timber Tech, Inc.
4.1 -- Indenture dated as of May 9, 1997, between the Company, the Guarantors and Bank One,
Columbus NA, as Trustee, relating to the Notes.
4.2 -- Registration Rights Agreement dated as of May 9, 1997 between the Company, the Guarantors
and Chase Securities Inc. and CIBC Wood Gundy Securities Corp.
4.3 -- Form of 10 7/8% Senior Subordinated Notes due 2004, Series A (included in Exhibit 4.1)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------
<C> <S> <C>
4.4 -- Form of 10 7/8% Senior Subordinated Notes due 2004, Series B (included in Exhibit 4.1)
5.1 -- Opinion of Kelly, Hart & Hallman, P.C.
10.1 -- Stockholders Agreement dated as of May 9, 1997 by and among RBPI Holding Corporation and
the Stockholders named therein
10.2 -- Registration Rights Agreement dated as of May 9, 1997 by and among RBPI Holding
Corporation and the Stockholders named therein
10.3 -- Credit Agreement dated as of May 9, 1997 by and among the Company, each of the Lenders
named therein and The Chase Manhattan Bank, as agent.
10.4 -- Consulting Agreement dated as of May 9, 1997 by and between the Company and George Group
Inc.
10.5 -- Acquisition Advisory Services Fee Letter dated March 27, 1997 between RBPI Holding
Corporation and George Group Inc.
10.6 -- Employment Agreement dated as of April 1, 1997 by and between the Company and David G.
Fiore
10.7 -- Employment Agreement dated as of March 31, 1994 by and between the Company and Virgil D.
Lowe
10.8 -- Transaction Incentive Agreement dated as of January 1, 1997 by and between RBPI Holding
Corporation, the Company and David G. Fiore
10.9 -- RBPI Holding Corporation Nonqualified Stock Option Plan
12.1 -- Statement re Computation of Ratios
23.1 -- Consent of Kelly, Hart & Hallman, P.C. (included in Exhibit 5.1).
23.2 -- Consent of Ernst & Young LLP, Independent Auditors
24.1 -- Power of Attorney (included on signature page to this Registration Statement).
25.1 -- Statement of Eligibility and Qualification of Trustee on Form T-1.
27.1 -- Financial Data Schedule
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
</TABLE>
<PAGE>
THIS AGREEMENT CONTAINS INDEMNIFICATION
PROVISIONS IN ARTICLE 7 AND SECTION 9.13,
NOTICE OF WHICH IS HEREBY GIVEN
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, made and entered into as of the 27th day of
March, 1997, by and between the parties listed on Schedule I hereto (the
"Stockholders") and Reliant Partners, L.P., a Texas limited partnership
("Purchaser").
W I T N E S S E T H:
WHEREAS, the Stockholders are the owners of all the issued and outstanding
shares of capital stock of RBPI Holding Corporation, a Delaware corporation (the
"Company"), other than the Series B Preferred Stock, which is owned by Guardian
Industries Corp. (the "Guardian Shares"); and
WHEREAS, the parties listed on Schedule I hereto designated with an
asterisk (the "Warrantholders") hold warrants (the "Warrants") to acquire Class
A Voting Common Stock and Class B Nonvoting Common Stock of the Company which
are currently exercisable for the respective number of shares of capital stock
of the Company set forth opposite their names on Schedule I; and
WHEREAS, the Stockholders intend to cause the Warrantholders to exercise
the Warrants prior to the Closing (as defined in Section 2.1 hereof); and
WHEREAS, the Stockholders desire to sell to Purchaser all of the capital
stock owned by the Stockholders and to cause the Warrantholders to sell all
shares of capital stock obtainable upon exercise of the Warrants to Purchaser,
and Purchaser desires to purchase all such shares of capital stock, subject to
the terms and conditions of this Agreement; and
WHEREAS, the Stockholders desire to appoint the Stockholders'
Representative referred to in Section 9.13 hereof;
NOW, THEREFORE, in consideration of the recitals and the mutual and
dependent covenants herein contained, it is agreed as follows:
1. PURCHASE AND SALE OF STOCK.
1.1 GENERAL. On the terms and subject to the conditions set forth in this
Agreement at the Closing, the Stockholders hereby agree to sell, assign,
transfer, convey and deliver to Purchaser, and Purchaser hereby agrees to
purchase from the Stockholders, the Purchase Shares (as hereinafter defined).
1.2 DELIVERY OF STOCK. On the terms and subject to the conditions hereof,
at the Closing, the Stockholders and the Warrantholders (the "Holders") shall
deliver to Purchaser and
<PAGE>
the Company, as applicable, against receipt of the consideration set forth in
Section 1.3 hereof, certificates representing all the shares of Class A
Voting Stock and Class B Nonvoting Common Stock held by the Holders (the
"Stock"), duly endorsed in blank or accompanied by stock powers duly executed.
1.3 PURCHASE PRICE. (a) In reliance on the representations, warranties
and agreements of the Stockholders contained herein and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Stockholders and Purchaser agree that the following shall take place at the
Closing:
(i) Purchaser shall pay to the Holders, in immediately available
funds, an aggregate amount equal to the remainder of $30,100,000 less the sum of
(A) the Seller Transaction Costs (as hereinafter defined), (B) $250,000 to be
paid by the Company to David G. Fiore as of the Closing as an extraordinary
bonus, (C) the aggregate cash payments required to be made to the Unitholders
pursuant to Section 1.4 hereof and (D) $250,000 to be delivered to the
Stockholders' Representative for satisfaction of Seller Transaction Costs that
are payable after the Closing;
(ii) the Company shall issue and deliver to the Holders notes in the
form of Exhibit A hereto (the "Holder Notes") in an aggregate principal amount
equal to $9,800,000 less the sum of the aggregate principal amount of Holder
Notes required to be issued to the Unitholders pursuant to Section 1.4 hereof,
in such denominations and names as may be designated in writing to Purchaser by
the Stockholder Representative in accordance with the terms of this Article I,
it being agreed that each Holder shall be entitled to its pro rata share of the
cash payments and Holder Notes issuable pursuant to this Section 1.3 based on
its relative ownership interest of Class A Common Stock and Class B Common
Stock, as set forth in Schedule I hereto.
(b) "Seller Transaction Costs" shall mean all costs and expenses incurred
and paid by the Company or Redman Building Products, Inc. ("Building Products")
incident to the negotiation, preparation and execution of this Agreement and the
transactions contemplated hereby; provided, however, that Seller Transaction
Costs shall not include any such costs or expenses related to Purchaser
obtaining financing for the consummation of the transactions contemplated
hereby.
1.4 PAYMENT OF UNITHOLDER CONSIDERATION. At the Closing, the Company
shall cause each person that is a party to a RBPI Incentive Unit Agreement (each
a "Unitholder"), a true and complete list of which is set forth on Schedule 1.4
hereto, to be paid cash and issued Holder Notes in the amounts determined by the
implementation on Closing Date of the formula set forth in Exhibit B hereto (the
"Unitholder Calculation"); it being expressly understood that the final
Unitholder Calculation cannot be made until such time as certain factors used in
the computation thereof are known to the parties and that the calculation set
forth in Exhibit B hereto is for illustrating the methodology by which the final
Unitholder Calculation shall be made at Closing. The Stockholders agree to use
reasonable efforts to obtain from each Unitholder at Closing a Release and
Waiver in substantially the form of Exhibit C hereto.
2
<PAGE>
1.5 REDEMPTION OF CERTAIN SHARES. Notwithstanding anything contained
elsewhere herein, it is acknowledged by the parties hereto that the issuance by
the Company of Holder Notes to the Holders pursuant to Section 1.3 above shall
be in redemption of such number of the Holders' shares of Class A Common Stock
and Class B Nonvoting Common Stock (the "Redemption Shares") as are determined
at the Closing based on the calculation set forth in Exhibit C hereto. Any
Shares of Class A Voting Stock owned by the Stockholders not so redeemed shall
be "Purchase Shares."
2. CLOSING.
2.1 GENERAL. Subject to waiver or satisfaction of the conditions set
forth in Article 5 hereof, the closing of the transactions provided for in this
Agreement (the "Closing") shall be held (i) at the offices of Kelly, Hart &
Hallman, 201 Main Street, Suite 2500, Fort Worth, Texas, at 10:00 a.m., local
time, on the first business day immediately following the date on or by which
each of the conditions set forth in Article 5 hereof (other than closing
deliveries) shall have been fulfilled or waived in accordance therewith, or (ii)
at such other place, date and time as may be mutually agreed upon by the
parties. The time and date of Closing are herein called the "Closing Date."
2.2 NECESSARY ACTION. At the Closing, subject to all of the terms and
conditions of this Agreement, the parties shall take such action as may be
necessary or appropriate in order to consummate the transactions provided for
herein. All proceedings to be taken and all documents to be executed and
delivered by the parties at Closing shall be deemed to have been taken and
executed and delivered simultaneously, and no proceeding shall be deemed taken
nor any document executed and delivered until all have been taken, executed and
delivered.
3. REPRESENTATIONS AND WARRANTIES.
3.1 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Wingate Partners,
L.P. ("Wingate Partners") and Wingate Affiliates, L.P. ("Wingate Affiliates"),
jointly and severally as to Wingate Partners and Wingate Affiliates, represent
and warrant to Purchaser, and the other Stockholders severally represent and
warrant to Purchaser, as follows:
(a) SUBSIDIARIES. The Company owns, directly or indirectly, all of
the outstanding capital stock of the corporations listed in Schedule 3.1(a)
hereto (collectively, the "Company Subsidiaries") in the amounts and
proportions stated therein. Except as set forth in Schedule 3.1(a) and
other than the Company Subsidiaries, neither the Company nor any of the
Company Subsidiaries owns any interest in or controls any corporation,
partnership, joint venture or other business association or enterprise.
Any reference herein to the "Companies" shall be a reference to any of the
Company, the Company Subsidiaries, all of the Company and the Company
Subsidiaries or any combination of them.
(b) DUE ORGANIZATION, GOOD STANDING AND POWER OF THE COMPANY AND THE
COMPANY SUBSIDIARIES. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
each of the Company Subsidiaries is a corporation duly organized, validly
existing and in good standing under
3
<PAGE>
the laws of the jurisdiction set forth opposite its name on Schedule
3.1(b)(i). Atemco ("Atemco") is a general partnership duly organized and
validly existing under the laws of Texas. Each of the Companies and
Atemco has all requisite corporate or partnership power, as applicable,
and authority to own, lease and operate its respective properties and to
carry on its respective businesses as presently conducted. Each of the
Companies and Atemco is duly qualified or licensed and authorized as a
foreign corporation or partnership, as applicable, to do business and is
in good standing in every jurisdiction where the respective properties
owned, leased or operated by it or the nature of its respective
businesses makes such qualification necessary, except where the failure
of such entity to be so qualified would not have a Material Adverse
Effect, and all of such jurisdictions are listed in Schedule 3.1(b)(ii)
hereto. As used herein, the term "Material Adverse Effect" means any
change or effect that is or is reasonably likely to be materially adverse
to the assets, business, financial condition or results of operations of
the Companies taken as a whole. A copy of the charter and all bylaws, or
partnership agreement, as applicable, of each of the Companies and Atemco
are attached hereto as Schedule 3.1(b)(iii), and each is true, correct
and complete, as amended to the date hereof.
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on
the part of the Stockholders. The Stockholders have all necessary power
and authority to execute, deliver and perform this Agreement, and this
Agreement, upon the due execution and delivery by the Stockholders assuming
the execution and delivery by Purchaser, shall constitute a valid and
binding obligation of the Stockholders enforceable against the Stockholders
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
the rights of creditors generally and general equitable principles.
(d) GOOD TITLE TO CAPITAL STOCK; CAPITALIZATION.
(i) The authorized capital stock of the Company consists solely
of (A) 1,500,000 shares of Class A Voting Common Stock, par value $.01
per share, (B) 50,000 shares of Class B Nonvoting Common Stock, par
value $.01 per share, and 30,000 shares of Preferred Stock, par value
$.01 per share. Assuming exercise of all Warrants and excluding the
Guardian Shares, on the Closing Date, the shares of capital stock
reflected on Schedule 3.1(d)(i)(a) will constitute all the issued and
outstanding shares of capital stock of the Company. The authorized
capital stock and the shares of capital stock outstanding of the
Company Subsidiaries are set forth on Schedule 3.1(d)(i)(b) hereto.
(ii) Except as set forth in Schedule 3.1(d) (ii) hereto, the
Stockholders own, and as of the Closing Date will own, good, valid and
marketable title to the shares of the Stock set forth on Schedule I as
being owned by the Stockholders, free and clear of all mortgages,
claims, liens, security interests, options, pledges or encumbrances of
any kind whatsoever ("Liens").
4
<PAGE>
(iii) Except as set forth in Schedule 3.1(d) (iii) hereto,
the Company owns, directly or indirectly, and as of the Closing Date
will so own, good, valid and marketable title to all of the issued and
outstanding shares of the capital stock of the Company Subsidiaries,
free and clear of all mortgages, claims, liens, security interests,
options, pledges or encumbrances of any kind whatsoever and Building
Products owns 50% of the issued and outstanding partnership interests
in Atemco free and clear of all Liens.
(iv) All shares of the Stock and all issued and outstanding
shares of the capital stock of the Company Subsidiaries are duly
authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. The partnership interests in Atemco owned by
Building Products have been validly issued and all capital
contributions required to be made with respect to such interests have
been made.
(v) As of the Closing Date and immediately after giving effect
to the exercise of all Warrants and the sale of the Stock and the
redemption by the Company of the Redemption Shares as contemplated
hereby, all of the issued and outstanding shares of the capital stock
of the Company will be owned by Purchaser with the exception of the
Guardian Shares, all of the issued and outstanding shares of the
capital stock of the Company Subsidiaries will be owned, directly or
indirectly, by the Company and 50% of the partnership interests in
Atemco will be owned by Building Products, free and clear, in each
case, of all Liens other than such as may be created by Purchaser
effective on the Closing.
(vi) Except as set forth on Schedule 3.1(d)(vi), none of the
Companies has any outstanding securities convertible into or
evidencing the right to purchase shares or subscribe for any of the
capital stock of such entity nor does such entity have any outstanding
or authorized subscriptions, options, warrants, calls, rights,
commitments or any other agreements or arrangements, preemptive or
contractual, oral or written, obligating it to issue, deliver or sell,
or cause to be issued, delivered or sold, any shares of its capital
stock or any securities convertible into or evidencing the right to
purchase or subscribe for any shares of such stock.
(vii) Other than this Agreement, and except as set forth on
Schedule 3.1(d)(vii), there are no agreements, understandings or
arrangements with respect to the dividend rights, voting, sale or
transfer of shares of the capital stock of the Companies.
(e) NO APPROVALS REQUIRED. Neither the execution, delivery and
performance of this Agreement, nor the consummation and performance of the
transactions contemplated hereby, nor compliance by the Stockholders with
any of the provisions hereof, will violate (with or without the giving of
notice or the lapse of time or both), or conflict with, or result in any
violation of or default or loss of benefit under, or permit the
acceleration of any obligation under, or require any consent, approval,
waiver, filing or notice under, the charter or bylaws, or partnership
agreement, as applicable of the
5
<PAGE>
Companies or Atemco or any statute, rule or regulation applicable to the
Stockholders or the Companies, other than as may be required by the
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "H-S-R Act"), or, except as set forth on Schedule 3.1(e)
and except where same would not have a Material Adverse Effect, any
indenture, mortgage, deed of trust, loan agreement, lease or contract or
any order, writ, injunction, judgment or decree to which the Stockholders
or the Companies are a party. Except for compliance with the H-S-R Act,
no consent, approval, order or authorization of, or registration,
declaration or filing with, any national, state or local governmental or
regulatory agency or authority (collectively, "Authorizations") is
required to be made or obtained by the Stockholders in order to execute
or deliver this Agreement or to consummate the transactions or fulfill
the obligations of the Stockholders provided for hereby.
(f) FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. Attached as
Schedule 3.1(f)(i) hereto are true and complete copies of (i) the audited
consolidated balance sheets as of and the consolidated statements of income
and changes in shareholders equity and cash flows for the fiscal years
ended March 31, 1996, April 1, 1995, and April 2, 1994, of the Company
Subsidiaries (ii) the unaudited consolidated balance sheet as of, and the
consolidated statement of income and changes in shareholders equity and
cash flows for the month ended, February 28, 1997, of the Company and (iii)
the applicable notes to and opinions of certified public accountants, if
any, on these financial statements (all of such financial statements and
notes being hereinafter referred to as the "Company Financial Statements"),
which notes and opinions set forth statements of the accounting principles
and practices employed and information required to be disclosed in
connection with the preparation of the Company Financial Statements. The
Company Financial Statements are prepared in accordance with GAAP and are
from the books and records of the Company and/or Building Products and its
consolidated subsidiaries at the dates shown and for the periods therein
indicated and fairly present the financial condition of such companies on a
consolidated basis as of the dates indicated and the results of their
operations for the periods indicated, except that the interim financial
statements do not contain footnotes and are subject to normal year-end
adjustments in accordance with past practice. Since March 31, 1996, the
Companies have not made any changes in their practices of reserving for
certain contingent liabilities whether or not such changes are allowed by
GAAP. The unaudited consolidated balance sheet of the Company and its
consolidated subsidiaries at February 28, 1997, is sometimes hereinafter
referred to as the "February Balance Sheet." The interim financial
statements include all adjustments, which consist only of normal recurring
accruals, necessary for such fair presentation, and such statements do not
contain any items of special or nonrecurring income or any other income not
earned in the ordinary course of business except as expressly specified
therein. None of the Companies has any debts, liabilities or obligations
whatsoever, either accrued, absolute, contingent or otherwise, except (i)
as and to the extent reflected or reserved against on the February Balance
Sheet (ii) those arising after the date of the February Balance Sheet in
the ordinary course of business and (iii) as set forth on Schedule
3.1(f)(ii). There is no oral or written guarantee by the Companies of any
obligation of any person or entity other than such corporations for the
borrowing of money, for the payment of any monetary obligation of any
nature whatsoever (whether
6
<PAGE>
due or to become due), or for the performance of any obligation of any
nature whatsoever or otherwise except as set forth on Schedule 3.1(f)(iii).
(g) DISTRIBUTION ARRANGEMENTS. Schedule 3.1(g)(i) contains a listing
of each distributor of the Companies' products that purchased over $250,000
of the Companies' products for the twelve-month period ended January 31,
1997, with a notation of the aggregate revenues generated from each such
distributor during such period. Schedule 3.1(g)(ii) contains a summary of
all material terms of the business relationship between the Companies and
such distributors, including oral agreements. Except as set forth on
Schedule 3.1(g)(iii), the Companies have no written or oral agreements
designating a particular distributor as the exclusive distributor of the
Companies' products in a particular area.
(h) TAX MATTERS. Except as set forth on Schedule 3.1(h):
(i) For taxable periods beginning on or after April 1, 1989, and
ending on or before September 23, 1993, the Companies were included
within the consolidated federal income tax returns of which Redman
Industries, Inc. ("Redman") was the common parent to the extent such
Companies existed during such period.
(ii) For taxable periods beginning on or after September 24,
1993, through the date hereof, the Companies have been included
within the consolidated federal income tax returns of which the
Company is the common parent to the extent such Companies existed
during such period. The Company has filed or caused to be filed all
Tax (as hereinafter defined) returns, information returns and reports
required to be filed by it on behalf of itself and the Companies for
each of its 1992, 1993, 1994, 1995 and 1996 fiscal years and Redman
has filed or caused to be filed all Tax returns, information returns
and reports required to be filed by it on behalf of itself and the
Companies for its 1992 fiscal year and that portion of its 1993 fiscal
year ending on September 23, 1993.
(iii) The Companies and Redman (solely with respect to periods
that include September 23, 1993, and prior periods) have paid or made
adequate provision in accordance with GAAP for (and in the case of the
Companies such provision is shown on the Company Financial Statements)
the payment of all Taxes (as hereinafter defined) with respect to
present and prior periods to the extent they have become due and
payable and all items, information and computations reported or
reflected on such returns are true, accurate and complete and, with
respect to the Companies, will not be adjusted or changed by the
Company at any time (before or after Closing).
(iv) The provisions for taxes payable reflected on the Company
Financial Statements are adequate for the payment of all unpaid Taxes
(whether or not due and payable and whether or not disputed) of the
Companies accrued through the dates thereof with respect to the
business operations through such dates and with respect to all fiscal
years prior thereto including, but not limited to, any Taxes
7
<PAGE>
attributable to the inclusion of the Companies in the consolidated
federal income tax return of which Redman was the common parent. None
of the Companies is a party to or aware of any claims or any pending
or, to the Stockholders' knowledge, threatened action, suit,
proceeding, audit or tax investigation against the Companies or Redman
(with respect to its consolidated federal income tax returns for
periods that include September 23, 1993, or prior periods), as
applicable, for the purpose of assessment or collection of Taxes, fees
or charges by any governmental authority.
(v) No deficiencies for any Taxes have been proposed, asserted
or assessed against any of the Companies or Redman, as applicable,
and, to the knowledge of the Stockholders, no state of facts exists or
has existed that would constitute grounds for the assessment of
liability for Taxes against any of the Companies or Redman (with
respect to its consolidated federal income tax returns for periods
that include September 23, 1993, or prior periods) as applicable.
None of the Companies or Redman (with respect to its consolidated
federal income tax returns for periods that include September 23,
1993, or prior periods), as applicable, has waived any applicable
statute of limitation or extended the time for the assessment of any
Tax, fee or governmental charge. Except as above set forth, none of
the Companies is liable for the Taxes of any other corporation.
For purposes of this Agreement, the terms "Tax" and "Taxes" shall
include (i) all taxes, assessments, levies, duties, license fees,
registration fees, withholding, or other similar governmental charges,
including, without limitation, income taxes, franchise taxes, transfer
taxes or fees, sales taxes, excise taxes, ad valorem taxes, withholding
taxes, minimum taxes and social security taxes, and (ii) any interest,
penalties or additions to tax imposed on a Tax described in clause (i)
hereof, imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof.
No consent has been filed by or relating to any of the Companies
pursuant to Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code").
None of the Companies has made any payments, is obligated to make any
payments or is a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under
Section 280G of the Code.
Each of the Companies has withheld from its employees and timely paid
to the appropriate governmental entity proper and accurate amounts for all
periods through the date hereof in compliance with all tax withholding
provisions of all applicable national, federal, state and local laws,
including, without limitation, income, social security and employment tax
withholding for all types of compensation.
(i) RECEIVABLES AND PAYABLES. Schedule 3.1(i)(i) hereto is a listing
of all accounts receivable (collectively, "Receivables") of the Companies
as of February 28, 1997. The Receivables, including but not limited to
those reflected in Schedule 3.1(i)(i) and in the February Balance Sheet and
all Receivables arising after the dates thereof to the Closing Date, arose
or will arise, as applicable, in the ordinary course of business
8
<PAGE>
of the Companies or in a bona fide transaction. None of the Receivables is
presently in dispute, unless adequately reserved for in the February
Balance Sheet.
Schedule 3.1(i)(ii) hereto lists and describes all Affiliate
transactions in effect or in the last year between or among the
Stockholders and the Stockholders' Affiliates, on the one hand, and the
Companies, on the other hand. "Affiliate," for the purposes of this
Agreement, shall mean any corporation or organization of which a
Stockholder is a general partner or of which a Stockholder and/or any of
the Companies is directly or indirectly the beneficial owner of 5% or more
of any class of equity securities, and a trust or other estate in which a
Stockholder and/or any of the Companies serves as grantor, trustee or in a
similar fiduciary capacity.
Schedule 3.1(i)(iii) hereto is a listing of all accounts payable
(collectively, "Payables") of the Companies as of February 28, 1997. The
Payables, including but not limited to those reflected in Schedule
3.1(i)(iii) and in the February Balance Sheet and all Payables arising
after the dates thereof to the Closing Date, arose or will arise, as
applicable, from bona fide transactions in the ordinary course of business
of the Companies and have been paid, are being contested with appropriate
proceedings or are not yet due and payable.
(j) TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES. Each of
the Companies has good, valid and marketable title to all of its properties
and assets (except those held pursuant to leaseholds) including without
limitation the assets reflected in the February Balance Sheet, except as
sold or otherwise disposed of in the ordinary course of business since such
date, subject to no Liens, except (a) as disclosed in the February Balance
Sheet, (b) Permitted Liens and (c) such imperfections of title,
restrictions and security interests, as are listed in Schedule 3.1(j)
hereto.
The term "Permitted Liens" means (i) Liens for Taxes, assessments and
other governmental charges which are not due and payable, (ii) Liens for
security claims for labor, materials or supplies, (iii) deposits in the
ordinary course with respect to workers compensation or unemployment
insurance, (iv) warehousemen and mechanic's Liens, and (v) with respect to
any real property, those consisting of zoning or planning restrictions,
easements, permits or other restrictions or limitations on the use of such
property or irregularities thereto which do not materially detract from the
value of such property or materially impair the use of such property.
(k) PROPERTIES, ASSETS, CONTRACTS AND OTHER DATA.
(i) Schedule 3.1(k)(i) lists all real property owned of record
or leased by the Companies.
(ii) Schedule 3.1(k)(ii) lists separately all material tangible,
personal property leased or owned by any of the Companies.
(iii) Schedule 3.1(k)(iii) lists (a) all service marks,
patents, trademarks, trade names, trademark and service mark or trade
name registrations, copyrights and
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copyright registrations of the Companies, and all pending applications
for any of the foregoing, and (b) all licenses granted by or to the
Companies and all other agreements to which any of the Companies is
a party which relate in whole or in part to any items of the
categories mentioned above.
(iv) Schedule 3.1(k)(iv) lists all policies of insurance in force
(with a notation as to the status of premiums paid or payable thereon)
with respect to the Companies, including without limitation those
covering the properties, buildings, machinery, equipment, fixtures,
liabilities and, operations of the Companies, specifying the insurer,
the amount of coverage, the deductible amount, the type of insurance,
the policy number, the cash surrender value, loans against such
policies, the owner, the beneficiary, the loss payee and all pending
claims thereunder. Each of such policies is in force, and no notice
of cancellation or non-renewal of any such policy has been received
and no such notice reasonably is expected to be received. The
insurance carried by the Companies is sufficient to cover (a) all
reasonably forseeable damage material to the Companies taken as a
whole and (b) all reasonably forseeable liabilities or contingencies
relating to the conduct by the Companies of their business and
material to the Companies taken as a whole.
(v) Schedule 3.1(k)(v) lists as of the date of this Agreement
all written contracts, leases, notes, bonds, debentures, obligations,
understandings and commitments (including, without limitation,
mortgages, deeds of trust, indentures, credit agreements and loan
agreements) to which any of the Companies is a party or by which any
properties or assets of any of them is bound which expressly require
future payment or receipt by the Company of in excess of $100,000.
(vi) Schedule 3.1(k)(vi) lists all employment, severance, "golden
parachute" or termination or compensation agreements, consulting,
agency or representation agreements, executive compensation plans,
bonus plans, deferred compensation agreements, employee pension plans
or retirement plans, retiree benefit or compensation plans, severance
pay arrangements, employee profit-sharing plans, employee stock
purchase and stock option plans, collective bargaining agreements,
oral or written agreements with labor unions or other collective
bargaining organizations with respect to employees of the Companies,
group life insurance, hospitalization insurance or other plans or
arrangements providing for benefits for the officers, directors or
employees of the Companies. Except as set forth in Schedule
3.1(k)(vi), none of the agreements disclosed in Schedule 3.1(k)(vi)
provides for payments in connection with any change in control of the
Companies and no amount will become due to any employee, consultant,
officer or director of the Companies solely as a result of the
consummation of the transactions contemplated by this Agreement.
(vii) Schedule 3.1(k)(vii) lists as of December 31, 1996, the
names, titles and current annual salary rates of each of the present
directors and officers of the Companies and the names and current
annual salary rates of each of the employees of the Companies whose
current annual rate of compensation is
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$50,000 or more, and the aggregate annual compensation of all
employees of the Companies, specifying the numbers of employees of
each of the Companies. None of such compensation rates is in the
process of being changed except in connection with ongoing merit
reviews by the Companies.
(viii) Schedule 3.1(k)(viii) lists the name of each bank or other
financial institution from which loans to the Companies are
outstanding.
(ix) Schedule 3.1(k)(ix) lists the name of each bank or other
financial institution in which the Companies have an account or safe
deposit box, the number of any such account, and the names of all
persons authorized to draw thereon or have access thereto.
(x) Schedule 3.1(k)(x) lists all material licenses,
certificates, permits, consents, approvals, authorizations,
qualifications, authorities and orders issued by any governmental
authority excluding environmental permits (collectively, the
"Permits") presently held by the Companies. The Permits listed in
Schedule 3.1(k)(x) are all of the Permits required or necessary to
conduct the businesses and operations of the Companies as presently
conducted. All Permits listed on Schedule 3.1(k)(x) are valid and
outstanding and each of the Companies is in compliance in all material
respects with all of the terms and conditions under which each of such
Permits is held. None of the Companies has received notice that the
issuer of any of the Permits intends to cancel or terminate any of the
Permits or that valid grounds for such cancellation or termination
currently exist.
True, complete and legible copies of all documents referred to in
Schedules 3.1(k)(i) through 3.1(k)(x) have been made available to Purchaser
other than those insurance policies the receipt of which are pending. With
respect to the contracts and agreements referred to in such Schedules, (i)
all are valid and enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization or other laws relating to
or affecting the enforcement of the rights of creditors generally and
general equitable principles, (ii) none of the Companies is in default in
the performance of any of its obligations thereunder and (iii) to the
knowledge of the Stockholders, no other parties thereto are in default in
the performance of any of their obligations thereunder except in the case
where any of the foregoing would not have a Material Adverse Effect.
(l) CONDITION OF ASSETS. Each of the buildings (including, without
limitation, roofs thereon) and other structures and improvements owned or
leased by the Companies is in good repair and operating condition, normal
wear and tear excepted, and is fit for its intended purpose, is free from
defects which would impair its ordinary commercial utility, and each such
building and other structure and improvement complies and conforms in all
material respects with all applicable ordinances and regulations and
building, zoning and other laws. Each of the material operating assets of
the Companies is in good repair and operating condition normal wear and
tear excepted, and fit for the purpose for which it is presently being
used. The manufacturing equipment
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used by the Companies is of a sufficient design and capacity so as to
enable the Companies to produce products in accordance with the Companies'
operating plans.
The real and personal property listed in Schedules 3.1(k)(i) and
3.1(k)(ii) constitute all the tangible properties and assets of the
Companies used in the business of the Companies as presently conducted,
excluding inventories and other assets and properties expended in the
ordinary course of business and such assets and properties that are
immaterial in the aggregate.
(m) NO VIOLATION OF LAW (EXCLUDING ENVIRONMENTAL MATTERS). Except as
set forth on Schedule 3.1(m), none of the Companies has been during the
last five years or is currently engaged in any activity or has omitted to
take any action in violation in any material respect of any law, ordinance
or regulation of any national, state or local governmental or regulatory
agency or authority (excluding environmental matters), and there is no
pending or, to the knowledge of the Stockholders, threatened investigation
or review with respect to same. The operations of RBP Transportation, Inc.
have been conducted in compliance in all material respects with all
applicable laws, including, without limitation, the Interstate Commerce Act
and the rules and regulations of the Interstate Commerce Commission
thereunder.
(n) NO LITIGATION. There is no pending or, to the knowledge of the
Stockholders, threatened litigation, action, suit, proceeding or
governmental investigation (collectively, "Litigation") against the
Companies, except that disclosed in Schedule 3.1(n)(i) hereto. Schedule
3.1(n)(ii) hereto sets forth a listing of all actions brought against the
Companies filed at any time since January 1, 1992, other than as set forth
on Schedule 3.1(n)(i).
Except as set forth on Schedule 3.1(f)(ii), there is no judgment,
decree, injunction, rule or order of any court, national, state or local
governmental or regulatory agency or authority, or arbitrator outstanding
against any of the Companies or by which any of the Companies are bound.
Attached hereto as Schedule 3.1(n)(iii) is a list of major litigation
for fiscal years 1992 through 1996, together with estimated expenses for
each case in each such year. Schedule 3.1(n)(iii) also sets forth
aggregate legal expenses for each of fiscal years 1992 through 1996.
(o) LABOR CONTROVERSIES. Except as set forth in Schedule 3.1(o)
hereto, there are no ongoing controversies pending or, to the knowledge of
the Stockholders, threatened and there have not been any controversies at
any time during the last three years, between any of the Companies and any
of their employees, former employees, job applicants or any association or
group of such persons except for such as would not have a Material Adverse
Effect. The Companies have complied in all material respects with all laws
applicable to them relating to the employment of labor, including, any
provisions thereof relating to wages, hours and payment of social security
taxes. To the knowledge of the Stockholders, there are no organizing
efforts underway by employees of any of the Companies and there are no
claims or actions pending before the National Labor Relations Board by
employees of any of the Companies.
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(p) PATENTS, TRADEMARKS AND RELATED CONTRACTS; MANAGEMENT INFORMATION
SYSTEMS.
(i) Each of the Companies owns or is licensed to use all
patents, trade names, trademarks, service marks, copyrights, know-how
and processes (collectively, "Proprietary Rights") now used by it,
except that know-how and those processes nonproprietary in nature.
There are no Proprietary Rights which are necessary for the conduct of
the business of the Companies as now conducted, except as listed in
Schedule 3.1(p) (i) hereto. To the knowledge of the Stockholders, (i)
no other person has any rights to any of the Proprietary Rights owned
by any of the Companies, (ii) no other person is infringing upon any
such Proprietary Right and (iii) no Proprietary Right is subject to
any Litigation.
(ii) The Companies own or have valid licenses to use all
management information systems necessary for the operations of the
Companies. Attached as Schedule 3.1(p)(ii) is a listing of all
management information systems equipment and processes used by the
Companies with a notation as to the Companies' ownership thereof or
valid right to use same.
(q) ABSENCE OF CERTAIN CHANGES OF EVENTS. Except as set forth in
Schedule 3.1(q), since the date of the February Balance Sheet to the date
hereof, none of the Companies has:
(i) Incurred any obligation or liability (contingent or
otherwise) except (x) normal trade or business obligations incurred in
the ordinary course of business, and (y) obligations under contracts,
agreements and leases described or cross-referenced in Schedule
3.1(k)(v) hereto;
(ii) Mortgaged, pledged or subjected to any lien, charge,
security interest or other encumbrance other than Permitted Liens any
of its properties or assets;
(iii) Sold, assigned, transferred, leased or otherwise disposed
of any of its properties or assets, except in the ordinary course of
business;
(iv) Made or granted any general wage or salary increase or
entered into any employment contract or other agreement providing for
payments in respect of services with any director, officer or employee
except in the ordinary course of business;
(v) Suffered any material casualty loss or damage, whether or
not such loss or damage shall have been covered by insurance, other
than in the ordinary course of business;
(vi) Suffered any Material Adverse Effect;
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(vii) Declared any dividend or made any payment or other
distribution in respect of its capital stock other than in respect of
the Series B Preferred Stock of the Company;
(viii) Purchased, redeemed, issued, sold or otherwise acquired or
disposed of any shares of its capital stock; or
(ix) Engaged in any other transaction outside the ordinary
course of its business.
(r) EMPLOYEE BENEFIT PLANS AND RELATED MATTERS
(i) Schedule 3.1(k)(vi) sets forth a true and complete list of
each "employee benefit plan," as such term is defined in section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), whether or not subject to ERISA, and each bonus, incentive
or deferred compensation, severance, termination, retention, change of
control, stock option, stock appreciation, stock purchase, phantom
stock or other equity-based plan, program, agreement, or policy that
provides or may provide benefits or compensation in respect of any
employee or former employee of the Companies or the beneficiaries or
dependents of any such employee or former employee (such employees,
former employees, beneficiaries and dependents, collectively, the
"Employees") or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by the Companies or any other trade or business, whether
or not incorporated, which, together with the Companies is or would
have been at any date of determination occurring within the preceding
six years treated as a single employer under Section 414 of the Code
(such other trades and businesses, collectively, the "Related
Persons"), or to which the Companies or any Related Person contributes
or is or has been obligated or required to contribute or with respect
to which the Companies may have any liability or obligation
(collectively, the "Plans"). With respect to each such Plan, the
Stockholders have provided the Purchaser with complete and correct
copies of: all Plans; all trust agreements, insurance contracts or
other funding arrangements; the two most recent actuarial and trust
reports; a statement demonstrating satisfaction of all
non-discrimination requirements of ERISA for the last two years; the
two most recent Forms 5500 and all schedules thereto; the most recent
IRS determination letter; current summary plan descriptions; all
material communications received from or sent to the Internal Revenue
Service, the Pension Benefit Guaranty Corporation or the Department
of Labor; an actuarial study of any post-employment life or medical
benefits provided under any such Plan, if any; statements or other
communications regarding withdrawal or other multiemployer plan
liabilities, if any; and all amendments and modifications to any such
document. None of the Companies has communicated to any Employee any
intention or commitment to modify any Plan or to establish or
implement any other employee or retiree benefit or compensation
arrangement and none of the Companies have communicated any intention
or commitment to
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permanently maintain any employee or retiree benefit or compensation
arrangement.
(ii) Each Plan intended to be qualified under Section 401(a) of
the Code, and the trust (if any) forming a part thereof, has received
a favorable determination letter from the IRS as to its qualification
under the Code and to the effect that each such trust is exempt from
taxation under Section 501(a) of the Code, and nothing has occurred
since the date of such determination letter that could adversely
affect such qualification or tax-exempt status.
(a) Each of the Plans has been operated and administered in
all respects in compliance with all applicable laws, except for
any failure so to comply that, individually or together with all
other such failures, has not and will not result in a material
liability or obligation on the part of the Companies, and has not
had or resulted in, and will not have or result in, a Material
Adverse Effect. There are no material pending or, to the
knowledge of the Stockholders, threatened claims against or
relating to any Plan, by any Employee or otherwise involving any
such Plan or the assets of any Plan (other than routine claims
for benefits by persons entitled to such benefits).
(b) No Plan is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA or is a "multiple employer plan"
within the meaning of Section 4063 or 4064 or ERISA.
(c) All contributions required to have been made by the
Companies and each Related Person to any Plan pursuant to the
terms of any such Plan or any applicable collective bargaining
agreement or applicable law have been made within the time
prescribed by any such Plan, agreement or applicable law.
(s) TERMINATION BY EMPLOYEE OR CLIENTS. Except as disclosed in
Schedule 3.1(s), since September 30, 1996, no employee of the Companies has
terminated or, to the knowledge of the Stockholders, threatened to
terminate his relationship with the Companies either as a result of the
transactions contemplated by this Agreement or otherwise other than in the
ordinary course of business and no distributor or other customer or group
of same which, singly or in the aggregate, accounted for revenue of more
than $1,000,000 for the twelve-month period ended January 31, 1997, has
terminated or threatened to terminate, in whole or in part, its
relationship with the Companies either as a result of the transactions
contemplated by this Agreement or otherwise.
(t) ENVIRONMENTAL MATTERS. Except as set forth in Schedule 3.1(t)
hereof,
(i) the Companies have obtained all licenses, permits,
certificates, approvals, applications, registrations and other
authorizations (collectively
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"Environmental Permits") which are required under all Environmental
Laws (as such term is hereinafter defined);
(ii) the Companies are in full compliance with all Environmental
Laws and have not violated any Environmental Laws;
(iii) none of the Companies' operations is or has been
subject to any judicial or administrative proceeding alleging the
violation of any Environmental Law;
(iv) no real estate owned or leased by the Companies or, to the
knowledge of the Stockholders, formerly owned or leased by the
Companies, is on the "CERCLIS" list of hazardous waste sites or the
"National Priorities List" of the U.S. Environmental Protection
Agency, or any similar state list, or, to the knowledge of the
Stockholders, the subject of any federal, state or local investigation
evaluating whether any remedial action is needed to respond to a
release of any Hazardous Material (as such term is hereinafter
defined);
(v) None of the Companies has filed any notice under any
federal, state or local law indicating past or present treatment,
storage or Release (as such term is hereinafter defined) of a
Hazardous Material or reported a Release of a Hazardous Material into
the environment;
(vi) The Companies have not performed or, to the knowledge of the
Stockholders, suffered any act which could give rise to liability to
any person or entity (governmental or not) under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or any
other Environmental Laws, nor have the Companies received notice of
any such liability or any claim therefor or submitted notice pursuant
to Section 103 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 to any governmental or
regulatory agency;
(vii) No Hazardous Material is present or has been Released on,
at, beneath or near any of the Companies' assets or properties or any
surface waters or ground waters thereon or thereunder in violation of
Environmental Laws; and
(viii) The Companies do not own or operate an underground
storage tank, nor is any such tank located on or in any of the real
properties leased or owned by the Companies.
As used herein, the term "Environmental Laws" shall mean all
applicable laws and regulations (federal, state, and local) relating to
pollution or to the protection of the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including without limitation (i) those laws and
regulations relating to the Release or threatened Release of Hazardous
Materials and to the manufacture, generation, management, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, (ii) duties or requirements arising
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out of common law, and (iii) legally binding judicial and administrative
interpretations thereof.
As used herein, the term "Hazardous Material" shall mean (i) any
chemicals, materials, wastes or substances that are defined, regulated,
determined or identified as toxic or hazardous in any Environmental Law
(including, without limitation, substances defined as "hazardous
substances", "hazardous materials", or "hazardous waste", "pollutant or
contaminant", "petroleum" or "natural gas liquids" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Hazardous Materials Transportation Act, the Resource Conservation and
Recovery Act, or comparable state and local statutes or in the regulations
adopted pursuant to said statutes), and (ii) any asbestos, polychlorinated
biphenyls, urea formaldehyde, lead based paint, petroleum, petroleum
products, oil, solid waste, pollutants, and other contaminants (whether or
not regulated under any Environmental Law).
As used herein, the term "Release" shall mean emitting, depositing,
leaking, spilling, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, dumping or disposing.
(u) WARRANTY; PRODUCTS LIABILITY. Schedule 3.1(u)(i) contains the
representative product warranty policies of the Companies generally in
effect in connection with the sale of their products. Schedule 3.1(u)(ii)
contains Warranty Analysis Reports for fiscal years 1995 and 1996, together
with the aggregate warranty and service expense for the Companies for
fiscal years 1992 through 1996. The Stockholders know of no material
design defects in any of the Companies' products nor any material flaws in
the manufacturing processes employed by the Companies. Set forth on
Schedule 3.1(u)(iii) is a listing of all products liability cases filed
against the Companies since January 1, 1992.
(v) CUSTOMERS. Schedule 3.1(v) contains a listing of each customer
of the Companies that generated at least $250,000 in revenues for the
Companies for the twelve-month period ended January 31, 1997, together with
the amount of revenues generated during such period. Schedule 3.1(k)(v)
contains a listing of all material contracts with customers that either
require a customer to purchase a certain quantity or portion of its
requirements for certain product(s) from the Companies or require the
Companies to sell a certain quantity or portion of its production of
certain products to a customer.
(w) INVENTORY. The inventories included in the Company Financial
Statements have been reflected in the Company Financial Statements at the
lower of cost or market value in accordance with GAAP. Such inventories do
not include any items which are not usable or saleable in the ordinary
course of business of the Companies or are obsolete or discounted items
except to the extent there are adequate reserves in the Company Financial
Statements in accordance with GAAP.
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(x) SECTION 280G. Stockholders holding at least 75% of the voting
power of the Company have approved the payments to be made pursuant to the
RBPI Incentive Unit Agreements Plan.
(y) FULL DISCLOSURE. No representation or warranty set forth in this
Agreement (as modified by the Schedules hereto) or in any certificate
required to be delivered by Section 5.1 hereof contains or will contain any
untrue statement of a material fact or omits or will omit to state a
material fact necessary, in light of the circumstances in which it was, or
will be, made, in order to make the statements herein or therein, not
misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to the Stockholders as follows:
(a) DUE ORGANIZATION, GOOD STANDING AND POWER. Purchaser is a limited
partnership validly existing under the laws of the State of Texas, with
requisite partnership power and authority to enter into this Agreement and
to perform its obligations hereunder.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on
the part of Purchaser. Purchaser has all necessary power and authority to
execute, deliver and perform this Agreement, and this Agreement, upon the
due execution and delivery by the Stockholders, shall constitute a legal,
valid and binding obligation of Purchaser, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
the rights of creditors generally and general equitable principles.
(c) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH CERTAIN
INSTRUMENTS. The execution, delivery and performance of this Agreement by
Purchaser will not require any consent, approval or notice under and will
not conflict with or result in the breach of any provision of, or
constitute a default under, Purchaser's Agreement of Limited Partnership,
or any indenture, mortgage, deed of trust, loan agreement, lease, licensing
agreement, contract, instrument or other agreement or any order, judgment
or decree, to which Purchaser is a party or by which Purchaser or any of
its properties or assets is bound, and to the knowledge of Purchaser will
not violate (with or without the giving of notice or the lapse of time or
both), or require consent, approval, filing or notice under, any provision
of law applicable to Purchaser, other than as may be required by the
provisions of the H-S-R Act. Except as aforesaid, no Authorizations are
required to be made or obtained by Purchaser in order to execute or deliver
this Agreement or to consummate the transactions or fulfill the obligations
of Purchaser provided for hereby.
(d) FULL DISCLOSURE. None of the information contained in the
representations and warranties of Purchaser set forth in this Agreement or
in any of the certificates, Schedules or documents delivered or to be
delivered to the Stockholders pursuant hereto contains or will contain any
untrue statement of a material fact or omits or will omit to
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state a material fact necessary to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading.
(e) FINANCING. Attached as Schedule 3.2(e) hereto are copies of a
commitment letter respecting the senior credit facility to be incurred by
Building Products as of the Closing, a highly confident letter respecting
the proposed issuance of Senior Subordinated Notes by Building Products and
an equity commitment letter from Keystone, Inc. respecting the equity to be
contributed to Purchaser (collectively, the "Commitment Letters").
4. PRE-CLOSING COVENANTS.
4.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. The
Stockholders agree that, during the period commencing on the date hereof and
ending on the Closing Date, (a) they will give or cause to be given to Purchaser
and its representatives full access during normal business hours to the
properties, books, contracts and records of any of the Companies, (b) they will
furnish or cause to be furnished to Purchaser and its representatives such
financial and operating data and other information with respect to the
businesses and properties of any of the Companies as Purchaser may reasonably
request, (c) they will furnish or cause to be furnished to Purchaser copies of
all documents and information concerning any of the Companies that Purchaser may
reasonably request and (d) they will afford Purchaser and its representatives an
opportunity to consult with the representatives, officers, employees, legal
counsel and accountants of the Companies.
4.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING DATE. The Stockholders
agree that, except pursuant to the prior written consent of Purchaser, as
contemplated hereby or as set forth on Schedule 4.2 hereto, during the period
commencing on the date hereof and ending on the Closing Date, they will cause
the Companies to:
(a) Operate their respective businesses only in the usual, regular
and ordinary manner and, to the extent consistent with such operation, use
reasonable efforts to preserve the present relationships with persons
having business dealings with any of them and to keep available the
services of their present officers and employees;
(b) Take all actions reasonably necessary and appropriate to
preserve, protect and maintain all of their assets other than disposable
assets in customary repair, order and condition, reasonable wear and tear
excepted;
(c) Make no disposition, other than the disposition of obsolete and
otherwise unusable assets, including any sale or transfer, of their assets,
other than sales in the ordinary course of business consistent with past
practice;
(d) Make no amendment to their charter or bylaws in any manner;
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(e) Make no change in the number of shares of their capital stock
issued and outstanding, and grant or give no option, warrant or any other
right to purchase or to convert any obligation into shares of their capital
stock;
(f) Not declare, pay or make a dividend or other distribution or
payment in respect of shares of their capital stock other than dividends on
the Series B Preferred Stock or purchase or redeem any of such shares or
dispose of any evidence of indebtedness or other securities of any other
person;
(g) Not merge or consolidate with any other corporation, sell all or
substantially all of their assets, or acquire any stock or, except in the
ordinary course of business consistent with past practice, any property or
assets of any other person, firm, association, corporation or other
business organization, or enter into any contract or agreement or other
commitment to effect any of the foregoing except in the ordinary course of
business;
(h) Not incur any indebtedness for borrowed money except in
accordance with Building Product's revolving line of credit or vary the
terms of any existing debt securities, nor issue or sell any debt
securities, nor enter into any other material transaction or commitment;
(i) Not mortgage, pledge or subject to any lien, lease, security
interest or other charge or encumbrance (other than Permitted Liens) any of
its properties or assets, tangible or intangible, other than in the
ordinary course of business consistent with prior practice;
(j) Except as may occur in the ordinary course of business, not
discharge or satisfy any lien or encumbrance or pay or satisfy any material
obligation or liability (fixed or contingent) or compromise, settle or
otherwise adjust any material claim or litigation;
(k) Not grant to any director, officer, employee or consultant any
increase in compensation in any form (other than pursuant to existing
employment agreements), or any severance or termination pay, or enter into
or vary the terms of any employment agreement with any such person except
performance increases in the ordinary course of business to employees who
do not participate in the Company's management bonus plan;
(l) Not make any capital expenditures, or enter into any commitment
to make, on any particular capital item or series of related items that
exceed(s) $50,000 or make aggregate capital expenditures in excess of
$250,000 except that Building Products may make those capital expenditures
specified by Virgil Lowe in his letter to Brad Henske dated March 24, 1997,
a copy of which is attached as Annex I to Schedule 4.2 hereof;
(m) Not adopt, amend in any material respect or terminate, any Plan
or other employee benefit program of general applicability; and
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(n) Not engage in any transaction with the Stockholders.
4.3 COMPLIANCE WITH LAWS. The Stockholders shall cause the Companies to,
and Purchaser shall, comply with all applicable laws as may be required for the
sale and transfer of the Stock and for the performance of all other acts and
things contemplated by this Agreement.
4.4 NOTICE OF BREACH. In the event of, and promptly after, the taking of
any action or occurrence or threatened occurrence of any event, the taking or
occurrence of which would make untrue, inaccurate or misleading or would
constitute or result in a breach or violation of any of the representations,
warranties, covenants or agreements of a party set forth herein, or would, if it
had occurred prior to the date hereof, make any representation or warranty made
by such party herein untrue, inaccurate or misleading, such party shall promptly
give written notice thereof to the other party.
4.5 CONSENTS. The Stockholders shall cause the Companies to use their
reasonable efforts to obtain the consent, waiver or approval of each person or
entity whose consent or approval is required for the consummation by the
Companies of the transactions contemplated hereby and to take any action
necessary or advisable to accomplish the transactions contemplated hereby,
provided, however, the Companies shall not be required to expend material sums
of money to comply with this provision.
4.6 ACQUISITION PROPOSALS. Until the close of business on May 15, 1997,
neither the Stockholders nor any of the Companies shall, directly or indirectly,
through any officer, director, agent, representative (including, without
limitation, investment bankers, attorneys and accountants) or otherwise, (i)
solicit, initiate or encourage submission of inquiries, proposals or offers from
any person, corporation, partnership or other entity or group other than
Purchaser (a "Third Party"), relating to any acquisition or purchase of all or a
portion of the assets of, or any equity interest in, any of the Companies; or
(ii) participate in any discussions or negotiations regarding, or furnish to any
Third Party any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any Third Party to do or seek any of the foregoing. The Stockholders
and the Companies shall promptly notify Purchaser if any such proposal or offer,
or any inquiry or contact with any Third Party with respect thereto, is made,
and shall in any such notice set forth in reasonable detail the identity of the
Third Party and the terms and conditions of such inquiry, proposal or offer.
4.7 REASONABLE EFFORTS. Each of the parties hereto agrees to use its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper or advisable to
satisfy promptly all conditions required hereby to be satisfied by such party in
order to consummate and make effective the transactions contemplated hereby.
4.8 NOTIFICATION. The Stockholders shall notify Purchaser, and Purchaser
shall notify the Stockholders, of any litigation, arbitration or administrative
proceeding pending or, to its knowledge, threatened against the Companies, the
Stockholders or Purchaser, as the case may be, which challenges the transactions
contemplated hereby.
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4.9 INJUNCTIONS. If any United States, state or foreign court having
jurisdiction over any party issues or otherwise promulgates any injunction,
decree or similar order prior to the Closing which prohibits the consummation of
the transactions contemplated hereby, the parties will use their respective
reasonable efforts to have such injunction dissolved or otherwise eliminated as
promptly as possible and, prior to or after the Closing, to pursue the
underlying litigation diligently and in good faith.
4.10. FILINGS. As promptly as practicable after the execution of this
Agreement, each party shall use its reasonable efforts to obtain, and to
cooperate with the other party in obtaining, all authorizations, consents,
orders and approvals of any governmental authority that may be or become
necessary in connection with the consummation of the transactions contemplated
by this Agreement, and to take all reasonable actions to avoid the entry of any
order or decree by any governmental authority prohibiting the consummation of
the transactions contemplated hereby, including without limitation, any reports
or notifications that may be required to be filed by it under the H-S-R Act, and
shall furnish to the other all such information in its possession as may be
necessary for the completion of the reports or notifications to be filed by the
other. Purchaser and the Stockholders agree that any filing fee required to be
paid in connection with any filing under the H-S-R Act shall be paid one-half by
the Stockholders and one-half by Purchaser.
4.11. PUBLICITY. Prior to the Closing, no party will issue or cause
the publication of any press release or other public announcement with respect
to this Agreement or the transactions contemplated hereby without the prior
consent of the other party, which consent will not be unreasonably withheld;
provided, however, that nothing herein will prohibit either party from issuing
or causing publication of any such press release or public announcement to the
extent that such party determines such action to be required by law, in which
event the party making such determination will, if practicable in the
circumstances, use reasonable efforts to allow the other party reasonable time
to comment on such release or announcement in advance of its issuance.
4.12. FINANCING. Purchaser shall use its reasonable efforts to obtain
and have available at the Closing the financing contemplated by the Commitments.
4.13 EXERCISE OF WARRANTS. Wingate Partners agrees to exercise its rights
pursuant to Section 2 of the Take Along/Drag Along Rights Agreement dated
September 8, 1994, among Wingate Partners and the Holders named therein, as
amended (the "Take Along Agreement"), to cause each of the Holders named therein
to exercise their Warrants, to sell the underlying shares of Class B Nonvoting
Common Stock received upon exercise thereof to Purchaser in accordance with the
terms of this Agreement and to make representations and warranties to Purchaser
as required by the Take Along Agreement.
5. CONDITIONS PRECEDENT.
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER. The obligations
of Purchaser to consummate and effect the transactions contemplated under this
Agreement are subject to the satisfaction on or before the Closing Date of each
of the following conditions (unless waived by Purchaser in writing):
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(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of the Stockholders contained in this Agreement shall be
true and correct in all material respects on and as of the date when made
and on and as of the Closing Date.
(b) PERFORMANCE OF AGREEMENT. The Stockholders shall have performed
and complied with in all material respects, and caused each of the
Companies to have performed and complied with in all material respects, all
agreements required by this Agreement to be performed or complied with by
them on or prior to the Closing Date.
(c) THE STOCKHOLDERS' CERTIFICATE. The Stockholders shall have
executed and delivered to Purchaser a certificate, dated the Closing Date,
to the effect set forth in Section 5.1(a) and 5.1(b) hereof, such
certificate to be in the form of Exhibit E attached hereto.
(d) NO LITIGATION. No action, suit, investigation or legal or
administrative claim or proceeding shall be pending or threatened before
any court, governmental agency or regulatory authority which may result in
the restraint, prohibition, or the obtaining of damages or other relief in
respect of, or which is related to or arises out of, this Agreement or the
transactions contemplated hereby.
(e) OPINION OF COUNSEL FOR THE STOCKHOLDERS. Purchaser shall have
received an opinion of counsel for the Stockholders dated the Closing Date
and in the form and to the effect of Exhibit F hereto.
(f) CHARTER, BYLAWS, QUALIFICATIONS TO TRANSACT BUSINESS AS FOREIGN
CORPORATIONS AND GOOD STANDING CERTIFICATES. Purchaser shall have received
a certified copy of the charter and the bylaws of each of the Companies;
certificates of existence and good standing of each of the Companies from
the appropriate official of each of their states of incorporation or
organization; and certificates of qualification to transact business as a
foreign corporation for the Companies from each state listed in Schedule
3.1(b)(iii) hereto.
(g) NO MATERIAL ADVERSE EFFECT. No Material Adverse Effect shall
have occurred from the date hereof to the Closing Date, and no damage,
destruction or loss, whether or not covered by insurance, adversely
affecting in any material respect the properties, businesses, prospects or
assets of the Companies shall have occurred or been threatened. The
Stockholders shall have executed and delivered to Purchaser a certificate,
dated the Closing Date, to such effect, such certificate to be in the form
of Exhibit G attached hereto.
(h) RESIGNATION OF DIRECTORS; RELEASES. Each director and officer of
the Companies shall have offered to Purchaser, and shall have delivered to
Purchaser, if Purchaser shall have accepted such offer, his or her
resignation as a director and/or officer and the Stockholders shall use
their reasonable efforts to cause each of such persons to offer to execute
and deliver to Purchaser if Purchaser shall have accepted such offer, a
written release, in form and substance acceptable to Purchaser, of all
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claims which such person might have against the Companies for compensation
or otherwise.
(i) THIRD-PARTY CONSENTS. Each consent set forth on Schedule 5.1(i)
shall have been obtained without resulting in the acceleration or
renegotiation of any such debt, termination, modification or cancellation
of any such lease, contract or any other right or authorization.
(j) APPROVAL OF COUNSEL. All instruments of transfer, resolution,
papers and other documents to be executed shall be reasonably satisfactory
in legal form and effect to counsel for Purchaser.
(k) TERMINATION OF INTERCOMPANY AGREEMENTS. Purchaser shall have
received an agreement in the form of Exhibit H attached hereto by which the
Stockholders and the Companies terminate the management and other
intercompany agreements (including the cancellation of any intercompany
indebtedness) among the Companies and the Stockholders and Affiliates of
the Stockholders and any other agreements among such parties, all as set
forth on Schedule 5.1(k) attached hereto.
(l) MANAGEMENT EQUITY. Each of David G. Fiore, Virgil D. Lowe, Jack
L. Morris, Charles R. Still and James R. Trigg, Jr. shall have executed the
agreement in the form of Exhibit I attached hereto respecting his
investment of amounts to be received pursuant to his RBPI Incentive Unit
Agreements Plan (the "Incentive Agreement") into equity in Purchaser. The
respective amounts of such investments shall not be less than the net cash
payments, after taxes, received by Mr. Fiore pursuant to his Incentive
Agreement as of the Closing or 80% of the net cash payments, after taxes,
received by Messrs. Lowe, Morris, Still and Trigg pursuant to each of their
Incentive Agreements as of the Closing.
(m) FINANCING. Purchaser shall have obtained the financing
contemplated by the Commitments.
(n) PAYMENTS UNDER RBPI INCENTIVE UNITS AGREEMENTS PLAN. The Company
shall have made payments to the Unitholders provided in Section 1.4 hereof
and each such party shall have executed and delivered a Release in favor of
the Company.
(o) H-S-R ACT. Any waiting period (and any extension thereof) under
the H-S-R Act applicable to the consummation of the Merger shall have
expired or been earlier terminated.
(p) APPROVAL OF CERTAIN PAYMENTS. The Stockholders shall have
approved, in accordance with Section 280G of the Code, the payment by the
Company of amounts to certain members of its management pursuant to the
Transaction Incentive Agreement and the RBPI Incentive Unit Agreements.
(q) WARRANTS. Wingate Partners shall have exercised its rights under
the Take Along Agreement to (i) cause all of the Warrants to be exercised,
(ii) all shares of Stock obtainable thereby to be sold to Purchaser
pursuant to this Agreement and (iii)
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the Warrantholders to make the representations and warranties to Purchaser
as required by the Take Along Agreement.
(r) PREFERRED STOCK. All shares of Series B Preferred Stock shall
have been redeemed either in accordance with the terms of same or
otherwise.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE STOCKHOLDERS. The
obligations of the Stockholders under this Agreement are subject to the
satisfaction on or before the Closing Date of each of the following conditions
(unless waived by the Stockholders in writing):
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Purchaser contained in this Agreement shall be true and
correct in all material respects on and as of the date when made and on and
as of the Closing Date.
(b) PERFORMANCE OF AGREEMENT. Purchaser shall have performed and
complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by Purchaser on
or prior to the Closing Date.
(c) NO LITIGATION. No action, suit, investigation or legal or
administrative claim or proceeding shall be pending or threatened before
any court, governmental agency or regulatory authority which may result in
the restraint, prohibition, or the obtaining of substantial damages or
other relief in respect of, or which is related to or arises out of, this
Agreement or the transactions contemplated hereby.
(d) APPROVAL OF COUNSEL. All instruments of transfer, restrictions,
papers and other documents to be executed, shall be reasonably satisfactory
in legal form and effect to counsel for the Stockholders.
(e) OPINION OF COUNSEL FOR PURCHASER. The Stockholders shall have
received an opinion of counsel for Purchaser dated the Closing Date and in
the form and the effect of Exhibit J hereto.
(f) H-S-R ACT. Any waiting period (and any extension thereof) under
the H-S-R Act applicable to the consummation of the Merger shall have
expired or been earlier terminated.
(g) THIRD-PARTY CONSENTS. Each consent set forth on Schedule 5.2(g)
shall have been obtained.
(h) PURCHASER'S CERTIFICATE. Purchaser shall have executed and
delivered to the Stockholders a certificate, dated the Closing Date, to the
effect set forth in Section 5.2(a) and 5.2(b) hereof, such certificate to
be in the form of Exhibit K hereto.
(i) PAYMENT OF INDEBTEDNESS. All indebtedness of the Companies
identified on Schedule 5.2(i) hereto shall have been paid in full.
6. POST-CLOSING OBLIGATIONS.
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6.1 FURTHER DOCUMENTS AND REQUESTS. Each of the parties shall execute and
deliver, at its own expense, such further instruments of transfer and
conveyance, documents and certificates as may be reasonably required for the
consummation of the transactions contemplated by this Agreement.
6.2 NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) From and after the Closing, the parties agree, and will use
reasonable efforts to cause their Affiliates, (i) not to use Confidential
Information for any purpose and (ii) not to disclose Confidential
Information, to any third party other than as necessary to its accountants,
representatives and advisors.
(b) For purposes of this Agreement, "Confidential Information" shall
mean with respect to the covenant running from the Purchaser to the
Stockholders any information, know how, data, process, technique, design,
drawing, formula or test data relating to any research project, work in
process, future development, engineering, manufacturing, marketing,
business plan, financial or personnel matter relating to the business or
assets of any of the Stockholders, their present or future products, sales,
suppliers, distributors, customers, employees, investors or business,
whether in oral, written, graphic or electronic form, and with respect to
the covenant running from the Stockholders to the Purchaser any
information, know how, data, process, technique, design, drawing, formula
or test data relating to any research project, work in process, future
development, engineering, manufacturing, marketing, business plan,
financial or personnel matter relating to the business or assets of any of
the Companies or the Purchaser, their present or future products, sales,
suppliers, distributors, customers, employees, investors or business,
whether in oral, written, graphic or electronic form.
(c) Confidential Information shall not include any information which
(i) is or becomes public knowledge without breach of this Agreement, (ii)
which is or becomes publicly available without a confidentiality
restriction and without breach of this Agreement from a source other than
the Companies or Purchaser, (iii) the recipient can demonstrate was known
by the recipient without a confidentiality restriction at the time of the
receipt of such information, or (iv) was independently developed by the
recipient by persons who did not have access to the disclosed information.
(d) Notwithstanding anything to the contrary contained herein, the
Stockholders shall not be deemed to have violated this Section 6.2 by the
making of any disclosure required by valid legal process.
6.3 NONCOMPETITION.
(a) Wingate Partners hereby agrees that, for a period of five (5)
years from the Closing Date, Wingate Partners will not, acting alone or in
conjunction with others, directly or indirectly, as a sole proprietor,
member of a partnership, or stockholder, investor, officer or director of a
corporation, or as an employee, agent, associate or consultant of any
person, firm or corporation:
(i) solicit business of the type conducted by the Companies as
of the Closing Date from or engage in such business with any actual or
prospective
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distributor, account, customer or client of the Companies at any time
during the three-year period prior to the Closing Date;
(ii) induce or attempt to influence any actual or prospective
distributor, account, customer or client of the Companies at any time
during the three-year period prior to the Closing Date to curtail or
cancel its business or relationship with the Companies;
(iii) induce or attempt to influence any employee of the
Companies to terminate such employee's employment; or
(iv) participate or engage in the business of manufacturing and
distributing aluminum or vinyl windows and doors, and wooden windows
and doors, and related component parts, within any metropolitan area
or within a 100 mile radius of any metropolitan area in which the
Companies engaged in such business at any time during the three year
period prior to the Closing Date;
provided, however, that nothing herein shall preclude Wingate Partners from
owning an equity interest of 5% or less in any publicly traded entity.
(b) The Stockholders and Purchaser recognize that the laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section 6.3. It is the intention of the Stockholders and Purchaser that
the provisions of this Section 6.3 be enforced to the fullest extent
permissible under the laws and policies of each jurisdiction in which
enforcement may be sought, and that the unenforceability (or the
modification to conform to such laws or policies) of any provision hereof
shall not render unenforceable, or impair, the remainder of the provisions
hereof. Accordingly, if any provision of this Section 6.3 shall be
determined to be invalid or unenforceable, either in whole or in part, this
Section 6.3 shall be deemed amended to delete or modify, as necessary, the
offending provision in order to render this Section 6.3 valid and
enforceable, such amendment to apply only with respect to the operation of
this Section 6.3 in the particular jurisdiction in which such determination
is made.
(c) Because the remedy at law for any breach of the provisions of
this Section 6.3 would be inadequate, the Stockholders hereby consent to
the granting by any court of an injunction or other equitable relief,
without the necessity of actual monetary loss being proved, in order that
any breach or threatened breach of such provisions may be effectively
restrained.
(d) The Stockholders hereby agree that the restraints imposed by this
Section 6.3 are reasonable as to time, scope and geographic coverage and
are reasonably necessary to preserve the legitimate business interests of
the Purchaser.
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7. INDEMNIFICATION.
7.1 INDEMNIFICATION. If the transactions contemplated hereby are
consummated, the Stockholders agree, jointly and severally as to Wingate
Partners and Wingate Affiliates, and severally and not jointly as to the other
Stockholders (pro rata in accordance with their interests as set forth on
Schedule I hereto), to indemnify, defend and hold harmless Purchaser, its
affiliates, officers, directors, owners, employees, agents and representatives
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, actual, punitive and consequential damages (excluding
punitive and consequential damages in a Direct Claim (as defined in Section
7.4)), recoveries and deficiencies, including interest, penalties and reasonable
attorneys' fees, net of any insurance proceeds (collectively "Damages") that
Purchaser shall incur or suffer, which arise, result from or relate to, directly
or indirectly, in whole or in part:
(a) (i) Taxes with respect to taxable periods (or portions thereof)
ending on or before February 28, 1997, but only to the extent that Damages
in respect of such Taxes exceed amounts reserved or accrued for Taxes in
the February Balance Sheet, (ii) Taxes with respect to taxable periods (or
portions thereof) beginning on or after March 1, 1997 and ending on or
before the Closing Date which arise other than (x) in the ordinary course
of business and (y) as set forth on Schedule 7.1(a) and or (iii) any
liabilities for Taxes attributable to or associated with inclusion of the
Companies in the consolidated income tax returns of Redman;
(b) Any inaccuracy, misrepresentation or breach of any of the
representations, warranties or agreements made herein by the Stockholders
or any breach or nonfulfillment by the Stockholders of any agreement or
covenant of the Stockholders contained herein;
(c) the RBPI Incentive Unit Agreements and claims of Unitholders
thereunder; and
(d) To the extent Purchaser prevails in its prosecution of a claim
for indemnification hereunder, any and all actions, suits, proceedings,
claims, demands, assessments, judgments, attorneys' fees, fines, costs and
legal and other expenses incident to any of the foregoing or the
enforcement by any such means of a valid right of indemnity pursuant
hereto.
The Stockholders agree to reimburse Purchaser, in accordance with this
Section 7.1, for any payment made by Purchaser at any time after the Closing in
respect of any liability or claim to which the foregoing indemnity relates. Any
amounts ultimately determined to be owing to Purchaser pursuant to the
provisions of this Article 7 shall be deemed to have been due and payable on the
thirtieth (30th) day following the Stockholders' receiving notice of a claim
hereunder. From and after the date on which payment is due, any amount owing
pursuant to this Section 7.1 shall bear interest at the prime rate of The Chase
Manhattan Bank, but in no event to exceed the maximum lawful rate permitted by
applicable law.
7.2 PURCHASER'S INDEMNIFICATION. If the transactions contemplated hereby
are consummated, Purchaser agrees to indemnify and hold harmless the
Stockholders, their affiliates, officers, directors, owners, employees, agents
and representatives against and in
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respect of Damages that the Stockholders shall incur or suffer, which arise,
result from or relate to, directly or indirectly, in whole or in part:
(a) Any inaccuracy, misrepresentation or breach of any of the
representations, warranties or agreements made herein by Purchaser or any
breach or nonfulfillment by Purchaser of any agreement or covenant of
Purchaser contained herein; and
(b) To the extent the Stockholders prevail in their Prosecution of a
claim for indemnification hereunder, any and all actions, suits,
proceedings, claims, demands, assessments, judgments, attorneys' fees,
fines, costs and legal and other expenses incident to any of the foregoing
or the enforcement by any such means of a valid right of indemnity pursuant
hereto.
Purchaser agrees to reimburse the Stockholders, in accordance with this
Section 7.2, for any payment made by the Stockholders at any time after the
Closing in respect of any liability or claim to which the foregoing indemnity
relates. Any amounts ultimately determined to be owing to the Stockholders
pursuant to the provisions of this Article 7 shall be deemed to have been due
and payable on the thirtieth (30th) day following Purchaser's receiving notice
of a claim hereunder. From and after the date on which payment is due, any
amount owing pursuant to this Article 7 shall bear interest at the prime rate of
The Chase Manhattan Bank but in no event to exceed the maximum lawful rate
permitted by applicable law.
7.3 CERTAIN PROCEDURES. If any action, suit, proceeding, claim or demand
is instituted or asserted by a third party in respect of which indemnity will be
sought hereunder (any such matter being hereinafter referred to as a "Third
Party Claim"), the following provisions shall apply:
(a) The party against whom indemnity is sought hereunder (the
"Indemnifying Party") shall have the right, at its option and at its own
expense, to be represented by counsel of its choice in connection with such
matter, and to assume and control the defense of and settle or otherwise
deal with such Third Party Claim, provided that it acts in good faith.
Failure by the Indemnifying Party to notify the party seeking
indemnification (the "Indemnified Party") of its election to defend
against and otherwise control a Third Party Claim within twenty (20) days
after written notice of such Third Party Claim shall have been given to the
Indemnifying Party by the Indemnified Party shall be deemed a waiver by the
Indemnifying Party of its right to assume and control the defense of and
otherwise control such matter. If the Indemnifying Party assumes defense
and control of a Third Party Claim, the Indemnified Party shall in all
events be entitled to indemnity with respect to such matter, to the extent
provided in this Agreement. The Indemnifying Party may not settle any
Third Party Claim without the consent of the Indemnified Party, which will
not unreasonably be withheld or delayed. In the event that the
Indemnifying Party does not elect to defend and otherwise control a Third
Party Claim, the Indemnified Party may defend against or otherwise deal
with such matter in such manner as it may deem appropriate, provided that
it acts in good faith and provided it may not settle a Third Party Claim
without the consent of the Indemnifying Party which may not be unreasonably
withheld and the Indemnifying Party shall be liable for indemnification
with respect to such matter, including without limitation the cost of such
defense, to the extent provided in this Agreement. If the Indemnifying
Party does not assume the
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defense of a Third Party Claim for any reason, it may still participate in,
but not control, the defense of such Third Party Claim at the Indemnifying
Party's sole cost and expense.
(b) The parties agree that they will cooperate fully with each other
in connection with the defense or settlement of any Third Party Claim. It
is further agreed that the party controlling any Third Party Claim will
keep the other party advised as to the status of such Third Party Claim.
(c) The Indemnifying Party shall be subrogated to, and the
Indemnified Party shall assign to the Indemnifying Party, any claim which
is the subject of reimbursement or payment under the foregoing Sections 7.1
or 7.2.
7.4 DIRECT CLAIMS. The Indemnifying Party will have a period of 30
calendar days within which to respond in writing to any claim by an Indemnified
Party on account of Damages which do not result from a Third Party Claim (a
"Direct Claim"). If the Indemnifying Party does not so respond within such 30
calendar day period, the Indemnifying Party will be deemed to have rejected such
claim, in which event the Indemnified Party will be free to pursue such remedies
as may be available to the Indemnified Party on the terms and subject to the
provisions of this Article 7. If the Indemnifying Party has disputed such
Direct Claim within such 30-day period, the Indemnifying Party and the
Indemnified Party agree to proceed in good faith to negotiate a resolution of
such dispute. If all such disputes are not resolved through negotiations within
30 days after such negotiations begin, either the Indemnifying Party or the
Indemnified Party may initiate litigation to resolve such disputes.
7.5 LIMITATIONS. Except with respect to the representations set forth in
Sections 3.1(d) and the matter set forth in Section 7.1(c) neither party
(considering Purchaser as a party and the Stockholders, collectively, as a
party) shall be required to indemnify the other party pursuant to this Article 7
until Damages incurred or suffered by such party, individually, with respect to
a single claim for indemnification, or in the aggregate, with respect to
multiple claims for indemnification, exceed $300,000, at which point the
Indemnifying Party shall be responsible to the Indemnified Party for all
Damages. Notwithstanding anything to the contrary contained herein, in the
absence of intentional fraud, the aggregate amount of indemnification claims
that either party may assert against the other pursuant to this Article 7 shall
not exceed $5,000,000, except for claims by Purchaser against the Stockholders
relating to the matters covered by Sections 3.1(d), 3.1(h), 3.1(t) and 7.1(c)
hereof (the "Excluded Matters"), as to which the foregoing limitation will not
apply; PROVIDED, HOWEVER, that such limitation will apply to claims relating to
the Excluded Matters solely to the extent that prior to the Closing the
Stockholders notify Purchaser in writing pursuant to Section 4.4 hereof of a
breach or breaches of the representations contained in Sections 3.1(d), (h) and
(t) that individually, or in the aggregate, exceed $5,000,000, in which case,
following the Closing, the aggregate amount of indemnification claims that
Purchaser may assert against the Stockholder solely with respect to such
breaches shall not exceed $5,000,000. Notwithstanding anything to the contrary
contained herein, the amount of Damages in respect of Taxes that Purchaser may
recover against the Stockholders pursuant to Section 7.1(a) or Section 7.1(b)
shall be reduced by the sum of (i) $76,000 and (ii) tax benefits (as calculated
below) realized by any of the Companies, the Purchaser or any affiliate (the
"Benefitted Party") attributable to or relating to the payment referred to in
Section 1.3(i)(B) hereof and payments of original issue discount in connection
with satisfaction of indebtedness with respect to which the Warrants
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were issued. For purposes of this Section 7.5, the tax benefits received by
the Benefitted Party are calculated as follows: the excess of the Benefitted
Party's liability for federal income taxes for the period in which the
deductions, losses or credits are claimed or deducted, computed without
regard to such deductions, losses or credits, over the Benefitted Party's
liability for federal income taxes in such period, computed by taking such
deductions, losses or credits into account. In the event the Benefitted
Party does not fully realize such tax benefit for the year in which the
deductions, losses or credits are deducted or claimed, then the foregoing
computation shall be applied with respect to any other applicable period. In
the event that a tax benefit is realized hereunder after payment of Damages
by the Stockholders, Purchaser shall promptly following filing of any Tax
Return in which such tax benefit is realized pay the amount of such tax
benefit to the Stockholders. If the Internal Revenue Service disallows a
deduction, loss or credit which was taken into account in computing tax
benefits hereunder and such disallowance is sustained after commercially
reasonable efforts to contest same at the IRS administrative levels, then the
amount, if any, by which Purchaser's claim for Damages was reduced by such
disallowed tax benefit shall be promptly repaid by the Stockholders to the
Purchaser.
7.6 OFFSET. In the event the Purchaser complies with the foregoing
procedures with respect to a claim for indemnification pursuant to this Article
7 (an "Indemnification Claim"), the Company may offset an amount of principal
and interest (the "Withheld Amount") that it would otherwise be obligated to pay
to the payees under the Holder Notes equal to the amount of the Indemnification
Claim until it is finally determined whether Purchaser is entitled to
indemnification from the Stockholders hereunder with respect to such
Indemnification Claim (a "Final Determination"); provided, however, that the
Withheld Amount shall not exceed the aggregate sum of $5,000,000 plus the
amounts as to which the Company has exercised its right of offset relating to
the Excluded Matters. Purchaser covenants that prior to the exercise of any of
the other remedies available to it for claims relating to the Excluded Matters,
it will first utilize the offset right granted the Company against the Holder
Notes. Upon a Final Determination, the Company shall be entitled (as its
exclusive remedy for recovery of Damages against the Stockholders pursuant to
this Article 7 or otherwise for all matters except for claims relating to the
matters covered by Sections 3.1(d), 3.1(h), 3.1(t) and Section 7.1(c)) to retain
by way of set-off an amount equal to the amount as to which it is established
that the Stockholders are obligated to indemnify the Purchaser pursuant to this
Article 7 and shall remit the balance of the Withheld Amount, if any, to the
payees under the Holder Notes (the "Refunded Amount") together with interest on
the Refunded Amount at the then current rate of interest under the Holder Notes.
Notwithstanding the foregoing, the right of offset will extend beyond June 30,
1998, with respect to any matter as to which the Company has made an
Indemnification Claim prior to the close of business on June 30, 1998, but as to
which no Final Determination has been issued as of such date.
7.7 EXCLUSIVITY OF REMEDY. Except as otherwise specifically set forth
herein, and except in cases of intentional fraud, the indemnification and offset
provisions contained in this Article 7 shall be deemed to be, to the extent
permitted by law, the exclusive remedy or exclusive means to obtain relief, as
the case may be, of any party hereto in the event of any breach of any
representation, warranty, covenant or agreement contained herein (or in any
certificates or other documents delivered pursuant hereto) by any other party
hereto or with respect to any claim of any third party arising out of or in
connection with this Agreement or the transactions contemplated hereby, and the
provisions of this Article 7 shall be in lieu of, any other rights or remedies
that may be available to any party at law, in equity or otherwise.
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<PAGE>
8. TERMINATION AND ABANDONMENT.
(a) Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated and abandoned at any time after the date hereof but
not later than the Closing:
(i) by the mutual consent of the Stockholders' Representative and
Purchaser;
(ii) by Purchaser, if without fault on the part of Purchaser, at any
time after May 15, 1997, if, by that date, the conditions set forth in
Section 5.1 hereof shall not have been fulfilled or waived;
(iii) by the Stockholders' Representative, if without fault on the
part of the Stockholders, at any time after May 15, 1997, if, by that date,
the conditions set forth in Section 5.2 hereof shall not have been
fulfilled or waived;
(iv) by the Stockholders' Representative or the Purchaser if at any
time there has been a material breach of any representation or warranty
made by the other party or parties, as applicable, herein or in any
certificate or other document delivered pursuant hereto or if there has
been any failure by the other party or parties, as applicable, to perform
in all material respects all obligations or to comply with all covenants on
its part to be performed hereunder; or
(v) by the Stockholders' Representative or the Purchaser, if there
shall have been any statute, rule, order or regulation enacted, issued or
promulgated or deemed applicable to the transactions contemplated hereby by
any government or governmental agency in the United States of America that,
in the reasonable judgment of Purchaser or of the Stockholders'
Representative, as the case may be, (x) restrain the consummation of the
transactions contemplated hereby; (y) render the parties unable to
consummate the transactions contemplated hereby; (z) make such consummation
illegal; or (xx) otherwise result in a Material Adverse Effect;
provided, however, no party may terminate this Agreement if such party is then
in material breach of any of its obligations under this Agreement.
(b) PROCEDURE UPON AND EFFECT OF TERMINATION. In the event of any
termination and abandonment pursuant to subsection (a) hereof, written notice
thereof shall forthwith be given to the other parties and the transactions
contemplated hereby shall thereupon be terminated and abandoned, without further
action by Purchaser or by the Stockholders (except for the provisions of
Sections 6.2, 9.1, 9.2 and 9.4 and 8(b) hereof), and there shall be no liability
on the part of any of Purchaser or the Stockholders or their respective
officers, directors or shareholders, except for the provisions of Sections 6.2,
9.1, 9.2 and 9.4 hereof or except for the material breach of any representation,
warranty or covenant contained herein that is within the control of the party in
breach.
9. MISCELLANEOUS PROVISIONS.
9.1 NO BROKERAGE. Purchaser hereby represents and warrants to the
Stockholders that it has not, and the Stockholders hereby represent and warrant
to Purchaser that neither the
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Stockholders nor the Companies have, incurred any obligation or liability,
contingent or otherwise, for brokerage or finder's fees or agent's
commissions or other like payment in connection with this Agreement or the
transactions contemplated hereby, except the fees of Chase Securities, Inc.,
which will be paid by Purchaser, and Purchaser, on the one hand, and the
Stockholders, on the other hand, hereby agree to indemnify and hold the other
harmless in respect of any costs, liabilities or expenses, including, but not
limited to, attorneys' fees, arising out of or relating to a breach by such
party of the representation and warranty contained in this Section 9.1.
9.2 EXPENSES. Except as otherwise provided herein, whether or not the
transactions contemplated hereby are consummated, Purchaser and the Stockholders
shall each pay their respective fees and expenses, including but not limited to,
attorneys' and accountants' fees incident to the negotiation, preparation and
execution of this Agreement and the consummation of the transactions provided
for herein. It is understood and agreed by the Stockholders and Purchaser that
no such fees or expenses shall be paid or borne by the Companies if the
transactions contemplated hereby are consummated except as may otherwise be
specified herein.
9.3 [Intentionally Omitted]
9.4 NOTICES. Any notice required or permitted to be given hereunder shall
be in writing to the other party or parties hereto and shall be deemed given
when delivered personally or, on the date transmitted if given by facsimile of
if sent by prepaid registered or certified mail, return receipt requested, on
the third business day following the date upon which the envelope containing the
notice is posted. All notices for purposes hereof shall be delivered or
addressed as follows:
If to the Stockholders:
c/o Wingate Partners, L.P.
750 N. St. Paul Street, Suite 1200
Dallas, Texas 75201
Attention: James A. Johnson and
Frederick B. Hegi, Jr.
Facsimile No. (214) 871-8799
with a copy to:
Weil, Gotshal & Manges, L.L.P.
100 Crescent Court
Suite 1300
Dallas, Texas 75201-6950
Attention: Mary R. Korby
Facsimile No. (214) 746-7777
If to Purchaser:
Keystone, Inc.
201 Main Street, Suite 3100
33
<PAGE>
Fort Worth, Texas 76102
Attention: W. Robert Cotham
Facsimile No. (817) 338-2064
with copies to:
Oak Hill Partners, Inc.
Park Avenue Tower
65 East 55th Street
32nd Floor
New York, New York 10022
Attention: Brad Bernstein
John Monsky
Facsimile No. (212) 754-5685
Kelly, Hart & Hallman
201 Main Street
Suite 2500
Fort Worth, Texas 76102
Attention: Kevin G. Levy
Facsimile No. (817) 878-9280
or to such other address as any party shall have specified by notice given in
compliance with this Section 9.4.
9.5 ENTIRE AGREEMENT; AMENDMENTS AND SUPPLEMENTS. This Agreement
(including the Schedules and Exhibits referred to herein, which are a part
hereof for all purposes) constitutes the entire agreement between the parties
with respect to the subject matter hereof and can be amended, supplemented or
changed, and any provision hereof can be waived, only by a written instrument
making specific reference to this Agreement and duly executed by Purchaser and
the Stockholders' Representative on behalf of the Stockholders in accordance
with Section 9.13 hereto. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the transactions contemplated
hereby. The Schedules to this Agreement are incorporated herein in full.
9.6 BINDING EFFECT; BENEFIT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns. Except as set forth in
Section 7 hereof, nothing contained in this Agreement, express or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, legal representatives, successors and permitted assigns, any
rights, remedies or obligations or liabilities under or by reason of this
Agreement.
9.7 ASSIGNABILITY. Neither this Agreement nor any of the parties' rights
hereunder may be assigned or otherwise transferred by any party without the
prior written consent of the other parties, which consent shall not unreasonably
be withheld or delayed; PROVIDED, HOWEVER, that Purchaser's, or its successors'
or assigns', rights hereunder may be assigned or otherwise transferred, in whole
or in part, without the Stockholders' consent, (i) to any successor by merger or
consolidation; (ii) to any bank, financial institution, individual, partnership,
corporation or other entity providing any financing to Purchaser, its successors
or assigns; or
34
<PAGE>
(iii) to any individual, partnership, corporation or other entity deriving
title from Purchaser, or its successors or assigns, to all or substantially
all of the assets and goodwill of the business being carried on by the
Companies immediately prior to the Closing and provided further the
Stockholders may distribute the Notes in accordance with their terms.
9.8 CAPTIONS. The captions of the various Sections and Articles are for
reference purposes only and shall not be deemed in any manner to affect the
meaning or interpretation of any of the provisions of this Agreement.
9.9 SEVERABILITY. If any provision of this Agreement shall be
determined to be illegal, void or unenforceable, all other provisions of this
Agreement shall not be affected and shall remain in full force and effect.
9.10 APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas (without regard to
principles of conflicts of laws).
9.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
9.12 SURVIVAL. Notwithstanding any investigation conducted or notice or
knowledge obtained by or on behalf of any party hereto, the warranties,
representations, covenants and agreements contained in this Agreement and the
indemnities herein shall survive the execution and delivery of this Agreement
and the Closing of the transactions contemplated hereby until June 30, 1998,
except that the representations and warranties set forth in Sections 3.1(d)
(Good Title to Capital Stock; Capitalization), (h) (Tax Matters) and (t)
(Environmental Matters) and indemnification respecting the matters set forth
in such sections and the covenant and agreement set forth in Section 7.1(c)
shall survive until the expiration of the relevant statutes of limitation,
and except for claims made prior to the expiration of such periods.
9.13 STOCKHOLDERS' REPRESENTATIVE.
(i) Each of the Stockholders hereby irrevocably appoints Wingate
Partners (the "Stockholders' Representative") as such Stockholder's agent
and attorney-in-fact to take any action required or permitted to be taken
by such Stockholder under the terms of this Agreement, including, without
limiting the generality of the foregoing, the giving and receipt of any
notices to be delivered or received by or on behalf of any or all of the
Stockholders, the payment of expenses relating to the transactions
contemplated by this Agreement, the representation of the Stockholders in
indemnification proceedings hereunder, and the right to waive, modify or
amend any of the terms of this Agreement, and agrees to be bound by any and
all actions taken by such agent on such Stockholder's behalf. Each
Stockholder further agrees that the Stockholders' Representative, its
agents, general partners and representatives, shall be fully indemnified by
the other Stockholders to the fullest extent permitted by law for damages
arising out of the Stockholders' Representative's actions or omissions in
such capacity. Each Stockholder hereby acknowledges that the foregoing
indemnity shall be applicable to all claims, liabilities, losses, damages
or expenses that have resulted from
35
<PAGE>
or are alleged to have resulted from the active or passive, or the sole,
joint or concurrent, ordinary negligence of the Stockholders'
Representative.
(ii) Purchaser shall be entitled to rely exclusively upon any
communications or writings given or executed by the Stockholders'
Representative and shall not be liable in any manner whatsoever for any
action taken or not taken in reliance upon the actions taken or not taken
or communications or writings given or executed by the Stockholders'
Representative. Purchaser shall be entitled to disregard any notices or
communications given or made by the Stockholders unless given or made
through the Stockholders' Representative.
(iii) Subsequent to the Closing Date, in the event of the
inability of the Stockholders' Representative to perform its functions
hereunder, the former Stockholders shall promptly appoint a new agent or
agents as attorney-in-fact or attorneys-in-fact, and such appointment or
appointments shall be deemed to have been made when communicated to
Purchaser in writing signed by the Stockholders (or the personal
representatives thereof) owning at least 51% of the Common Stock of the
Company outstanding immediately prior to the Closing Date. If the
Stockholders do not within fifteen days appoint a new agent or agents, then
the former Stockholder then living or existing who previously owned the
greatest number of shares of Common Stock of the Company outstanding
immediately prior to the Closing Date shall serve as Stockholders'
Representative if he or it is able and willing to do so, until a successor
agent or agents shall have been appointed in accordance with the provisions
hereof.
(iv) The manner and form by which the Stockholders shall decide upon
any new agent and attorney-in-fact shall be decided solely by the
Stockholders owning 51% of the shares of Common Stock of the Company
outstanding immediately prior to the Closing Date. The Stockholders
recognize, and hereby acknowledge, that the Stockholders' Representative
has an interest in the subject matter of this Agreement and that the
appointment of such Stockholders' Representative (which shall include any
successor Stockholders' Representative) as the Stockholders' Representative
constitutes an irrevocable power-of-attorney coupled with an interest.
9.14 WAIVER. At any time prior to the Closing, each of the parties
hereto may (i) extend the time for the performance of any of the obligations
or other acts of any other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (iii) waive compliance with any of the covenants,
agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed by the party granting such waiver. Such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or future failure.
9.15 TAX MATTERS. (a) The Purchaser shall provide the Stockholders'
Representative with the opportunity to review and comment upon any Tax
returns of the Companies due after the Closing Date and relating to periods
through the Closing Date at least twenty business days prior to the filing
thereof.
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<PAGE>
(b) After the Closing Date, none of the Companies shall file any
amended Tax Return which may give rise to a claim for indemnification
hereunder without the prior written consent of the Stockholders'
Representative, which will not unreasonably be withheld.
(c) The Purchaser and the Companies and the Stockholders will
cooperate with one another in connection with the preparation and filing of
Tax returns relating to the Companies and any audits or administrative or
judicial proceedings relating to Taxes due from the Companies and will
provide one another with access, at any reasonable time, at the business
location at which the books and records are maintained, after the Closing
Date, to such Tax data in such party's possession as is reasonably related to
such matters.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
37
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement as of
the day and year first above written.
PURCHASER: STOCKHOLDERS:
RELIANT PARTNERS, L.P. WINGATE PARTNERS, L.P.
By: Group 31, Inc., By: Wingate Partners Mangement
Company, L.P.,
General Partner its general partner
By: /s/ W. Robert Cotham By: /s/ F.B. Hegi, Jr.
----------------------- -----------------------------
Name: W. ROBERT COTHAM Name: F.B. Hegi, Jr.
--------------------- ---------------------------
Its: Vice President Its:
---------------------- ---------------------------
WINGATE AFFILIATES, L.P.
By: /s/ F.B. Hegi, Jr.
-----------------------------------
Name: F.B. Hegi, Jr.
---------------------------------
Its:
---------------------------------
WALLACE R. HAWLEY AND
ALEXANDRA HAWLEY
REVOCABLE TRUST
U/A/D 07/30/92
By: /s/ F.B. Hegi, Jr.
-----------------------------------
Name: F.B. Hegi, Jr.
---------------------------------
Its:
---------------------------------
/s/ V. Edward Easterling
---------------------------------------
V. EDWARD EASTERLING, JR.
MAY FINANCIAL CORPORATION
FBO JEAN C. BEASLEY IRA
By: /s/ F.B. Hegi, Jr.
-----------------------------------
Name: F.B. Hegi, Jr.
---------------------------------
Its:
---------------------------------
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<PAGE>
SCHEDULE I
Class A Voting Common Stock
Percentage of
Name of Stockholder No. of Shares Cash Purchase Price
- ------------------- ------------- -------------------
Wingate Partners, L.P. 953,948 87.76
Wingate Affiliates, L.P. 17,763 1.63
The Trustees of the
Wallace R. Hawley and
Alexandra Hawley Revocable
Trust U/A/D 07/30/92 6,579 .61
V. Edward Easterling, Jr. 3,289 .30
May Financial Corporation
FBO Jean C. Beasley IRA 18,421 1.69
*Wingate Partners, L.P. 53,216 4.90
*Wingate Affiliates, L.P. 1,043 .10
Class B Nonvoting Common Stock
- ------------------------------
Percentage of
Name of Stockholder No. of Shares Cash Purchase Price
- ------------------- ------------- -------------------
Heller Financial, Inc. 16,307 1.50
Sanwa Business Credit 6,251 .58
First National Bank of Boston 6,251 .58
Girocredit Bank Aktiengesellschaf
Der Sparkassen, Grand Cayman
Island Branch 3,802 .35
--------- ------
1,086,870 100.00%
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<PAGE>
SCHEDULE I
Class A Voting Common Stock
Wingate Partners, L.P. --- 953,948
Wingate Affiliates, L.P. -- 17,763
The Trustees of the
Wallace R. Hawley and
Alexandra Hawley Revocable
Trust U/A/D 07/30/92 -- 6,579
V. Edward Easterling, Jr. -- 3,289
May Financial Corporation
FBO Jean C. Beasley IRA -- 18,421
*Wingate Partners, L.P. -- 53,216
*Wingate Affiliates, L.P. -- 1,043
Class B Nonvoting Common Stock
- ------------------------------
Heller Financial, Inc. -- 16,307
Sanwa Business Credit -- 6,251
First National Bank of Boston -- 6,251
Girocredit Bank Aktiengesellschaf
Der Sparkassen, Grand Cayman
Island Branch -- 3,802
40
<PAGE>
EXHIBIT A
THIS NOTE IS SUBJECT TO A RIGHT OF OFFSET IN THE MANNER AND TO THE EXTENT SET
FORTH IN SECTION 6.4 BELOW.
THIS NOTE CONTAINS INDEMNIFICATION PROVISIONS IN SECTION 6.4, NOTICE OF WHICH
IS HEREBY GIVEN.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAW. IT MAY NOT BE OFFERED
FOR SALE OR SOLD IN THE ABSENCE OF: (1) REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2)
APPLICABLE EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS.
RBPI HOLDING CORPORATION
SUBORDINATED NOTE
$_______________________ _________________, 1997
FOR VALUE RECEIVED, RBPI Holding Corporation, a Delaware corporation
("Maker"), whose address is 3030 LBJ Freeway, Suite 300, Dallas, Texas 75234
promises to pay to each of the persons listed on Annex I hereto in accordance
with their respective interests set forth therein (collectively, "Payee"), at
the respective addresses of such persons set forth on Annex I hereto, the
aggregate principal sum of __________________________ DOLLARS
($__________________), together with interest thereon at the rates
hereinafter provided.
Section 1. INTEREST. Interest on the principal amount of this Note
shall be payable, at Maker's option from time to time, either (a) in cash; (b)
by Capitalization of the Interest (as defined herein) as set forth in Section
3.2; or (c) any combination of (a) and (b) hereof. Interest paid in cash shall
accrue at the rate of ten percent (10.00%) per annum (the "Cash Interest Rate")
and interest paid by Capitalization of the Interest shall accrue at the rate of
twelve percent (12.00%) per annum (the "Capitalized Interest Rate") (such
interest rate, whether the Cash Interest Rate or the Capitalized Interest Rate
or a combination thereof, being hereinafter referred to as the "Interest Rate");
PROVIDED, HOWEVER, that, upon the fourth anniversary of this Note, the Interest
Rate shall automatically increase by two percent (2%) per annum and upon the
fifth anniversary of this Note, the Interest Rate shall automatically increase
by one percent (1%) per annum. Interest shall be payable semi-annually on the
first business day of ____________________ and __________________ of each year,
commencing on _______, 1997 (each, an "Interest Payment Date"), based on a three
hundred sixty-five (365) day year for actual number of days elapsed.
Section 2. PAYMENT. The remaining outstanding principal amount of this
Note shall be due and payable on ____________, 2007.
Section 3. METHOD OF PAYMENT.
<PAGE>
3.1 CASH PAYMENTS. Cash payments of principal, interest and
other amounts due hereunder shall be made in lawful money of the United
States of America by (a) in the case of payments of principal, wire transfer
of immediately available funds to the respective accounts of each of the
persons constituting Payee designated in the records maintained by Maker, and
(b) in the case of interest and any and all other payments, company check to
each of the persons constituting Payee at the respective addresses set forth
in Maker's records unless and until any such person provides written notice
to Maker to the contrary.
3.2 CAPITALIZED INTEREST. To the extent that Maker elects to
add accrued interest at any Interest Payment Date to the principal of this
Note ("Capitalization of the Interest"), such accrued interest shall
thereafter be included in the principal amount of this Note for all purposes.
In connection with any such election by Maker, Maker shall notify in writing
each of the persons constituting Payee of its election and include in such
notice a statement setting forth the new principal of the Note as of such
Interest Payment Date. Any notice hereunder to each of the persons
constituting Payee shall be delivered to the respective addresses set forth
in Maker's records unless and until any such person provides written notice
to Maker to the contrary.
Section 4. DEFAULT INTEREST. If any installment of interest, or the
principal amount hereof, is not paid within fifteen (15) days after the due
date thereof, interest shall accrue on such unpaid amount at a default rate
equal to the lesser of (a) two percent (2%) per annum above the then
applicable Capitalized Interest Rate or (b) the highest rate permitted under
applicable law, until such amount is paid in full (the "Default Rate").
Section 5. PREPAYMENT.
5.1 VOLUNTARY PREPAYMENTS. This Note may be prepaid by Maker in
whole or in part at any time without prepayment premium or penalty.
5.2 MANDATORY PREPAYMENTS.
(a) Not later than the date 120 days after the end of each
fiscal year of Maker ending after the date of this Note, subject to
restrictions contained in documents evidencing Senior Debt, Maker shall
prepay this Note in an aggregate amount equal to the excess (if any) of (i)
50% of Consolidated Available Cash Flow over (ii) the sum of (x) cash
interest paid on this Note during such fiscal year and (y) the cumulative
amount, if any (calculated by reference to the aggregate principal amount of
this Note outstanding at the beginning and at the end of such fiscal year),
by which the aggregate principal amount of this Note has been reduced by
prepayments of this Note made during such fiscal year pursuant to Section 5.1
hereof.
(b) Not later than the date 15 days after the closing of a
Public Equity Offering by Maker, Maker shall prepay this Note in an aggregate
amount equal to the excess (if any) of (i) the Net Available Proceeds of the
Public Equity Offering over (b) the amount of Net Available Proceeds required
to be applied to Senior Debt, which amount shall not exceed 50% of Net
Available Proceeds.
Section 6. DEFAULTS AND REMEDIES.
6.1 EVENTS OF DEFAULT. Any one or more of the following shall
constitute an Event of Default hereunder: (a) default shall be made in the
payment of the principal of this
2
<PAGE>
Note when and as the same shall become due and payable, whether at stated
maturity, by acceleration, or otherwise after five (5) days notice of such
failure from Payee; (b) Maker shall fail to pay within ten (10) days
following the due date any installment of interest hereof; (c) Maker or the
Operating Company shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or be generally unable to pay its debts as such debts
become due; (d) an involuntary case or other proceeding shall be commenced
against Maker or the Operating Company seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property or an order for relief shall be entered
against Maker under the federal bankruptcy laws or the laws of the
jurisdiction of organization of Maker as now or hereafter in effect, and such
involuntary case or other proceeding or order shall remain undismissed or
unstayed for a period of sixty (60) days, and if stayed, such involuntary
case or other proceeding or order shall be dismissed upon termination of
such stay; (e) default shall be made in the performance or observance of any
other covenant, agreement or condition contained herein and such default
shall have continued for a period of thirty (30) days after such default
shall first have become known to Maker; or (f) a Change in Control of Maker
shall occur.
6.2 ACCELERATION. If (a) an Event of Default shall occur
pursuant to Sections 6.1(c) or (d), the principal of, and accrued interest
on, and all other amounts due under this Note shall become immediately due
and payable, and (b) any other Event of Default shall occur, the principal
of, and accrued interest on, and all other amounts due under, this Note shall
become immediately due and payable upon notice by Payee to Maker.
6.3 WAIVER OF PRESENTMENT, ETC. Maker hereby waives
presentment, demand, protest or notice of any kind in connection with this
Note.
6.4 RIGHTS OF THIRD PARTIES. Notwithstanding anything contained
herein to the contrary, payments under this Note are subject to offset in the
event that there are indemnification claims made by Purchaser (as defined in
the Stock Purchase Agreement) against Payee to the extent and in the manner
provided in that certain Stock Purchase Agreement by and among Reliant
Partners, L.P. and the Stockholders of Maker named therein, dated as of March
__, 1997 (the "Stock Purchase Agreement"). Each of the persons listed on
Annex I hereto (and, by acceptance of an assignment of all or a portion of
this Note, their successors and assigns) hereby irrevocably appoints Wingate
Partners, L.P. ("Wingate") as its agent and attorney-in-fact to take any
action required or permitted to be taken by Payee under this Note, including,
without limiting the generality of the foregoing, the giving and receipt of
any notices to be delivered by or on behalf of any or all of such persons,
the payment of expenses relating to any dispute hereunder, the representation
of such person in indemnification proceedings or in respect of any dispute
hereunder, and the right to waive, modify or amend any of the terms of this
Note or settle any dispute in respect hereof and agrees to be bound by any
and all actions taken by such agent on such person's behalf. Each of such
persons further agrees to indemnify and hold
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harmless Wingate, its general partners, agents and representatives
(collectively, for purposes of this Section 6.4, "Wingate") to the fullest
extent permitted by law for damages arising out of Wingate's actions or
omissions in such capacity. Each of such persons hereby acknowledges that the
foregoing indemnity shall be applicable to all claims, liabilities, losses,
damages or expenses that have resulted from or are alleged to have resulted from
the active or passive or the sole, joint or concurrent ordinary negligence of
Wingate.
Section 7. FINANCIAL STATEMENTS AND INFORMATION. Maker shall furnish
to the Payee, so long as this Note shall be outstanding:
(a) as soon as available and in any event within 45 days
after the end of the first, second and third quarterly accounting periods in
each fiscal year of Maker, copies of the consolidated balance sheet of Maker
and its Subsidiaries as of the end of such accounting period and copies of
the related consolidated statements of income and changes in shareholders
equity and cash flows of Maker and its Subsidiaries for the portion of the
fiscal year ended with the last day of such quarterly accounting period
certified by the principal financial officer of Maker to present fairly in
all material respects the information contained therein; PROVIDED, HOWEVER,
that delivery of a copy of a Quarterly Report on Form 10-Q (without exhibits
unless requested by Payee) of the Operating Company for such quarterly period
filed with the Commission shall be deemed to satisfy the requirements of this
paragraph (a); and
(b) as soon as available and in any event within 90 days
after the end of each fiscal year of Maker, copies of the consolidated
balance sheet of Maker and its Subsidiaries as of the end of such fiscal year
and copies of the related audited consolidated statements of income and
changes in shareholders equity and cash flows of Maker and its Subsidiaries
for such fiscal year; PROVIDED, HOWEVER, that delivery of a copy of an Annual
Report on Form 10-K (without exhibits unless requested by Payee) of the
Operating Company for such year filed with the Commission shall be deemed to
satisfy the requirements of this paragraph (b).
Section 8. COVENANTS. Maker covenants and agrees that on and after the
date hereof, so long as this Note shall be outstanding:
8.1 PAYMENT OF NOTE. Maker shall pay the principal of and
interest on this Note on the dates and in the manner provided herein.
8.2 LEGAL EXISTENCE. Maker shall do or cause to be done all
things necessary to preserve and keep in full force and effect its legal
existence and the legal existence of its Subsidiaries in accordance with the
rights, licenses and franchises of Maker and its Subsidiaries, except where
the failure to so act would not have a material adverse effect on Maker and
its Subsidiaries taken as a whole; PROVIDED, HOWEVER, Maker may merge or
consolidate with a corporation provided that the surviving corporation has a
Consolidated Net Worth equal to or in excess of that of Maker prior to such
merger or consolidation and PROVIDED FURTHER, that such corporation executes
an assumption agreement evidencing such corporation's assumption of all of
Maker's obligations under this Note and such other documents as Payee may
reasonably request; and PROVIDED FURTHER that one or more of its Subsidiaries
may merge with and into another Subsidiary or Maker.
8.3 LIMITATIONS ON RESTRICTED PAYMENTS. Maker shall not and
shall not permit any of its Subsidiaries to declare or pay any dividend on,
or make any distribution in respect of
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(other than dividends and distributions payable exclusively in
non-participating common equity interests or preferred equity interests as to
which dividends are payable solely in kind of Maker or a Subsidiary), or
purchase, redeem or retire for value any equity interests of Maker or a
Subsidiary (other than in exchange for Maker's or a Subsidiary's own
non-participating common equity interests or preferred equity interests as to
which dividends are payable solely in kind) (collectively, "Restricted
Payments"), except for the following: (i) dividends and distributions among
wholly-owned Subsidiaries; (ii) dividends and distributions from the
Subsidiaries to Maker solely to the extent all sums so dividended or
distributed are used by Maker for one of the following purposes: (x) to make
mandatory prepayments pursuant to Section 5.2 hereof; (y) to make voluntary
prepayments pursuant to Section 5.1 hereof; (z) to pay expenses of Maker to
the extent permitted by Senior Debt; and (xxx) to pay tax liabilities of
Maker and its consolidated group; and (iii) payments to repurchase equity
interests and other rights and obligations owned by former employees and
others of up to $1,000,000 in the aggregate. The foregoing provisions will
not prevent the purchase or redemption of equity interests in Maker or a
Subsidiary with proceeds from concurrent sales of equity interests in Maker
or a Subsidiary; PROVIDED, HOWEVER, that in the event the proceeds of such
sale exceed $1,000,000, Maker shall apply one-half of such proceeds in excess
of $1 million toward the prepayment of this Note.
8.4 LIMITATION ON OTHER DEBT. Other than Permitted
Indebtedness, Maker shall not incur, and shall not permit any of its
Subsidiaries to incur, any Indebtedness unless the ratio of Maker's EBITDA
(taking into account on a pro forma basis for historic operations without
regard to synergies the results of operations of any person acquired as if
such acquisition had occurred at the beginning of the period) for the
preceding four fiscal quarters (or if fewer than four fiscal quarters have
elapsed since the date of this Note, then for the number of fiscal quarters
elapsed since the date of this Note) to Total Interest Expense (taking into
account on a pro forma basis interest expense on the Indebtedness to be
incurred as if it were incurred at the beginning of the period) for the four
fiscal quarters (or if fewer than four fiscal quarters have elapsed since the
date of this Note, then for the number of quarters elapsed since the date of
this Note), is at least 1.75:1.
8.5 LIMITATION ON LIENS. Maker shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien upon any of its assets now owned or hereafter
acquired except for Permitted Liens.
8.6 DISTRIBUTIONS FROM SUBSIDIARIES. Maker shall cause its
Subsidiaries to distribute sums to Maker to enable it to satisfy its
obligations set forth in Section 5.2 subject to restrictions contained in
documents evidencing Senior Debt and applicable law.
8.7 MANAGEMENT FEES. Maker shall not and shall not permit any
of its Subsidiaries to pay any management or consulting fees, or fees of a
like nature, to any affiliate of Maker except payments of compensation to
George Group, Inc. in exchange for consulting services to be provided by
George Group, Inc. to Maker and its Subsidiaries, reasonable compensation in
connection with valid services rendered, payable to employees of Maker and
its Subsidiaries (other than partners and Affiliates of Reliant Partners,
L.P., a Texas limited partnership) in connection with their employment and
payments being made simultaneously with the issuance of this Note.
8.8 NOTIFICATION OF CALCULATION. Maker shall notify Payee not
later than 90 days after the end of each fiscal year of Maker ending after
the date of this Note of its
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calculation of Consolidated Available Cash Flow for such fiscal year (whether
or not any amounts will be due and payable hereunder in respect thereof),
with reasonable support for such calculation.
8.9 CERTAIN CREDIT AGREEMENT PROVISIONS. Maker will use its
reasonable efforts to insure that the provisions of the Senior Debt allow the
payments called for by Section 5.2(a) above. Maker shall provide written
notice to Wingate prior to amending, restating or modifying the terms of the
Senior Debt.
Section 9. DEFINITIONS. The following terms, as used herein, have the
following respective meanings:
ACQUIRED INDEBTEDNESS means any Indebtedness incurred in connection
with the financing of all or any part of the acquisition or construction of
any property, whether incurred prior to, at the time of or within 120 days
after, the acquisition or completion of construction by Maker of such
property.
AFFILIATE of any specified person shall mean any other person
controlling or controlled by or under common control with such specified
person. For purposes of this definition, "control" when used with respect to
any specified 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.
CAPITALIZED LEASE OBLIGATIONS means all obligations to pay rent or
other amounts under a lease of (or other agreement conveying the right to
use) property to the extent such obligations are required to be classified
and accounted for under GAAP as a capital lease on the balance sheet of the
lessee.
CHANGE IN CONTROL means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Operating
Company): (i) prior to the first public offering of Voting Equity Interests
of Maker or the Operating Company, either (x) the Permitted Holders cease to
be the "beneficial owner" or "beneficial owners" (as defined in Rule 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, of at least a
majority of the total voting power of the then outstanding Voting Equity
Interests of Maker or of the Operating Company, or (y) the Permitted Holders
cease to be entitled by voting power, contract or otherwise to elect or cause
the election of directors of Maker or the Operating Company having a majority
of the total voting power of the Board of Directors of Maker or the Operating
Company, as the case may be, in each case, whether as a result of issuance of
securities of Maker or the Operating Company, as the case may be, any merger
consolidation, liquidation or dissolution of Maker or the Operating Company,
as the case may be, any direct or indirect transfer of securities by any
Permitted Holder or otherwise (for purposes of this clause (i) and clause
(ii) below, Permitted Holders shall be deemed to beneficially own any Voting
Equity Interests of an entity (the "specified entity") held by any other
entity (the "parent entity") so long as the Permitted Holders beneficially
own (as so defined), directly or indirectly, a majority of the voting power
of the then outstanding Voting Equity Interests of the parent entity); (ii)
following the first public offering of Voting Equity Interests of Maker or
the Operating Company, any Person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, including any group acting for the purpose of
acquiring, holding or disposing of securities within
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the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than one or
more Permitted Holders, is or becomes the beneficial owner (as defined in
clause (i) above, except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time, upon the happening of an event or otherwise), directly or indirectly,
of more than 35% of the total voting power of the then outstanding Voting
Equity Interests of Maker or the Operating Company; PROVIDED, HOWEVER, that
the Permitted Holders beneficially own (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the then outstanding Voting Equity Interests of Maker or the
Operating Company, as the case may be, than such other Person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of Maker or the
Operating Company, as the case may be; (iii) Maker or the Operating Company
consolidates with, or merges with or into, another Person or, Maker or any of
its Subsidiaries sell, assign, convey, transfer, lease or otherwise dispose
of all or substantially all of the assets of Maker and its Subsidiaries
(determined on a consolidated basis) to any Person (other than the Operating
Company or any Wholly Owned Restricted Subsidiary) or the Operating Company
or the Restricted Subsidiaries sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of the assets of the Operating
Company and the Restricted Subsidiaries (determined on a consolidated basis)
to any Person (other than a Wholly Owned Restricted Subsidiary), or any
Person consolidates with, or merges with or into, Maker or the Operating
Company, other than any such transaction where immediately after such
transaction the Person or Persons that "beneficially owned" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time) immediately prior to such transaction, directly or
indirectly, the then outstanding Voting Equity Interests of Maker or the
Operating Company, as the case may be, "beneficially own" (as so determined),
directly or indirectly, a majority of the total voting power of the then
outstanding Voting Equity Interests of the surviving or transferee Person; or
(iv) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Maker or the
Operating Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of
Maker or the Operating Company, as the case may be, was approved by a vote of
a majority of the directors of Maker or the Operating Company, as the case
may be, then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Maker or the Operating Company, as the case may be, then in
office.
COMMISSION means the Securities and Exchange Commission.
CONSOLIDATED AVAILABLE CASH FLOW means EBITDA MINUS payments made in
respect of capital expenditures, Total Interest Expense, principal payments
on indebtedness, increases in working capital and payments of taxes.
CONSOLIDATED NET INCOME means, for any fiscal period, the
consolidated net earnings or loss of Maker and its Subsidiaries as the same
would appear on a consolidated statement of earnings of Maker for such fiscal
period prepared in accordance with GAAP.
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CREDIT AGREEMENT means the Credit Agreement dated as of __________,
1997 among ______________________, the lenders listed on the signature pages
thereof and ____________________, as Agent, as the same may be amended,
restated, modified, extended or supplemented from time to time in accordance
with its terms and any successor financial institution credit agreement
refinancing all or a portion of the Credit Agreement and designated by Maker
as the Credit Agreement for purposes hereof.
EBITDA means Consolidated Net Income plus Total Interest Expense,
income taxes, depreciation and amortization.
EQUITY INTEREST in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
GAAP means generally accepted accounting principles applied on a
consistent basis.
INDEBTEDNESS means (a) any obligation for borrowed money, (b) any
obligation owed for all or any part of the purchase price of property or other
assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in the ordinary course of business, (c) any obligations
secured by any lien in respect of property even though the person owning the
property has not assumed or become liable for the payment of such obligation,
(d) any lease obligation capitalized on Maker's books, (e) any guarantee with
respect to Indebtedness (of the kind otherwise described in this definition) of
another person and (f) obligations in respect of letters of credit.
INDENTURE means the Indenture dated as of __________, 1997 between the
Operating Company and ______________________, as the same may be amended,
restated, modified, extended or supplemented from time to time in accordance
with its terms.
INTEREST EXPENSE means, for any period, the sum, for Maker and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP) all interest in respect of Indebtedness (including,
without limitation, the interest component of any payments in respect of capital
lease obligations) accrued or capitalized during such period (whether or not
actually paid during such period).
LIEN means any lien, security interest, charge or encumbrance of any
kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest).
NET AVAILABLE PROCEEDS means the aggregate amount of cash received by
Maker in respect of a Public Equity Offering, net of all expenses incurred by
Maker in connection therewith and any underwriting fees and expense.
OPERATING COMPANY means Redman Building Products, Inc., a Delaware
corporation and wholly-owed subsidiary of Maker.
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PERMITTED HOLDER means any of (i) Reliant Partners, L.P. and its
direct and indirect general and limited partners on the date hereof; (ii) any of
the Permitted Transferees of the persons referred to in clause (i); and (iii)
any person or group controlled by each or any of the Persons referred to in
clauses (i) and (ii).
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PERMITTED INDEBTEDNESS means any of the following:
(i) Senior Debt in an aggregate principal amount at any one time
outstanding not to exceed the sum of (A) the greater of (i) $25.0 million
and (ii) the sum of (a) 85% of [Eligible Receivables] (as defined in the
Credit Agreement as in effect on the date hereof whether or not the Credit
Agreement is in effect on the date of determination), PLUS (b) 50% of
[Eligible Inventory] (as defined in the Credit Agreement as in effect on
the date hereof whether or not the Credit Agreement is in effect on the
date of determination), PLUS (B) any amounts outstanding under the Credit
Agreement that utilize subparagraph (vii) of this definition plus the
aggregate amount outstanding under the Indenture;
(ii) intercompany Indebtedness;
(iii) Indebtedness in respect of this Note;
(iv) Indebtedness in respect of any performance bonds, letters of
credit or other similar instruments and obligations entered into in the
ordinary course of business consistent with past practices;
(v) Indebtedness in respect of Capitalized Lease Obligations,
purchase money obligations and Acquired Indebtedness, not to exceed $10
million;
(vi) Indebtedness existing on the date of this Note;
(vii) other Indebtedness not to exceed $15 million;
(viii) Indebtedness in respect of any interest rate protection or
hedging arrangements entered into in order to fix the floating interest
rate of any Permitted Indebtedness, to the extent that such Permitted
Indebtedness is incurred prior to or at the time of entry into such
arrangement or is reasonably expected to be incurred within thirty days
thereafter, in an amount not exceeding the notional principal amount of
such Permitted Indebtedness; and
(ix) any Indebtedness incurred in exchange for or the proceeds of
which are used to exchange, refinance or refund Indebtedness referenced in
any of (i) through (viii) above; PROVIDED, HOWEVER, that the principal
amount of the Indebtedness so incurred does not exceed the principal amount
(plus any premium) of the Indebtedness so exchanged, refinanced or
refunded.
PERMITTED LIENS means any of the following:
(i) any Lien on property if such Lien is in existence at the time of
acquisition by Maker of such property or is to secure any Indebtedness
permitted hereunder that is incurred (prior to, at the time of or within
120 days after, the acquisition or completion of construction by Maker of
such property) for the purpose of, or in connection with, financing all or
any part of the acquisition or the cost of construction thereof;
(ii) any Lien on property of a corporation if such Lien is in
existence at the time such corporation is merged into or consolidated with
Maker or at the time of a sale, lease or other disposition of the
properties of a corporation as an entirety or substantially as an entirety
to Maker or any Lien on property of a person not a corporation if such Lien
is in existence at the time of a sale, lease or other disposition of the
properties of such
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person as an entirety or substantially as an entirety to Maker, PROVIDED,
in each such case, that (i) such Lien is not created in contemplation of
such merger, consolidation or disposition and does not extend to properties
not subject thereto immediately prior to such merger, consolidation or
disposition and (ii) any Indebtedness incurred or assumed in connection
therewith is permitted hereunder;
(iii) any Lien existing on the date of this Note;
(iv) Liens to secure the Senior Debt;
(v) Encumbrances consisting of minor easements, zoning restrictions,
or other restrictions on the use of real property that do not (individually
or in the aggregate) materially affect the value of the assets encumbered
thereby or materially impair the ability of Maker to use such assets in
their respective businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(vi) Liens for taxes, assessments, or other governmental charges which
are not delinquent or which are being contested in good faith and for which
adequate reserves have been established;
(vii) Liens of mechanics, materialmen, warehousemen, carriers or other
similar statutory Liens securing obligations that are not yet due and are
incurred in the ordinary course of business or which are being contested in
good faith and for which adequate reserves have been established;
(viii) Liens resulting from good faith deposits to secure payments of
worker's compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, or contracts (other than for payment of Indebtedness) in the ordinary
course of business;
(ix) Liens for purchase money obligations and Capitalized Lease
Obligations; PROVIDED that any such Lien encumbers only the asset so
purchased or leased and the associated Indebtedness is otherwise permitted
hereunder;
(x) Leases or subleases granted to others for fair market value
consideration, in any such case not interfering in any material respect
with the business of Maker;
(xi) Liens held by operators under operating agreements for amounts
not yet due and payable;
(xii) Liens securing Permitted Indebtedness; or
(xiii) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien
referred to in the foregoing clauses (i) through (xii), inclusive;
PROVIDED, HOWEVER, that the principal amount of Indebtedness secured
thereby shall not exceed the principal amount of Indebtedness so secured at
the time of such extension, renewal or replacement, and that such
extension, renewal, or replacement Lien shall be limited to all or part of
the asset which secured the Indebtedness secured by the Lien so extended,
renewed or replaced (plus improvements on such asset).
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PERMITTED TRANSFEREE means, with respect to any Person: (a) in the
case of any Person who is a natural person, such individual's spouse or
children, any trust for such individual's benefit or the benefit of such
individual's spouse or children, or any corporation or partnership in which the
direct and beneficial owner of all of the equity interest is such Person or such
individual's spouse or children or any trust for the benefit of such persons;
(b) in the case of any Person who is a natural person, the heirs, executors,
administrators or personal representatives upon the death of such Person or upon
the incompetency or disability of such Person for purposes of the protection and
management of such individual's assets; and (c) in the case of any Person who is
not a natural person, any Affiliate of such Person.
PERSON means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
limited partnership, trust, unincorporated organization or government or any
agency or political subdivision thereof.
PREFERRED EQUITY INTEREST, in any person, means an Equity Interest of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.
PUBLIC EQUITY OFFERING means a public offering of some or all of
Maker's equity interests, which yields Net Available Proceeds of at least
$30,000,000.
RESTRICTED SUBSIDIARY means any Subsidiary of the Operating Company
that has not been designated as an Unrestricted Subsidiary pursuant to the
Indenture.
SENIOR DEBT means (a) the principal amount under the Credit Agreement
and premium, if any, and interest thereon (including, without limitation, any
interest (Post-Petition Interest) which accrues (or which would accrue but for
such case, proceeding or other action) after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of Maker (whether or not such interest is allowed as a claim in
such case, proceeding or other action)), and all Notes issued pursuant to, the
Credit Agreement, (b) the principal amount under the Indenture and premium, if
any, and interest thereon (including, without limitation, any interest
(Post-Petition Interest) which accrues (or which would accrue but for such case,
proceeding or other action) after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency or reorganization of Maker
(whether or not such interest is allowed as a claim in such case, proceeding or
other action)), and all Notes issued pursuant to, the Indenture; (c) any
renewals, refinancings or extensions of any of the foregoing (or any portion
thereof) (including Post-Petition Interest), and any increases in the foregoing
and (d) all fees, expenses, indemnities and all other amounts payable by Maker
thereunder or with respect thereto, including under any other Financing
Document. Terms used in this definition that are not defined herein have the
meaning specified in the Credit Agreement or the Indenture, as appropriate.
SUBSIDIARY means any corporation, partnership or other entity of
which at least a majority of the securities or other ownership interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at
the time securities or other ownership interests of any other class or
classes of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening
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of any contingency) is at the time directly or indirectly owned or controlled
by Maker or one or more Subsidiaries of Maker or by Maker and one or more
Subsidiaries of Maker.
TOTAL INTEREST EXPENSE means, for any period, the Interest Expense
(net of interest income) of Maker and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, whether paid or
accrued, to the extent such expense was deducted in computing Consolidated Net
Income.
UNRESTRICTED SUBSIDIARY means any Subsidiary of the Operating Company
designated as such pursuant to the Indenture.
VOTING EQUITY INTERESTS means Equity Interests in a corporation or
other Person with voting power under ordinary circumstances entitling the
holders thereof to elect the board of directors or other governing body of such
corporation or Person.
WHOLLY OWNED RESTRICTED SUBSIDIARY means any Restricted Subsidiary all
of the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Operating Company.
Section 10. MISCELLANEOUS.
10.1 NO WAIVER. It is expressly agreed that any waiver by Payee of
any item or provision hereof or of any right, remedy or option under this
Note shall not be controlling, nor shall it prevent or estop Payee from
thereafter enforcing such term, provision, right, remedy or option in any
other instance, and neither the failure or refusal of Payee to insist in any
one or more instances upon the strict performance of this Note, nor the
acceptance by Payee of any payment less than the amount then due hereunder,
shall be construed as a waiver or relinquishment for the future of any such
term or provision or the amount remaining due, but the same shall continue in
full force and effect, it being understood and agreed that Payee's rights,
remedies and options under this Note are and shall be cumulative and are in
addition to all of the rights, remedies and options of Payee in law or in
equity, or under any other agreement.
10.2 SAVINGS CLAUSE. If at any time the Interest Rate or Default
Rate, together with all fees and charges, if any, contracted for, charged,
received, taken or reserved by Payee in connection with this Note that may be
treated as interest under applicable law (collectively, the "Charges"), computed
over the full term of this Note, exceeds the maximum lawful rate (the "Maximum
Rate") which may be contracted for, charged, taken, received or reserved by
Payee in accordance with the laws of the State of Texas from time to time in
effect, except to the extent federal law permits Payee to contract for, charge
or receive a greater amount of interest, due credit being given for all charges
made in connection with this Note that may be treated as interest under
applicable law, the rate of interest payable hereunder, together with all
Charges, shall be limited to the Maximum Rate; PROVIDED, HOWEVER, that upon any
subsequent increase in the Maximum Rate from time to time, the interest charged
on the unpaid principal amount of this Note shall remain equal to the Maximum
Rate, and any subsequent reduction in the Interest Rate shall not reduce the
rate borne by this Note, until the total amount of interest earned hereunder,
together with all Charges, equals the total amount of interest which would have
accrued at the Interest Rate if the Interest Rate had at all times been in
effect; and PROVIDED, FURTHER, that if at maturity or final payment of this Note
the total amount of interest paid or accrued under the foregoing provisions is
less than the total amount of interest which
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would have accrued if the Interest Rate had at all times been in effect,
Maker agrees to pay Payee, to the extent allowed by the then applicable law,
an amount equal to the difference between (a) the lesser of (i) the amount of
interest which would have been accrued on this Note if the Maximum Rate had
at all times been in effect, and (ii) the amount of interest which would have
accrued if the Interest Rate had at all times been in effect, and (b) the
amount of interest actually accrued in accordance with the provisions of this
Note.
10.3 AMENDMENTS; BINDING EFFECT. This Note may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
This Note shall be binding upon the successors, permitted assigns and legal
representatives of Maker.
10.4 ASSIGNMENT; ENTIRE AGREEMENT. Neither Maker nor Payee may assign
its rights under this Note or any interest therein without the prior written
consent of the other party. This Note constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
10.5 NOTICES. All notices hereunder shall be in writing (including
prepaid overnight courier, facsimile transmission or similar writing) and shall
be delivered to Maker at its address set forth in the first paragraph of this
Note and to each of the persons constituting Payee at the respective addresses
of such persons set forth on Annex 1 hereto (or at such other address as shall
be specified by like notice to each of the persons constituting Payee and
Maker). All notices shall be deemed given as of the date when such notice is
first delivered by hand or sent by telecopier (receipt confirmed, with a copy
simultaneously mailed registered mail), one day after depositing for delivery,
fee prepaid, with a Federal Express or similar overnight deliver service and
five days after mailing, postage prepaid and properly addressed in the U.S.
mails.
10.6 GOVERNING LAW. This Note shall be governed by, and the
terms and provisions hereof and the rights and duties created hereby shall be
interpreted, construed and enforced in accordance with, the laws of the State of
Texas, without giving effect to conflicts of law provisions.
10.7 WAIVER OF JURY TRIAL. THE MAKER AND PAYEE HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[Remainder of Page Intentionally Left Blank.]
14
<PAGE>
IN WITNESS WHEREOF, Maker has caused this Subordinated Note to be executed
and delivered by its duly authorized officer, as of the day and year and at the
place first above written.
RBPI HOLDING CORPORATION
By:
-------------------------------------
Title:
----------------------------------
15
<PAGE>
ANNEX I TO SUBORDINATED NOTE
<PAGE>
EXHIBIT B
UNITHOLDER CALCULATION
(Illustrative Example)
1. Determine net proceeds for each of the cash and note components of the
purchase price after deducting transactions costs, which are estimated for
purposes of this example as $500,000 to be deducted solely from the cash
proceeds:
Cash Proceeds $30,100,000 Note $9,800,000
(Transaction costs) 500,000 Transaction costs 0
----------- ----------
Net Cash Proceeds $29,600,000 Net Note $9,800,000
2. Determine shares for Unitholder Calculation by dividing the total number
of shares of Stock and Warrants owned by the Stockholders, on a fully
diluted basis, by 1,000 and add the number of Incentive Units to determine
Total Units:
Stockholder shares of Stock: 1,000,000
Stockholder Warrants: 54,259
---------
1,054,259
Adjusted Stockholder Units
(divide by 1,000): 1,054.26
Incentive Units: 113.70
--------
Total Units: 1,167.96
3. Determine amount of cash to be paid and Holder Notes to be issued to
each Unitholder by: (i) determining the Redemption Value; (ii) determining
the Redemption Base for incentive Units held by RBPI Unitholders (i.e.,
all Unitholders except RII Unitholders: Paul Barrett, Mark Kirkpatrick and
Fergus Walker); (iii) determining the Note Value of Incentive Units; and
(iv) determining Cash Value of Incentive Units:
Redemption Value
(Net Cash Proceeds/Total Units): $25,343/unit
Redemption Base
($8,431,000/Adjusted Stockholder Units): $ 7,997/unit
Note Value to all Unitholders
(Net Note/Total Units): $ 8,391/unit
Cash Value (RBPI Unitholders)
(Redemption Value - Redemption Base) $17,346/unit
Cash Value (RII Unitholders)
(Redemption Value): $25,343/unit
4. Determine earnback on Warrants owned by Wingate and Affiliates by (i)
calculating the cash available to pay Stockholders after deducting the
above payments to Unitholders and the transaction costs (estimated as
$500,000) and adding proceeds from the exercise of
<PAGE>
the Warrants ($31,468), on a fully diluted per share basis (i.e.,
$25,307 per share), and (ii) adjusting such amount to reflect a 30%
Internal Rate of Return to Wingate on the $2.6 million Wingate Note.
The total value of the Wingate and Affiliates Warrants (collectively,
54,259 Warrants) is, therefore approximately $1,373,133 (i.e., 54,259 x
$25.307). Assuming the Closing Date is April 15, 1997, Wingate will
have earned $322,535 in interest on the $2.6 million Wingate Note,
resulting in a total return to Wingate of $1,695,668. The allowed 30%
return on the $2.6 million Wingate Note would be $750,082 as of April
15, 1997, resulting in an adjustment of $427,547 to the value of the
Warrants owned by Wingate and Affiliates, or an earnback of $945,586.
Dividing the total earnback by the adjusted number of shares of Common
Stock owned by the Stockholders (not including Warrants) plus the
number of incentive Units (i.e., 1,113.70), produces the total value of
the earnback to each Unitholder of $849 per unit. This earnback is
subject to change over time as the amount of interest earned on the
$2.6 million Wingate Note changes.
<PAGE>
EXHIBIT C
RELEASE AND WAIVER
In consideration of the willingness of Wingate Partners, L.P., a Delaware
limited partnership, and its affiliates ("Wingate") to enter into that
certain Stock Purchase Agreement dated as of the __ day of March, 1997, by
and between the parties listed on Schedule I thereto and Reliant Partners,
L.P., a Texas limited partnership, a copy of which is attached hereto as
EXHIBIT A (the "Agreement"), the undersigned hereby agrees as follows (the
"Release and Waiver"):
1. The undersigned is a party to that certain Incentive Units Agreement
with Redman Building Products, Inc., a Delaware corporation ("RBPI"), and
RBPI Holding Corporation, a Delaware corporation ("Holding"), dated as of
___________________, as amended to the date hereof (the "Incentive Agreement").
2. The undersigned agrees and acknowledges that the undersigned's
execution of this Release and Waiver is a condition precedent to Wingate's
entering into and performing under the Agreement and that Wingate would not
have executed the Agreement without an agreement by the undersigned to enter
into this Release and Waiver.
3. The undersigned has reviewed the calculation of the Redemption Base
(as defined in the Incentive Agreement) as set forth on EXHIBIT B attached
hereto. The undersigned acknowledges and agrees that the calculation of the
final Redemption Base cannot be made until such time as certain factors used
in the computation thereof (E.G., transaction costs and adjustments to the
value of warrants held by certain Stockholders of Holding) are known to the
parties and that the calculation set forth in EXHIBIT B hereto is for
illustrating the methodology by which the final Redemption Base will be
calculated at the closing of the transactions contemplated by the Agreement
(the "Closing"). EXHIBIT B hereto assumes that closing will occur on April
15, 1997. If closing occurs before or after such date, the exact amount of
the Redemption Base will change, as calculated in accordance with the
methodology set forth on EXHIBIT B. The undersigned understands and agrees
that an aggregate of $250,000 in cash compensation otherwise available for
distribution to stockholders of Holding and Incentive Unitholders (as defined
in the Agreement) will be deposited with Wingate at Closing for the purpose
of paying certain costs and expenses incurred incident to the negotiation,
preparation and execution of the Agreement and the transactions contemplated
thereby (including, without limitation, the Notes (as defined in the
Agreement) (the "Expenses") and not paid on or prior to the Closing and that
any amounts not used for such purposes will be distributed to the
Stockholders and the Unitholders, as determined in accordance with the
methodology set forth in EXHIBIT B, at such time as Wingate in its sole
discretion determines that all such Expenses have been reasonably estimated
and paid. Based upon the factors set forth above, and acknowledging that the
exact amount of the Redemption Base will change if the Closing occurs before
or after April 15, 1997, but will in any event be based upon the methodology
set forth on EXHIBIT B hereto, the undersigned acknowledges and agrees that
the methodology used in such calculation, as set forth on EXHIBIT B hereto,
is correct and that the amount of the Redemption Base, when so calculated,
is the correct amount to be paid to the undersigned at Closing.
<PAGE>
4. In consideration of the foregoing, and for other good and sufficient
consideration, the receipt and adequacy of which is hereby acknowledged, the
undersigned hereby, for himself, his attorneys, heirs, executors,
administrators, successors and assigns does hereby irrevocably and
unconditionally release, acquit, and forever discharge Wingate, RBPI and
Holding and each of its respective owners, stockholders, predecessors,
successors, assigns, agents, directors, officers, employees, representatives,
attorneys, affiliates (and agents, directors, officers, employees,
representatives and attorneys of such affiliates), and all persons acting by,
through, under or in concert with any of them (collectively "Releases"), or
any of them, from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, controversies, damages, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses (including
attorneys fees and costs actually incurred), of any nature whatsoever, known
or unknown, which the undersigned now has, owns, or holds, or claims to have,
own, or hold, or which he at any time heretofore had, owned or held, or
claimed to have, own, or hold, or which he at any time hereafter may have,
own, or hold, or claim to have, own, or hold against each or any of the
Releases in respect of or in connection with the Incentive Agreement.
5. This Release and Waiver is made and entered into in the State of Texas
and shall in all respects be interpreted, enforced and governed under the
laws of said state. The language of all parts of this Release and Waiver
shall in all cases be construed as a whole, according to its fair meaning,
and not strictly for or against any of the parties. Should any provision of
this Release and Waiver be declared or be determined by any court to be
illegal or invalid, the validity of the remaining parts, terms or provisions
shall not be affected thereby and said illegal or invalid part, term, or
provision shall be deemed not to be a part of this Release and Waiver. This
Release and Waiver, including attachments, sets forth the entire agreement
between the parties hereto as to the subject matter hereof and fully
supersedes any and all prior agreements or understandings among the
undersigned and the Releases pertaining to the subject matter hereof.
PLEASE READ CAREFULLY. THIS WAIVER AND RELEASE INCLUDES A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS.
Executed this ____ day of ____________, 1997.
----------------------------------------
Signature of Incentive Unitholder
Print Name:
-----------------------------
2
<PAGE>
EXHIBIT A
STOCK PURCHASE AGREEMENT
[Intentionally Omitted]
3
<PAGE>
EXHIBIT B
UNITHOLDER CALCULATION
[Intentionally Omitted-See Exhibit D to Stock Purchase Agreement]
4
<PAGE>
EXHIBIT D
The number of Redemption Shares to be redeemed by the issuance of Holder
Notes is calculated as follows:
1. Calculate the aggregate Note value to all Incentive Unitholders
pursuant to paragraph 3 of Exhibit B, and deduct such aggregate Note value
from $9,800,000 to determine the "Stockholder Note Value".
2.
(i) Determine the "Net Cash Proceeds to Unitholders" by adding (x)
the Cash Value (RBPI Unitholders) timed the number of RBPI Units PLUS (y) the
Cash Value (RII Unitholders) times the number of RII Units PLUS (z) the
aggregate amount of the earnback on Warrants owned by Wingate and Affiliates
payable to Unitholders, as determined pursuant to paragraphs 3 and 4 of
Exhibit B.
(ii) Determine the "Net Cash Proceeds Available to Stockholders" by
subtracting (x) the Net Cash Proceeds to Unitholders (determined in
accordance with paragraph (i) above) from (y) the Net Cash Proceeds
(determined in accordance with paragraph 1 of Exhibit B).
3. Determine the "Net Proceeds per Share" by dividing (x) the Net Cash
Proceeds Available to Stockholders PLUS the Stockholder Note Value by (y) the
number of fully-diluted shares of Stock.
4. Divide the Stockholder Note Value by the Net Proceeds per Share to
determine the number of Redemption Shares.
<PAGE>
EXHIBIT E
COMPLIANCE CERTIFICATE
This certificate is delivered to Reliant Partners, L.P., a Texas limited
partnership (the "Purchaser"), pursuant to Section 5.1(c) of the Stock
Purchase Agreement (the "Purchase Agreement"), dated as of March ___, 1997,
by and among the Purchaser and each of the undersigned (the "Stockholders"),
relating to the acquisition of capital stock of RBPI Holding Corporation, a
Delaware corporation (the "Corporation"). Capitalized terms used herein
without definition shall have the meanings set forth in the Purchase
Agreement. The Stockholders hereby certify as follows:
1. All representations and warranties of the Stockholders contained in
the Purchase Agreement are true and correct in all material respects
on and as of the date when made and on and as of the date hereof.
2. The Stockholders have performed and complied with in all material
respects, and caused each of the Companies to have performed and
complied with in all material respects, all agreements and conditions
required by the Purchase Agreement to be performed or complied with by
them on or prior to the Closing Date.
IN WITNESS WHEREOF, the undersigned have signed this Certificate effective
as of the ___ day of _____________, 1997.
WINGATE PARTNERS, L.P. WALLACE R. HAWLEY AND
ALEXANDRA HAWLEY REVOCABLE
By: Wingate Management Company, L.P., TRUST U/A/D 07/30/92
its general partner
By: By:
-------------------------------- -------------------------------
Name: Name:
------------------------------ -----------------------------
Its: Its:
------------------------------- ------------------------------
WINGATE AFFILIATES, L.P. -------------------------------------
V. EDWARD EASTERLING, JR.
By:
--------------------------------
Name:
------------------------------
Its:
------------------------------- MAY FINANCIAL CORPORATION
FBO JEAN C. BEASLEY IRA
By:
-----------------------------
Name:
---------------------------
Its:
----------------------------
<PAGE>
EXHIBIT G
CERTIFICATE
This certificate is delivered to Reliant Partners, L.P., a Texas limited
partnership (the "Purchaser"), pursuant to Section 5.1(g) of the Stock
Purchase Agreement (the "Purchase Agreement"), dated as of March ___, 1997,
by and among the Purchaser and each of the undersigned (the "Stockholders"),
relating to the acquisition of capital stock of RBPI Holding Corporation, a
Delaware corporation (the "Corporation"). Capitalized terms used herein
without definition shall have the meanings set forth in the Purchase
Agreement.
The Stockholders hereby certify that no Material Adverse Effect has
occurred from the date of the Purchase Agreement to the Closing Date, and no
damage, destruction or loss, whether or not covered by insurance, adversely
affecting in any material respect the properties, businesses, prospects or
assets of the Companies has occurred or been threatened.
IN WITNESS WHEREOF, the undersigned have signed this Certificate
effective as of the ___ day of ___________________, 1997.
WINGATE PARTNERS, L.P. WALLACE R. HAWLEY AND
ALEXANDRA HAWLEY REVOCABLE
By: Wingate Management Company, L.P., TRUST U/A/D 07/30/92
its general partner
By: By:
-------------------------------- -------------------------------
Name: Name:
------------------------------ -----------------------------
Its: Its:
------------------------------- ------------------------------
WINGATE AFFILIATES, L.P. --------------------------------------
V. EDWARD EASTERLING, JR.
By:
--------------------------------
Name:
------------------------------
Its:
------------------------------- MAY FINANCIAL CORPORATION
FBO JEAN C. BEASLEY IRA
By:
------------------------------
Name:
---------------------------
Its:
----------------------------
<PAGE>
EXHIBIT H
TERMINATION OF INTERCOMPANY AGREEMENTS
This Termination Agreement (the "Agreement"), dated effective as of the
____ day of ____________, 1997 (the "Effective Date"), is by and among RBPI
Holding Corporation, a Delaware corporation ("Holding"), each of the
Stockholders of Holding (the "Stockholders'), Redman Building Products, Inc.,
a Delaware corporation (the "Operating Company"), and each of its
subsidiaries noted on the signature pages hereto (collectively with the
Operating Company, the "Companies").
RECITALS
In connection with the Stock Purchase Agreement dated as of March ___,
1997 by and among Reliant Partners, L.P. and the Stockholders (the "Purchase
Agreement"), the parties hereto desire to terminate all management and other
intercompany agreements among the Companies and the Stockholders and
Affiliates of the Stockholders as of the Effective Date. Capitalized terms
used herein without definition shall have the meanings as set forth in the
Purchase Agreement.
NOW, THEREFORE, in consideration of the provisions and respective
agreements hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. TERMINATION OF AGREEMENTS. As of the Effective Date, all management
and other intercompany agreements among the Companies, on the one hand, and
the Stockholders and Affiliates of the Stockholders, on the other hand,
including, without limitation, the Oral Management and Consulting Fee
Agreement by and between Wingate Partners, L.P. and Holding, are hereby
terminated and are of no further force or effect.
2. CANCELLATION OF INDEBTEDNESS. As of the Effective Date, all
indebtedness of the Companies to the Stockholders and the Affiliates of the
Stockholders is hereby cancelled and of no further force or effect.
3. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
Agreement.
4. ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
COMPANIES
RBPI HOLDING CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
REDMAN BUILDING PRODUCTS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
RBP OF ARIZONA, INC.
RBP CUSTOM GLASS, INC.
RBP FENESCO, INC.
RBP OF TEXAS, INC.
RBP TRANS, INC.
LEVAN BUILDERS SUPPLY,
INCORPORATED
NUPRIME OF DENVER, INC.
TIMBER TECH, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
STOCKHOLDERS
WINGATE PARTNERS, L.P.
By: Wingate Management Company, L.P.,
its general partner
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
WINGATE AFFILIATES, L.P.
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
2
<PAGE>
WALLACE R. HAWLEY AND
ALEXANDRA HAWLEY
REVOCABLE TRUST
U/A/D 07/30/92
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
--------------------------------------------
V. EDWARD EASTERLING, JR.
MAY FINANCIAL CORPORATION
FBO JEAN C. BEASLEY IRA
By:
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
3
<PAGE>
EXHIBIT I
RELIANT PARTNERS, L.P.
201 MAIN STREET, SUITE 3100
FORT WORTH, TEXAS 76102
March ___, 1997
[Certain Members of Senior Management]
- --------------------------
- --------------------------
Re: Application of Net Incentive Payments
Dear Mr. __________:
Reference is made to (i) that certain Stock Purchase Agreement, dated as
of even date herewith (the "Purchase Agreement"), by and between the parties
listed on Schedule I thereto (the "Stockholders") and Reliant Partners, L.P.,
a Texas limited partnership ("Purchaser"), pertaining to Purchaser's purchase
of capital stock of RBPI Holding Corporation, a Delaware corporation
("RBPI"), from the Stockholders; and (ii) that certain RBPI Incentive Unit
Agreement by and between you and RBPI (the "Incentive Agreement").
You hereby acknowledge and agree that immediately upon your receipt of
payments pursuant to the Incentive Agreement you will pay [80% of] the net
cash payments, after taxes, ^ to be made to you by RBPI as of the Closing of
the transactions contemplated by the Stock Purchase Agreement in respect of
the Incentive Agreement as a direct or indirect result of the consummation of
the transactions contemplated by the Purchase Agreement (the "Net Incentive
Payments") to Purchaser in consideration of the purchase by you of an
interest in Purchaser, such purchase to be at the same price, on the same
terms and subject to the same conditions as interests in Purchaser are sold
to others.
[Remainder of Page Intentionally Left Blank]
<PAGE>
If the foregoing sets forth the agreement of the parties with regard to
the matters addressed herein, please so evidence by signing the attached
duplicate original of this letter in the space provided for your signature
and returning it to the undersigned, whereupon the provisions hereof will
constitute a binding agreement.
Sincerely,
RELIANT PARTNERS, L.P.
By: Reliant Investment Partners, L.P., its
General Partner
By: Group 31, Inc., its General Partner
By:
---------------------------------------
Title:
------------------------------------
AGREED TO AND
ACKNOWLEDGED BY:
- --------------------------------------
[CERTAIN MEMBERS OF SENIOR MANAGEMENT]
RBPI HOLDING CORPORATION
By:
---------------------------------------
Title:
------------------------------------
2
<PAGE>
EXHIBIT J
--------------
Wingate Partners, L.P.
Wingate Affiliates, L.P.
Wallace R. Hawley and Alexandra
Hawley Revocable Trust U/A/D 07/30/92
V. Edward Easterling
May Financial Corporation
FBO Jean C. Beasley IRA
c/o Wingate Partners, L.P.
750 N. St. Paul Street, Suite 1200
Dallas, Texas 75201
Re: Stock Purchase Agreement (the "Agreement") dated as of March ____,
1997 by and among Reliant Partners, L.P., a Texas limited partnership
(the "Purchaser") and Wingate Partners, L.P.; Wingate Affiliates,
L.P.; Wallace R. Hawley and Alexandra Hawley Revocable Trust U/A/D
07/30/92; V. Edward Easterling; and May Financial Corporation FBO Jean
C. Beasley IRA (collectively, the "Stockholders")
Ladies and Gentlemen:
This firm has acted as legal counsel to Purchaser, for the purpose of
delivering this opinion letter to you, as provided by Section 5.2(e) of the
Agreement.
Except as otherwise indicated herein, capitalized terms used in this
opinion letter are defined as set forth in the Agreement.
In rendering this opinion, we have examined (a) the Agreement; and (b)
the Limited Partnership Agreement of Purchaser and a certified copy of its
certificate of limited partnership.
[ASSUMPTIONS ]
Based upon and subject to the foregoing, and the other limitations and
qualifications set forth herein, we are of the opinion that:
1. The Purchaser was formed and exists as a limited partnership under
the laws of the State of Texas.
2. The Purchaser has the partnership power and authority to execute and
deliver the Agreement and to perform its obligations under the Agreement.
<PAGE>
3. The Agreement has been authorized, executed and delivered by the
Purchaser, and constitutes the legal and enforceable obligation of the
Purchaser.
4. The execution and delivery of the Agreement by the Purchaser do
not, and the performance of the Agreement by the Purchaser will not,
render the Purchaser in violation of its Limited Partnership Agreement
or Certificate of Limited Partnership, or any statute or regulation by
which the Purchaser is bound. We have no knowledge that the execution
and delivery of the Agreement by the Purchaser will (i) result in the
violation of any order or judgment of any court, government agency or
arbitrator in which the Purchaser is named, or (ii) constitute a breach
of any other agreement to which the Purchaser is a party.
5. We have no knowledge that the execution, delivery and performance
by the Purchaser of the Agreement will require the consent or approval
of, or filing with, any person or governmental entity; PROVIDED, HOWEVER,
that we express no opinion with respect to any filing requirements under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
[LIMITATIONS]
Respectfully submitted,
KELLY, HART & HALLMAN
(a professional corporation)
2
<PAGE>
EXHIBIT K
COMPLIANCE CERTIFICATE
This certificate is delivered to Wingate Partners, L.P., Wingate
Affiliates, L.P., Wallace R. Hawley and Alexandra Hawley Revocable Trust U/A/D
07/30/92, V. Edward Easterling, Jr., and May Financial Corporation FBO Jean C.
Beasley IRA (collectively, the "Stockholders") by Reliant Partners, L.P., a
Texas limited partnership (the "Purchaser"), pursuant to Section 5.2(h) of the
Stock Purchase Agreement (the "Purchase Agreement"), dated as of March ___,
1997, by and among the Purchaser and the Stockholders, relating to the
acquisition by Purchaser of capital stock of RBPI Holding Corporation, a
Delaware corporation (the "Corporation"). Capitalized terms used herein without
definition shall have the meanings as set forth in the Purchase Agreement. The
Purchaser hereby certifies as follows:
1. All representations and warranties of the Purchaser contained in the
Purchase Agreement are true and correct in all material respects on
and as of the date when made and on and as of the date hereof.
2. The Purchaser has performed and complied in all material respects with
all agreements and conditions required by the Purchase Agreement to be
performed or complied with by it on or prior to the Closing Date.
IN WITNESS WHEREOF, the undersigned has signed this Certificate effective
as of the ____ day of _________, 1997.
RELIANT PARTNERS, L.P.
By: Reliant Investment Partners, L.P.,
General Partner
By: Group 31, Inc., General Partner
By:
------------------------------------
Name:
----------------------------------
Title:
----------------------------------
<PAGE>
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
This First Amendment to Stock Purchase Agreement (the "First Amendment"),
entered into to be effective as of the 9th day of May, 1997, amends that certain
Stock Purchase Agreement (the "Agreement"), dated effective as of March 27,
1997, by and between Reliant Partners, L.P., a Texas limited partnership ("RP"),
and the parties listed on Schedule 1 thereto (the "Stockholders").
WHEREAS, RP and the Stockholders entered into the Agreement pursuant to
which RP agreed to purchase from the Stockholders certain securities of RBPI
Holding Corporation, a Delaware corporation (the "Company");
WHEREAS, RP has assigned (the "Assignment") to Reliant Partners II, L.P., a
Texas limited partnership ("RPII"), and the other parties listed on Appendix 1
(RPII and such other parties being herein referred to as the "Additional
Purchasers" and, together with RP, the "Purchasers"), interests in the Agreement
as specified on Appendix 1; and
WHEREAS, the Stockholders and the Purchasers desire to amend certain
provisions contained in the Agreement;
NOW, THEREFORE, for and in consideration of the mutual promises and
agreements contained herein, the parties hereto hereby agree as follows:
1. To reflect the Assignment, all references in the Agreement to
Purchaser shall be deemed to be references to the Purchasers and the permitted
successors and assigns of each of the Purchasers; PROVIDED, HOWEVER, that each
individual included in the Additional Purchasers shall be deemed to have made
only such of those representations and warranties contained in Section 3.2 of
the Agreement as would be appropriate for an individual to make; and PROVIDED
FURTHER, HOWEVER, that the representations and warranties contained in Section
3.2 shall be deemed to have been made by RP and each of the Additional
Purchasers severally and not jointly.
2. The Stockholders hereby expressly consent, in accordance with Section
9.7 of the Agreement, to the Assignment.
3. Exhibits A, C, E, G, H, I, J and K are hereby deleted in their
entireties and shall read in their entireties as set forth on Exhibits A, C, E,
G, H, I, J and K, respectively, attached hereto. Exhibit F shall be deemed to
be modified, as appropriate, to reflect the assignment to the Additional
Purchasers of interests in the Agreement and this First Amendment.
4. Section 1.3(a) of the Agreement is hereby amended in its entirety to
read as follows:
"1.3 PURCHASE PRICE. (a) In reliance on the representations,
warranties and agreements of the Stockholders contained herein and for
good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the
<PAGE>
Stockholders and Purchasers agree that the following shall take place at
the Closing:
(i) Purchasers shall pay to the Holders, in immediately
available funds, an aggregate amount equal to the remainder of
$22,726,922.50 less the sum of (A) $250,000 to be paid by the Company
to David G. Fiore as of the Closing as an extraordinary bonus, (B) the
aggregate cash payments required to be made to the Unitholders
pursuant to Section 1.4 hereof and (C) $250,000 to be delivered to
the Stockholders' Representative for satisfaction of Seller
Transaction Costs (as hereinafter defined) that are payable after the
Closing;
(ii) the Company shall (A) pay $7,373,077.50, in the
aggregate, to the Holders, in immediately available funds, and (B)
issue and deliver to the Holders notes in the form of Exhibit A hereto
(the "Holder Notes") in an aggregate principal amount equal to
$9,800,000 less the sum of the aggregate principal amount of Holder
Notes required to be issued to the Unitholders pursuant to Section 1.4
hereof, in such denominations and names as may be designated in
writing to Purchaser by the Stockholder Representative in accordance
with the terms of this Article I, it being agreed that each Holder
shall be entitled to its pro rata share of the cash payments and
Holder Notes issuable pursuant to this Section 1.3 based on its
relative ownership interest of Class A Common Stock and Class B Common
Stock, as set forth in Schedule I hereto."
5. Section 1.5 of the Agreement is hereby amended in its entirety to read
as follows:
"1.5 REDEMPTION OF CERTAIN SHARES. Notwithstanding anything
contained elsewhere herein, it is acknowledged by the parties hereto
that the payment of cash and issuance by the Company of Holder Notes
to the Holders pursuant to Section 1.3(a)(ii) above shall be in
redemption of such number of the Holders' shares of Class A Common
Stock and Class B Nonvoting Common Stock (the "Redemption Shares") as
are determined at the Closing based on the calculations set forth in
Exhibit C hereto. Any Shares of Class A Voting Stock owned by the
Stockholders not so redeemed shall be "Purchase Shares.""
6. Section 5.2(e) of the Agreement is hereby amended in its entirety to
read as follows:
"OPINION OF COUNSEL FOR RP AND RPII. The Stockholders shall have
received an opinion of counsel for RP and RPII dated the Closing Date
and in the form and the effect of Exhibit J hereto."
7. The first sentence of the final paragraph of Section 7.1, immediately
following subsection (d) of Section 7.1, is hereby amended in its entirety to
read as follows:
"The Stockholders agree to reimburse the Purchasers, pro rata in
accordance with their respective interests in the Company purchased
pursuant hereto and in
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accordance with this Section 7.1, for any payment made by Purchasers at
any time after the Closing in respect of any liability or claim to which
the foregoing indemnity relates."
8. The caption and the introductory sentence to Section 7.2, immediately
prior to subsection (a) of Section 7.2, is hereby amended in its entirety to
read as follows:
"7.2 PURCHASERS' INDEMNIFICATION. If the transactions
contemplated hereby are consummated, the Purchasers agree, jointly and
severally as to RP and RPII, and severally and not jointly as to the
other Purchasers (pro rata in accordance with their respective
interests in the Company purchased pursuant hereto), to indemnify and
hold harmless the Stockholders, their affiliates, officers, directors,
owners, employees, agents and representatives against and in respect
of Damages that the Stockholders shall incur or suffer, which arise,
result from or relate to, directly or indirectly, in whole or in
part:"
9. The address for notice to the Purchasers contained in Section 9.4 is
hereby amended in its entirety to read as follows:
"If to Purchasers:
c/o Reliant Partners, L.P.
201 Main Street, Suite 3100
Fort Worth, Texas 76102
Attention: W. Robert Cotham
Facsimile No. (817) 338-2064"
10. Section 9.1 of the Agreement is hereby amended in its entirety to read
as follows:
"9.1 NO BROKERAGE. Purchasers hereby represent and warrant to
the Stockholders that they have not, and the Stockholders hereby
represent and warrant to Purchasers that neither the Stockholders nor
the Companies have, incurred any obligation or liability, contingent
or otherwise, for brokerage or finder's fees or agent's commissions or
other like payment in connection with this Agreement or the
transactions contemplated hereby, except the fees of George Group,
Inc., which will be paid by the Company, and the fees of Chase
Securities, Inc., which will be paid by Purchasers, and Purchasers, on
the one hand, and the Stockholders, on the other hand, hereby agree to
indemnify and hold the other harmless in respect of any costs,
liabilities or expenses, including, but not limited to, attorneys'
fees, arising out of or relating to a breach by such party of the
representation and warranty contained in this Section 9.1."
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11. A new Section 9.16 is hereby added to the Agreement, which such
Section 9.16 shall read in its entirety as follows:
"9.16 PURCHASERS' REPRESENTATIVE.
(i) Each of the Purchasers hereby irrevocably appoints RP (the
"Purchasers' Representative") as such Purchaser's agent and attorney-in-fact
to take any action required or permitted to be taken by such Purchaser
under the terms of this Agreement, including, without limiting the
generality of the foregoing, the giving and receipt of any notices to be
delivered or received by or on behalf of any or all of the Purchasers, the
payment of expenses relating to the transactions contemplated by this
Agreement, the representation of the Purchasers in indemnification
proceedings hereunder, and the right to waive, modify or amend any of the
terms of this Agreement, and agrees to be bound by any and all actions
taken by such agent on such Purchaser's behalf. Each Purchaser further
agrees that the Purchasers' Representative, its agents, general partners
and representatives, shall be fully indemnified by the other Purchasers to
the fullest extent permitted by law for damages arising out of the
Purchasers' Representative's actions or omissions in such capacity. Each
Purchaser hereby acknowledges that the foregoing indemnity shall be
applicable to all claims, liabilities, losses, damages or expenses that
have resulted from or are alleged to have resulted from the active or
passive, or the sole, joint or concurrent, ordinary negligence of the
Purchasers' Representative.
(ii) The Stockholders shall be entitled to rely exclusively upon any
communications or writings given or executed by the Purchasers'
Representative and shall not be liable in any manner whatsoever for any
action taken or not taken in reliance upon the actions taken or not taken
or communications or writings given or executed by the Purchasers'
Representative. The Stockholders shall be entitled to disregard any
notices or communications given or made by the Purchasers unless given or
made through the Purchasers' Representative.
(iii) Subsequent to the Closing Date, in the event of the
inability of the Purchasers' Representative to perform its functions
hereunder, the former Purchasers shall promptly appoint a new agent or
agents as attorney-in-fact or attorneys-in-fact, and such appointment or
appointments shall be deemed to have been made when communicated to the
Stockholders' Representative in writing signed by the Purchasers (or the
personal representatives thereof) owning at least 51% of the Common Stock
of the Company purchased by the Purchasers on the date hereof. If the
Purchasers do not within fifteen days appoint a new agent or agents, then
the former Purchaser then living or existing who owns the greatest number
of shares of Common Stock of the Company shall serve as Purchasers'
Representative if he or it is able and willing to do so, until a successor
agent or agents shall have been appointed in accordance with the provisions
hereof.
(iv) The manner and form by which the Purchasers shall decide upon any
new agent and attorney-in-fact shall be decided solely by the Purchasers
owning 51% of the shares of Common Stock of the Company purchased by the
Purchasers on the date hereof. The Purchasers recognize, and hereby
acknowledge, that the Purchasers'
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Representative has an interest in the subject matter of this Agreement
and that the appointment of such Purchasers' Representative (which shall
include any successor Purchasers' Representative) as the Purchasers'
Representative constitutes an irrevocable power-of-attorney coupled with
an interest."
12. Capitalized terms used but not defined herein shall have the same
meanings as set forth in the Agreement.
13. All terms and conditions of the Agreement, as amended hereby, remain
in full force and effect. The Stockholders and the Purchasers ratify and
confirm the Agreement and each of the schedules, appendices and/or exhibits
thereto as amended hereby.
14. This First Amendment may be executed in one or more counterparts, or
facsimiles thereof, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the date first set forth above.
STOCKHOLDERS:
WINGATE PARTNERS, L.P., on its own behalf and in
its capacity as Stockholders' Representative
By: Wingate Management Company, L.P.,
its general partner
By: /s/ James A. Johnson
---------------------------------------
Name: James A. Johnson
---------------------------------------
Its: Principal
---------------------------------------
PURCHASERS
RELIANT PARTNERS, L.P.
By: Group 31, Inc., General Partner
By: /s/ W.R. Cotham
-------------------------------------------
Name: W.R. Cotham
-------------------------------------------
Its: Vice President
-------------------------------------------
RELIANT PARTNERS II, L.P.
By: FW Group Genpar, Inc., General Partner
By: /s/ W.R. Cotham
-------------------------------------------
Name: W.R. Cotham
-------------------------------------------
Its: Vice President
-------------------------------------------
/s/ David G. Fiore /s/ Virgil D. Lowe
- --------------------------------- -----------------------------------
DAVID G. FIORE VIRGIL D. LOWE
/s/ Rodney Vickers /s/ Charles E. Still
- --------------------------------- -----------------------------------
RODNEY VICKERS CHARLES E. STILL
/s/ Jack L. Morris /s/ James R. Trigg, Jr.
- --------------------------------- -----------------------------------
JACK L. MORRIS JAMES R. TRIGG, JR.
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APPENDIX 1
Name of Assignee Assigned Interest
---------------- -----------------
Reliant Partners II, L.P. 47.80%
David G. Fiore 2.15%
Virgil D. Lowe 0.50%
Charles E. Still 0.25%
Jack L. Morris 0.50%
James R. Trigg, Jr. 0.50%
Rodney Vickers 0.50%
7
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NOTE NO. ________
EXHIBIT A
THIS NOTE IS ONE OF A SERIES OF NOTES (COLLECTIVELY, THE "NOTES") BEING EXECUTED
AND DELIVERED BY THE MAKER HEREOF PURSUANT TO THE TERMS OF THE STOCK PURCHASE
AGREEMENT (AS DEFINED HEREIN), SUCH NOTES BEING IN AN AGGREGATE PRINCIPAL AMOUNT
EQUAL TO $9,800,000.
THIS NOTE IS SUBJECT TO A RIGHT OF OFFSET IN THE MANNER AND TO THE EXTENT SET
FORTH IN SECTION 6.4 BELOW.
THIS NOTE CONTAINS INDEMNIFICATION PROVISIONS IN SECTION 6.4, NOTICE OF WHICH IS
HEREBY GIVEN.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY APPLICABLE STATE SECURITIES LAW. IT MAY NOT BE OFFERED FOR SALE OR
SOLD IN THE ABSENCE OF: (1) REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) APPLICABLE EXEMPTIONS
FROM SUCH REGISTRATION REQUIREMENTS.
RBPI HOLDING CORPORATION
SUBORDINATED NOTE
-----------------
$_______________________ May 9, 1997
FOR VALUE RECEIVED, RBPI Holding Corporation, a Delaware corporation
("Maker"), whose address is 3030 LBJ Freeway, Suite 300, Dallas, Texas 75234
promises to pay to _______________________________________ ("Payee"), at
___________________________________________, the aggregate principal sum of
__________________________ DOLLARS ($__________________), together with interest
thereon at the rates hereinafter provided.
Section 1. INTEREST. Interest on the principal amount of this Note
shall be payable, at Maker's option from time to time, either (a) in cash; (b)
by Capitalization of the Interest (as defined herein) as set forth in Section
3.2; or (c) any combination of (a) and (b) hereof. Interest paid in cash shall
accrue at the rate of ten percent (10.00%) per annum (the "Cash Interest Rate")
and interest paid by Capitalization of the Interest shall accrue at the rate of
twelve percent (12.00%) per annum (the "Capitalized Interest Rate") (such
interest rate, whether the Cash Interest Rate or the Capitalized Interest Rate
or a combination thereof, being hereinafter referred
<PAGE>
to as the "Interest Rate"); PROVIDED, HOWEVER, that, upon the fourth
anniversary of this Note, the Interest Rate shall automatically increase by
two percent (2%) per annum and upon the fifth anniversary of this Note, the
Interest Rate shall automatically increase by one percent (1%) per annum.
Interest shall be payable semi-annually on the first business day of
________________ and _________________ of each year, commencing on _______,
1997 (each, an "Interest Payment Date"), based on a three hundred sixty-five
(365) day year for actual number of days elapsed.
Section 2. PAYMENT. The remaining outstanding principal amount of this
Note shall be due and payable on May 9, 2007.
Section 3. METHOD OF PAYMENT.
3.1 CASH PAYMENTS. Cash payments of principal, interest and other
amounts due hereunder shall be made in lawful money of the United States of
America by (a) in the case of payments of principal, wire transfer of
immediately available funds to the account of Payee designated in the records
maintained by Maker, and (b) in the case of interest and any and all other
payments, company check to Payee at the address set forth in Maker's records
unless and until Payee provides written notice to Maker to the contrary.
3.2 CAPITALIZED INTEREST. To the extent that Maker elects to add
accrued interest at any Interest Payment Date to the principal of this Note
("Capitalization of the Interest"), such accrued interest shall thereafter be
included in the principal amount of this Note for all purposes. In connection
with any such election by Maker, Maker shall notify in writing Payee of its
election and include in such notice a statement setting forth the new principal
of the Note as of such Interest Payment Date. Any notice hereunder to Payee
shall be delivered to Payee at the address for Payee set forth in Maker's
records unless and until Payee provides written notice to Maker to the contrary.
Section 4. DEFAULT INTEREST. If any installment of interest, or the
principal amount hereof, is not paid within fifteen (15) days after the due date
thereof, interest shall accrue on such unpaid amount at a default rate equal to
the lesser of (a) two percent (2%) per annum above the then applicable
Capitalized Interest Rate or (b) the highest rate permitted under applicable
law, until such amount is paid in full (the "Default Rate").
Section 5. PREPAYMENT.
5.1 VOLUNTARY PREPAYMENTS. This Note may be prepaid by Maker in
whole or in part at any time without prepayment premium or penalty; provided,
however, that any such prepayments shall be applied to the Notes on a pro rata
basis.
5.2 MANDATORY PREPAYMENTS.
(a) Not later than the date 120 days after the end of each
fiscal year of Maker ending after the date of this Note, subject to restrictions
contained in documents evidencing Senior Debt, Maker shall prepay this Note in
an aggregate amount equal to Payee's Pro Rata Share of the excess (if any) of
(i) 50% of Consolidated Available Cash Flow over (ii) the sum of (x) cash
interest paid on the Notes during such fiscal year and (y) the cumulative
amount, if any (calculated by reference to the aggregate principal amount of the
Notes outstanding at the beginning and at the end of such fiscal year), by which
the aggregate principal amount of the Notes has been reduced by prepayments of
the Notes made during such fiscal year.
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<PAGE>
(b) Not later than the date 15 days after the closing of a
Public Equity Offering by Maker, Maker shall prepay this Note in an aggregate
amount equal to Payee's Pro Rata Share of the excess (if any) of (i) the Net
Available Proceeds of the Public Equity Offering over (b) the amount of Net
Available Proceeds required to be applied to Senior Debt, which amount shall not
exceed 50% of Net Available Proceeds.
Section 6. DEFAULTS AND REMEDIES.
6.1 EVENTS OF DEFAULT. Any one or more of the following shall
constitute an Event of Default hereunder: (a) default shall be made in the
payment of the principal of this Note when and as the same shall become due and
payable, whether at stated maturity, by acceleration, or otherwise after five
(5) days notice of such failure from Payee; (b) Maker shall fail to pay within
ten (10) days following the due date any installment of interest hereof;
(c) Maker or the Operating Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or be generally unable to pay its debts as such debts
become due; (d) an involuntary case or other proceeding shall be commenced
against Maker or the Operating Company seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property or an order for relief shall be entered against
Maker under the federal bankruptcy laws or the laws of the jurisdiction of
organization of Maker as now or hereafter in effect, and such involuntary case
or other proceeding or order shall remain undismissed or unstayed for a period
of sixty (60) days, and if stayed, such involuntary case or other proceeding or
order shall be dismissed upon termination of such stay; (e) default shall be
made in the performance or observance of any other covenant, agreement or
condition contained herein and such default shall have continued for a period of
thirty (30) days after such default shall first have become known to Maker; or
(f) a Change in Control of Maker shall occur.
6.2 ACCELERATION. If (a) an Event of Default shall occur pursuant to
Sections 6.1(c) or (d), the principal of, and accrued interest on, and all other
amounts due under this Note shall become immediately due and payable, and
(b) any other Event of Default shall occur, the principal of, and accrued
interest on, and all other amounts due under, this Note shall become immediately
due and payable upon notice by Payee to Maker.
6.3 WAIVER OF PRESENTMENT, ETC. Maker hereby waives presentment,
demand, protest or notice of any kind in connection with this Note.
6.4 RIGHTS OF THIRD PARTIES. Notwithstanding anything contained
herein to the contrary, payments under this Note are subject to offset in the
event that there are indemnification claims made by Purchaser (as defined in the
Stock Purchase Agreement) to the extent and in the manner provided in the Stock
Purchase Agreement. Payments hereunder may be offset by an amount equal to the
total amount of such indemnification claim multiplied by Payee's Pro Rata Share.
Payee (and, by acceptance of an assignment of all or a portion of this
3
<PAGE>
Note, Payee's successors and assigns) hereby irrevocably appoints Wingate
Partners, L.P. ("Wingate") as Payee's agent and attorney-in-fact to take any
action required or permitted to be taken by Payee under this Note, including,
without limiting the generality of the foregoing, the giving and receipt of
any notices to be delivered by or on behalf of Payee, the payment of expenses
relating to any dispute hereunder, the representation of Payee in
indemnification proceedings or in respect of any dispute hereunder, and the
right to waive, modify or amend any of the terms of this Note or settle any
dispute in respect hereof and agrees to be bound by any and all actions taken
by such agent on Payee's behalf. Payee further agrees to indemnify and hold
harmless Wingate, its general partners, agents and representatives
(collectively, for purposes of this Section 6.4, the "Wingate Indemnitees")
to the fullest extent permitted by law for damages arising out of the Wingate
Indemnitees' actions or omissions in such capacity. Payee hereby
acknowledges that the foregoing indemnity shall be applicable to all claims,
liabilities, losses, damages or expenses that have resulted from or are
alleged to have resulted from the active or passive or the sole, joint or
concurrent ordinary negligence of the Wingate Indemnitees.
Section 7. FINANCIAL STATEMENTS AND INFORMATION. Maker shall furnish
to Wingate, as agent for Payee, so long as this Note shall be outstanding:
(a) as soon as available and in any event within 45 days after
the end of the first, second and third quarterly accounting periods in each
fiscal year of Maker, copies of the consolidated balance sheet of Maker and its
Subsidiaries as of the end of such accounting period and copies of the related
consolidated statements of income and changes in shareholders equity and cash
flows of Maker and its Subsidiaries for the portion of the fiscal year ended
with the last day of such quarterly accounting period certified by the principal
financial officer of Maker to present fairly in all material respects the
information contained therein; PROVIDED, HOWEVER, that delivery of a copy of a
Quarterly Report on Form 10-Q (without exhibits unless requested by Payee) of
the Operating Company for such quarterly period filed with the Commission shall
be deemed to satisfy the requirements of this paragraph (a); and
(b) as soon as available and in any event within 90 days after
the end of each fiscal year of Maker, copies of the consolidated balance
sheet of Maker and its Subsidiaries as of the end of such fiscal year and
copies of the related audited consolidated statements of income and changes
in shareholders equity and cash flows of Maker and its Subsidiaries for such
fiscal year; PROVIDED, HOWEVER, that delivery of a copy of an Annual Report
on Form 10-K (without exhibits unless requested by Payee) of the Operating
Company for such year filed with the Commission shall be deemed to satisfy
the requirements of this paragraph (b).
Section 8. COVENANTS. Maker covenants and agrees that on and after the
date hereof, so long as this Note shall be outstanding:
8.1 PAYMENT OF NOTE. Maker shall pay the principal of and interest
on this Note on the dates and in the manner provided herein.
8.2 LEGAL EXISTENCE. Maker shall do or cause to be done all things
necessary to preserve and keep in full force and effect its legal existence and
the legal existence of its Subsidiaries in accordance with the rights, licenses
and franchises of Maker and its Subsidiaries, except where the failure to so act
would not have a material adverse effect on Maker and its
4
<PAGE>
Subsidiaries taken as a whole; PROVIDED, HOWEVER, Maker may merge or
consolidate with a corporation provided that the surviving corporation has a
Consolidated Net Worth equal to or in excess of that of Maker prior to such
merger or consolidation and PROVIDED FURTHER, that such corporation executes
an assumption agreement evidencing such corporation's assumption of all of
Maker's obligations under this Note and such other documents as Payee may
reasonably request; and PROVIDED FURTHER that one or more of its Subsidiaries
may merge with and into another Subsidiary or Maker.
8.3 LIMITATIONS ON RESTRICTED PAYMENTS. Maker shall not and shall
not permit any of its Subsidiaries to declare or pay any dividend on, or make
any distribution in respect of (other than dividends and distributions payable
exclusively in non-participating common equity interests or preferred equity
interests as to which dividends are payable solely in kind of Maker or a
Subsidiary), or purchase, redeem or retire for value any equity interests of
Maker or a Subsidiary (other than in exchange for Maker's or a Subsidiary's own
non-participating common equity interests or preferred equity interests as to
which dividends are payable solely in kind) (collectively, "Restricted
Payments"), except for the following: (i) dividends and distributions among
wholly-owned Subsidiaries; (ii) dividends and distributions from the
Subsidiaries to Maker solely to the extent all sums so dividended or distributed
are used by Maker for one of the following purposes: (x) to make mandatory
prepayments pursuant to the Notes; (y) to make voluntary prepayments pursuant to
the Notes; (z) to pay expenses of Maker to the extent permitted by Senior Debt;
and (xxx) to pay tax liabilities of Maker and its consolidated group; and (iii)
payments to repurchase equity interests and other rights and obligations owned
by former employees and others of up to $1,000,000 in the aggregate. The
foregoing provisions will not prevent the purchase or redemption of equity
interests in Maker or a Subsidiary with proceeds from concurrent sales of equity
interests in Maker or a Subsidiary; PROVIDED, HOWEVER, that in the event the
proceeds of such sale exceed $1,000,000, Maker shall apply toward the prepayment
of this Note Payee's Pro Rata Share of one-half of such proceeds in excess of $1
million.
8.4 LIMITATION ON OTHER DEBT. Other than Permitted Indebtedness,
Maker shall not incur, and shall not permit any of its Subsidiaries to incur,
any Indebtedness unless the ratio of Maker's EBITDA (taking into account on a
pro forma basis for historic operations without regard to synergies the results
of operations of any person acquired as if such acquisition had occurred at the
beginning of the period) for the preceding four fiscal quarters (or if fewer
than four fiscal quarters have elapsed since the date of this Note, then for the
number of fiscal quarters elapsed since the date of this Note) to Total Interest
Expense (taking into account on a pro forma basis interest expense on the
Indebtedness to be incurred as if it were incurred at the beginning of the
period) for the four fiscal quarters (or if fewer than four fiscal quarters have
elapsed since the date of this Note, then for the number of quarters elapsed
since the date of this Note), is at least 1.75:1.
8.5 L IMITATION ON LIENS. Maker shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist any Lien upon any of its assets now owned or hereafter acquired except
for Permitted Liens.
8.6 DISTRIBUTIONS FROM SUBSIDIARIES. Maker shall cause its
Subsidiaries to distribute sums to Maker to enable it to satisfy its obligations
set forth in Section 5.2 subject to restrictions contained in documents
evidencing Senior Debt and applicable law.
5
<PAGE>
8.7 MANAGEMENT FEES. Maker shall not and shall not permit any of its
Subsidiaries to pay any management or consulting fees, or fees of a like nature,
to any affiliate of Maker except payments of compensation to George Group, Inc.
in exchange for consulting services to be provided by George Group, Inc. to
Maker and its Subsidiaries, reasonable compensation in connection with valid
services rendered, payable to employees of Maker and its Subsidiaries (other
than partners and Affiliates of Reliant Partners, L.P., a Texas limited
partnership, and/or Reliant Partners II, L.P., a Texas limited partnership) in
connection with their employment and payments being made simultaneously with the
issuance of this Note.
8.8 NOTIFICATION OF CALCULATION. Maker shall notify Wingate, as
agent for Payee, not later than 90 days after the end of each fiscal year of
Maker ending after the date of this Note of its calculation of Consolidated
Available Cash Flow for such fiscal year (whether or not any amounts will be due
and payable hereunder in respect thereof), with reasonable support for such
calculation.
8.9 CERTAIN CREDIT AGREEMENT PROVISIONS. Maker will use its
reasonable efforts to insure that the provisions of the Senior Debt allow the
payments called for by Section 5.2(a) above. Maker shall provide written notice
to Wingate prior to amending, restating or modifying the terms of the Senior
Debt.
Section 9. DEFINITIONS. The following terms, as used herein, have the
following respective meanings:
ACQUIRED INDEBTEDNESS means any Indebtedness incurred in connection
with the financing of all or any part of the acquisition or construction of any
property, whether incurred prior to, at the time of or within 120 days after,
the acquisition or completion of construction by Maker of such property.
AFFILIATE of any specified person shall mean any other person
controlling or controlled by or under common control with such specified person.
For purposes of this definition, "control" when used with respect to any
specified 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.
CAPITALIZED LEASE OBLIGATIONS means all obligations to pay rent or
other amounts under a lease of (or other agreement conveying the right to use)
property to the extent such obligations are required to be classified and
accounted for under GAAP as a capital lease on the balance sheet of the lessee.
CHANGE IN CONTROL means the occurrence of any of the following events
(whether or not approved by the Board of Directors of the Operating Company):
(i) prior to the first public offering of Voting Equity Interests of Maker or
the Operating Company, either (x) the Permitted Holders cease to be the
"beneficial owner" or "beneficial owners" (as defined in Rule 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of at least a majority of the
total voting power of the then outstanding Voting Equity Interests of Maker or
of the Operating Company, or (y) the Permitted Holders cease to be entitled by
voting power, contract or otherwise to elect or cause the election of directors
of Maker or the Operating Company having a majority of the total voting power of
the Board of Directors of Maker or the Operating Company, as the case may be, in
each case, whether as a result of issuance of securities of
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<PAGE>
Maker or the Operating Company, as the case may be, any merger consolidation,
liquidation or dissolution of Maker or the Operating Company, as the case may
be, any direct or indirect transfer of securities by any Permitted Holder or
otherwise (for purposes of this clause (i) and clause (ii) below, Permitted
Holders shall be deemed to beneficially own any Voting Equity Interests of an
entity (the "specified entity") held by any other entity (the "parent
entity") so long as the Permitted Holders beneficially own (as so defined),
directly or indirectly, a majority of the voting power of the then
outstanding Voting Equity Interests of the parent entity); (ii) following the
first public offering of Voting Equity Interests of Maker or the Operating
Company, any Person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, including any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (i) above, except that a
Person shall be deemed to have "beneficial ownership" of all shares that any
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time, upon the happening of an event
or otherwise), directly or indirectly, of more than 35% of the total voting
power of the then outstanding Voting Equity Interests of Maker or the
Operating Company; PROVIDED, HOWEVER, that the Permitted Holders beneficially
own (as defined in clause (i) above), directly or indirectly, in the
aggregate a lesser percentage of the total voting power of the then
outstanding Voting Equity Interests of Maker or the Operating Company, as the
case may be, than such other Person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of Maker or the Operating Company, as the
case may be; (iii) Maker or the Operating Company consolidates with, or
merges with or into, another Person or, Maker or any of its Subsidiaries
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of the assets of Maker and its Subsidiaries (determined on
a consolidated basis) to any Person (other than the Operating Company or any
Wholly Owned Restricted Subsidiary) or the Operating Company or the
Restricted Subsidiaries sell, assign, convey, transfer, lease or otherwise
dispose of all or substantially all of the assets of the Operating Company
and the Restricted Subsidiaries (determined on a consolidated basis) to any
Person (other than a Wholly Owned Restricted Subsidiary), or any Person
consolidates with, or merges with or into, Maker or the Operating Company,
other than any such transaction where immediately after such transaction the
Person or Persons that "beneficially owned" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time) immediately prior to such transaction, directly or
indirectly, the then outstanding Voting Equity Interests of Maker or the
Operating Company, as the case may be, "beneficially own" (as so determined),
directly or indirectly, a majority of the total voting power of the then
outstanding Voting Equity Interests of the surviving or transferee Person; or
(iv) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Maker or the
Operating Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of
Maker or the Operating Company, as the case may be, was approved by a vote of
a majority of the directors of Maker or the Operating Company, as the case
may be, then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Maker or the Operating Company, as the case may be, then in
office.
7
<PAGE>
COMMISSION means the Securities and Exchange Commission.
CONSOLIDATED AVAILABLE CASH FLOW means EBITDA MINUS payments made in
respect of capital expenditures, Total Interest Expense, principal payments on
indebtedness, increases in working capital and payments of taxes.
CONSOLIDATED NET INCOME means, for any fiscal period, the consolidated
net earnings or loss of Maker and its Subsidiaries as the same would appear on a
consolidated statement of earnings of Maker for such fiscal period prepared in
accordance with GAAP.
CREDIT AGREEMENT means the Credit Agreement dated as of even date
herewith among the Operating Company, each of the financial institutions which
is a signatory thereto or which may from time to time become a party thereto and
The Chase Manhattan Bank, as agent, as the same may be amended, restated,
modified, extended or supplemented from time to time in accordance with its
terms and any successor financial institution credit agreement refinancing all
or a portion of the Credit Agreement and designated by Maker as the Credit
Agreement for purposes hereof.
EBITDA means Consolidated Net Income plus Total Interest Expense,
income taxes, depreciation and amortization.
EQUITY INTEREST in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
GAAP means generally accepted accounting principles applied on a
consistent basis.
INDEBTEDNESS means (a) any obligation for borrowed money, (b) any
obligation owed for all or any part of the purchase price of property or other
assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in the ordinary course of business, (c) any obligations
secured by any lien in respect of property even though the person owning the
property has not assumed or become liable for the payment of such obligation,
(d) any lease obligation capitalized on Maker's books, (e) any guarantee with
respect to Indebtedness (of the kind otherwise described in this definition) of
another person and (f) obligations in respect of letters of credit.
INDENTURE means the Indenture dated as of even date herewith among the
Operating Company, the Guarantors (as defined in the Indenture) and Bank One,
Columbus, NA, as trustee, as the same may be amended, restated, modified,
extended or supplemented from time to time in accordance with its terms.
INTEREST EXPENSE means, for any period, the sum, for Maker and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP) all interest in respect of Indebtedness (including,
without limitation, the interest component of any payments in respect of capital
lease obligations) accrued or capitalized during such period (whether or not
actually paid during such period).
8
<PAGE>
LIEN means any lien, security interest, charge or encumbrance of any
kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest).
NET AVAILABLE PROCEEDS means the aggregate amount of cash received by
Maker in respect of a Public Equity Offering, net of all expenses incurred by
Maker in connection therewith and any underwriting fees and expense.
OPERATING COMPANY means Redman Building Products, Inc., a Delaware
corporation and wholly-owed subsidiary of Maker.
PERMITTED HOLDER means any of (i) Reliant Partners, L.P. and Reliant
Partners II, L.P. and their direct and indirect general and limited partners on
the date hereof; (ii) any of the Permitted Transferees of the persons referred
to in clause (i); and (iii) any person or group controlled by each or any of the
Persons referred to in clauses (i) and (ii).
PERMITTED INDEBTEDNESS means any of the following:
(i) Senior Debt in an aggregate principal amount at any one time
outstanding not to exceed the sum of (A) the greater of (i) $25.0 million
and (ii) the sum of (a) 85% of Eligible Receivables (as defined in the
Credit Agreement as in effect on the date hereof whether or not the Credit
Agreement is in effect on the date of determination), PLUS (b) 50% of
Eligible Inventory (as defined in the Credit Agreement as in effect on the
date hereof whether or not the Credit Agreement is in effect on the date of
determination), PLUS (B) any amounts outstanding under the Credit Agreement
that utilize subparagraph (vii) of this definition plus the aggregate
amount outstanding under the Indenture;
(ii) intercompany Indebtedness;
(iii) Indebtedness in respect of the Notes;
(iv) Indebtedness in respect of any performance bonds, letters of
credit or other similar instruments and obligations entered into in the
ordinary course of business consistent with past practices;
(v) Indebtedness in respect of Capitalized Lease Obligations,
purchase money obligations and Acquired Indebtedness, not to exceed $10
million;
(vi) Indebtedness existing on the date of this Note;
(vii) other Indebtedness not to exceed $15 million;
(viii) Indebtedness in respect of any interest rate protection or
hedging arrangements entered into in order to fix the floating interest
rate of any Permitted Indebtedness, to the extent that such Permitted
Indebtedness is incurred prior to or at the time of entry into such
arrangement or is reasonably expected to be incurred within thirty days
thereafter, in an amount not exceeding the notional principal amount of
such Permitted Indebtedness; and
(ix) any Indebtedness incurred in exchange for or the proceeds of
which are used to exchange, refinance or refund Indebtedness referenced in
any of (i) through (viii) above; PROVIDED, HOWEVER, that the principal
amount of the Indebtedness so incurred does
9
<PAGE>
not exceed the principal amount (plus any premium) of the Indebtedness
so exchanged, refinanced or refunded.
PERMITTED LIENS means any of the following:
(i) any Lien on property if such Lien is in existence at the time of
acquisition by Maker of such property or is to secure any Indebtedness
permitted hereunder that is incurred (prior to, at the time of or within
120 days after, the acquisition or completion of construction by Maker of
such property) for the purpose of, or in connection with, financing all or
any part of the acquisition or the cost of construction thereof;
(ii) any Lien on property of a corporation if such Lien is in
existence at the time such corporation is merged into or consolidated with
Maker or at the time of a sale, lease or other disposition of the
properties of a corporation as an entirety or substantially as an entirety
to Maker or any Lien on property of a person not a corporation if such Lien
is in existence at the time of a sale, lease or other disposition of the
properties of such person as an entirety or substantially as an entirety to
Maker, PROVIDED, in each such case, that (i) such Lien is not created in
contemplation of such merger, consolidation or disposition and does not
extend to properties not subject thereto immediately prior to such merger,
consolidation or disposition and (ii) any Indebtedness incurred or assumed
in connection therewith is permitted hereunder;
(iii) any Lien existing on the date of this Note;
(iv) Liens to secure the Senior Debt;
(v) Encumbrances consisting of minor easements, zoning restrictions,
or other restrictions on the use of real property that do not (individually
or in the aggregate) materially affect the value of the assets encumbered
thereby or materially impair the ability of Maker to use such assets in
their respective businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(vi) Liens for taxes, assessments, or other governmental charges which
are not delinquent or which are being contested in good faith and for which
adequate reserves have been established;
(vii) Liens of mechanics, materialmen, warehousemen, carriers or other
similar statutory Liens securing obligations that are not yet due and are
incurred in the ordinary course of business or which are being contested in
good faith and for which adequate reserves have been established;
(viii) Liens resulting from good faith deposits to secure payments of
worker's compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, or contracts (other than for payment of Indebtedness) in the ordinary
course of business;
(ix) Liens for purchase money obligations and Capitalized Lease
Obligations; PROVIDED that any such Lien encumbers only the asset so
purchased or leased and the associated Indebtedness is otherwise permitted
hereunder;
10
<PAGE>
(x) Leases or subleases granted to others for fair market value
consideration, in any such case not interfering in any material respect
with the business of Maker;
(xi) Liens held by operators under operating agreements for amounts
not yet due and payable;
(xii) Liens securing Permitted Indebtedness; or
(xiii) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien
referred to in the foregoing clauses (i) through (xii), inclusive;
PROVIDED, HOWEVER, that the principal amount of Indebtedness secured
thereby shall not exceed the principal amount of Indebtedness so secured at
the time of such extension, renewal or replacement, and that such
extension, renewal, or replacement Lien shall be limited to all or part of
the asset which secured the Indebtedness secured by the Lien so extended,
renewed or replaced (plus improvements on such asset).
PERMITTED TRANSFEREE means, with respect to any Person: (a) in the
case of any Person who is a natural person, such individual's spouse or
children, any trust for such individual's benefit or the benefit of such
individual's spouse or children, or any corporation or partnership in which the
direct and beneficial owner of all of the equity interest is such Person or such
individual's spouse or children or any trust for the benefit of such persons;
(b) in the case of any Person who is a natural person, the heirs, executors,
administrators or personal representatives upon the death of such Person or upon
the incompetency or disability of such Person for purposes of the protection and
management of such individual's assets; and (c) in the case of any Person who is
not a natural person, any Affiliate of such Person.
PERSON means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
limited partnership, trust, unincorporated organization or government or any
agency or political subdivision thereof.
PRO RATA SHARE means a fraction the numerator of which is the stated
principal amount of this Note and the denominator of which is the aggregate
stated principal amount of the Notes.
PREFERRED EQUITY INTEREST, in any person, means an Equity Interest of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.
PUBLIC EQUITY OFFERING means a public offering of some or all of
Maker's equity interests, which yields Net Available Proceeds of at least
$30,000,000.
RESTRICTED SUBSIDIARY means any Subsidiary of the Operating Company
that has not been designated as an Unrestricted Subsidiary pursuant to the
Indenture.
SENIOR DEBT means (a) the principal amount under the Credit Agreement
and premium, if any, and interest thereon (including, without limitation, any
interest (Post-Petition Interest) which accrues (or which would accrue but for
such case, proceeding or other action) after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of Maker (whether or not such interest is allowed as a claim in
such
11
<PAGE>
case, proceeding or other action)), and all Notes issued pursuant to, the
Credit Agreement, (b) the principal amount under the Indenture and premium, if
any, and interest thereon (including, without limitation, any interest
(Post-Petition Interest) which accrues (or which would accrue but for such case,
proceeding or other action) after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency or reorganization of Maker
(whether or not such interest is allowed as a claim in such case, proceeding or
other action)), and all Notes issued pursuant to, the Indenture; (c) any
renewals, refinancings or extensions of any of the foregoing (or any portion
thereof) (including Post-Petition Interest), and any increases in the foregoing
and (d) all fees, expenses, indemnities and all other amounts payable by Maker
thereunder or with respect thereto, including under any other Financing
Document. Terms used in this definition that are not defined herein have the
meaning specified in the Credit Agreement or the Indenture, as appropriate.
STOCK PURCHASE AGREEMENT means the Stock Purchase Agreement, dated as
of March 27, 1997, by and among Reliant Partners, L.P. and the stockholders of
Maker named therein, as the same may be amended, restated, modified, extended or
supplemented from time to time in accordance with its terms.
SUBSIDIARY means any corporation, partnership or other entity of which
at least a majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by Maker or one or more Subsidiaries of Maker or
by Maker and one or more Subsidiaries of Maker.
TOTAL INTEREST EXPENSE means, for any period, the Interest Expense
(net of interest income) of Maker and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, whether paid or
accrued, to the extent such expense was deducted in computing Consolidated Net
Income.
UNRESTRICTED SUBSIDIARY means any Subsidiary of the Operating Company
designated as such pursuant to the Indenture.
VOTING EQUITY INTERESTS means Equity Interests in a corporation or
other Person with voting power under ordinary circumstances entitling the
holders thereof to elect the board of directors or other governing body of such
corporation or Person.
WHOLLY OWNED RESTRICTED SUBSIDIARY means any Restricted Subsidiary all
of the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Operating Company.
Section 10. MISCELLANEOUS.
10.1 NO WAIVER. It is expressly agreed that any waiver by Payee of
any item or provision hereof or of any right, remedy or option under this Note
shall not be controlling, nor shall it prevent or estop Payee from thereafter
enforcing such term, provision, right, remedy or option in any other instance,
and neither the failure or refusal of Payee to insist in any one or more
instances upon the strict performance of this Note, nor the acceptance by Payee
of any
12
<PAGE>
payment less than the amount then due hereunder, shall be construed as a
waiver or relinquishment for the future of any such term or provision or the
amount remaining due, but the same shall continue in full force and effect,
it being understood and agreed that Payee's rights, remedies and options
under this Note are and shall be cumulative and are in addition to all of the
rights, remedies and options of Payee in law or in equity, or under any other
agreement.
10.2 SAVINGS CLAUSE. If at any time the Interest Rate or Default
Rate, together with all fees and charges, if any, contracted for, charged,
received, taken or reserved by Payee in connection with this Note that may be
treated as interest under applicable law (collectively, the "Charges"), computed
over the full term of this Note, exceeds the maximum lawful rate (the "Maximum
Rate") which may be contracted for, charged, taken, received or reserved by
Payee in accordance with the laws of the State of Texas from time to time in
effect, except to the extent federal law permits Payee to contract for, charge
or receive a greater amount of interest, due credit being given for all charges
made in connection with this Note that may be treated as interest under
applicable law, the rate of interest payable hereunder, together with all
Charges, shall be limited to the Maximum Rate; PROVIDED, HOWEVER, that upon any
subsequent increase in the Maximum Rate from time to time, the interest charged
on the unpaid principal amount of this Note shall remain equal to the Maximum
Rate, and any subsequent reduction in the Interest Rate shall not reduce the
rate borne by this Note, until the total amount of interest earned hereunder,
together with all Charges, equals the total amount of interest which would have
accrued at the Interest Rate if the Interest Rate had at all times been in
effect; and PROVIDED, FURTHER, that if at maturity or final payment of this Note
the total amount of interest paid or accrued under the foregoing provisions is
less than the total amount of interest which would have accrued if the Interest
Rate had at all times been in effect, Maker agrees to pay Payee, to the extent
allowed by the then applicable law, an amount equal to the difference between
(a) the lesser of (i) the amount of interest which would have been accrued on
this Note if the Maximum Rate had at all times been in effect, and (ii) the
amount of interest which would have accrued if the Interest Rate had at all
times been in effect, and (b) the amount of interest actually accrued in
accordance with the provisions of this Note.
10.3 AMENDMENTS; BINDING EFFECT. This Note may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
This Note shall be binding upon the successors, permitted assigns and legal
representatives of Maker.
10.4 ASSIGNMENT; ENTIRE AGREEMENT. Neither Maker nor Payee may assign
its rights under this Note or any interest therein without the prior written
consent of the other party. [INSERT TO WINGATE PARTNERS, L.P. NOTE ONLY: ";
PROVIDED, HOWEVER, PAYEE SHALL BE PERMITTED TO ASSIGN ITS RIGHTS HEREUNDER, IN
WHOLE OR IN PART, TO ANY OF ITS LIMITED PARTNERS."] This Note constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
10.5 NOTICES. All notices hereunder shall be in writing (including
prepaid overnight courier, facsimile transmission or similar writing) and shall
be delivered to Maker at its address set forth in the first paragraph of this
Note and to Payee at its address set forth in the first paragraph of this Note
or at such other address as shall be specified by like notice to Payee or Maker
as applicable. All notices shall be deemed given as of the date when such
13
<PAGE>
notice is first delivered by hand or sent by telecopier (receipt confirmed, with
a copy simultaneously mailed registered mail), one day after depositing for
delivery, fee prepaid, with a Federal Express or similar overnight deliver
service and five days after mailing, postage prepaid and properly addressed in
the U.S. mails.
10.6 GOVERNING LAW. This Note shall be governed by, and the
terms and provisions hereof and the rights and duties created hereby shall be
interpreted, construed and enforced in accordance with, the laws of the State of
Texas, without giving effect to conflicts of law provisions.
10.7 WAIVER OF JURY TRIAL. THE MAKER AND PAYEE HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[Remainder of Page Intentionally Left Blank.]
14
<PAGE>
IN WITNESS WHEREOF, Maker has caused this Subordinated Note to be executed
and delivered by its duly authorized officer, as of the day and year and at the
place first above written.
RBPI HOLDING CORPORATION
By:
-----------------------------------
Title:
---------------------------------
[For management stockholders receiving loans from Keystone, Inc. to purchase
stock from RBPI, add the following endorsement:]
This endorsement is made in accordance with that certain Pledge Agreement dated
effective as of May 9, 1997, by and between ________________________, an
individual, as pledgor, and Keystone, Inc., a Texas corporation, as pledgee.
PAY TO THE ORDER OF KEYSTONE, INC., a Texas corporation.
---------------------------------------
[Name of individual Payee under this
Subordinated Note.]
15
<PAGE>
EXHIBIT C
[Intentionally Omitted]
<PAGE>
COMPLIANCE CERTIFICATE
This certificate is delivered by the undersigned (the "Stockholders") to
the Purchasers (as defined in the Purchase Agreement (as defined below)),
pursuant to Section 5.1(c) of the Stock Purchase Agreement, dated as of March
27, 1997, by and among Reliant Partners, L.P. and the Stockholders, as amended
by the First Amendment to Stock Purchase Agreement, dated as of May 9, 1997, by
and among the Stockholders and the Purchasers (as so amended, the "Purchase
Agreement"), relating to the acquisition of capital stock of RBPI Holding
Corporation, a Delaware corporation (the "Corporation"). Capitalized terms used
herein without definition shall have the meanings set forth in the Purchase
Agreement. The Stockholders hereby certify as follows:
1. All representations and warranties of the Stockholders contained in
the Purchase Agreement are true and correct in all material respects
on and as of the date when made and on and as of the date hereof.
2. The Stockholders have performed and complied with in all material
respects, and caused each of the Companies to have performed and
complied with in all material respects, all agreements and conditions
required by the Purchase Agreement to be performed or complied with by
them on or prior to the Closing Date.
IN WITNESS WHEREOF, the undersigned have signed this Certificate in one or
more counterparts effective as of the 9th day of May, 1997.
WINGATE PARTNERS, L.P. WALLACE R. HAWLEY AND
ALEXANDRA HAWLEY REVOCABLE
By: Wingate Management Company, L.P., TRUST U/A/D 07/30/92
its general partner
By: By:
---------------------------- -------------------------------
Name: Name:
-------------------------- -----------------------------
Its: Its:
--------------------------- ------------------------------
WINGATE AFFILIATES, L.P. ----------------------------------
V. EDWARD EASTERLING, JR.
By:
---------------------------
Name:
-------------------------
Its: MAY FINANCIAL CORPORATION
------------------------- FBO JEAN C. BEASLEY IRA
By:
------------------------------
Name:
----------------------------
Its:
-----------------------------
<PAGE>
CERTIFICATE
This certificate is delivered by the undersigned (the "Stockholders") to
the Purchasers (as defined in the Purchase Agreement (as defined below)),
pursuant to Section 5.1(g) of the Stock Purchase Agreement, dated as of March
27, 1997, by and among Reliant Partners, L.P. and the Stockholders, as amended
by the First Amendment to Stock Purchase Agreement, dated as of May 9, 1997, by
and among the Stockholders and the Purchasers (as so amended, the "Purchase
Agreement"), relating to the acquisition of capital stock of RBPI Holding
Corporation, a Delaware corporation (the "Corporation"). Capitalized terms used
herein without definition shall have the meanings set forth in the Purchase
Agreement.
The Stockholders hereby certify that no Material Adverse Effect has
occurred from the date of the Purchase Agreement to the Closing Date, and no
damage, destruction or loss, whether or not covered by insurance, adversely
affecting in any material respect the properties, businesses, prospects or
assets of the Companies has occurred or been threatened.
IN WITNESS WHEREOF, the undersigned have signed this Certificate effective
as of the 9th day of May, 1997.
WINGATE PARTNERS, L.P. WALLACE R. HAWLEY AND
ALEXANDRA HAWLEY REVOCABLE
By: Wingate Management Company, L.P., TRUST U/A/D 07/30/92
its general partner
By: By:
---------------------------- -------------------------------
Name: Name:
-------------------------- -----------------------------
Its: Its:
--------------------------- ------------------------------
WINGATE AFFILIATES, L.P. ----------------------------------
V. EDWARD EASTERLING, JR.
By:
---------------------------
Name:
-------------------------
Its: MAY FINANCIAL CORPORATION
------------------------- FBO JEAN C. BEASLEY IRA
By:
------------------------------
Name:
----------------------------
Its:
-----------------------------
<PAGE>
EXHIBIT H
TERMINATION OF INTERCOMPANY AGREEMENTS
This Termination Agreement (the "Agreement"), dated effective as of the
____ day of ____________, 1997 (the "Effective Date"), is by and among RBPI
Holding Corporation, a Delaware corporation ("Holding"), each of the
Stockholders of Holding (the "Stockholders'), Redman Building Products, Inc.,
a Delaware corporation (the "Operating Company"), and each of its
subsidiaries noted on the signature pages hereto (collectively with the
Operating Company, the "Companies").
RECITALS
In connection with the Stock Purchase Agreement dated as of March 27,
1997 by and among Reliant Partners, L.P. and the Stockholders, as amended by
the First Amendment to Stock Purchase Agreement (as so amended, the "Purchase
Agreement"), dated as of May __, 1997, by and among the Stockholders and the
Purchasers (as defined in the Purchase Agreement), the parties hereto desire
to terminate all management and other intercompany agreements among the
Companies and the Stockholders and Affiliates of the Stockholders as of the
Effective Date. Capitalized terms used herein without definition shall have
the meanings as set forth in the Purchase Agreement.
NOW, THEREFORE, in consideration of the provisions and respective
agreements hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. TERMINATION OF AGREEMENTS. As of the Effective Date, all management
and other intercompany agreements among the Companies, on the one hand, and
the Stockholders and Affiliates of the Stockholders, on the other hand,
including, without limitation, the Oral Management and Consulting Fee
Agreement by and between Wingate Partners, L.P. and Holding, are hereby
terminated and are of no further force or effect.
2. CANCELLATION OF INDEBTEDNESS. As of the Effective Date, all
indebtedness of the Companies to the Stockholders and the Affiliates of the
Stockholders is hereby cancelled and of no further force or effect.
3. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
Agreement.
4. ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
COMPANIES
RBPI HOLDING CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
REDMAN BUILDING PRODUCTS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
RBP OF ARIZONA, INC.
RBP CUSTOM GLASS, INC.
RBP FENESCO, INC.
RBP OF TEXAS, INC.
RBP TRANS, INC.
LEVAN BUILDERS SUPPLY,
INCORPORATED
NUPRIME OF DENVER, INC.
TIMBER TECH, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
STOCKHOLDERS
WINGATE PARTNERS, L.P.
By: Wingate Management Company, L.P.,
its general partner
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
WINGATE AFFILIATES, L.P.
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
2
<PAGE>
WALLACE R. HAWLEY AND
ALEXANDRA HAWLEY
REVOCABLE TRUST
U/A/D 07/30/92
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
--------------------------------------------
V. EDWARD EASTERLING, JR.
MAY FINANCIAL CORPORATION
FBO JEAN C. BEASLEY IRA
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
3
<PAGE>
EXHIBIT I
RELIANT PARTNERS, L.P.
201 MAIN STREET, SUITE 3100
FORT WORTH, TEXAS 76102
March 27, 1997
[Certain Members of Senior Management]
- --------------------------
- --------------------------
Re: Application of Net Incentive Payments
Dear Mr. __________:
Reference is made to (i) that certain Stock Purchase Agreement, dated as
of even date herewith (the "Purchase Agreement"), by and between the parties
listed on Schedule I thereto (the "Stockholders") and Reliant Partners, L.P.,
a Texas limited partnership ("Purchaser"), pertaining to Purchaser's purchase
of capital stock of RBPI Holding Corporation, a Delaware corporation
("RBPI"), from the Stockholders; and (ii) that certain RBPI Incentive Unit
Agreement by and between you and RBPI (the "Incentive Agreement").
You hereby acknowledge and agree that immediately upon your receipt of
payments pursuant to the Incentive Agreement you will pay the Net Cash
Incentive Payment (as defined below) to RBPI in consideration of the purchase
by you of an interest in RBPI, such purchase to be at the same price, on the
same terms and subject to the same conditions as interests in RBPI are sold
to others. As used herein, the term "Net Cash Incentive Payment" shall mean
the difference between (a) the amount of cash to be paid to you by RBPI as of
the Closing of the transactions contemplated by the Stock Purchase Agreement
in respect of the Incentive Agreement as a direct or indirect result of the
consummation of the transactions contemplated by the Purchase Agreement and
(b) the amount of taxes payable by you in respect of (i) the cash amounts
payable and (ii) the promissory note issuable to you in satisfaction of
RBPI's obligations to you under the Incentive Agreement.
[Remainder of Page Intentionally Left Blank]
<PAGE>
If the foregoing sets forth the agreement of the parties with regard to
the matters addressed herein, please so evidence by signing the attached
duplicate original of this letter in the space provided for your signature
and returning it to the undersigned, whereupon the provisions hereof will
constitute a binding agreement.
Sincerely,
RELIANT PARTNERS, L.P.
By: Reliant Investment Partners, L.P., its
General Partner
By: Group 31, Inc., its General Partner
By:
----------------------------------------
Title:
-------------------------------------
AGREED TO AND
ACKNOWLEDGED BY:
- --------------------------------------
[CERTAIN MEMBERS OF SENIOR MANAGEMENT]
RBPI HOLDING CORPORATION
By:
----------------------------------
Title:
-------------------------------
2
<PAGE>
May 9, 1997
Wingate Partners, L.P.
Wingate Affiliates, L.P.
Wallace R. Hawley and Alexandra
Hawley Revocable Trust U/A/D 07/30/92
V. Edward Easterling
May Financial Corporation
FBO Jean C. Beasley IRA
c/o Wingate Partners, L.P.
750 N. St. Paul Street, Suite 1200
Dallas, Texas 75201
Re: Stock Purchase Agreement (the "Stock Purchase Agreement") dated as of
March 27, 1997 by and among Reliant Partners, L.P., a Texas limited
partnership ("Reliant") and Wingate Partners, L.P., Wingate
Affiliates, L.P., Wallace R. Hawley and Alexandra Hawley Revocable
Trust U/A/D 07/30/92, V. Edward Easterling, and May Financial
Corporation FBO Jean C. Beasley IRA (collectively, the "Stockholders")
Ladies and Gentlemen:
This firm has acted as legal counsel to Purchasers (as defined herein),
for the purpose of delivering this opinion letter to you, as provided by
Section 5.2(e) of the Agreement (as defined herein).
Except as otherwise indicated herein, capitalized terms used in this
opinion letter are defined as set forth in the Agreement.
In rendering this opinion, we have examined (a) the Stock Purchase
Agreement; (b) the First Amendment to the Stock Purchase Agreement (the
"Amendment") dated as of the date hereof, by and among Reliant, Sellers,
Reliant Partners II, L.P., a Texas limited partnership ("Reliant II"), David
G. Fiore, Virgil D. Lowe, Charles E. Still, Jack L. Morris, James R. Trigg,
Jr. and Rodney Vickers; (c) the Amended and Restated Limited Partnership
Agreement of Reliant and a copy of its certificate of limited partnership
certified by the Secretary of State of the State of Texas as of May 7, 1997;
and (d) the Limited Partnership Agreement of Reliant II and a copy of its
certificate of limited partnership certified by the Secretary of State of the
State of Texas as of May 7, 1997.
The Stock Purchase Agreement as amended by the Amendment is referred to
herein as the "Agreement." Reliant and Reliant II are collectively referred
to herein as the "Purchasers."
<PAGE>
Wingate Partners, L.P. et al
May 9, 1997
Page 2 of 6
In rendering this opinion, we have made the following assumptions:
(a) All natural persons have sufficient legal capacity to enter into
the transaction contemplated by the Agreement (the "Transaction") and to
perform their roles thereunder.
(b) Each of the Purchasers holds requisite title and rights to any
property involved in the Transaction.
(c) Each party to the Transaction (other than the Purchasers) has
satisfied those legal requirements that are applicable to it to the extent
necessary to make the Agreement enforceable against it.
(d) Each party to the Transaction (other than the Purchasers) has
complied with all legal requirements pertaining to its status as such status
relates to its rights to enforce the Agreement against the Purchasers.
(e) Each document that we have reviewed in connection herewith is
accurate and complete, each such document that is an original is authentic,
each such document that is a copy conforms to an authentic original, and all
signatures on each such document (other than the signatures by the Purchasers
on the Agreement) are genuine.
(f) Each certificate of a public authority on which we have relied is
accurate, complete and authentic and all official public records (including
their proper indexing and filing) are accurate and complete.
(g) There has not been any mutual mistake of fact or misunderstanding,
fraud, duress or undue influence.
(h) The conduct of the parties to the Transaction has complied with any
requirement of good faith, fair dealing and conscionability.
(i) You and agents acting for you in connection with the Transaction
have acted in good faith and without any notice of any defense against the
enforcement of any rights created by, or adverse claim to any property or
security interest transferred or created as part of, the Transaction.
(j) There are no agreements or understandings among the parties to the
Transaction, written or oral, and there is no usage of trade or course of
prior dealing among the parties that would, in either case, define,
supplement or qualify the terms of the Documents.
(k) All statutes, judicial and administrative decisions, and rules and
regulations of governmental agencies, constituting the law of the State of
Texas, are generally available (i.e., in terms of access and distribution
following publication or other release) to lawyers practicing in the State of
Texas, and are in a format that makes legal research reasonably feasible.
<PAGE>
Wingate Partners, L.P. et al
May 9, 1997
Page 3 of 6
(l) The constitutionality or validity of a relevant statute, rule,
regulation or agency action is not in issue unless a reported decision has
specifically addressed but not resolved, or has established, its
unconstitutionality or invalidity.
(m) Agreements to which any of the Purchasers is a party or by which
any of them or their property is bound, other than the Agreement ("Other
Agreements"), court and administrative orders, writs, judgments and decrees
that name any of the Purchasers and are specifically directed to any of them
or their property ("Court Orders") would be enforced as written.
(n) Neither of the Purchasers will in the future take any discretionary
action (including a decision not to act) permitted under the Agreement that
would result in a violation of law or constitute a breach or default under
any Other Agreement or Court Order.
(o) Each of the Purchasers will obtain all permits and governmental
approvals required in the future, and take all actions similarly required,
relevant to subsequent consummation of the Transaction or performance of the
Agreement.
(p) All parties to the Transaction will act in accordance with, and
will refrain from taking any action that is forbidden by, the terms and
conditions of the Agreement.
Based upon and subject to the foregoing, and the other limitations and
qualifications set forth herein, we are of the opinion that:
1. Each of the Purchasers was formed and exists as a limited partnership
under the laws of the State of Texas.
2. Each of the Purchasers has the partnership power and authority to
execute and deliver the Agreement and to perform its respective
obligations under the Agreement.
3. The Agreement has been authorized, executed and delivered by each
of the Purchasers, and constitutes the legal and enforceable obligation of
each of the Purchasers.
4. The execution and delivery of the Agreement by the Purchasers do
not, and the performance of the Agreement by the Purchasers will not,
render either Purchaser in violation of its respective Limited Partnership
Agreement or Certificate of Limited Partnership, or any statute or
regulation by which either Purchaser is bound. We have no knowledge that
the execution and delivery of the Agreement by either Purchaser will
(i) result in the violation of any order or judgment of any court,
government agency or arbitrator in which either Purchaser is named, or
(ii) constitute a breach of any other agreement to which either Purchaser
is a party.
5. We have no knowledge that the execution, delivery and performance
by the Purchasers of the Agreement will require the consent or approval
of, or filing with, any person or governmental entity; PROVIDED, HOWEVER,
that we express no opinion with respect
<PAGE>
Wingate Partners, L.P. et al
May 9, 1997
Page 4 of 6
to any filing requirements under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
This opinion is further limited and qualified in all respects as follows:
A. This opinion is specifically limited to matters of the existing
federal law of the United States of America and the law of the State of
Texas. We express no opinion as to the applicability of the laws of any
other particular jurisdiction to the Transaction described in this
opinion.
B. For purposes of expressing the opinions in paragraph 1 regarding
the existence of the Purchasers, we have relied, with your permission,
solely upon certificates of the Secretary of State of the State of Texas,
without independent investigation.
C. The opinions herein are subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar
laws affecting the rights and remedies of creditors generally. This
exception includes (a) the Federal Bankruptcy Code and thus comprehends,
among others, matters of turn-over, automatic stay, avoiding powers,
fraudulent transfer, preference, discharge, conversion of a non-recourse
obligation into a recourse claim, limitations on IPSO FACTO and
anti-assignment clauses and the coverage of pre-petition security
agreements applicable to property acquired after a petition is filed;
(b) all other Federal and state bankruptcy, insolvency, reorganization,
receivership, moratorium, arrangement and assignment for the benefit of
creditors laws that affect the rights and remedies of creditors generally
(not just creditors of specific types of debtors); (c) all other Federal
bankruptcy, insolvency, reorganization, receivership, moratorium,
arrangement and assignment for the benefit of creditors laws that have
reference to or affect generally only creditors of specific types of
debtors and state laws of like character affecting generally only
creditors of financial institutions and insurance companies; (d) state
fraudulent transfer and conveyance laws; and (e) judicially developed
doctrines relevant to any of the foregoing laws, such as substantive
consolidation of entities.
D. The opinions expressed herein are subject to the effect of general
principles of equity, whether applied by a court of law or equity. This
limitation includes principles (a) governing the availability of specific
performance, injunctive relief or other equitable remedies, which
generally place the award of such remedies, subject to certain guidelines,
in the discretion of the court to which application for such relief is
made; (b) affording equitable defenses (e.g. waiver, laches and estoppel)
against a party seeking enforcement; (c) requiring good faith and fair
dealing in the performance and enforcement of a contract by the party
seeking its enforcement; (d) requiring reasonableness in the performance
and enforcement of any agreement by the party seeking enforcement of the
contract; (e) requiring consideration of the materiality of (i) any breach
by the Purchasers or (ii) the consequences of the breach to the party
seeking enforcement; (f) requiring consideration of the impracticability
or impossibility of performance at the time of attempted
<PAGE>
Wingate Partners, L.P. et al
May 9, 1997
Page 5 of 6
enforcement; and (g) affording defenses based upon the
unconscionability of the enforcing party's conduct after the parties have
entered into the contract.
F. This opinion is subject to the effect of generally applicable rules
of law of the State of Texas and of the United States of America that
(a) limit or affect the enforcement of provisions of a contract that
purport to require waiver of the obligations of good faith, fair dealing,
diligence and reasonableness; (b) provide that forum selection clauses in
contracts are not necessarily binding on the court(s) in the forum
selected; (c) limit the availability of a remedy under certain
circumstances in which another remedy has been elected; (d) limit the
right of a creditor to use force or cause a breach of the peace in
enforcing rights; (e) relate to the sale or disposition of collateral or
the requirements of a commercially reasonable sale; (f) limit the
enforceability of provisions releasing, exculpating or exempting a party
from, or requiring indemnification of a party for, liability for its own
action or inaction, to the extent the action or inaction involves gross
negligence, recklessness, willful misconduct or unlawful conduct; (g) may,
if less than all of a contract is deemed unenforceable, limit the
enforceability of the balance of the contract to circumstances in which
the unenforceable portion is not an essential part of the agreed exchange;
(h) govern and afford judicial discretion regarding the determination of
damages and entitlement to attorneys' fees and other costs; and (i) may
permit a party who has materially failed to render or offer performance
required by the contract to cure that failure unless (I) permitting a cure
would unreasonably hinder the aggrieved party from making substitute
arrangements for performance, or (II) it was important in the
circumstances to the aggrieved party that performance occur by the date
stated in the contract.
G. This opinion does not address any of the following legal
issues unless we have explicitly addressed the specific legal issue
herein: (a) Federal securities laws and regulations administered by the
Securities and Exchange Commission, state "Blue Sky" laws and
regulations, and laws and regulations relating to commodity (and other)
futures and indices and other similar instruments; (b) Federal Reserve
Board margin regulations; (c) pension and employee benefit laws and
regulations; (d) Federal and state antitrust and unfair competition laws
and regulations; (e) Federal and state laws and regulations concerning
filing and notice requirements, other than requirements applicable to
charter-related documents; (f) compliance with fiduciary duty
requirements; (g) statutes and ordinances, the administrative decisions,
and the rules and regulations of counties, towns, municipalities and
special political subdivisions and judicial decisions to the extent that
they deal with any of the foregoing; (h) the characterization of a
Transaction as one involving the creation of a lien on real property or
a security interest in personal property, the characterization of a
contract as one in a form sufficient to create a lien or a security
interest, and the creation, attachment, perfection, priority or
enforcement of a lien on real property or a security interest in
personal property; (i) fraudulent transfer and fraudulent conveyance
laws; (j) Federal and state environmental laws and regulations; (k)
Federal and state land use and subdivision laws and regulations; (l)
Federal and state tax laws and regulations, including, without
limitation, the Federal Tax Lien Act of 1966, as amended; (m) Federal
patent, copyright and trademark, state trademark, and other Federal and
state
<PAGE>
Wingate Partners, L.P. et al
May 9, 1997
Page 6 of 6
intellectual property laws and regulations; (n) Federal and state
racketeering laws and regulations; (o) Federal and state health and
safety laws and regulations; (p) Federal and state labor laws and
regulations; (q) Federal and state laws, regulations and policies
concerning (i) national and local emergency, (ii) possible judicial
deference to acts of sovereign states, and (iii) criminal and civil
forfeiture laws; or (r) other Federal and state statutes of general
application to the extent they provide for criminal prosecution.
H. We have assumed for purposes of the opinions expressed herein,
the truth and accuracy of all statements and certifications made to you
by the Purchasers or by any person on behalf of the Purchasers, and all
documents and other matters furnished to you by or on behalf of the
Purchasers, and that none of such entities or persons have made, and
that none of such documents or other matters contained or contain an
untrue statement of any material fact or omitted or omit to state a
material fact necessary in order to make such statements and
certifications, in light of the circumstances in which they were made,
not misleading.
I. As used herein, the phrases "to our knowledge," "known to us,"
or, "we have no knowledge," or any similar phrase means that the
knowledge of this firm is limited to the present personal recollection
of the attorneys in our firm who have prepared this opinion and who have
had actual involvement in the transaction that is the subject of this
opinion letter, and further you cannot rely on such attorneys having
made any independent verification of, or inquiry with respect to, the
facts relevant to this opinion letter, whether in the general course of
our representation of the Purchasers or for purposes of rendering this
opinion letter to you.
This opinion is limited to the specific opinions expressly stated
herein, and no other opinion is implied or may be inferred beyond the
specific opinions expressly stated herein.
This opinion is intended solely for your benefit. It is not to be
quoted in whole or in part, disclosed, made available to or relied upon by
any other person, firm or entity for any purpose whatsoever, without in each
instance our express prior written consent.
This opinion is based upon our knowledge of the law and our
understanding of the facts as of the date hereof. We assume no duty to
update or supplement this opinion to reflect any facts or circumstances that
may hereafter come to our attention or to reflect any changes in any law that
may hereafter occur or become effective.
Respectfully submitted,
KELLY, HART & HALLMAN
(a professional corporation)
<PAGE>
COMPLIANCE CERTIFICATE
This certificate is delivered to Wingate Partners, L.P., Wingate
Affiliates, L.P., Wallace R. Hawley and Alexandra Hawley Revocable Trust
U/A/D 07/30/92, V. Edward Easterling, Jr., and May Financial Corporation FBO
Jean C. Beasley IRA (collectively, the "Stockholders") by the undersigned
(individually, a "Purchaser" and collectively, the "Purchasers"), pursuant to
Section 5.2(h) of the Stock Purchase Agreement, dated as of March 27, 1997,
by and among Reliant Partners, L.P. and the Stockholders, as amended by the
First Amendment to Stock Purchase Agreement, dated as of May __, 1997, by and
among the Stockholders and the Purchasers (as so amended, the "Purchase
Agreement"), relating to the acquisition by the Purchasers of capital stock
of RBPI Holding Corporation, a Delaware corporation (the "Corporation").
Capitalized terms used herein without definition shall have the meanings as
set forth in the Purchase Agreement. The undersigned hereby certify as
follows:
1. With respect to itself or himself only, all representations and
warranties of such Purchaser contained in the Purchase Agreement are
true and correct in all material respects on and as of the date when
made and on and as of the date hereof.
2. The Purchasers have performed and complied in all material respects
with all agreements and conditions required by the Purchase Agreement
to be performed or complied with by the Purchasers on or prior to the
Closing Date.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this Certificate in one
or more counterparts effective as of the ___ day of May, 1997.
RELIANT PARTNERS, L.P.
By: Group 31, Inc., General Partner
By:
-----------------------------------
Title:
--------------------------------
RELIANT PARTNERS II, L.P.
By: FW Group Genpar, Inc., General Partner
By:
-----------------------------------
Title:
--------------------------------
-----------------------------------------
DAVID G. FIORE
-----------------------------------------
VIRGIL D. LOWE
-----------------------------------------
CHARLES E. STILL
-----------------------------------------
JACK L. MORRIS
-----------------------------------------
JAMES R. TRIGG, JR.
-----------------------------------------
RODNEY VICKERS
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
REDMAN BUILDING PRODUCTS, INC.
- --------------------------------------------------------------------------------
Pursuant to Section 245 of the General Corporation Law of the State of Delaware
- --------------------------------------------------------------------------------
Redman Building Products, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that:
FIRST, the Corporation was originally incorporated under the name Redman
Building Products, Inc. and its original Certificate of Incorporation was filed
on May 24, 1971.
SECOND, the directors of the Corporation approved resolutions setting forth
a proposed Restated Certificate of Incorporation of the Corporation and
declaring such Restated Certificate of Incorporation to be advisable.
THIRD, thereafter, pursuant to Section 228 of the General Corporation Law
of the State of Delaware, the sole stockholder of the Corporation consented in
writing to the proposed Restated Certificate of Incorporation of the
Corporation.
FOURTH, the Restated Certificate of Incorporation set forth in the
following resolutions was duly adopted in accordance with the provisions of
Sections 242 and 245 of the General Corporation Law of the State of Delaware.
RESOLVED, that the Certificate of Incorporation of the Corporation is
hereby amended and restated in its entirety as follows:
FIRST: The name of the Corporation is Redman Building Products, Inc.
<PAGE>
SECOND: The registered office of the Corporation in the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
THIRD: The purpose for which the Corporation is organized is to engage in
any and all lawful acts and activity for which corporations may be organized
under the General Corporation Law of the State of Delaware. The Corporation
will have perpetual existence.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 20,000 shares of capital stock, classified as (i)
10,000 shares of preferred stock, par value $.01 per share ("Preferred Stock"),
and (ii) 10,000 shares of common stock, par value $1.00 per share ("Common
Stock").
The designations and the powers, preferences, rights, qualifications,
limitations, and restrictions of the Preferred Stock and Common Stock are as
follows:
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have such designations
and powers, preferences, and rights, and qualifications, limitations, and
restrictions thereof, as are stated and expressed herein and in the resolution
or resolutions providing for the issue of such class or series adopted by the
board of directors of the Corporation aa hereafter prescribed.
(b) Authority is hereby expressly granted to and vested in the board
of directors of the Corporation to authorize the issuance of the Preferred
Stock from time to time in one or more classes or series, and with respect to
each class or series of the Preferred Stock, to fix and state by the
resolution or resolutions from time to time adopted providing for the
issuance thereof the following:
(i) whether or not the class or series is to have voting rights,
full, special, or limited, or is to be without voting rights, and whether or not
such class or series is to be entitled to vote as a separate class either alone
or together with the holders of one or more other classes or series of stock;
2
<PAGE>
(ii) the number of shares to constitute the class or series and
the designations thereof;
(iii) the preferences, and relative, participating, optional, or
other special rights, if any, and the qualifications, limitations, or
restrictions thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or series shall be
redeemable at the option of the Corporation or the holders thereof or upon the
happening of any specified event, and, if redeemable, the redemption price or
prices (which may be payable in the form of cash, notes, securities, or other
property), and the time or times at which, and the terms and conditions upon
which, such shares shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or series shall be
subject to the operation of retirement or sinking funds to be applied to the
purchase or redemption of such shares for retirement, and, if such retirement or
sinking fund or funds are to be established, the annual amount thereof, and the
terms and provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are payable in cash,
stock of the Corporation, or other property, the conditions upon which and the
times when such dividends are payable, the preference to or the relation to the
payment of dividends payable on any other class or classes or series of stock,
whether or not such dividends shall be cumulative or noncumulative, and if
cumulative, the date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the amounts thereof which the
holders of any class or series thereof shall be entitled to receive upon the
voluntary or involuntary dissolution of, or upon any distribution of the assets
of, the Corporation;
(viii) whether or not the shares of any class or series, at the
option of the Corporation or the holder thereof or upon the happening of any
specified event, shall be convertible into or exchangeable for, the shares of
any other class or classes or of any other series of the same or any other
class or classes of stock, securities, or other property of the Corporation
and the conversion price or prices or ratio or ratios or the rate or rates at
which such exchange may be made, with such adjustments, if any, as shall be
stated and expressed or provided for in such resolution or resolutions; and
(ix) such other special rights and protective provisions with
respect to any class or series as may to the board of directors of the
Corporation seem advisable.
3
<PAGE>
(c) The shares of each class or series of the Preferred Stock may vary
from the shares of any other class or series thereof in any or all of the
foregoing respects. The board of directors of the Corporation may increase the
number of shares of the Preferred Stock designated for any existing class or
series by a resolution adding to such class or series authorized and unissued
shares of the Preferred Stock not designated for any other class or series. The
board of directors of the Corporation may decrease the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
subtracting from such class or series authorized and unissued shares of the
Preferred Stock designated for such existing class or series, and the shares so
subtracted shall become authorized, unissued, and undesignated shares of the
Preferred Stock.
2. Provisions Relating to the Common Stock.
(a) Each share of Common Stock of the Corporation shall have identical
rights and privileges in every respect. The holders of shares of Common Stock
shall be entitled to vote upon all matters submitted to a vote of the
stockholders of the Corporation and shall be entitled to one vote for each share
of Common Stock held.
(b) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock shall be entitled to receive such dividends (payable in cash,
stock, or otherwise) as may be declared thereon by the board of directors at any
time and from time to time out of any funds of the Corporation legally available
therefor.
(c) In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation, after distribution in full of
the preferential amounts, if any, to be distributed to the holders of shares
of the Preferred Stock or any series thereof, the holders of shares of the
Common Stock shall be entitled to receive all of the remaining assets of the
Corporation available for distribution to its stockholders, ratably in
proportion to the number of shares of the Common Stock held by them. A
liquidation, dissolution, or winding-up of the Corporation, as such terms
are used in this Paragraph (c), shall not be deemed to be occasioned by or to
include any consolidation or merger of the Corporation with or into any other
corporation or corporations or other entity or a sale, lease, exchange, or
conveyance of all or a part of the assets of the Corporation.
4
<PAGE>
3. General.
(a) Subject to the foregoing provisions of this Certificate of
Incorporation, the Corporation may issue shares of its Preferred Stock and
Common Stock from time to time for such consideration (not less than the par
value thereof) as may be fixed by the board of directors of the Corporation,
which is expressly authorized to fix the same in its absolute and uncontrolled
discretion subject to the foregoing conditions. Shares so issued for which the
consideration shall have been paid or delivered to the Corporation shall be
deemed fully paid stock and shall not be liable to any further call or
assessment thereon, and the holders of such shares shall not be liable for any
further payments in respect of such shares.
(b) The Corporation shall have authority to create and issue rights
and options entitling their holders to purchase shares of the Corporation's
capital stock of any class or series or other securities of the Corporation, and
such rights and options shall be evidenced by instrument(s) approved by the
board of directors of the Corporation. The board of directors of the
Corporation shall be empowered to set the exercise price, duration, times for
exercise, and other terms of such options or rights; PROVIDED, HOWEVER, that the
consideration to be received for any shares of capital stock subject thereto
shall not be less than the par value thereof.
FIFTH: Directors of the Corporation need not be elected by written ballot
unless the By-laws of the Corporation otherwise provide.
SIXTH: The directors of the Corporation shall have the power to adopt,
amend and repeal the By-laws of the Corporation.
SEVENTH: No contract or transaction between the Corporation and one or more
of its directors, officers or stockholders or between the Corporation and any
person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her or their votes are counted for such purpose, if: (i) the
5
<PAGE>
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified by the board of directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.
EIGHTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, 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, to the
fullest extent permitted under the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended. Such right shall be a
contract right and as such shall run to the benefit of any director or officer
who is elected and accepts the position of director or officer of the
Corporation or elects to continue to serve as a director or officer of the
Corporation while this Article Eighth is in effect. Any repeal or amendment of
this Article Eighth shall be prospective only and shall not limit the rights of
any such director or officer or the obligations of the Corporation with respect
to any claim arising from or related to the services of such director or officer
in any of the foregoing capacities prior to any such repeal or amendment to this
Article Eighth. Such right shall include the right to be paid by the
Corporation expenses incurred in defending any such proceeding in advance of its
final disposition to the maximum extent permitted under the General Corporation
Law of the State of Delaware, as the same exists or may hereafter be amended.
If a claim for indemnification or advancement of expenses hereunder is not paid
in full by the Corporation
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within sixty (60) days after a written claim has been received by the
Corporation, 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 also be entitled to be paid the expenses
of prosecuting such claim. It shall be a defense to any such action that
such indemnification or advancement of costs of defense are not permitted
under the General Corporation Law of the State of Delaware, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its board of directors or any committee thereof,
independent legal counsel, or stockholders) to have made its determination
prior to the commencement of such action that indemnification of, or
advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible
shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death
of any person having a right of indemnification under the foregoing
provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights
conferred above shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, bylaw, resolution of
stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
NINTH: A director of the Corporation shall not be personally 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 knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal
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benefit. Any repeal or amendment of this Article Ninth by the stockholders
of the Corporation shall be prospective only, and shall not adversely affect
any limitation on the personal liability of a director of the Corporation
arising from an act or omission occurring prior to the time of such repeal or
amendment. In addition to the circumstances in which a director of the
Corporation is not personally liable as set forth in the foregoing provisions
of this Article Ninth, a director shall not be liable to the Corporation or
its stockholders to such further extent as permitted by any law hereafter
enacted, including without limitation any subsequent amendment to the General
Corporation Law of the State of Delaware.
TENTH: The Corporation expressly elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Redman Building Products, Inc. has caused this Restated
Certificate of Incorporation to be executed by its Executive Vice President and
attested by its Secretary this 9th day of July, 1990.
REDMAN BUILDING PRODUCTS, INC.
By: /s/ Fergus J. Walker
----------------------------------
Fergus J. Walker
Executive Vice President
ATTEST:
/s/ Paul L. Barrett
- ------------------------------
Paul L. Barrett
Secretary
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CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
REDMAN BUILDING PRODUCTS, INC.
The undersigned, being the Executive Vice President and Secretary,
respectively, of Redman Building Products, Inc., a Delaware corporation (the
"Corporation"), do hereby certify:
FIRST: The name of the Corporation is Redman Building Products, Inc.
SECOND: The Certificate of Incorporation was filed with the Secretary of
State of Delaware on May 24, 1971, and a Restated Certificate of Incorporation
was filed on July 11, 1990.
THIRD: Article EIGHTH of the Certificate of Incorporation is hereby
amended to read in its entirety as set forth in EXHIBIT A hereto (and
incorporated herein by reference).
FOURTH: Article NINTH of the Certificate of Incorporation is hereby
amended to read in its entirety as set forth in EXHIBIT B hereto (and
incorporated herein by reference).
FIFTH: The aforementioned amendments to the Certificate of Incorporation
were duly adopted in accordance with Section 242 of the General Corporation Law
of the State of Delaware (the "DGCL"). Written consent of the Corporation's
sole stockholder has been given in accordance with the provisions of Section 228
of the DGCL.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed pursuant to Section 103(a)(2) of the DGCL by the
undersigned duly authorized officers of the Corporation as of the 7th day of
September, 1993.
REDMAN BUILDING PRODUCTS, INC.
By: \s\ Fergus J. Walker, Jr.
---------------------------------
Fergus J. Walker, Jr.
Executive Vice President
ATTEST:
\s\ Paul L. Barrett
- -----------------------------
Paul L. Barrett
Secretary
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EXHIBIT A
EIGHTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, 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, to the
fullest extent permitted under the General Corporation Law of the State of
Delaware (the "DGCL"), as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article Eighth is in effect. Any repeal
or amendment of this Article Eighth shall be prospective only and shall not
limit the rights of any such director or officer or the obligations of the
Corporation with respect to any claim arising from or related to the services of
such director or officer in any of the foregoing capacities prior to any such
repeal or amendment to this Article Eighth. Such right shall include the right
to be paid by the Corporation expenses incurred in investigating or defending
any such proceeding in advance of its final disposition to the maximum extent
permitted under the DGCL, as the same exists or may hereafter be amended. If a
claim for indemnification or advancement of expenses hereunder is not paid in
full by the Corporation within sixty (60) days after a written claim has been
received by the Corporation, 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 also be entitled to be paid
the expenses of prosecuting such claim. It shall be a defense to any such
action that such indemnification or advancement of costs of defense is not
permitted under the DGCL, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its board of
directors or any committee thereof, independent legal
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counsel, or stockholders) to have made its determination prior to the
commencement of such action that indemnification of, or advancement of costs
of defense to, the claimant is permissible in the circumstances nor an actual
determination by the Corporation (including its board of directors or any
committee thereof, independent legal counsel, or stockholders) that such
indemnification or advancement is not permissible shall be a defense to the
action or create a presumption that such indemnification or advancement is
not permissible. In the event of the death of any person having a right of
indemnification under the foregoing provisions, such right shall inure to the
benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
by-law, resolution of stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Eighth shall extend to proceedings involving the negligence of such
person.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
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EXHIBIT B
NINTH: A director of the Corporation shall not be personally 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 knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or amendment of this Article Ninth by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation arising from an act or
omission occurring prior to the time of such repeal or amendment. In addition
to the circumstances in which a director of the Corporation is not personally
liable as set forth in the foregoing provisions of this Article Ninth, a
director shall not be liable to the Corporation or its stockholders to such
further extent as permitted by any law hereafter enacted, including without
limitation any subsequent amendment to the DGCL.
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AMENDMENT TO CERTIFICATE OF INCORPORATION
OF
REDMAN BUILDING PRODUCTS, INC.
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware (the "Act"), the undersigned corporation hereby adopts the following
Amendment to Certificate of Incorporation:
FIRST: The name of the corporation is Redman Building Products, Inc. (the
"Corporation").
SECOND: The Certificate of Incorporation was filed with the Secretary of State
of Delaware on May 24, 1971, a Restated Certificate of Incorporation
was filed on July 11, 1990 and a Certificate of Amendment was filed on
September 23, 1993.
THIRD: The following amendment to the Certificate of Incorporation of the
Corporation was duly adopted by a Written Consent of Sole Stockholder
on May 8, 1997 in accordance with Section 242 of the Act.
FOURTH: Article First of the Certificate of Incorporation of the Corporation
is hereby deleted in its entirety with the following Article First
being substituted in its place:
"FIRST: The name of the Corporation is Reliant Building Products,
Inc."
The undersigned officer of the Corporation, for the purpose of amending the
Certificate of Incorporation of the Corporation, does make and file this
Amendment to Certificate of Incorporation, hereby declaring and certifying the
facts herein are true and accordingly has set his hand effective as of May 8,
1997.
REDMAN BUILDING PRODUCTS, INC.
By: /s/ David G. Fiore
--------------------------------------
Name: David G. Fiore
--------------------------------------
Title: President
--------------------------------------
<PAGE>
REDMAN BUILDING PRODUCTS, INC.
BYLAWS
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. 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. All meetings of the stockholders for the election of
directors shall be held in the City of Dallas, State of Texas, at such place
as may be fixed from time to time by the board of directors, or at such other
place either within or without the State of Delaware as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting. Meetings of stockholders for any other purpose may be held at such
time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1972, shall be held on the second Tuesday of April, if not a legal holiday,
and if a legal holiday, then on the next secular day following, at 10:00
a.m., or at such other date and time as shall be designated from time to time
by the board of directors and stated in the notice of the meeting, at which
they shall elect by a plurality vote a board of directors, and transact such
other business as may properly be brought before the meeting.
<PAGE>
Section 3. 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 fifty days before the
date of the meeting.
Section 4. 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 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 5. 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 6. 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 fifty days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
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Section 8. 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 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 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.
Section 9. 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 10. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, but no proxy
shall be voted on after three years from its date, unless the proxy provides
for a longer period.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken for or in connection with any corporate
action, by any provision of the statutes, the meeting and vote of
stockholders may be dispensed with if all of the stockholders who would have
been entitled to vote upon the action if such meeting were held shall consent
in writing to such corporate action being taken; or if the certificate of
incorporation authorizes the action to be taken with the written consent of
the holders of less than all of the stock who would have been entitled to
vote upon the action if a meeting were held, then on the written
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consent of the stockholders having not less than such percentage of the
number of votes as may be authorized in the certificate of incorporation;
provided that in no case shall the written consent be by the holders of stock
having less than the minimum percentage of the vote required by statute for
the proposed corporate action, and provided that prompt notice must be given
to all stockholders of the taking of corporate action without a meeting and
by less than unanimous written consent.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be four (4). 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.
Section 2. 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. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and
do all such lawful acts and things as
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are not by statute or by the certificate of incorporation or by these bylaws
directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held immediately following and at the same place as the annual
meeting of stockholders 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 such meeting is not held at
such time and place, 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.
Section 6. 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.
Section 7. Special meetings of the board may be called by the
president on twenty-four hours 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.
Section 8. 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.
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Section 9. Unless otherwise restricted by the certificate of
incorporation or these bylaws, 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.
COMMITTEES OF DIRECTORS
Section 10. 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. Any such committee, to the extent provided in the resolution,
shall have and may exercise the powers 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;
provided, however, that in the absence or disqualification of any member of
such committee or committees 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. 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.
Section 11. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 12. 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 or 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.
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Members of special or standing committees may be allowed like compensation
for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, 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 prepaid telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
bylaws, 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.
ARTICLE V
OFFICERS
Section 1. ELECTED OFFICERS. The officers of the corporation shall
be chosen by the board of directors and shall be a president, one or more
vice presidents, a secretary and a treasurer.
Section 2. ELECTION. The board of directors, at its first meeting
after each annual meeting of stockholders, shall choose a president from its
members, and one or more vice presidents, a secretary and a treasurer, none
of whom need be a member of the board of directors. The board of directors
or the president at any time may also appoint one or more assistant
secretaries and assistant treasurers.
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Section 3. APPOINTED OFFICERS. 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 of directors.
Section 4. COMPENSATION. The salaries of the president, of any vice
president and of the secretary and the treasurer of the corporation shall be
fixed by the board of directors.
Section 5. TERM OF OFFICE; REMOVAL; FILLING OF VACANCIES. Except as
may be otherwise provided by the board of directors or in these bylaws, each
officer of the corporation shall hold office until the first meeting of
directors after the next annual meeting of stockholders following his
election or appointment and until his successor is chosen and qualified.
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 whole board of
directors. If the office of any officer becomes vacant for any reason, the
vacancy shall be filled by the board of directors.
PRESIDENT
Section 6. 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 and all policies formulated by the board of directors are carried
into effect.
Section 7. 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 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.
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VICE PRESIDENTS
Section 8. 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, 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.
SECRETARY AND ASSISTANT SECRETARIES
Section 9. 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. 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.
Section 10. 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.
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THE TREASURER AND ASSISTANT TREASURERS
Section 11. 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.
Section 12. He 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.
Section 13. If required by the board of directors, he 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 his 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.
Section 14. 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 absence of the treasurer or in the event of his
inability or refusal to act, 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.
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ARTICLE VI
CERTIFICATES OF STOCK
Section 1. 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 treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by him in the corporation.
Section 2. Where a certificate is countersigned (1) by a transfer
agent other than the corporation or its employee, or, (2) by a registrar
other than the corporation or its employee, any other signature on the
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.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates 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. 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 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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TRANSFERS OF STOCK
Section 4. 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, 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.
FIXING RECORD DATE
Section 5. 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.
REGISTERED STOCKHOLDERS
Section 6. 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.
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ARTICLE VII
GENERAL PROVISIONS
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. Each person who acts as a director or officer of the
corporation shall be indemnified by the corporation against any costs,
expenses and liabilities which may be imposed upon or reasonably incurred by
him in connection with any civil or criminal action, suit or proceeding in
which he may be named as a party defendant by reason of his being or having
been such director or officer or by reason of any action alleged to have been
taken or omitted by him in either such capacity and any person who, at the
request of the corporation, acts as a director or officer of any of its
subsidiary or affiliate corporations shall likewise be indemnified by the
corporation against such costs, expenses and liabilities; provided that, in
any case, the right of indemnification herein provided for shall not extend
to any costs, expenses or liabilities imposed upon or incurred by any
director or officer of the corporation or of any subsidiary or affiliate
corporation in relation to matters as to which he shall be finally adjudged
to be liable for negligence or misconduct in the performance of his duties as
such director or officer or to any sum paid by him to the corporation or to
such subsidiary or affiliate corporation, as the case may be, in settlement
of any action, suit or proceeding based on his alleged dereliction of duty.
The right of indemnification herein provided for shall inure to each of the
directors and officers of the corporation and to such of the directors and
officers of any subsidiary or affiliate corporation as shall act in such
capacity at the request of the corporation, whether or not the respective
director or officer is acting as such at the time such costs, expenses or
liabilities are imposed or incurred and whether or not the claim asserted
against him is based on matters which antedate the adoption of this Section
of the bylaws, and in the event of his death shall extend to his legal
representatives; but such rights shall not be exclusive of any other rights
to which he may be entitled.
DIVIDENDS
Section 2. 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
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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.
Section 3. 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.
ANNUAL STATEMENT
Section 4. 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.
CHECKS
Section 5. 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.
FISCAL YEAR
Section 6. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 7. 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
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may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new
bylaws may be adopted by the stockholders or by the board of directors 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 bylaws be contained in
the notice of such special meeting.
15
<PAGE>
ARTICLES OF INCORPORATION
OF
LEVAN BUILDERS SUPPLY, INCORPORATED
-----------------------------------
STATE OF OKLAHOMA )
) ss.
COUNTY OF TULSA )
TO: SECRETARY OF STATE OF THE STATE OF OKLAHOMA
We, the undersigned Incorporators:
NAME ADDRESS
---- -------
Harry M. LeVan 816 Twin Oaks, Broken Arrow, OK 74012
Patricia A. LeVan 816 Twin Oaks, Broken Arrow, OK 74012
Terrel Taylor 2450 S.E. Washington Blvd., Bartlesville, OK 74003
being persons legally competent to enter into contracts, for the purpose of
forming a corporation under the "Business Corporation Act" of the State of
Oklahoma, do hereby adopt the following Articles of Incorporation:
ARTICLE ONE
The name of this corporation is LeVAN BUILDERS SUPPLY, INCORPORATED.
ARTICLE TWO
The address of its registered office in the State of Oklahoma is 816 Twin
Oaks, Broken Arrow, Tulsa County, Oklahoma 74012, and the name of its registered
agent at such address is Harry M. LeVan.
<PAGE>
ARTICLE THREE
The duration of the corporation is fifty (50) years.
ARTICLE FOUR
The purpose for which the corporation is formed are: To carry on any
business whatsoever that this corporation may deem proper or convenient; that it
may deem calculated, directly or indirectly, to improve the interests of this
corporation, and to do all things specified in the Business Corporation Act of
the State of Oklahoma, and to have and to exercise all powers conferred by the
laws of the State of Oklahoma on corporations formed under the laws pursuant to
which and under which this corporation is formed, as such laws are now in effect
or may at any time hereafter be amended, and to do any and all things
hereinabove set forth to the same extent and as fully as natural persons might
or could do, either alone or in connection with any other persons, firms,
associations or corporations, and in any part of the world.
ARTICLE FIVE
The aggregate number of shares which the corporation shall have authority
to allot is fifty thousand (50,000).
The designation of each class, the number of shares of each class, and the
par value of the shares in each class are as follows:
CLASS NUMBER PAR VALUE
- ----- ------ ---------
Common 50,000 $ 1.00
TOTAL PAR VALUE $ 50,000.00
2
<PAGE>
ARTICLE SIX
When the Board of Directors so determine, any issuance of stock as
authorized under these Articles of Incorporation or any Amended Articles of
Incorporation shall first be offered at par value pro rata to the stockholders
in relation to their then present holdings. Such preemptive right shall apply
to the purchase or subscription for any stock of any class which the corporation
may issue or sell whether or not exchangeable for any stock in the corporation
of any class or classes, and whether out of unissued shares authorized by the
Articles of Incorporation as originally filed or by any Amendment thereof, or
out of the shares of stock of the corporation acquired by it after the issue
thereof, and whether issued for cash, labor done, personal property, or real
property, or leases thereof.
ARTICLE SEVEN
The amount of stated capital with which the corporation shall begin
business is Five Thousand Dollars ($5,000.00) which has been fully paid in.
(Affidavit is attached.)
ARTICLE EIGHT
The number and class of shares to be allotted by the corporation before it
shall begin business and the consideration to be received by the corporation
therefor are as follows: Five thousand shares, common stock for a consideration
of Five Thousand Dollars ($5,000.00).
ARTICLE NINE
The number of Directors to be elected at the first meeting of shareholders
is three (3).
3
<PAGE>
ARTICLE TEN
No right to dissent, as set out in the "Business Corporation Act" of the
State of Oklahoma, or subsequent amendments and supplements thereto, shall exist
in behalf of any stockholders of this corporation as to any specified corporate
action or as to all corporate action if such action be approved by the vote or
written consent of the holders of at least two-thirds of all outstanding shares
of the corporation.
ARTICLE ELEVEN
The Directors of this corporation shall have the authority to adopt, alter
or repeal By-Laws for the corporation to the extent permitted by law unless the
shareholders, by appropriate action, specifically limit this authority.
ARTICLE TWELVE
The names and residence addresses of all the original shareholders,
directors and officers of the corporation are:
NAME ADDRESS
---- -------
Harry M. LeVan 816 Twin Oaks, Broken Arrow, OK 74012
Patricia A. LeVan 816 Twin Oaks, Broken Arrow, OK 74012
Terrel Taylor 2450 S.E. Washington Blvd., Bartlesville, OK 74003
4
<PAGE>
In Witness Whereof, We have executed these Articles of Incorporation in
triplicate on this 16th day of June, 1978.
/s/ Harry M. LeVan
-------------------------------------
Harry M. LeVan
/s/ Patricia A. LeVan
-------------------------------------
Patricia A. LeVan
/s/ Terrel Taylor
-------------------------------------
Terrel Taylor
5
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
LeVAN BUILDERS SUPPLY, INCORPORATED
The undersigned, being the Vice President and Secretary, respectively, of
LeVan Builders Supply, Incorporated, an Oklahoma corporation (the
"Corporation"), do hereby certify:
FIRST: The name of the Corporation is LeVan Builders Supply, Incorporated.
SECOND: The Articles of Incorporation were filed with the Secretary of
State of Oklahoma on June 20, 1978.
THIRD: The Articles of Incorporation are hereby amended by adding the
provisions set forth in EXHIBIT A hereto (and incorporated herein by reference)
as Article THIRTEENTH.
FOURTH: The Articles of Incorporation are hereby amended by adding the
provisions set forth in EXHIBIT B hereto (and incorporated herein by reference)
as Article FOURTEENTH.
FIFTH: The aforementioned amendments to the Articles of Incorporation were
duly adopted in accordance with the Oklahoma General Corporation Act (the
"OGCA"). Written consent of the Corporation's sole stockholder has been given
in accordance with the provisions of the OGCA.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed pursuant to the OGCA by the undersigned duly authorized
officers of the Corporation as of the 7th day of September, 1993.
LeVAN BUILDERS SUPPLY, INCORPORATED
By: /s/ Fergus J. Walker, Jr.
----------------------------------
Fergus J. Walker, Jr.
Vice President
ATTEST:
/s/ Paul L. Barrett
- --------------------------------
Paul L. Barrett
Secretary
2
<PAGE>
EXHIBIT A
ARTICLE THIRTEENTH
The Corporation shall indemnify any person who was, is, or is threatened
to be made a party to a proceeding (as hereinafter defined) by reason of the
fact that he or she (i) is or was a director or officer of the Corporation or
(ii) while a director or officer of the Corporation, 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, to the
fullest extent permitted under the Oklahoma General Corporation Act (the
"OGCA"), as the same exists or may hereafter be amended. Such right shall be
a contract right and as such shall run to the benefit of any director or
officer who is elected and accepts the position of director or officer of the
Corporation or elects to continue to serve as a director or officer of the
Corporation while this Article Thirteenth is in effect. Any repeal or
amendment of this Article Thirteenth shall be prospective only and shall not
limit the rights of any such director or officer or the obligations of the
Corporation with respect to any claim arising from or related to the services
of such director or officer in any of the foregoing capacities prior to any
such repeal or amendment to this Article Thirteenth. Such right shall
include the right to be paid by the Corporation expenses incurred in
investigating or defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the OGCA, as the same
exists or may hereafter be amended. If a claim for indemnification or
advancement of expenses hereunder is not paid in full by the Corporation
within sixty (60) days after a written claim has been received by the
Corporation, 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 also be entitled to be paid the expenses
of prosecuting such claim. It shall be a defense to any such action that
such indemnification or advancement of costs of defense is not permitted
under the OGCA, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its board of
directors or any committee thereof, independent legal counsel, or
stockholders) to have made its determination
3
<PAGE>
prior to the commencement of such action that indemnification of, or
advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible
shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death
of any person having a right of indemnification under the foregoing
provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights
conferred above shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, by-law, resolution of
stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Thirteenth shall extend to proceedings involving the negligence of such
person.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
4
<PAGE>
EXHIBIT B
ARTICLE FOURTEENTH
A director of the Corporation shall not be personally 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
knowing violation of law, (iii) under the OGCA, or (iv) for any transaction
from which the director derived an improper personal benefit. Any repeal or
amendment of this Article Fourteenth by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on
the personal liability of a director of the corporation arising from an act
or omission occurring prior to the time of such repeal or amendment. In
addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
Fourteenth, a director shall not be liable to the Corporation or its
stockholders to such further extent as permitted by any law hereafter
enacted, including without limitation any subsequent amendment to the OGCA.
5
<PAGE>
BY-LAWS
OF
LEVAN BUILDERS SUPPLY, INCORPORATED
ARTICLE ONE
This corporation shall be known as LeVAN BUILDERS SUPPLY, INCORPORATED.
ARTICLE TWO
The principal place of business shall be at Broken Arrow, Oklahoma, and
branch offices may be maintained at other places which the Directors may
determine from time to time.
ARTICLE THREE
SECTION ONE. The control of this company shall be vested in a Board of
Directors composed of three (3) members.
SECTION TWO. The Directors shall be elected by the stockholders and shall
serve one (1) year until their successors are elected.
SECTION THREE. The Directors shall elect the following officers:
President, Vice-President and Secretary-Treasurer. In addition, there shall be
named such other officers (including assistant secretaries and assistant
treasurers) as may be determined by the Board to be necessary. Said officers
shall have control of the property and operation of the business of the
corporation, subject only to the control of the Board of Directors.
SECTION FOUR. The Directors shall meet annually immediately after the
annual stockholders' meeting. At that time they shall elect officers for the
ensuing year and transact any other business that may concern the corporation to
be acted upon by them. Special meetings of Directors may be called at any time
by the President or Secretary upon the written request of any Director and
notice thereof in writing must be mailed to each Director at least five (5) days
in advance of such meeting; provided, that the notices required under this
Section may be waived by the written assent of all the Directors. Any Director
by attendance at any meeting shall be deemed to have waived notice thereof.
SECTION FIVE. Vacancies occurring during the year in any office or in the
Board of Directors may be filled by the Board, and the Board can remove any
officer by a majority vote. Compensation, if any, of all the officers shall be
fixed by the Board of Directors.
SECTION SIX. The Directors, as such, shall not receive any stated salaries
for their services, but by resolution of the Board a fixed sum for expenses may
be allowed for attendance at any regular or special meeting; provided, that
nothing herein contained shall be construed as precluding any Director from
serving the corporation in any other capacity and receiving compensation
therefor.
<PAGE>
SECTION SEVEN. The Directors shall have power to create, make and issue
mortgages, bonds, deeds of trust, trust agreements and negotiable or
transferable instruments and securities secured by mortgage or otherwise, and
can do every other act and thing necessary to effect the same including the
delegation to the officers of the corporation of the power to execute and issue
such instruments.
SECTION EIGHT. In addition to such express powers as are conferred hereby,
said Board may do all other acts as in the usual course of events shall be
deemed to be necessary or desirable for the best interests of the corporation
and not required to be exercised by the stockholders.
SECTION NINE. Any two Directors present at any regular or special meeting
shall constitute a quorum.
SECTION TEN. Any action which might be taken at a meeting of the Board of
Directors may be taken without a meeting if a record or memorandum thereof be
made in writing and signed by all the members of the Board.
ARTICLE FOUR
The annual meeting of the stockholders shall be held on the second Monday
in July commencing with the year 1979 or on the following day if that day be a
holiday. Meetings shall be held at the principal place of business unless upon
request in writing by a majority of the stockholders the Secretary may change
the meeting place. Written notice of meetings must be mailed to each stockholder
by the Secretary at least ten (10) days prior to such meeting. Special meetings
of stockholders may be called by the President upon a written request of two
stockholders. Notice thereof must be given in writing at least five (5) days
prior thereto. Notice of any meeting may be waived in writing or by attendance
of such meeting, but all stockholders must waive notice to preclude the
necessity of notice.
At all meetings a majority of the subscribed shares of stock issued and
outstanding must be represented in person or by proxy in writing. The
stockholders shall elect the Board of Directors at the annual meeting and a
majority of the subscribed shares of stock shall be necessary elect. Each holder
of voting stock shall be entitled to one vote for each share of stock standing
in his or her name on the books of the company ten (10) days prior to such
meeting. If, for any reason, Directors are not elected at the annual meeting,
then they shall be elected at a special meeting called for that purpose, which
special meeting may be called at the request of any stockholder or Director.
Any action which might be taken at a meeting of the stockholders may be
taken without a meeting if a record or memorandum thereof be made in writing and
signed by all of the stockholders.
2
<PAGE>
ARTICLE FIVE
SECTION ONE. The officers of the corporation shall be chosen by the
Directors and shall be: President, Vice-President, and Secretary-Treasurer and
such other officers (including assistant secretaries and assistant treasurers)
as the Board may determine from time to time.
SECTION TWO. Officers shall hold office until their successors are chosen
and qualify in their stead. Any officer or employee may be removed at any time
by the affirmative vote of a majority of the entire Board of Directors.
SECTION THREE. The President shall be the chief executive officer of the
corporation; he shall preside at all meetings of stockholders and Directors; he
shall perform such other functions and duties as may be authorized by the Board
of Directors; he shall execute bonds, mortgages, contracts, deeds, and other
instruments on behalf of the corporation and where required shall execute the
same under the seal of the corporation.
SECTION FOUR. The Vice-President in the absence or disability of the
President shall preside over meetings of the stockholders and carry on the other
duties of the President.
SECTION FIVE. The Secretary shall be present at all meetings of the
stockholders and Directors, and shall take and keep full minutes thereof; he
shall keep a stock book in which he shall enter all transfers of stock; he shall
have charge of all records of the corporation, together with the seal and
charter, and he shall have authority to affix the seal. He shall give notice of
all meetings of stockholders and Directors as herein provided. He shall attest
all certificates of stock, deeds, mortgages, contracts and other instruments
executed by the corporation and shall have such other duties as may be
determined by the Directors. In the absence of the Secretary, an assistant
secretary may perform his duties.
SECTION SIX. The Treasurer, who may be the Secretary as well, 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, and he shall perform such other duties as the Board
of Directors shall prescribe.
SECTION SEVEN. At the annual stockholders' meeting, all officers shall
render reports of the business transacted by them, and such reports shall only
be in writing if so requested by the Board of Directors or by a majority of the
stockholders.
ARTICLE SIX
The certificates of stock of the corporation 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 number of shares and shall be signed by the President or
the Vice-President and attested by the Secretary or assistant Secretary.
3
<PAGE>
ARTICLE SEVEN
Transfers of stock shall be made on the books of the corporation only by
the persons named in the certificate or by attorney lawfully constituted in
writing, and upon surrender of the certificate therefor. The Board of Directors
may close the transfer books at their discretion for a period not exceeding
thirty (30) days preceding any meeting, annual or special, of the stockholders,
or preceding the day appointed for the payment of a dividend.
ARTICLE EIGHT
Any person claiming a certificate of stock to have been lost or destroyed
shall make an Affidavit or affirmation of that fact and advertise the same in
such manner as the Board of Directors may require, and shall, as the Directors
so require, give the corporation a bond of indemnity in form and with one or
more sureties satisfactory to the Board in at least double the value of the
stock represented by said certificate; whereupon, a new certificate will be
issued in the same tenor and for the same number of shares as the one alleged to
have been lost or destroyed.
ARTICLE NINE
The fiscal year of the corporation shall be from July 1 through June 30
commencing with the calendar year 1978. The Board of Directors shall have the
authority to alter or amend such fiscal year.
ARTICLE TEN
Dividends upon the capital stock of the corporation when earned may be
declared by the Board of Directors at any regular or special meeting. Before
payment of any dividend or making any distribution of profits there may be set
aside out of the surplus or net profits of the corporation such sum or sums as
the Directors from time to time in their absolute discretion think proper as
conducive to the best interests of the corporation.
ARTICLE ELEVEN
The corporate seal shall be the usual and customary paperpress seal
containing the words "Corporate Seal of LeVan Builders Supply, Incorporated,
State of Oklahoma", and such seal shall be in the care of the Secretary.
ARTICLE TWELVE
The Board of Directors shall have the power to make, amend, and repeal the
By-Laws of the corporation by a vote of a majority of all the Directors at any
regular or special meeting of the Board. The stockholders, by an affirmative
vote of a majority of the stock issued and outstanding, may make, alter or amend
by By-Laws at any regular meeting or any special meeting if notice thereof be
contained in the notice of such special meeting.
4
<PAGE>
Dated this 30th day of June, 1978.
/s/ HARRY M. LEVAN
--------------------------------------
Harry M. LeVan
/s/ Patricia A. LeVan
--------------------------------------
Patricia A. LeVan
/s/ Terrel Taylor
--------------------------------------
Terrel Taylor
5
<PAGE>
CERTIFICATE OF INCORPORATION
OF
RBP OF ARIZONA, INC.
- -------------------------------------------------------------------------------
I, the undersigned natural person acting as an incorporator of a corporation
(hereinafter called the "Corporation") under the General Corporation Law of the
State of Delaware, do hereby adopt the following Certificate of Incorporation
for the Corporation:
FIRST: The name of the Corporation is RBP of Arizona, Inc.
SECOND: The registered office of the Corporation in the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
THIRD: The purpose for which the Corporation is organized is to engage in
any and all lawful acts and activity for which corporations may be organized
under the General Corporation Law of Delaware. The Corporation will have
perpetual existence.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 1,000 shares, par value $.01 per share, designated
Common Stock.
FIFTH: The name of the incorporator of the Corporation is Annette Beebe,
and the mailing address of such incorporator is Founders Square, Suite 100, 900
Jackson Street, Dallas, Texas 75202-4499.
SIXTH: Directors of the Corporation need not be elected by written ballot
unless the by-laws of the Corporation otherwise provide.
SEVENTH: The directors of the Corporation shall have the power to adopt,
amend, and repeal the by-laws of the Corporation.
<PAGE>
EIGHTH: No contract or transaction between the Corporation and one or more
of its directors, officers, or stockholders or between the Corporation and any
person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved, or ratified by the board of directors, a committee thereof, or the
stockholders, Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.
NINTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director of officer of the Corporation, 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, to the
fullest extent permitted under the Delaware General Corporation Law, as the same
exists or may hereinafter be amended. Such right shall be a contract right and
as such shall run to the benefit of any director or officer who is elected and
accepts the position of director or officer of the Corporation or elects to
continue to serve as a director or officer of the Corporation while this Article
Ninth is in effect. Any repeal or amendment of this Article
2
<PAGE>
Ninth shall be prospective only and shall not limit the rights of any such
director or officer or the obligations of the Corporation with respect to any
claim arising from or related to the services of such director or officer in
any of the foregoing capacities prior to any such repeal or amendment to this
Article Ninth. Such right shall include the right to be paid by the
Corporation expenses incurred in defending any such proceeding in advance of
its final disposition to the maximum extent permitted under the Delaware
General Corporation Law, as the same exists or may hereafter be amended. If a
claim for indemnification or advancement of expenses hereunder is not paid in
full by the Corporation within sixty (60) days after a written claim has been
received by the Corporation, 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 also be entitled to be paid
the expenses of prosecuting such claim. It shall be a defense to any such
action that such indemnification or advancement of costs of defense are not
permitted under the Delaware General Corporation Law, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its board of directors or any committee thereof,
independent legal counsel, or stockholders) to have made its determination
prior to the commencement of such action that indemnification of, or
advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible
shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death
of any person having a right of indemnification under the foregoing
provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights conferred
above shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, by-law, resolution of stockholders or
directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
3
<PAGE>
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such action, suit, or proceeding,
and any inquiry or investigation that could lead to such an action, suit, or
proceeding.
TENTH: A director of the Corporation shall not be personally 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 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. Any repeal or amendment of this Article Tenth by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation arising from an act or omission occurring prior to the time of such
repeal or amendment. In addition to the circumstances in which a director of
the Corporation is not personally liable as set forth in the foregoing
provisions of this Article Tenth, a director shall not be liable to the
Corporation or its stockholders to such further extent as permitted by any law
hereafter enacted, including without limitation any subsequent amendment to the
Delaware General Corporation Law.
I, the undersigned, for the purpose of forming the Corporation under the
laws of the State of Delaware, do make, file, and record this Certificate of
Incorporation and do certify that this is my act and deed and that the facts
stated herein are true and, accordingly, I do hereunto set my hand on this 19th
day of February, 1991.
/s/ Annette Beebe
----------------------------------
Annette Beebe, Incorporator
4
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
RBP OF ARIZONA, INC.
The undersigned, being the Executive Vice President and Secretary,
respectively, of RBP of Arizona, Inc., a Delaware corporation (the
"Corporation"), do hereby certify:
FIRST: The name of the Corporation is RBP of Arizona, Inc.
SECOND: The Certificate of Incorporation was filed with the Secretary of
State of Delaware on February 19, 1991.
THIRD: Article NINTH of the Certificate of Incorporation is hereby amended
by to read in its entirety as set forth in EXHIBIT A hereto (and incorporated
herein by reference).
FOURTH: Article TENTH of the Certificate of Incorporation is hereby
amended to read in its entirety as set forth in EXHIBIT B hereto (and
incorporated herein by reference).
FIFTH: The aforementioned amendments to the Certificate of Incorporation
were duly adopted in accordance with Section 242 of the General Corporation Law
of the State of Delaware (the "DGCL"). Written consent of the Corporation's
sole stockholder has been given in accordance with the provisions of Section 228
of the DGCL.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed pursuant to Section 103(a)(2) of the DGCL by the
undersigned duly authorized officers of the Corporation as of the 7th day of
September, 1993.
RBP OF ARIZONA, INC.
By: /s/ Fergus J. Walker, Jr.
---------------------------------
Fergus J. Walker, Jr.
Executive Vice President
ATTEST:
/s/ Paul L. Barrett
- ---------------------------------
Paul L. Barrett
Secretary
2
<PAGE>
EXHIBIT A
NINTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, 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, to the
fullest extent permitted under the General Corporation Law of the State of
Delaware (the "DGCL"), as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article Ninth is in effect. Any repeal or
amendment of this Article Ninth shall be prospective only and shall not limit
the rights of any such director or officer or the obligations of the Corporation
with respect to any claim arising from or related to the services of such
director or officer in any of the foregoing capacities prior to any such repeal
or amendment to this Article Ninth. Such right shall include the right to be
paid by the Corporation expenses incurred in investigating or defending any such
proceeding in advance of its final disposition to the maximum extent permitted
under the DGCL, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, 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 also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense is not permitted under the
DGCL, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its board of directors or any
committee thereof, independent legal counsel, or stockholders) to have made its
determination prior to the commencement of such action that indemnification of,
or advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal
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<PAGE>
counsel, or stockholders) that such indemnification or advancement is not
permissible shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death
of any person having a right of indemnification under the foregoing
provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights conferred
above shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, by-law, resolution of stockholders or
directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Ninth shall extend to proceedings involving the negligence of such
person.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
4
<PAGE>
EXHIBIT B
TENTH: A director of the Corporation shall not be personally 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 knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or amendment of this Article Tenth by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation arising from an act or
omission occurring prior to the time of such repeal or amendment. In addition
to the circumstances in which a director of the Corporation is not personally
liable as set forth in the foregoing provisions of this Article Tenth, a
director shall not be liable to the Corporation or its stockholders to such
further extent as permitted by any law hereafter enacted, including without
limitation any subsequent amendment to the DGCL.
5
<PAGE>
BY-LAWS
OF
RBP OF ARIZONA, INC.
A Delaware Corporation
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent . . . . . . . . . . . . . . . . . . . . .1
1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.2 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.4 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.5 Voting List . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.6 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.7 Required Vote: Withdrawal of Quorum . . . . . . . . . . . . . . . . .4
2.8 Method of Voting; Proxies . . . . . . . . . . . . . . . . . . . . . .4
2.9 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.10 Conduct of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . .6
2.11 Inspectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE THREE: DIRECTORS
3.1 Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.2 Number; Qualification; Election; Term . . . . . . . . . . . . . . . .7
3.3 Change in Number. . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.4 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.6 Meetings of Directors . . . . . . . . . . . . . . . . . . . . . . . .8
3.7 First Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.8 Election of Officers. . . . . . . . . . . . . . . . . . . . . . . . .9
3.9 Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.10 Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.11 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.12 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . . . .9
3.13 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Presumption of Assent . . . . . . . . . . . . . . . . . . . . . . . 10
3.15 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE FOUR: COMMITTEES
4.1 Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Number; Qualification; Term . . . . . . . . . . . . . . . . . . . . 11
4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Committee Changes . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Alternate Members of Committees . . . . . . . . . . . . . . . . . . 11
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4.6 Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . . . 12
4.9 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE FIVE: NOTICE
5.1 Method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. . . . . . . . . . . . . . . . . . . 13
6.2 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . 14
6.7 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.8 Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.9 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.10 Assistant Treasurers. . . . . . . . . . . . . . . . . . . . . . . . 15
6.11 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.12 Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares . . . . . . . . . . . . . . . . . . . . . . 16
7.2 Replacement of Lost or Destroyed Certificates . . . . . . . . . . . 17
7.3 Transfer of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 17
7.4 Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . 17
7.5 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.6 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.5 Seal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.6 Resignations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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8.7 Securities of Other Corporations. . . . . . . . . . . . . . . . . . 19
8.8 Telephone Meetings. . . . . . . . . . . . . . . . . . . . . . . . . 19
8.9 Action Without a Meeting. . . . . . . . . . . . . . . . . . . . . . 19
8.10 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . . . . . 20
8.11 Mortgages, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.12 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.13 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.14 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
iii
<PAGE>
BY-LAWS
OF
RBP OF ARIZONA, INC.
A Delaware Corporation
PREAMBLE
These by-laws are subject to, and governed by, the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of RBP of Arizona, Inc., a Delaware corporation
(the "Corporation"). In the event of a direct conflict between the
provisions of these by-laws and the mandatory provisions of the Delaware
General Corporation Law or the provisions of the certificate of incorporation
of the Corporation, such provisions of the Delaware General Corporation Law
or the certificate of incorporation of the Corporation, as the case may be,
will be controlling.
ARTICLE ONE: OFFICES
1.1 REGISTERED OFFICE AND AGENT. The registered office and registered
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State
of the State of Delaware.
1.2 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 as the business of the
Corporation may require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 ANNUAL MEETING. An annual meeting of stockholders of the
Corporation shall be held each calendar year on such date and at such time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting or in a duly executed waiver
<PAGE>
of notice of such meeting. At such meeting, the stockholders shall elect
directors and transact such other business as may properly be brought before
the meeting.
2.2 SPECIAL MEETING. A special meeting of the stockholders may be
called at any time by the Chairman of the Board, the President, the board of
directors, and shall be called by the President or the Secretary at the
request in writing of the stockholders of record of not less than ten percent
of all shares entitled to vote at such meeting or as otherwise provided by
the certificate of incorporation of the Corporation. A special meeting shall
be held on such date and at such time as shall be designated by the person(s)
calling the meeting and stated in the notice of the meeting or in a duly
executed waiver of notice of such meeting. Only such business shall be
transacted at a special meeting as may be stated or indicated in the notice
of such meeting or in a duly executed waiver of notice of such meeting.
2.3 PLACE OF MEETINGS. An annual meeting of stockholders may held at
any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within
or without the State of Delaware designated in the notice of the meeting or a
duly executed waiver of notice of such meeting. Meetings of stockholders
shall be held at the principal office of the Corporation unless another place
is designated for meetings in the manner provided herein.
2.4 NOTICE. Written or printed notice stating the place, day, and time
of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not
less than ten nor more than 60 days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the
Secretary, or the officer or person(s) calling the meeting, to each
stockholder of record entitled to vote at such meeting. If such notice is to
be sent by mail, it shall be directed to such stockholder at his address as
it appears on the records of the Corporation, unless he shall have filed with
the Secretary of the Corporation a written request that notices to him be
mailed to some other address, in which case it shall be directed to him at
such other address. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall attend such meeting in
person or by proxy and shall not, at the beginning of such meeting, object to
the
2
<PAGE>
transaction of any business because the meeting is not lawfully called or
convened, or who shall, either before or after the meeting, submit a signed
waiver of notice, in person or by proxy.
2.5 VOTING LIST. At least ten days before each meeting of stockholders,
the Secretary or other officer of the Corporation who has charge of the
Corporation's stock ledger, either directly or through another officer
appointed by him or through a transfer agent appointed by the board of
directors, shall prepare a complete list of stockholders entitled to vote
thereat, arranged in alphabetical order and showing the address of each
stockholder and number of shares registered in the name of each stockholder.
For a period of ten days prior to such meeting, such list shall be kept on
file at a place within the city where the meeting is to be held, which place
shall be specified in the notice of meeting or a duly executed waiver of
notice of such meeting or, if not so specified, at the place where the
meeting is to be held and shall be open to examination by any stockholder
during ordinary business hours. Such list shall be produced at such meeting
and kept at the meeting at all times during such meeting and may be inspected
by any stockholder who is present.
2.6 QUORUM. The holders of a majority of the outstanding shares
entitled to vote on a matter, present in person or by proxy, shall constitute
a quorum at any meeting of stockholders, except as otherwise provided by law,
the certificate of incorporation of the Corporation, or these by-laws. If a
quorum shall not be present, in person or by proxy, at any meeting of
stockholders, the stockholders entitled to vote thereat who are present, in
person or by proxy, or, if no stockholder entitled to vote is present, any
officer of the Corporation may adjourn the meeting from time to time, without
notice other than announcement at the meeting (unless the board of directors,
after such adjournment, fixes a new record date for the adjourned meeting),
until a quorum shall be present, in person or by proxy. At any adjourned
meeting at which a quorum shall be present, in person or by proxy, any
business may be transacted which may have been transacted at the original
meeting had a quorum been present; provided that, if the adjournment is for
more than 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 adjourned meeting.
3
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2.7 REQUIRED VOTE: WITHDRAWAL OF QUORUM. When a quorum is present at
any meeting, the vote of the holders of at least a majority of the
outstanding shares entitled to vote who are present, in person or by proxy,
shall decide any question brought before such meeting, unless the question is
one on which, by express provision of statute, the certificate of
incorporation of the Corporation, or these by-laws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question. The stockholders present at a duly constituted
meeting may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum.
2.8 METHOD OF VOTING; PROXIES. Except as otherwise provided in the
certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors
need not be by written ballot. At any meeting of stockholders, every
stockholder having the right to vote may vote either in person or by a proxy
executed in writing by the stockholder or by his duly authorized
attorney-in-fact. Each 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 three years from the date of its execution, unless otherwise provided
in the proxy. If no date is stated in a proxy, such proxy shall be presumed
to have been executed on the date of the meeting at which it is to be voted.
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 or unless otherwise made irrevocable by law.
2.9 RECORD DATE. (a) 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 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 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, for any such
determination of stockholders, such date in any case to be not more than 60
days and not less than ten days prior to such meeting nor more than 60 days
prior to any other action. If no record date is fixed:
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<PAGE>
(i) 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.
(ii) 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.
(iii) 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.
(b) 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 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 law or these by-laws, 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 in the State of Delaware, principal place of business, or
such officer or agent 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 law or
these by-laws, the record date for determining stockholders entitled to
consent to
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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.
2.10 CONDUCT OF MEETING. The Chairman of the Board, if such office has
been filled, and, if not or if the Chairman of the Board is absent or
otherwise unable to act, the President shall preside at all meetings of
stockholders. The Secretary shall keep the records of each meeting of
stockholders. In the absence or inability to act of any such officer, such
officer's duties shall be performed by the officer given the authority to act
for such absent or non-acting officer under these by-laws or by some person
appointed by the meeting.
2.11 INSPECTORS. The board of directors may, in advance of any meeting
of stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If any of the inspectors so appointed shall fail to
appear or act, the chairman of the meeting shall, or if inspectors shall not
have been appointed, the chairman of the meeting may, appoint one or more
inspectors. Each inspector, 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 shall determine the number of shares of capital
stock of the Corporation outstanding and the voting power of each, the number
of shares represented at the meeting, the existence of a quorum, and the
validity and effect of proxies and shall receive votes, ballots, or consents,
hear and determine all challenges and questions arising in connection with
the right to vote, count and tabulate all votes, ballots, or consents,
determine the results, and do such acts as are proper to conduct the election
or vote with fairness to all stockholders. On request of the chairman of the
meeting, the inspectors shall make a report in writing of any challenge,
request, or matter determined by them and shall execute a certificate of any
fact found by them. No director or candidate for the office of director
shall act as an inspector of an election of directors. Inspectors need not be
stockholders.
ARTICLE THREE: DIRECTORS
3.1 MANAGEMENT. The business and property of the Corporation shall be
managed by the board of directors. Subject to the restrictions imposed by law,
the certificate of
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incorporation of the Corporation, or these by-laws, the board of directors
may exercise all the powers of the Corporation.
3.2 NUMBER; QUALIFICATION; ELECTION; TERM. The number of directors
which shall constitute the entire board of directors shall be not less than
one. The first board of directors shall consist of the number of directors
named in the certificate of incorporation of the Corporation or, if no
directors are so named, shall consist of the number of directors elected by
the incorporator(s) at an organizational meeting or by unanimous written
consent in lieu thereof. Thereafter, within the limits above specified, the
number of directors which shall constitute the entire board of directors
shall be determined by resolution of the board of directors or by resolution
of the stockholders at the annual meeting thereof or at a special meeting
thereof called for that purpose. Except as otherwise required by law, the
certificate of incorporation of the Corporation, or these by-laws, the
directors shall be elected at an annual meeting of stockholders at which a
quorum is present. Directors shall be elected by a plurality of the votes of
the shares present in person or represented by proxy and entitled to vote on
the election of directors. Each director so chosen shall hold office until
the first annual meeting of stockholders held after his election and until
his successor is elected and qualified or, if earlier, until his death,
resignation, or removal from office. None of the directors need be a
stockholder of the Corporation or a resident of the State of Delaware. Each
director must have attained the age of majority.
3.3 CHANGE IN NUMBER. No decrease in the number of directors
constituting the entire board of directors shall have the effect of
shortening the term of any incumbent director.
3.4 REMOVAL. Except as otherwise provided in the certificate of
incorporation of the Corporation or these by-laws, at any meeting of
stockholders called expressly for that purpose, any director or the entire
board of directors may be removed, with or without cause, by a vote of the
holders of a majority of the shares then entitled to vote on the election of
directors; provided, however, that so long as stockholders have the right to
cumulate votes in the election of directors pursuant to the certificate of
incorporation of the Corporation, if less than the entire board of directors
is to be removed, no one of the directors may be removed if the votes cast
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against his removal would be sufficient to elect him if then cumulatively
voted at an election of the entire board of directors.
3.5 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
the sole remaining director, and each director so chosen shall hold office
until the first annual meeting of stockholders held after his election and
until his successor is elected and qualified or, if earlier, until his death,
resignation, or removal from office. If there are no directors in office, 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 of directors (as constituted immediately prior to any such increase),
the Court of Chancery may, upon application of any stockholder or
stockholders holding at least 10% 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. Except as otherwise provided in these by-laws, when one or more
directors shall resign from the board of directors, effective at a future
date, a majority of the directors then in office, including those who have so
resigned, shall have the power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in these
by-laws with respect to the filling of other vacancies.
3.6 MEETINGS OF DIRECTORS. The directors may hold their meetings and
may have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time to time determine or as
shall be specified in the notice of such meeting or duly executed waiver of
notice of such meeting.
3.7 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,
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immediately after and at the same place as the annual meeting of
stockholders, and no notice of such meeting shall be necessary.
3.8 ELECTION OF OFFICERS. At the first meeting of the board of
directors after each annual meeting of stockholders at which a quorum shall
be present, the board of directors shall elect the officers of the
Corporation.
3.9 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.
3.10 SPECIAL MEETINGS. Special meetings of the board of directors shall
be held whenever called by the Chairman of the Board, the President, or any
director.
3.11 NOTICE. The Secretary shall give notice of each special meeting to
each director at least 24 hours before the meeting. Notice of any such
meeting need not be given to any director who shall, either before or after
the meeting, submit a signed waiver of notice or who shall attend such
meeting without protesting, prior to or at its commencement, the lack of
notice to him. 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.
3.12 QUORUM; MAJORITY VOTE. At all meetings of the board of directors, a
majority of the directors fixed in the manner provided in these by-laws shall
constitute a quorum for the transaction of business. If at any meeting of
the board of directors there be less than a quorum present, a majority of
those present or any director solely present may adjourn the meeting from
time to time without further notice. Unless the act of a greater number is
required by law, the certificate of incorporation of the Corporation, or
these by-laws, the act of a majority of the directors present at a meeting at
which a quorum is in attendance shall be the act of the board of directors.
At any time that the certificate of incorporation of the Corporation provides
that directors elected by the holders of a class or series of stock shall
have more or less than one vote
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per director on any matter, every reference in these by-laws to a majority or
other proportion of directors shall refer to a majority or other proportion
of the votes of such directors.
3.13 PROCEDURE. At meetings of the board of directors, business shall be
transacted in such order as from time to time the board of directors may
determine. The Chairman of the Board, if such office has been filled, and,
if not or if the Chairman of the Board is absent or otherwise unable to act,
the President shall preside at all meetings of the board of directors. In
the absence or inability to act of either such officer, a chairman shall be
chosen by the board of directors from among the directors present. The
Secretary of the Corporation shall act as the secretary of each meeting of
the board of directors unless the board of directors appoints another person
to act as secretary of the meeting. The board of directors shall keep
regular minutes of its proceedings which shall be placed in the minute book
of the Corporation.
3.14 PRESUMPTION OF ASSENT. A director of the Corporation who is present
at the meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action 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 secretary
of the meeting before the adjournment thereof or shall forward any dissent by
certified or 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.
3.15 COMPENSATION. The board of directors shall have the authority to
fix the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in
any other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 DESIGNATION. The board of directors may, by resolution by a
majority of the entire board of directors, designate one or more committees.
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4.2 NUMBER; QUALIFICATION; TERM. Each committee shall consist of one or
more directors appointed by resolution adopted by a majority of the entire board
of directors. The number of committee members may be increased or decreased
from time to time by resolution adopted by a majority of the entire board of
directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal as a committee member or as a
director.
4.3 AUTHORITY. Each committee, to the extent expressly provided in the
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation except to the extent expressly restricted by law,
the certificate of incorporation of the Corporation, or these by-laws.
4.4 COMMITTEE CHANGES. The board of directors shall have the power at any
time to fill vacancies in, to change the membership of, and to discharge any
committee.
4.5 ALTERNATE MEMBERS OF COMMITTEES. The board of directors may designate
one or more directors as alternate members of any committee. Any such alternate
member may replace any absent or disqualified member at any meeting of the
committee. If no alternate committee members have been so appointed to a
committee or each such alternate committee member is absent or disqualified, the
member or members of such committee 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.
4.6 REGULAR MEETINGS. Regular meetings of any committee may be held
without notice at such time and place as may be designated time to time by the
committee and communicated to all members thereof.
4.7 SPECIAL MEETINGS. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special
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meeting, to be given to each committee member at least two days before such
special meeting. Neither the business to be transacted at, nor the purpose
of, any special meeting of any committee need be specified in the notice or
waiver of notice of any special meeting.
4.8 QUORUM; MAJORITY VOTE. At meetings of any committee, a majority of
the number of members designated by the board of directors shall constitute a
quorum for the transaction of business. If a quorum is not present at a meeting
of any committee, a majority of the members present may adjourn the meeting from
time to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the certificate of incorporation of
the Corporation, or these by-laws.
4.9 MINUTES. Each committee shall cause minutes of its proceedings to be
prepared and shall report the same to the board of directors upon the request of
the board of directors. The minutes of the proceedings of each committee shall
be delivered to the Secretary of the Corporation for placement in the minute
books of the Corporation.
4.10 COMPENSATION. Committee members may, by resolution of the board of
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.11 RESPONSIBILITY. The designation of any committee and the delegation
of authority to it shall not operate to relieve the board of directors or any
director of any responsibility imposed upon it or such director by law.
ARTICLE FIVE: NOTICE
5.1 METHOD. Whenever by statute, the certificate of incorporation of the
Corporation, or these by-laws, notice is required to be given to any committee
member, director, or stockholder and no provision is made as to how such notice
shall be given, personal notice shall
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not be required and any such notice may be given (a) in writing, by mail,
postage prepaid, addressed to such committee member, director, or stockholder
at his address as it appears on the books or (in the case of a stockholder)
the stock transfer records of the Corporation, or (b) by any other method
permitted by law (including but not limited to overnight courier service,
telegram, telex, or telefax). Any notice required or permitted to be given
by mail shall be deemed to be delivered and given at the time when the same
is deposited in the United States mail as aforesaid. Any notice required or
permitted to be given by overnight courier service shall be deemed to be
delivered and given at the time delivered to such service with all charges
prepaid and addressed as aforesaid. Any notice required or permitted to be
given by telegram, telex, or telefax shall be deemed to be delivered and
given at the time transmitted with all charges prepaid and addressed as
aforesaid.
5.2 WAIVER. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these by-laws, 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. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 NUMBER; TITLES; TERM OF OFFICE. The officers of the Corporation shall
be a President, a Secretary, and such other officers as the board of directors
may from time to time elect or appoint, including a Chairman of the Board, one
or more Vice Presidents (with each Vice President to have such descriptive
title, if any, as the board of directors shall determine), and a Treasurer.
Each officer shall hold office until his successor shall have been duly elected
and shall have qualified, until his death, or until he shall resign or shall
have been removed in the manner hereinafter provided. Any two or more offices
may be held by the same person.
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None of the officers need be a stockholder or a director of the Corporation
or a resident of the State of Delaware.
6.2 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 interest 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.
6.3 VACANCIES. Any vacancy occurring in any office of the Corporation (by
death, resignation, removal, or otherwise) may be filled by the board of
directors.
6.4 AUTHORITY. Officers shall have such authority and perform such duties
in the management of the Corporation as are provided in these by-laws or as may
be determined by resolution of the board of directors not inconsistent with
these by-laws.
6.5 COMPENSATION. The compensation, if any, of officers and agents shall
be fixed from time to time by the board of directors; provided, however, that
the board of directors may delegate the power to determine the compensation of
any officer and agent (other than the officer to whom such power is delegated)
to the Chairman of the Board or the President.
6.6 CHAIRMAN OF THE BOARD. The Chairman of the Board, if elected by the
board of directors, shall have such powers and duties as may be prescribed by
the board of directors. Such officer shall preside at all meetings of the
stockholders and of the board of directors. Such officer may sign all
certificates for shares of stock of the Corporation.
6.7 PRESIDENT. The President shall be the chief executive officer of the
Corporation and, subject to the board of directors, he shall have general
executive charge, management, and control of the properties and operations of
the Corporation in the ordinary course of its business, with all such powers
with respect to such properties and operations as may be reasonably incident to
such responsibilities. If the board of directors has not elected a Chairman of
the
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Board or in the absence or inability to act of the Chairman of the Board, the
President shall exercise all of the powers and discharge all of the duties of
the Chairman of the Board. As between the Corporation and third parties, any
action taken by the President in the performance of the duties of the
Chairman of the Board shall be conclusive evidence that there is no Chairman
of the Board or that the Chairman of the Board is absent or unable to act.
6.8 VICE PRESIDENTS. Each Vice President shall have such powers and
duties as may be assigned to him by the board of directors, the Chairman of the
Board, or the President, and (in order of their seniority as determined by the
board of directors or, in the absence of such determination, as determined by
the length of time they have held the office of Vice President) shall exercise
the powers of the President during that officer's absence or inability to act.
As between the Corporation and third parties, any action taken by a Vice
President in the performance of the duties of the President shall be conclusive
evidence of the absence or inability to act of the President at the time such
action was taken.
6.9 TREASURER. The Treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate account of receipts and
disbursements, shall deposit all monies and valuable effects in the name and to
the credit of the Corporation in such depository or depositories as may be
designated by the board of directors, and shall perform such other duties as may
be prescribed by the board of directors, the Chairman of the Board, or the
President.
6.10 ASSISTANT TREASURERS. Each Assistant Treasurer shall have such powers
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President. The Assistant Treasurers (in the order of their
seniority as determined by the board of directors or, in the absence of such a
determination, as determined by the length of time they have held the office of
Assistant Treasurer) shall exercise the powers of the Treasurer during that
officer's absence or inability to act.
6.11 SECRETARY. Except as otherwise provided in these by-laws, the
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books
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provided for that purpose, and he shall attend to the giving and service of
all notices. He may sign with the Chairman of the Board or the President, in
the name of the Corporation, all contracts of the Corporation and affix the
seal of the Corporation thereto. He may sign with the Chairman of the Board
or the President all certificates for shares of stock of the Corporation, and
he shall have charge of the certificate books, transfer books, and stock
papers as the board of directors may direct, all of which shall at all
reasonable times be open to inspection by any director upon application at
the office of the Corporation during business hours. He shall in general
perform all duties incident to the office of the Secretary, subject to the
control of the board of directors, the Chairman of the Board, and the
President.
6.12 ASSISTANT SECRETARIES. Each Assistant Secretary shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Secretaries (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they have
held the office of Assistant Secretary) shall exercise the powers of the
Secretary during that officer's absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 CERTIFICATES FOR SHARES. Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or the
President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an Assistant Treasurer. Any and all signatures
on the certificate may be a facsimile and may be sealed with the seal of the
Corporation or a facsimile thereof. If any officer, transfer agent, or
registrar who has signed, or whose facsimile signature has been placed upon, a
certificate has ceased to be such officer, transfer agent, or registrar before
such certificate is issued, such certificate 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. The 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 the number of shares.
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7.2 REPLACEMENT OF LOST OR DESTROYED CERTIFICATES. The board of directors
may direct a new certificate or certificates to be issued in place of a
certificate or certificates theretofore issued by the Corporation and alleged to
have been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate or certificates representing shares to be lost
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 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 with a surety or
sureties satisfactory to the Corporation in such sum as it may direct as
indemnity against any claim, or expense resulting from a claim, that may be made
against the Corporation with respect to the certificate or certificates alleged
to have been lost or destroyed.
7.3 TRANSFER OF SHARES. 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 to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 REGISTERED STOCKHOLDERS. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock 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 law.
7.5 REGULATIONS. 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 stock of the Corporation.
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7.6 LEGENDS. The board of directors shall have the power and authority to
provide that certificates representing shares of stock bear such legends as the
board of directors deems appropriate to assure that the Corporation does not
become liable for violations of federal or state securities laws or other
applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 DIVIDENDS. Subject to provisions of law and the certificate of
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and
payment shall be at the discretion of the board of directors.
8.2 RESERVES. There may be created by the board of directors out of funds
of the Corporation legally available therefor such reserve or reserves as the
directors from time to time, in their discretion, consider proper to provide for
contingencies, to equalize dividends, or to repair or maintain any property of
the Corporation, or for such other purpose as the board of directors shall
consider beneficial to the Corporation, and the board of directors may modify or
abolish any such reserve in the manner in which it was created.
8.3 BOOKS AND RECORDS. The Corporation shall keep correct and complete
books and records of account, shall keep minutes of the proceedings of its
stockholders and board of directors and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 FISCAL YEAR. The fiscal year of the Corporation shall be fixed by the
board of directors; provided, that if such fiscal year is not fixed by the board
of directors and the selection of the fiscal year is not expressly deferred by
the board of directors, the fiscal year shall be the calendar year.
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8.5 SEAL. The seal of the Corporation shall be such as from time to time
may be approved by the board of directors.
8.6 RESIGNATIONS. Any director, committee member, or officer may resign
by so stating at any meeting of the board of directors or by giving written
notice to the board of directors, the Chairman of the Board, the President, or
the Secretary. Such resignation shall take effect at the time specified
therein or, if no time is specified therein, immediately upon its receipt.
Unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
8.7 SECURITIES OF OTHER CORPORATIONS. The Chairman of the Board, the
President, or any Vice President of the Corporation shall have the power and
authority to transfer, endorse for transfer, vote, consent, or take any other
action with respect to any securities of another issuer which may be held or
owned by the Corporation and to make, execute, and deliver any waiver, proxy, or
consent with respect to any such securities.
8.8 TELEPHONE MEETINGS. Stockholders (acting for themselves or through a
proxy), members of the board of directors, and members of a committee of the
board of directors may participate in and hold a meeting of such stockholders,
board of directors, or committee by means of a conference telephone or similar
communications equipment by means of which persons participating in the meeting
can hear each other, and 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 on the ground that the meeting is not lawfully
called or convened.
8.9 ACTION WITHOUT A MEETING. (a) Unless otherwise provided in the
certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the 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, shall be signed by the holders (acting for themselves or
through a proxy) of
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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 the
holders of 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. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent
and no written consent shall be effective to take the corporate action
referred to therein unless, within sixty days of the earliest dated consent
delivered in the manner required by this Section 8.9(a) to the Corporation,
written consents signed by a sufficient number of holders to take action are
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, principal place of business, or such officer or agent shall be by
hand or by certified or registered mail, return receipt requested.
(b) Unless otherwise restricted by the certificate of incorporation of the
Corporation or by these by-laws, any action required or permitted to be taken at
a meeting of the board of directors, or of any committee of the board of
directors, may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by all the directors or all
the committee members, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect as
a vote of such directors or committee members, as the case may be, and may be
stated as such in any certificate or document filed with the Secretary of State
of the State of Delaware or in any certificate delivered to any person. Such
consent or consents shall be filed with the minutes of proceedings of the board
or committee, as the case may be.
8.10 INVALID PROVISIONS. If any part of these by-laws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
20
<PAGE>
8.11 MORTGAGES, ETC. With respect to any deed, deed of trust, mortgage, or
other instrument executed by the Corporation through its duly authorized officer
or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage, or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the board of directors
authorizing such execution expressly state that such attestation is necessary.
8.12 HEADINGS. The headings used in these by-laws have been inserted for
administrative convenience only and do not constitute matter to be construed in
interpretation.
8.13 REFERENCES. Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 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 at any
regular meeting of the stockholders or the board of directors or at any special
meeting of the stockholders or 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.
The undersigned, the Secretary of the Corporation, hereby certifies that
the foregoing by-laws were adopted by unanimous consent by the directors of the
Corporation as of February 25, 1991.
/s/ Paul L. Barrett
---------------------------------------
Paul L. Barrett, Secretary
21
<PAGE>
CERTIFICATE OF INCORPORATION
OF
RBP CUSTOM GLASS, INC.
THE UNDERSIGNED, acting as the incorporator of a corporation under and in
accordance with the General Corporation Law of the State of Delaware, hereby
adopts the following Certificate of Incorporation for such corporation:
ARTICLE I
NAME
The name of the corporation is RBP Custom Glass, Inc. (the "Corporation").
ARTICLE II
PERIOD OF DURATION
The period of duration of the Corporation is perpetual or until dissolved
or merged or consolidated in some lawful manner.
ARTICLE III
PURPOSE AND POWERS
Section 1. PURPOSE. The purpose for which the Corporation is
organized is to engage in any lawful acts or activities for which
corporations may be organized under the General Corporation Law of the State
of Delaware (the "Act").
Section 2. POWERS. Subject to any specific written limitations or
restrictions imposed by the Act, by other law, or by this Certificate of
Incorporation, and solely in furtherance thereof, but not in addition to the
purposes set forth in Section 1 of this Article, the Corporation
<PAGE>
shall have and exercise all of the powers specified in the Act, which powers
are not inconsistent with this Certificate of Incorporation.
ARTICLE IV
CAPITALIZATION, PREEMPTIVE RIGHTS AND VOTING
Section 1. AUTHORIZED SHARES. The aggregate number of shares of
capital stock which the Corporation shall have authority to issue is Ten
Thousand (10,000), which shall be common stock, par value $0.01 per share.
Section 2. PREEMPTIVE RIGHTS. No holder of shares of capital stock
of the Corporation shall, as such holder, have any right to purchase or
subscribe for any capital stock of any class which the Corporation may issue
or sell, whether or not exchangeable for any capital stock of the Corporation
of any class or classes, whether issued out of unissued shares authorized by
this Certificate of Incorporation as originally filed or by any amendment
thereof, or out of shares of capital stock of the Corporation acquired by it
after the issue thereof; nor shall any holder of shares of capital stock of
the Corporation, as such holder, have any right to purchase, acquire or
subscribe for any securities which the Corporation may issue or sell whether
or not convertible into or exchangeable for shares of capital stock of the
Corporation of any class or classes, and whether or not any such securities
have attached or appurtenant thereto warrants, options or other instruments
which entitle the holders thereof to purchase, acquire or subscribe for
shares of capital stock of any class or classes.
Section 3. VOTING. In the exercise of voting privileges, each holder
of shares of the common stock of the Corporation shall be entitled to one (1)
vote for each share held in his name on the books of the Corporation, and
each holder of any series of preferred stock of the Corporation shall have
such voting rights, if any, as shall be specified for such series. In all
elections of Directors of the Corporation, cumulative voting is expressly
prohibited. With respect to any action to be taken by the stockholders of the
Corporation as to any matter, the affirmative vote of the holders of a
majority of the shares of the capital stock of the Corporation entitled to
vote thereon and represented in person or by proxy at a meeting of the
stockholders
2
<PAGE>
at which a quorum is present shall be sufficient to authorize, affirm, ratify
or consent to such action. Any action required by the Act to be taken at any
annual or special meeting of the stockholders may be taken without a meeting,
without prior notice, and without a vote, if a consent of consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of a majority of the outstanding shares of the capital stock of the
Corporation entitled to vote thereon and shall be delivered to the
Corporation by delivery to its registered office in Delaware, its principal
place of business or an officer or agent of the Corporation having custody of
the Corporation's minute book.
ARTICLE V
REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the Corporation is
1209 Orange Street, Wilmington, New Castle County, Delaware 19801, and the
name of the initial registered agent at such address is The Corporation Trust
Company.
ARTICLE VI
DIRECTORS
Section 1. NUMBER. The business and affairs of the Corporation shall
be managed by or be under the direction of the Board of Directors which shall
consist of not less than one director, the exact number of which shall be
determined in accordance with the Bylaws of the Corporation. A director
shall hold office until the next annual meeting of stockholders of the
Corporation and until his successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement, disqualification
or removal from office. Any director elected to fill a vacancy not resulting
from an increase in the number of directors shall have the same remaining
term as that of his predecessor. A director elected by the Board of
Directors to fill a newly created directorship resulting from an increase in
the number of directors shall hold office until the next election of
directors.
3
<PAGE>
Section 2. INITIAL BOARD OF DIRECTORS. The powers of the
incorporator shall terminate upon the filing of this Certificate of
Incorporation, and the following persons shall thereupon serve as the initial
directors of the Corporation until the next annual meeting of stockholders of
the Corporation or until their respective successors are duly elected and
qualified:
NAME ADDRESS
---- -------
Thomas W. Sturgess 2550 Walnut Hill Lane, Dallas, TX
Fergus J. Walker 2550 Walnut Hill Lane, Dallas, TX
Fred Babb 2550 Walnut Hill Lane, Dallas, TX
Section 3. LIMITATION ON LIABILITY OF DIRECTORS. Pursuant to Section
102(b)(7) of the Act, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (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) under Section 174 of the
General Corporation Law of the State of Delaware; or (4) for any transaction
from which the director derived an improper personal benefit. If the Act or
other applicable provision of Delaware law hereafter is amended to authorize
further elimination or limitation of the liability of directors, then the
liability of a director of this Corporation, in additional to the limitation
on personal liability provided herein, shall be limited to the fullest extent
permitted by the Act or other applicable provision of Delaware law as
amended. Any repeal or modification of this Section 3 by the stockholders of
this Corporation shall be prospective only, and shall not adversely affect
any limitation on the personal liability of a director of the Corporation
existing at the time of such repeal or modification.
Section 4. ELECTION AND REMOVAL OF DIRECTORS. Election of directors
need not be by written ballot. 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, except as otherwise
provided by law.
4
<PAGE>
ARTICLE VII
SPECIAL POWERS OF BOARD OF DIRECTORS
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
1. To adopt, amend or repeal the Bylaws of the Corporation;
2. To authorize and cause to be executed mortgages and liens upon the
real and personal property of the Corporation;
3. To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose, and to abolish any such
reserve in the manner in which it was created; and
4. By a majority of the whole board, to designate one or more committees,
each committee to consist of two 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; any such committee, to the extent provided in the resolution or
in the Bylaws of the Corporation, shall have and may exercise any or all of the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, except to the extent that the Act requires a particular
matter to be authorized by the Board of Directors, and may authorize the seal of
the Corporation to be affixed to all papers which may require it; provided,
however, the Bylaws may provide that in the absence or disqualification of any
member of the committee or committees, 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.
5
<PAGE>
ARTICLE VIII
ADDITIONAL POWERS IN BYLAWS
The Corporation may in its Bylaws confer powers and authorities upon the
Board of Directors in addition to the foregoing and those expressly conferred
upon them by the Act.
ARTICLE IX
INDEMNIFICATION
Section 1. MANDATORY INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
Each person who was or is made a party or is threatened to be made a party to
or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, any appeal in such action, suit or proceeding, and any inquiry
or investigation that could lead to such an action, suit, or proceeding
("Proceeding"), by reason of the fact that he is or was an officer or a
director of the Corporation, or who, while a director or officer of the
Corporation, 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 corporation, partnership, joint venture,
sole proprietorship, trust, employee benefit plan or other enterprise, shall
be indemnified and held harmless by the Corporation to the fullest extent
permitted by the Act against all judgments, penalties (including excise and
similar taxes), fines, settlements, and reasonable expenses (including
attorneys' fees) actually incurred by such person in connection with such
Proceeding. Such right shall be a contract right and shall include the right
to require advancement by the Corporation of reasonable expenses (including
attorneys' fees) incurred in defending any such Proceeding in advance of its
final disposition; provided, however, that the payment of such expenses in
advance of the final disposition of such Proceeding shall be made by the
Corporation only upon delivery to the Corporation of a written affirmation by
such person of his good faith belief that he has met the standard of conduct
necessary for indemnification under the Act and a written undertaking, by or
on behalf of such person, to repay all amounts so advanced if it should be
ultimately determined that such person has not satisfied such requirements.
6
<PAGE>
Section 2. NATURE OF INDEMNIFICATION. The indemnification and
advancement of expenses provided for herein shall not be deemed exclusive of
any other rights permitted by law to which a person seeking indemnification
may be entitled under any Bylaw, agreement, vote of stockholders or
otherwise, and shall continue as to a person who has ceased to be a director
or officer of the Corporation and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 3. INSURANCE. The Corporation shall have power to 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 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 corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the provisions of
this Article or the Act.
ARTICLE X
ARRANGEMENT WITH CREDITORS
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this 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 this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this 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 this 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 this 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 this Corporation, as the case may be,
agree to any compromise or arrangement
7
<PAGE>
and to any reorganization of this 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 this
Corporation, as the case may be, and also on this Corporation.
ARTICLE XI
TRANSACTIONS WITH INTERESTED PARTIES
No contract or other transaction between the Corporation and any other
corporation and no other acts of the Corporation with relation to any other
corporation shall, in the absence of fraud, in any way be invalidated or
otherwise affected by the fact that any one or more of the directors or
officers of the Corporation are pecuniarily or otherwise interested in, or
are directors or officers of, such other corporation. Any director or
officer of the Corporation individually, or any firm or association of which
any director or officer may be a member, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or transaction of the
Corporation, provided that the fact that he individually or as a member of
such firm or association is such a party or is so interested shall be
disclosed or shall have been known to the board of directors or a majority of
such members thereof as shall be present at any meeting of the board of
directors at which action upon any such contract or transaction shall be
taken; and any director of the Corporation who is also a director or officer
of such other corporation or who is such a party or so interested may be
counted in determining the existence of a quorum at any meeting of the board
of directors which shall authorize any such contract or transaction and may
vote thereat to authorize any such contract or transaction, with like force
and effect as if he were not such a director or officer of such other
Corporation or not so interested. Any director of the Corporation may vote
upon any contract or any other transaction between the Corporation and any
subsidiary or affiliated corporation without regard to the fact that he is
also a director or officer of such subsidiary or affiliated corporation.
Any contract, transaction, act of the Corporation or of the directors,
which shall be ratified at any annual meeting of the stockholders of the
Corporation, or at any special meeting
8
<PAGE>
of the stockholders of the Corporation, or at any special meeting called for
such purpose, shall, insofar as permitted by law, be as valid and as binding
as though ratified by every stockholder of the Corporation; PROVIDED,
HOWEVER, that any failure of the stockholders to approve or ratify any such
contract, transaction or act, when and if submitted, shall not be deemed in
any way to invalidate the same or deprive the Corporation, its directors,
officers or employees, of its or their right to proceed with such contract,
transaction or act.
ARTICLE XII
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal any
provision continued in this Certificate of Incorporation or in its Bylaws in the
manner now or hereafter prescribed by the Act or this Certificate of
Incorporation, and all rights conferred on stockholders herein are granted
subject to this reservation.
ARTICLE XIII
CAPTIONS
The captions used in this Certificate of Incorporation are for convenience
only and shall not be construed in interpreting the provisions hereof.
ARTICLE XIV
INCORPORATOR
The name and address of the incorporator are as follows:
Jeffrey M. Davis
901 Main Street, Suite 3000
Dallas, Texas 75202-3714
9
<PAGE>
IN WITNESS WHEREOF, the incorporator has executed this Certificate of
Incorporation on the 13th day of April, 1992.
INCORPORATOR:
/s/ Jeffrey M. Davis
-----------------------
Jeffrey M. Davis
10
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
RBP CUSTOM GLASS, INC.
The undersigned, being the Executive Vice President and Secretary,
respectively, of RBP Custom Glass, Inc., a Delaware corporation (the
"Corporation"), do hereby certify:
FIRST: The name of the Corporation is RBP Custom Glass, Inc.
SECOND: The Certificate of Incorporation was filed with the Secretary of
State of Delaware on April 15, 1992.
THIRD: Article IX of the Certificate of Incorporation is hereby amended to
read in its entirety as set forth in EXHIBIT A hereto (and incorporated herein
by reference).
FOURTH: Article VI, Section 3 of the Certificate of Incorporation is
hereby amended to read in its entirety as set forth in EXHIBIT B hereto (and
incorporated herein by reference).
FIFTH: The aforementioned amendments to the Certificate of Incorporation
were duly adopted in accordance with Section 242 of the General Corporation Law
of the State of Delaware (the"DGCL"). Written consent of the Corporation's sole
stockholder has been given in accordance with the provisions of Section 228 of
the DGCL.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed pursuant to Section 103(a)(2) of the DGCL by the
undersigned duly authorized officers of the Corporation as of the 7th day of
September, 1993.
RBP CUSTOM GLASS, INC.
By: /s/ Fergus J. Walker, Jr.
------------------------------
Fergus J. Walker, Jr.
Executive Vice President
ATTEST:
/s/ Paul L. Barrett
- -------------------------------
Paul L. Barrett
Secretary
2
<PAGE>
EXHIBIT A
ARTICLE IX
INDEMNIFICATION
The Corporation shall indemnify any person who was, is, or is threatened to
be made a party to a proceeding (as hereinafter defined) by reason of the fact
that he or she (i) is or was a director or officer of the Corporation or (ii)
while a director or officer of the Corporation, 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, to the fullest extent permitted under the
General Corporation Law of the State of Delaware (the "DGCL"), as the same
exists or may hereafter be amended. Such right shall be a contract right and as
such shall run to the benefit of any director or officer who is elected and
accepts the position of director or officer of the Corporation or elects to
continue to serve as a director or officer of the Corporation while this Article
IX is in effect. Any repeal or amendment of this Article IX shall be
prospective only and shall not limit the rights of any such director or officer
or the obligations of the Corporation with respect to any claim arising from or
related to the services of such director or officer in any of the foregoing
capacities prior to any such repeal or amendment to this Article IX. Such right
shall include the right to be paid by the Corporation expenses incurred in
investigating or defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the DGCL, as the same exists
or may hereafter be amended. If a claim for indemnification or advancement of
expenses hereunder is not paid in full by the Corporation within sixty (60) days
after a written claim has been received by the Corporation, 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
also be entitled to be paid the expenses of prosecuting such claim. It shall be
a defense to any such action that such indemnification or advancement of costs
of defense is not permitted under the DGCL, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its board of directors or any committee thereof, independent legal
counsel, or stockholders) to have made its determination prior to the
commencement of such action that indemnification of, or advancement of costs of
defense to,
3
<PAGE>
the claimant is permissible in the circumstances nor an actual determination
by the Corporation (including its board of directors or any committee
thereof, independent legal counsel, or stockholders) that such
indemnification or advancement is not permissible shall be a defense to the
action or create a presumption that such indemnification or advancement is
not permissible. In the event of the death of any person having a right of
indemnification under the foregoing provisions, such right shall inure to the
benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
by-law, resolution of stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to
this Article IX shall extend to proceedings involving the negligence of such
person.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in such an action,
suit, or proceeding, and any inquiry or investigation that could lead to such
an action, suit or proceeding.
4
<PAGE>
EXHIBIT B
ARTICLE VI
DIRECTORS
Section 3. LIMITATION ON LIABILITY OF DIRECTORS. A director of the
Corporation shall not be personally 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 knowing violation of law,
(iii) under Section 174 of the DGCL, or (iv) for any transaction from which
the director derived an improper personal benefit. Any repeal or amendment
of this Article VI, Section 3 by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation arising from an act or
omission occurring prior to the time of such repeal or amendment. In
addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
VI, Section 3, a director shall not be liable to the corporation or its
stockholders to such further extent as permitted by any law hereafter
enacted, including without limitation any subsequent amendment to the DGCL.
5
<PAGE>
BY-LAWS
OF
RBP CUSTOM GLASS, INC.
A Delaware Corporation
<PAGE>
BY-LAWS
OF
RBP CUSTOM GLASS, INC.
A Delaware Corporation
PREAMBLE
These by-laws are subject to, and governed by, the General Corporation Law
of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of RBP CUSTOM GLASS, INC., a Delaware corporation
(the "Corporation"). In the event of a direct conflict between the provisions of
these by-laws and the mandatory provisions of the Delaware General Corporation
Law or the provisions of the certificate of incorporation of the Corporation,
such provisions of the Delaware General Corporation Law or the certificate of
incorporation of the Corporation, as the case may be, will be controlling.
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE: OFFICES
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1.1 Registered Office and Agent.. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.l Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Voting List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Required Vote; Withdrawal of Quorum . . . . . . . . . . . . . . . . . . 3
2.8 Method of Voting; Proxies . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Conduct of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Inspectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE THREE: DIRECTOR
3.1 Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Number; Qualification; Election; Term . . . . . . . . . . . . . . . . . 7
3.3 Change in Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Meetings of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 First Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Election of Officers. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.13 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Presumption of Assent . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.15 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE FOUR: COMMITTEES
4.1 Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Number; Qualification; Term . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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4.4 Committee Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Alternate Members of Committees . . . . . . . . . . . . . . . . . . . . 11
4.6 Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.7 Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.8 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.9 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE FIVE: NOTICE
5.1 Method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. . . . . . . . . . . . . . . . . . . . . 14
6.2 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.7 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.8 Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.9 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.10 Assistant Treasurers. . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.11 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.12 Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 Replacement of Lost or Destroyed Certificates . . . . . . . . . . . . . 17
7.3 Transfer of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.4 Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . . . 17
7.5 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.6 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 Seal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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8.6 Resignations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.7 Securities of Other Corporations. . . . . . . . . . . . . . . . . . . . 19
8.8 Telephone Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.9 Action Without a Meeting. . . . . . . . . . . . . . . . . . . . . . . . 20
8.10 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.11 Mortgages, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.12 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.13 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.14 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
iii
<PAGE>
BY-LAWS
OF
RBP CUSTOM GLASS, INC.
A Delaware Corporation
PREAMBLE
These by-laws are subject to, and governed by, the General Corporation Law
of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of RBP CUSTOM GLASS, INC., a Delaware corporation
(the "Corporation"). In the event of a direct conflict between the provisions
of these by-laws and the mandatory provisions of the Delaware General
Corporation Law or the provisions of the certificate of incorporation of the
Corporation, such provisions of the Delaware General Corporation Law or the
certificate of incorporation of the Corporation, as the case may be, will be
controlling.
1.1 REGISTERED OFFICE AND AGENT. The registered office and registered
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State of
the State of Delaware.
1.2 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 as the business of the Corporation may
require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 ANNUAL MEETING. An annual meeting of stockholders of the Corporation
shall be held each calendar year on such date and at such time as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting or in a duly executed waiver of notice of such meeting. At such
meeting, the stockholders shall elect directors and transact such other business
as may properly be brought before the meeting.
<PAGE>
2.2 SPECIAL MEETING. A special meeting of the stockholders may be
called at any time by the Chairman of the Board, the President, the board of
directors, and shall be called by the President or the Secretary at the
request in writing of the stockholders of record of not less than ten percent
of all shares entitled to vote at such meeting or as otherwise provided by
the certificate of incorporation of the Corporation. A special meeting shall
be held on such date and at such time as shall be designated by the person(s)
calling the meeting and stated in the notice of meeting or in a duly executed
waiver of notice of such meeting. Only such business shall be transacted at
a special meeting as may be stated or indicated in the notice of such meeting
or in a duly executed waiver of notice of such meeting.
2.3 PLACE OF MEETINGS. An annual meeting of stockholders may be held at
any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within or
without the State of Delaware designated in the notice of the meeting or a duly
executed waiver of notice of such meeting. Meetings of stockholders shall be
held at the principal office of the Corporation unless another place is
designated for meetings in the manner provided herein.
2.4 NOTICE. Written or printed notice stating the place, day, and time of
each meeting of the stockholders and, in case of a special meeting, the purpose
or purposes for which the meeting is called shall be delivered not less than ten
nor more than 60 days before the date of the meeting, either personally or by
mail, by or at the direction of the President, the Secretary, or the officer or
person(s) calling the meeting, to each stockholder of record entitled to vote at
such meeting. If such notice is to be sent by mail, it shall be directed to such
stockholder at his address as it appears on the records of the Corporation,
unless he shall have filed with the Secretary of the Corporation a written
request that notices to him be mailed to some other address, in which case it
shall be directed to him at such other address. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy and shall not, at the beginning of
such meeting, object to the transaction of any business because the meeting is
not lawfully called or convened, or who shall, either before or after the
meeting, submit a signed waiver of notice, in person or by proxy.
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<PAGE>
2.5 VOTING LIST. At least ten days before each meeting of stockholders,
the Secretary or other officer of the Corporation who has charge of the
Corporation's stock ledger, either directly or through another officer appointed
by him or through a transfer agent appointed by the board of directors, shall
prepare a complete list of stockholders entitled to vote thereat, arranged in
alphabetical order and showing the address of each stockholder and number of
shares registered in the name of each stockholder. For a period of ten days
prior to such meeting, such list shall be kept on file at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of meeting or a duly executed waiver of notice of such meeting or, if not
so specified, at the place where the meeting is to be held and shall be open to
examination by any stockholder during ordinary business hours. Such list shall
be produced at such meeting and kept at the meeting at all times during such
meeting and may be inspected by any stockholder who is present.
2.6 QUORUM. The holders of a majority of the outstanding shares entitled
to vote on a matter, present in person or by proxy, shall constitute a quorum at
any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these by-laws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders, the
stockholders entitled to vote thereat who are present, in person or by proxy,
or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other than
announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 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 adjourned meeting.
2.7 REQUIRED VOTE; WITHDRAWAL OF QUORUM. When a quorum is present at any
meeting, the vote of the holders of at least a majority of the outstanding
shares entitled to vote who are
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<PAGE>
present, in person or by proxy, shall decide any question brought before such
meeting, unless the question is one on which, by express provision of
statute, the certificate of incorporation of the Corporation, or these
by-laws, a different vote is required, in which case such express provision
shall govern and control the decision of such question. The stockholders
present at a duly constituted meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum.
2.8 METHOD OF VOTING; PROXIES. Except as otherwise provided in the
certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each 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 three years from the date of its
execution, unless otherwise provided in the proxy. If no date is stated in a
proxy, such proxy shall be presumed to have been executed on the date of the
meeting at which it is to be voted. 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 or unless otherwise made
irrevocable by law.
2.9 RECORD DATE. (a) 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 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 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, for any such
determination of stockholders, such date in any case to be not more than 60
days and not less than ten days prior to such meeting nor more than 60 days
prior to any other action. If no record date is fixed:
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<PAGE>
(i) 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.
(ii) 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.
(iii) 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.
(b) 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 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 law or these by-laws, 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 in the State of Delaware, principal place of business, or
such officer or agent 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 law or
these by-laws, the record date for determining stockholders entitled to
consent to
5
<PAGE>
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.
2.10 CONDUCT OF MEETING. The Chairman of the Board, if such office has
been filled, and, if not or if the Chairman of the Board is absent or
otherwise unable to act, the President shall preside at all meetings of
stockholders. The Secretary shall keep the records of each meeting of
stockholders. In the absence or inability to act of any such officer, such
officer's duties shall be performed by the officer given the authority to act
for such absent or non-acting officer under these by-laws or by some person
appointed by the meeting.
2.11 INSPECTORS. The board of directors may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If any of the inspectors so appointed shall fail to appear
or act, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors.
Each inspector, 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
shall determine the number of shares of capital stock of the Corporation
outstanding and the voting power of each, the number of shares represented at
the meeting, the existence of a quorum, and the validity and effect of proxies
and shall receive votes, ballots, or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and tabulate
all votes, ballots, or consents, determine the results, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request, or matter determined by them and shall
execute a certificate of any fact found by them. No director or candidate for
the office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
ARTICLE THREE: DIRECTORS
3.1 MANAGEMENT. The business and property of the Corporation shall be
managed by the board of directors. Subject to the restrictions imposed by law,
the certificate of incorporation
6
<PAGE>
of the Corporation, or these by-laws, the board of directors may exercise all
the powers of the Corporation.
3.2 NUMBER; QUALIFICATION; ELECTION; TERM. The number of directors which
shall constitute the entire board of directors shall be not less than one. The
first board of directors shall consist of the number of directors named in the
certificate of incorporation of the Corporation or, if no directors are so
named, shall consist of the number of directors elected by the incorporator at
an organizational meeting or by unanimous written consent in lieu thereof.
Thereafter, within the limits above specified, the number of directors which
shall constitute the entire board of directors shall be determined by resolution
of the board of directors or by resolution of the stockholders at the annual
meeting thereof or at a special meeting thereof called for that purpose. Except
as otherwise required by law, the certificate of incorporation of the
Corporation, or these by-laws, the directors shall be elected at an annual
meeting of stockholders at which a quorum is present. Directors shall be
elected by a plurality of the votes of the shares present in person or
represented by proxy and entitled to vote on the election of directors. Each
director so chosen shall hold office until the first annual meeting of
stockholders held after his election and until his successor is elected and
qualified or, if earlier, until his death, resignation, or removal from office.
None of the directors need be a stockholder of the Corporation or a resident of
the State of Delaware. Each director must have attained the age of majority.
3.3 CHANGE IN NUMBER. No decrease in the number of directors constituting
the entire board of directors shall have the effect of shortening the term of
any incumbent director.
3.4 REMOVAL. Except as otherwise provided in the certificate of
incorporation of the Corporation or these by-laws, at any meeting of
stockholders called expressly for that purpose, any director or the entire board
of directors may be removed, with or without cause, by a vote of the holders of
a majority of the shares then entitled to vote on the election of directors;
provided, however, that so long as stockholders have the right to cumulate votes
in the election of directors pursuant to the certificate of incorporation of
the Corporation, if less than the entire board of directors is to be removed, no
one of the directors may be removed if the votes cast
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<PAGE>
against his removal would be sufficient to elect him if then cumulatively
voted at an election of the entire board of directors.
3.5 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 the sole
remaining director, and each director so chosen shall hold office until the
first annual meeting of stockholders held after his election and until his
successor is elected and qualified or, if earlier, until his death, resignation,
or removal from office. If there are no directors in office, 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 of directors (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least 10% 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. Except as otherwise provided in these by-laws,
when one or more directors shall resign from the board of directors, effective
at a future date, a majority of the directors then in office, including those
who have so resigned, shall have the power to fill such vacancy or vacancies,
the vote thereon to take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold office as provided in
these by-laws with respect to the filling of other vacancies.
3.6 MEETINGS OF DIRECTORS. The directors may hold their meetings and may
have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time to time determine or as shall
be specified in the notice of such meeting or duly executed waiver of notice of
such meeting.
3.7 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
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<PAGE>
after and at the same place as the annual meeting of stockholders, and no
notice of such meeting shall be necessary.
3.8 ELECTION OF OFFICERS. At the first meeting of the board of directors
after each annual meeting of stockholders at which a quorum shall be present,
the board of directors shall elect the
officers of the Corporation.
3.9 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.
3.10 SPECIAL MEETINGS. Special meetings of the board of directors shall
be held whenever called by the Chairman of the Board, the President, or any
director.
3.11 NOTICE. The Secretary shall give notice of each special meeting to
each director at least 24 hours before the meeting. Notice of any such meeting
need not be given to any director who shall, either before or after the meeting,
submit a signed waiver of notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice to him. 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.
3.12 QUORUM; MAJORITY VOTE. At all meetings of the board of directors, a
majority of the directors fixed in the manner provided in these by-laws shall
constitute a quorum for the transaction of business. If at any meeting of the
board of directors there be less than a quorum present, a majority of those
present or any director solely present may adjourn the meeting from time to
time without further notice. Unless the act of a greater number is required
by law, the certificate of incorporation of the Corporation, or these
by-laws, the act of a majority of the directors present at a meeting at which
a quorum is in attendance shall be the act of the board of directors. At any
time that the certificate of incorporation of the Corporation provides that
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<PAGE>
directors elected by the holders of a class or series of stock shall have
more or less than one vote per director on any matter, every reference in
these by-laws to a majority or other proportion of directors shall refer to a
majority or other proportion of the votes of such directors.
3.13 PROCEDURE. At meetings of the board of directors, business shall be
transacted in such order as from time to time the board of directors may
determine. The Chairman of the Board, if such office has been filled, and, if
not or if the Chairman of the Board is absent or otherwise unable to act, the
President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of directors from among the directors present. The Secretary of
the Corporation shall act as the secretary of each meeting of the board of
directors unless the board of directors appoints another person to act as
secretary of the meeting. The board of directors shall keep regular minutes of
its proceedings which shall be placed in the minute book of the Corporation.
3.14 PRESUMPTION OF ASSENT. A director of the Corporation who is present
at the meeting of the board of directors at which action on any corporate matter
is taken shall be presumed to have assented to the action 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 secretary of the
meeting before the adjournment thereof or shall forward any dissent by certified
or 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.
3.15 COMPENSATION. The board of directors shall have the authority to fix
the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
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<PAGE>
ARTICLE FOUR: COMMITTEES
4.1 DESIGNATION. The board of directors may, by resolution adopted by a
majority of the entire board of directors, designate one or more committees.
4.2 NUMBER; QUALIFICATION; TERM. Each committee shall consist of one or
more directors appointed by resolution adopted by a majority of the entire board
of directors. The number of committee members may be increased or decreased from
time to time by resolution adopted by a majority of the entire board of
directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal as a committee member or as a
director.
4.3 AUTHORITY. Each committee, to the extent expressly provided in the
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation except to the extent expressly restricted by law,
the certificate of incorporation of the Corporation, or these by-laws.
4.4 COMMITTEE CHANGES. The board of directors shall have the power at any
time to fill vacancies in, to change the membership of, and to discharge any
committee.
4.5 ALTERNATE MEMBERS OF COMMITTEES. The board of directors may designate
one or more directors as alternate members of any committee. Any such alternate
member may replace any absent or disqualified member at any meeting of the
committee. If no alternate committee members have been so appointed to a
committee or each such alternate committee member is absent or disqualified, the
member or members of such committee 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.
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4.6 REGULAR MEETINGS. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.7 SPECIAL MEETINGS. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least two days before such special meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of any committee need be
specified in the notice or waiver of notice of any special meeting.
4.8 QUORUM; MAJORITY VOTE. At meetings of any committee, a majority of the
number of members designated by the board of directors shall constitute a quorum
for the transaction of business. If a quorum is not present at a meeting of any
committee, a majority of the members present may adjourn the meeting from time
to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the certificate of incorporation of
the Corporation, or these by-laws.
4.9 MINUTES. Each committee shall cause minutes of its proceedings to be
prepared and shall report the same to the board of directors upon the request of
the board of directors. The minutes of the proceedings of each committee shall
be delivered to the Secretary of the Corporation for placement in the minute
books of the Corporation.
4.10 COMPENSATION. Committee member may, by resolution of the board of
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
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4.11 RESPONSIBILITY. The designation of any committee and the delegation
of authority to it shall not operate to relieve the board of directors or any
director of any responsibility imposed upon it or such director by law.
ARTICLE FIVE: NOTICE
5.1 METHOD. Whenever by statute, the certificate of incorporation of the
Corporation, or these by-laws, notice is required to be given to any committee
member, director, or stockholder and no provision is made as to how such notice
shall be given, personal notice shall not be required and any such notice may be
given (a) in writing, by mail, postage prepaid, addressed to such committee
member, director, or stockholder at his address as it appears on the books or
(in the case of a stockholder) the stock transfer records of the Corporation, or
(b) by any other method permitted by law (including but not limited to overnight
courier service, telegram, telex, or telefax). Any notice required or permitted
to be given by mail shall be deemed to be delivered and given at the time when
the same is deposited in the United States mail as aforesaid. Any notice
required or permitted to be given by overnight courier service shall be deemed
to be delivered and given at the time delivered to such service with all charges
prepaid and addressed as aforesaid. Any notice required or permitted to be
given by telegram, telex, or telefax shall be deemed to be delivered and given
at the time transmitted with all charges prepaid and addressed as aforesaid.
5.2 WAIVER. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these by-laws, 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. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
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ARTICLE SIX: OFFICERS
6.1 NUMBER; TITLES; TERM OF OFFICE. The officers of the Corporation shall
be a President, a Secretary, and such other officers as the board of directors
may from time to time elect or appoint, including a Chairman of the Board, one
or more Vice Presidents (with each Vice President to have such descriptive
title, if any, as the board of directors shall determine), and a Treasurer. Each
officer shall hold office until his successor shall have been duly elected and
shall have qualified, until his death, or until he shall resign or shall have
been removed in the manner hereinafter provided. Any two or more offices may be
held by the same person. None of the officers need be a stockholder or a
director of the Corporation or a resident of the State of Delaware.
6.2 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 interest 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.
6.3 VACANCIES. Any vacancy occurring in any office of the Corporation (by
death, resignation, removal, or otherwise) may be filled by the board of
directors.
6.4 AUTHORITY. Officers shall have such authority and perform such duties
in the management of the Corporation as are provided in these by-law or as may
be determined by resolution of the board of directors not inconsistent with
these by-laws.
6.5 COMPENSATION. The compensation, if any, of officers and agents shall
be fixed from time to time by the board of directors; provided, however, that
the board of directors may delegate the power to determine the compensation of
any officer and agent (other than the officer to whom such power is delegated)
to the Chairman of the Board or the President.
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6.6 CHAIRMAN OF THE BOARD. The Chairman of the Board, if elected by the
board of directors, shall have such powers and duties as may be prescribed by
the board of directors. Such officer shall preside at all meetings of the
stockholders and of the board of directors. Such officer may sign all
certificates for shares of stock of the Corporation.
6.7 PRESIDENT. The President shall be the chief executive officer of
the Corporation and, subject to the board of directors, he shall have general
executive charge, management, and control of the properties and operations of
the Corporation in the ordinary course of its business, with all such powers
with respect to such properties and operations as may be reasonably incident
to such responsibilities. If the board of directors has not elected a
Chairman of the Board or in the absence or inability to act of the Chairman
of the Board, the President shall exercise all of the powers and discharge
all of the duties of the Chairman of the Board. As between the Corporation
and third parties, any action taken by the President in the performance of
the duties of the Chairman of the Board shall be conclusive evidence that
there is no Chairman of the Board or that the Chairman of the Board is absent
or unable to act.
6.8 VICE PRESIDENTS. Each Vice President shall have such powers and
duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President, and (in order of their seniority as determined
by the board of directors or, in the absence of such determination, as
determined by the length of time they have held the office of Vice President)
shall exercise the powers of the President during that officer's absence or
inability to act. As between the Corporation and third parties, any action
taken by a Vice President in the performance of the duties of the President
shall be conclusive evidence of the absence or inability to act of the
President at the time such action was taken.
6.9 TREASURER. The Treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate account of receipts and
disbursements, shall deposit all monies and valuable effects in the name and
to the credit of the Corporation in such depository or depositories as may be
designated by the board of directors, and shall perform such other duties as
may be prescribed by the board of directors, the Chairman of the Board, or
the President.
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6.10 ASSISTANT TREASURERS. Each Assistant Treasurer shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Treasurers (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they
have held the office of Assistant Treasurer) shall exercise the powers of the
Treasurer during that officer's absence or inability to act.
6.11 SECRETARY. Except as otherwise provided in these by laws, the
Secretary shall keep the minutes of all meetings of the board of directors
and of the stockholders in books provided for that purpose, and he shall
attend to the giving and service of all notices. He may sign with the
Chairman of the Board or the President, in the name of the Corporation, all
contracts of the Corporation and affix the seal of the Corporation thereto.
He may sign with the Chairman of the Board or the President all certificates
for shares of stock of the Corporation, and he shall have charge of the
certificate books, transfer books, and stock papers as the board of directors
may direct, all of which shall at all reasonable times be open to inspection
by any director upon application at the office of the Corporation during
business hours. He shall in general perform all duties incident to the
office of the Secretary, subject to the control of the board of directors,
the Chairman of the Board, and the President.
6.12 ASSISTANT SECRETARIES. Each Assistant Secretary shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Secretaries (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they
have held the office of Assistant Secretary) shall exercise the powers of the
Secretary during that officer's absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 CERTIFICATES FOR SHARES. Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or
the President or a Vice President and also by the Secretary or an
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Assistant Secretary or by the Treasurer or an Assistant Treasurer. Any and
all signatures on the certificate may be a facsimile and may be sealed with
the seal of the Corporation or a facsimile thereof. If any officer, transfer
agent, or registrar who has signed, or whose facsimile signature has been
placed upon, a certificate has ceased to be such officer, transfer agent, or
registrar before such certificate is issued, such certificate 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. The 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 the number of
shares.
7.2 REPLACEMENT OF LOST OR DESTROYED CERTIFICATES. The board of
directors may direct a new certificate or certificates to be issued in place
of a certificate or certificates theretofore issued by the Corporation and
alleged to have been lost or destroyed, upon the making of an affidavit of
that fact by the person claiming the certificate or certificates representing
shares to be lost 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 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 with a surety or sureties satisfactory to the Corporation
in such sum as it may direct as indemnity against any claim, or expense
resulting from a claim, that may be made against the Corporation with respect
to the certificate or certificates alleged to have been lost or destroyed.
7.3 TRANSFER OF SHARES. 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 to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper
evidence of succession, assignment, or authority to transfer, the Corporation
or its transfer agent shall issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its
books.
7.4 REGISTERED STOCKHOLDERS. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not
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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 law.
7.5 REGULATIONS. 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 stock of the Corporation.
7.6 LEGENDS. The board of directors shall have the power and authority
to provide that certificates representing shares of stock bear such legends
as the board of directors deems appropriate to assure that the Corporation
does not become liable for violations of federal or state securities laws or
other applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 DIVIDENDS. Subject to provisions of law and the certificate of
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and
payment shall be at the discretion of the board of directors.
8.2 RESERVES. There may be created by the board of directors out of funds
of the Corporation legally available therefor such reserve or reserves as the
directors from time to time, in their discretion, consider proper to provide for
contingencies, to equalize dividends, or to repair or maintain any property of
the Corporation, or for such other purpose as the board of directors shall
consider beneficial to the Corporation, and the board of directors may modify or
abolish any such reserve in the manner in which it was created.
8.3 BOOKS AND RECORDS. The Corporation shall keep correct and complete
books and records of account, shall keep minutes of the proceedings of its
stockholders and board of directors and shall keep at its registered office or
principal place of business, or at the office of
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its transfer agent or registrar, a record of its stockholders, giving the
names and addresses of all stockholders and the number and class of the
shares held by each.
8.4 FISCAL YEAR. The fiscal year of the Corporation shall be fixed by the
board of directors; provided, that if such fiscal year is not fixed by the board
of directors and the selection of the fiscal year is not expressly deferred by
the board of directors, the fiscal year shall be the calendar year.
8.5 SEAL. The seal of the Corporation shall be such as from time to time
may be approved by the board of directors.
8.6 RESIGNATIONS. Any director, committee member, or officer may resign
by so stating at any meeting of the board of directors or by giving written
notice to the board of directors, the Chairman of the Board, the President, or
the Secretary. Such resignation shall take effect at the time specified therein
or, if no time is specified therein, immediately upon its receipt. Unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
8.7 SECURITIES OF OTHER CORPORATIONS. The Chairman of the Board, the
President, or any Vice President of the Corporation shall have the power and
authority to transfer, endorse for transfer, vote, consent, or take any other
action with respect to any securities of another issuer which may be held or
owned by the Corporation and to make, execute, and deliver any waiver, proxy, or
consent with respect to any such securities.
8.8 TELEPHONE MEETINGS. Stockholders (acting for themselves or through a
proxy), members of the board of directors, and members of a committee of the
board of directors may participate in and hold a meeting of such stockholders,
board of directors, or committee by means of a conference telephone or similar
communications equipment by means of which persons participating in the meeting
can hear each other, and participation in a meeting pursuant to this section
shall constitute presence in person at such meeting, except where a person
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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.
8.9 ACTION WITHOUT A MEETING. (a) Unless otherwise provided in the
certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting
of the stockholders, or any action which may be taken at any annual or
special meeting of the 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, shall be signed by the holders (acting for
themselves or through a proxy) 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 the holders of 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.
Every written consent of stockholders shall bear the date of signature of
each stockholder who signs the consent and no written consent shall be
effective to take the corporate action referred to therein unless, within
sixty days of the earliest dated consent delivered in the manner required by
this Section 8.9(a) to the Corporation, written consents signed by a
sufficient number of holders to take action are 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, principal place of
business, or such officer or agent shall be by hand or by certified or
registered mail, return receipt requested.
(b) Unless otherwise restricted by the certificate of incorporation of
the Corporation or by these by-laws, any action required or permitted to be
taken at a meeting of the board of directors, or of any committee of the
board of directors, may be taken without a meeting if a consent or consents
in writing, setting forth the action so taken, shall be signed by all the
directors or all the committee members, as the case may be, entitled to vote
with respect to the subject matter thereof, and such consent shall have the
same force and effect as a vote of such directors or committee members, as
the case may be, and may be stated as such in any
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certificate or document filed with the Secretary of State of the State of
Delaware or in any certificate delivered to any person. Such consent or
consents shall be filed with the minutes of proceedings of the board or
committee, as the case may be.
8.10 INVALID PROVISIONS. If any part of these by-laws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
8.11 MORTGAGES, ETC. With respect to any deed, deed of trust, mortgage, or
other instrument executed by the Corporation through its duly authorized officer
or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage, or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the board of directors
authorizing such execution expressly state that such attestation is necessary.
8.12 HEADINGS. The headings used in these by-laws have been inserted for
administrative convenience only and do not constitute matter to be construed in
interpretation.
8.13 REFERENCES. Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 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 at any
regular meeting of the stockholders or the board of directors or at any special
meeting of the stockholders or 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.
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The undersigned, the Secretary of the Corporation, hereby certifies that
the foregoing by-laws were adopted by unanimous consent by the directors of
the Corporation as of April 15, 1992.
\s\ Paul L. Barrett
------------------------------------
Paul L. Barrett, Secretary
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EXHIBIT 3.14
CERTIFICATE OF INCORPORATION
OF
RBP TRANS, INC.
(Under Section 102 of the General Corporation Law
of the State of Delaware)
* * * * * * * * * * * * * * * * * * * *
FIRST: The name of the corporation is
RBP TRANS, INC.
SECOND: The registered office of the Corporation in the State of
Delaware is located at 100 West Tenth Street, in the City of Wilmington, County
of New Castle. 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 General Corporation Law of the State of
Delaware, including without limitation the following:
A. To engage in and conduct in all its several departments,
phases and branches the business of transporting goods, wares,
merchandise and personal property of every kind and description, as a
common and/or contract carrier for compensation over and upon the
public highways of the United States of America; to arrange for the
transportation of such property by other common and/or contract
carriers; to acquire Certificates of Public Necessity and Convenience
and other permits and licenses authorizing such operations as granted
by the Interstate Commerce Commission and the various state
commissions and agencies having the authority to issue the same; and
to do all things necessary, convenient, expedient or incidental to the
carrying out of the purpose of operating a motor freight line.
B. To engage in and conduct, in all its several department,
phases and branches, the business of designing, manufacturing,
fabricating, assembling, processing, leasing as lessee, purchasing or
otherwise acquiring, investing in, holding, owning, operating,
servicing, mortgaging, pledging or otherwise giving liens against,
leasing as lessor, selling, assigning, exchanging, transferring or
otherwise disposing of, shipping, importing, exporting and generally
dealing in
<PAGE>
and with any and all classes of goods, wares and merchandise and personal
property of every class, character and description, and generally to engage
in and conduct any form of manufacturing or mercantile business not
contrary to law.
C. To take, lease as lessee, purchase or otherwise acquire,
invest in, own, hold, use, exchange, develop, improve, manage,
operate, option, subdivide or otherwise deal in and with, mortgage,
encumber, lease as lessor, sell, convey, assign, transfer, release or
otherwise dispose of real property of any and all kinds and any and
all estates, rights and interests therein.
D. To engage in the business of managing, supervising and
operating real property, buildings and structures; to negotiate and
consummate for itself or for others leases with respect to any such
property; to enter into contracts and arrangements, either as
principal or as agent for the maintenance, repair and improvement of
any such property; to furnish financial (without banking or discount
privileges), management and other services to others; to purchase or
otherwise acquire, own, use, improve, maintain, sell, lease or
otherwise dispose of any articles, materials, machinery and property
used for or in connection with the business of the Corporation, and to
engage in and conduct or authorize, license and permit others to
engage in and conduct any business or activity incident, necessary,
advisable or advantageous to the ownership of real property, buildings
and structures.
E. To carry on and conduct a general construction business,
including the designing, constructing, removing or otherwise engaging
in any work upon houses, buildings, factories and other structures of
every description, and all kinds of excavation and iron, steel, wood,
masonry, mechanical, electrical and earth construction and
installations; to make, execute and take or receive any contracts or
assignments of contracts therefor or in anywise connected therewith;
to manufacture or otherwise acquire and furnish all building and other
materials and supplies connected therewith or required therefor; to
manufacture, produce, adapt and prepare, deal in and with any
materials, articles or things incidental to or required for or useful
in connection with any of its business.
F. To enter into joint ventures, associations or general or
limited partnership arrangements of every kind and character with any
person, firm, association or corporation.
G. To purchase or otherwise acquire the whole or any part of
the property, assets, business, good will and rights, and to undertake
and assume the whole or any part of the liabilities and obligations of
any person, firm, association or corporation, and to pay for the same
in cash, in shares of stock of any class of the Corporation or the
bonds, notes or other obligations thereof, or otherwise; to hold or in
any manner to dispose of the whole or any part of the business so
acquired, and to exercise all powers necessary or convenient in or
about the conduct, management and carrying on of any such business.
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H. To subscribe for, purchase, borrow or otherwise acquire,
own, hold, sell, lend, exchange, pledge, hypothecate or otherwise
dispose of or deal in and with shares of stocks or bonds, debentures,
notes, acceptances or other obligations made, created or issued by any
private, public, quasi-public or other corporation or association,
domestic or foreign, or by any domestic or foreign state, government
or governmental authority, or by any political or administrative
subdivision or department thereof, and any and all trust participation
or other certificates of or for, or receipt evidencing interest in,
any such shares or obligations and to issue in payment or exchange
therefor by any other lawful means and, while the owner of any shares,
bonds, debentures, notes, acceptances or other obligations, or of any
interest therein, to possess and exercise all the rights, powers and
privileges of ownership, including the right to vote thereon for any
and all purposes.
I. To borrow or raise moneys for any of the purposes of the
Corporation and, from time to time without limit as to amount, to
draw, make accept, endorse, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures and other
negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the
interest thereon by mortgage upon or pledge, conveyance or assignment
in trust of the whole or any part of the property of the Corporation,
whether at the time owned or thereafter acquired, and to sell, pledge
or otherwise dispose of such bonds or other obligations of the
Corporation for its corporate purposes.
In general, to possess and exercise all the powers and privileges granted
by the General Corporation Law of Delaware or by any other law of Delaware or by
this certificate of incorporation together with any powers incidental or
convenient to the conduct, promotion or attainment of the business or purposes
of the Corporation.
The business and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in nowise limited or restricted by reference to,
or inference from, the terms of any other clause in this certificate of
incorporation, but the business and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent business and purposes.
FOURTH: The Corporation is authorized to issue only one class of
stock, which shall be designated "Capital Stock". The total number of shares of
stock which the
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Corporation shall have authority to issue is one thousand (1,000), and the par
value of each of such shares is One Dollar ($1.00).
FIFTH: The names and mailing addresses of the incorporators of the
Corporation are:
Name Mailing Address
---- ---------------
D. R. Burg Suite 200, 2550 Walnut Hill Lane, Dallas, TX 75229
Winston L. Adkins Suite 200, 2550 Walnut Hill Lane, Dallas, TX 75229
Fred Babb Suite 200, 2550 Walnut Hill Lane, Dallas, TX 75229
SIXTH: The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
A. Election of directors need not be by ballot;
B. The Board of Directors shall have power to make, alter,
amend or repeal the bylaws of the Corporation, except as otherwise
provided in any bylaws adopted by the stockholders then entitled to
vote, but bylaws so made, altered or amended by the Board of Directors
may be altered or repealed by the stockholders then entitled to vote;
C. The Corporation, its directors, officers and stockholders
shall possess and may exercise all powers and privileges which are now
or may hereafter be conferred by the laws of the State of Delaware;
and
D. To the extent permitted by law and subject to the provisions
of this certificate of incorporation any contract, transaction or act
of the Corporation or of the Board of Directors or of any committee
thereof which shall be ratified by a majority in interest of a quorum
of the stockholders of the Corporation entitled to vote at any annual
or special meeting called for such purpose shall be as valid and
binding as though ratified by every stockholder of the Corporation;
provided, however, that any failure to submit any such contract,
transaction or act to the stockholders for approval and ratification
or any failure of the stockholders to approve and ratify such
contract, transaction or act, when submitted, shall not be deemed in
any way to invalidate the same or deprive the Corporation, its
directors or officers of their right to proceed with such contract,
transaction or act.
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SEVENTH: 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.
EIGHTH: Cumulative voting for the election of directors shall not be
permitted.
NINTH: No holder of any shares of capital stock of the Corporation
shall, as such holder, have any preemptive or preferential right to receive,
purchase or subscribe to any shares of capital stock of the Corporation; any
obligations, evidences of indebtedness or other securities of the Corporation
convertible into or accompanied by rights to receive, purchase or subscribe to
any shares of capital stock of the Corporation; any right of subscription to, or
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any warrant or option for the purchase of, any thereof; or any other securities
that may be issued or sold by the Corporation.
TENTH: The Corporation shall have perpetual existence.
ELEVENTH: The stockholders of the Corporation shall not be personally
liable for the payment of the Corporation's debts.
TWELFTH: The Corporation reserves the right to take any lawful action
and to make any amendment of this certificate of incorporation in any form,
manner or substance now or hereafter authorized or permitted by law. All
holders of stock of the Corporation, by acceptance of their shares, agree that
all rights to which such shares entitle them are subject to the provisions of
this certificate of incorporation from the time of issuance thereof.
We, the undersigned, being each of the incorporators 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 our act and deed and the facts stated herein are true
and accordingly, have hereunto set our hands this 6th day of January, A.D.,
1984.
/s/ D. R. Burg
-------------------------------------------
D. R. Burg
/s/ Winston L. Adkins
-------------------------------------------
Winston L. Adkins
/s/ Fred Babb
-------------------------------------------
Fred Babb
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CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF RBP TRANS, INC.
The undersigned, being the Vice President and Secretary, respectively, of
RBP Trans, Inc., a Delaware corporation (the "Corporation"), do hereby certify:
FIRST: The name of the Corporation is RBP Trans, Inc.
SECOND: The Certificate of Incorporation was filed with the Secretary of
State of Delaware on January 9, 1984.
THIRD: The Certificate of Incorporation is hereby amended by adding the
provisions set forth in EXHIBIT A hereto (and incorporated herein by reference)
as Article THIRTEENTH.
FOURTH: The Certificate of Incorporation is hereby amended by adding the
provisions set forth in EXHIBIT B hereto (and incorporated herein by reference)
as Article FOURTEENTH.
FIFTH: The aforementioned amendments to the Certificate of Incorporation
were duly adopted in accordance with Section 242 of the General Corporation Law
of the State of Delaware (the "DGCL"). Written consent of the Corporation's
sole stockholder has been given in accordance with the provisions of Section 228
of the DGCL.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed pursuant to Section 103(a)(2) of the DGCL by the
undersigned duly authorized officers of the Corporation as of the 7th day of
September, 1993.
RBP TRANS, INC.
By: /s/ Fergus J. Walker, Jr.
---------------------------------------
Fergus J. Walker, Jr.
Vice President
ATTEST:
/s/ Paul L. Barrett
- --------------------------------
Paul L. Barrett
Secretary
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EXHIBIT A
THIRTEENTH: The Corporation shall indemnify any person who was, is, or
is threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, 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, to the
fullest extent permitted under the General Corporation Law of the State of
Delaware (the "DGCL"), as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article Thirteenth is in effect. Any
repeal or amendment of this Article Thirteenth shall be prospective only and
shall not limit the rights of any such director or officer or the obligations of
the Corporation with respect to any claim arising from or related to the
services of such director or officer in any of the foregoing capacities prior to
any such repeal or amendment to this Article Thirteenth. Such right shall
include the right to be paid by the Corporation expenses incurred in
investigating or defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the DGCL, as the same exists
or may hereafter be amended. If a claim for indemnification or advancement of
expenses hereunder is not paid in full by the Corporation within sixty (60) days
after a written claim has been received by the Corporation, 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
also be entitled to be paid the expenses of prosecuting such claim. It shall be
a defense to any such action that such indemnification or advancement of costs
of defense is not permitted under the DGCL, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its board of directors or any committee thereof, independent legal
counsel, or stockholders) to have made its determination prior to the
commencement of such action that indemnification of, or advancement of costs of
defense to, the claimant is permissible in the circumstances nor an actual
determination by the Corporation (including its board of directors or any
committee
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thereof, independent legal counsel, or stockholders) that such indemnification
or advancement is not permissible shall be a defense to the action or create a
presumption that such indemnification or advancement is not permissible. In the
event of the death of any person having a right of indemnification under the
foregoing provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights conferred
above shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, by-law, resolution of stockholders or
directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Thirteenth shall extend to proceedings involving the negligence of such
person.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
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EXHIBIT B
FOURTEENTH: A director of the Corporation shall not be personally 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
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or amendment of this Article Fourteenth by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation arising
from an act or omission occurring prior to the time of such repeal or amendment.
In addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
Fourteenth, a director shall not be liable to the Corporation or its
stockholders to such further extent as permitted by any law hereafter enacted,
including without limitation any subsequent amendment to the DGCL.
<PAGE>
EXHIBIT 3.16
RBP TRANS, INC.
BYLAWS
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. 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. All meetings of the stockholders for the election of
directors shall be held in the City of Dallas, State of Texas, at such place as
may be fixed from time to time by the board of directors, or at such other place
either within or without the State of Delaware as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1985, shall be held on the second Tuesday of April, if not a legal holiday, and
if a legal holiday, then on the next secular day following, at l0:00 a.m., or at
such other date and time as shall be designated from time to time by the board
of directors and stated in the notice of the meeting, at which they shall elect
by a plurality vote a board of directors, and transact such other business as
may properly be brought before the meeting.
<PAGE>
Section 3. 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 fifty days before the
date of the meeting.
Section 4. 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 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 5. 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 6. 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 fifty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
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Section 8. 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 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 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.
Section 9. 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 10. Each stockholder shall at every meeting of the stockholders
be entitled to one vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, but no proxy shall be voted
on after three years from its date, unless the proxy provides for a longer
period.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken for or in connection with any corporate
action, by any provision of the statutes, the meeting and vote of stockholders
may be dispensed with if all of the stockholders who would have been entitled to
vote upon the action if such meeting were held shall consent in writing to such
corporate action being taken; or if the certificate of incorporation authorizes
the action to be taken with the written consent of the holders of less than all
of the stock who would have been entitled to vote upon the action if a meeting
were held, then on the written
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consent of the stockholders having not less than such percentage of the
number of votes as may be authorized in the certificate of incorporation;
provided that in no case shall the written consent be by the holders of stock
having less than the minimum percentage of the vote required by statute for
the proposed corporate action, and provided that prompt notice must be given
to all stockholders of the taking of corporate action without a meeting and
by less than unanimous written consent.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be three (3). 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.
Section 2. 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. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as
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are not by statute or by the certificate of incorporation or by these bylaws
directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held immediately following and at the same place as the annual meeting
of stockholders 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 such meeting is not held at such time and place,
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.
Section 6. 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.
Section 7. Special meetings of the board may be called by the president
on twenty-four (24) hours 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.
Section 8. 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.
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Section 9. Unless otherwise restricted by the certificate of
incorporation or these bylaws, 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.
COMMITTEES OF DIRECTORS
Section 10. 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. Any
such committee, to the extent provided in the resolution, shall have and may
exercise the powers 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; provided, however, that in the
absence or disqualification of any member of such committee or committees 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. 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.
Section 11. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
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COMPENSATION OF DIRECTORS
Section 12. 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
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, 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 prepaid telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
bylaws, 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.
ARTICLE V
OFFICERS
Section 1. ELECTED OFFICERS. The officers of the corporation shall be
chosen by the board of directors and shall be a president, one or more vice
presidents, a secretary and a treasurer.
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Section 2. ELECTION. The board of directors, at its first meeting after
each annual meeting of stockholders, shall choose a president from its members,
and one or more vice presidents, a secretary and a treasurer, none of whom need
be a member of the board of directors. The board of directors or the president
at any time may also appoint one or more assistant secretaries and assistant
treasurers.
Section 3. APPOINTED OFFICERS. 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 of directors.
Section 4. COMPENSATION. The salaries of the president, of any vice
president and of the secretary and the treasurer of the corporation shall be
fixed by the board of directors.
Section 5. TERM OF OFFICE; REMOVAL; FILLING OF VACANCIES. Except as may
be otherwise provided by the board of directors or in these bylaws, each officer
of the corporation shall hold office until the first meeting of directors after
the next annual meeting of stockholders following his election or appointment
and until his successor is chosen and qualified. 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 whole board of directors. If the office of
any officer becomes vacant for any reason, the vacancy shall be filled by the
board of directors.
THE PRESIDENT
Section 6. 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 and all policies formulated by the board of directors are carried into
effect.
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Section 7. 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 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 VICE PRESIDENTS
Section 8. 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, 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.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. 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 meeting 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. 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.
Section 10. 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
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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.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. 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.
Section 12. He 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.
Section 13. If required by the board of directors, he 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 his 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.
Section 14. 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 thereto, cancel
the old certificate and record the transaction upon its books.
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FIXING RECORD DATE
Section 5. 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.
REGISTERED STOCKHOLDERS
Section 6. 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 VII
GENERAL PROVISIONS
INDEMNIFICATION
Section 1. (a) The corporation shall have power 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 (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as
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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 him in connection with such action, suit or
proceeding 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 any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he 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 reasonable cause
to believe that his conduct was unlawful.
(b) The corporation shall have power 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 or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he 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) actually and reasonably incurred by him in
connection with 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 except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless and only to the extent that the Court of
Chancery or 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 the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b), or in defense
of any claim, issue or matter therein, he shall be
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indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in subsections (a) and (b). Such determination shall be
made (1) by the board of the directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
board of directors in the specific case upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Section. 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.
(f) The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who 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 any liability asserted
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against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Section.
(h) For purposes of this Section, 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 the provisions of this Section with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this Section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
Section.
DIVIDENDS
Section 2. 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.
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<PAGE>
Section 3. Before payment of any dividend, there may 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.
ANNUAL STATEMENT
Section 4. 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.
CHECKS
Section 5. 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.
FISCAL YEAR
Section 6. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 7. 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.
15
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ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new
bylaws may be adopted by the stockholders or by the board of directors 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 bylaws be contained in the
notice of such special meeting.
16
<PAGE>
CERTIFICATE OF INCORPORATION
OF
RBP FENESCO, INC.
- -------------------------------------------------------------------------------
I, the undersigned natural person acting as an incorporator of a
corporation (hereinafter called the "Corporation") under the General Corporation
Law of the State of Delaware (the "DGCL"), do hereby adopt the following
Certificate of Incorporation for the Corporation:
FIRST: The name of the Corporation is RBP Fenesco, Inc.
SECOND: The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
THIRD: The purpose for which the Corporation is organized is to
engage in any and all lawful acts and activity for which corporations may be
organized under the DGCL. The Corporation will have perpetual existence.
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1,000 shares, par value $.01 per share,
designated Common Stock.
FIFTH: The name of the incorporator of the Corporation is Joseph T.
Verdesca, Jr., and the mailing address of such incorporator is 100 Crescent
Court, Suite 1300, Dallas, Texas 75201-6950.
SIXTH: The number of directors constituting the initial board of
directors is three, and the names and mailing addresses of the persons who are
to serve as directors until the first annual meeting of stockholders or until
their successors are elected and qualified are as follows:
<PAGE>
Thomas W. Sturgess
750 N. St. Paul Street
Suite 1200
Dallas, Texas 75201
David G. Fiori
2550 Walnut Hill Lane
Suite 200
Dallas, Texas 75229
Frederick B. Hegi, Jr.
750 N. St. Paul Street
Suite 1200
Dallas, Texas 75201
SEVENTH: Directors of the Corporation need not be elected by written
ballot unless the bylaws of the Corporation otherwise provide.
EIGHTH: The directors of the Corporation shall have the power to
adopt, amend, and repeal the bylaws of the Corporation.
NINTH: No contract or transaction between the Corporation and one
or more of its directors, officers, or stockholders or between the Corporation
and any person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders;
2
<PAGE>
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved, or ratified by the board of directors, a
committee thereof, or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the board of
directors or of a committee which authorizes the contract or transaction.
TENTH: The Corporation shall indemnify any person who was, is, or
is threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, 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, to the
fullest extent permitted under the DGCL, as the same exists or may hereafter be
amended. Such right shall be a contract right and as such shall run to the
benefit of any director or officer who is elected and accepts the position of
director or officer of the Corporation or elects to continue to serve as a
director or officer of the Corporation while this Article Tenth is in effect.
Any repeal or amendment of this Article Tenth shall be prospective only and
shall not limit the rights of any such director or officer or the obligations of
the Corporation with respect to any claim arising from or related to the
services of such director or officer in any of the foregoing capacities prior to
any such repeal or amendment to this Article Tenth. Such right shall include
the right to be paid by the Corporation expenses incurred in defending any such
proceeding in advance of its final disposition to the maximum extent permitted
under the DGCL, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, 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 also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense are not permitted under the
DGCL, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its board of directors or any
committee thereof, independent legal counsel, or stockholders) to have made its
determination prior to the commencement of such
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<PAGE>
action that indemnification of, or advancement of costs of defense to, the
claimant is permissible in the circumstances nor an actual determination by the
Corporation (including its board of directors or any committee thereof,
independent legal counsel, or stockholders) that such indemnification or
advancement is not permissible shall be a defense to the action or create a
presumption that such indemnification or advancement is not permissible. In the
event of the death of any person having a right of indemnification under the
foregoing provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights conferred
above shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, bylaw, resolution of stockholders or
directors, agreement, or otherwise.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Tenth shall extend to proceedings involving the negligence of such
person.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
ELEVENTH: A director of the Corporation shall not be personally
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 knowing violation of law, (iii) under Section 174 of the DGCL,
or (iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or amendment of this Article Eleventh by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of
the Corporation arising
4
<PAGE>
from an act or omission occurring prior to the time of such repeal or amendment.
In addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
Eleventh, a director shall not be liable to the Corporation or its stockholders
to such further extent as permitted by any law hereafter enacted, including
without limitation any subsequent amendment to the DGCL.
TWELFTH: The Corporation expressly elects not to be governed by
Section 203 of the DGCL.
I, the undersigned, for the purpose of forming the Corporation under the
laws of the State of Delaware, do make, file, and record this Certificate of
Incorporation and do certify that this is my act and deed and that the facts
stated herein are true and, accordingly, I do hereunto set my hand on this 17th
day of August, 1994.
/s/ Joseph T. Verdesca, Jr.
-------------------------------------------
Joseph T. Verdesca, Jr.
5
<PAGE>
BYLAWS
OF
RBP FENESCO, INC.
A Delaware Corporation
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE ONE: OFFICES
1.1 REGISTERED OFFICE AND AGENT . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 ANNUAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 PLACE OF MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 VOTING LIST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 QUORUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 REQUIRED VOTE; WITHDRAWAL OF QUORUM . . . . . . . . . . . . . . . . . 3
2.8 METHOD OF VOTING: PROXIES . . . . . . . . . . . . . . . . . . . . . . 3
2.9 RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 CONDUCT OF MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 INSPECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE THREE: DIRECTORS
3.1 MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 NUMBER; QUALIFICATION; ELECTION; TERM . . . . . . . . . . . . . . . . 5
3.3 CHANGE IN NUMBER. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 REMOVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 VACANCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.6 MEETINGS OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 FIRST MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.8 ELECTION OF OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . 6
3.9 REGULAR MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.10 SPECIAL MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.11 NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.12 QUORUM; MAJORITY VOTE . . . . . . . . . . . . . . . . . . . . . . . . 6
3.13 PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.14 PRESUMPTION OF ASSENT . . . . . . . . . . . . . . . . . . . . . . . . 7
3.15 COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE FOUR: COMMITTEES
4.1 DESIGNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 NUMBER; QUALIFICATION; TERM . . . . . . . . . . . . . . . . . . . . . 7
4.3 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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4.4 COMMITTEE CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 ALTERNATE MEMBERS OF COMMITTEES . . . . . . . . . . . . . . . . . . . 8
4.6 REGULAR MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7 SPECIAL MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.8 QUORUM; MAJORITY VOTE . . . . . . . . . . . . . . . . . . . . . . . . 8
4.9 MINUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.10 COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.11 RESPONSIBILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE FIVE: NOTICE
5.1 METHOD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE SIX: OFFICERS
6.1 NUMBER; TITLES; TERM OF OFFICE. . . . . . . . . . . . . . . . . . . . 9
6.2 REMOVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 VACANCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.5 COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.6 CHAIRMAN OF THE BOARD . . . . . . . . . . . . . . . . . . . . . . . 10
6.7 PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.8 VICE PRESIDENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.9 TREASURER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.10 ASSISTANT TREASURERS. . . . . . . . . . . . . . . . . . . . . . . . 10
6.11 SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.12 ASSISTANT SECRETARIES . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 CERTIFICATES FOR SHARES . . . . . . . . . . . . . . . . . . . . . . 11
7.2 REPLACEMENT OF LOST OR DESTROYED CERTIFICATES . . . . . . . . . . . 11
7.3 TRANSFER OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 REGISTERED STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . 12
7.5 REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.6 LEGENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.2 RESERVES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.3 BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.4 FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.5 SEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.6 RESIGNATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.7 SECURITIES OF OTHER CORPORATIONS. . . . . . . . . . . . . . . . . . 13
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8.8 TELEPHONE MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . 13
8.9 ACTION WITHOUT A MEETING. . . . . . . . . . . . . . . . . . . . . . 13
8.10 INVALID PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . 14
8.11 MORTGAGES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.12 HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.13 REFERENCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.14 AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
iii
<PAGE>
BYLAWS
OF
RBP FENESCO, INC.
A Delaware Corporation
PREAMBLE
These bylaws are subject to, and governed by, the General Corporation Law
of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of RBP Fenesco, Inc., a Delaware corporation
(the "Corporation"). In the event of a direct conflict between the provisions
of these bylaws and the mandatory provisions of the Delaware General
Corporation Law or the provisions of the certificate of incorporation of the
Corporation, such provisions of the Delaware General Corporation Law or the
certificate of incorporation of the Corporation, as the case may be, will be
controlling.
ARTICLE ONE: OFFICES
1.1 REGISTERED OFFICE AND AGENT. The registered office and registered
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of
State of the State of Delaware.
1.2 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 as the business of the
Corporation may require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 ANNUAL MEETING. An annual meeting of stockholders of the
Corporation shall be held each calendar year on such date and at such time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting or in a duly executed waiver of notice of such
meeting. At such meeting, the stockholders shall elect directors and transact
such other business as may properly be brought before the meeting.
2.2 SPECIAL MEETING. A special meeting of the stockholders may be
called at any time by the Chairman of the Board, the President, the board of
directors, and shall be called by the President or the Secretary at the
request in writing of the stockholders of record of not less than ten percent
of all shares entitled to vote at such meeting or as otherwise provided by
the certificate of incorporation of the Corporation. A special meeting shall
be held on such date and at such time as shall be designated by the person(s)
calling the meeting and stated in the notice of the meeting or in a duly
executed waiver of notice of such meeting. Only such business shall be
transacted at a special meeting as may be stated or indicated in the notice
of such meeting or in a duly executed waiver of notice of such meeting.
<PAGE>
2.3 PLACE OF MEETINGS. An annual meeting of stockholders may be held at
any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within
or without the State of Delaware designated in the notice of the meeting or a
duly executed waiver of notice of such meeting. Meetings of stockholders
shall be held at the principal office of the Corporation unless another place
is designated for meetings in the manner provided herein.
2.4 NOTICE. Written or printed notice stating the place, day, and time
of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not
less than ten nor more than 60 days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the
Secretary, or the officer or person(s) calling the meeting, to each
stockholder of record entitled to vote at such meeting. If such notice is to
be sent by mail, it shall be directed to such stockholder at his address as
it appears on the records of the Corporation, unless he shall have filed with
the Secretary of the Corporation a written request that notices to him be
mailed to some other address, in which case it shall be directed to him at
such other address. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall attend such meeting in
person or by proxy and shall not, at the beginning of such meeting, object to
the transaction of any business because the meeting is not lawfully called or
convened, or who shall, either before or after the meeting, submit a signed
waiver of notice, in person or by proxy.
2.5 VOTING LIST. At least ten days before each meeting of stockholders,
the Secretary or other officer of the Corporation who has charge of the
Corporation's stock ledger, either directly or through another officer
appointed by him or through a transfer agent appointed by the board of
directors, shall prepare a complete list of stockholders entitled to vote
thereat, arranged in alphabetical order and showing the address of each
stockholder and number of shares registered in the name of each stockholder.
For a period of ten days prior to such meeting, such list shall be kept on
file at a place within the city where the meeting is to be held, which place
shall be specified in the notice of meeting or a duly executed waiver of
notice of such meeting or, if not so specified, at the place where the
meeting is to be held and shall be open to examination by any stockholder
during ordinary business hours. Such list shall be produced at such meeting
and kept at the meeting at all times during such meeting and may be inspected
by any stockholder who is present.
2.6 QUORUM. The holders of a majority of the outstanding shares
entitled to vote on a matter, present in person or by proxy, shall constitute
a quorum at any meeting of stockholders, except as otherwise provided by law,
the certificate of incorporation of the Corporation, or these bylaws. If a
quorum shall not be present, in person or by proxy, at any meeting of
stockholders, the stockholders entitled to vote thereat who are present, in
person or by proxy, or, if no stockholder entitled to vote is present, any
officer of the Corporation may adjourn the meeting from time to time, without
notice other than announcement at the meeting (unless the board of directors,
after such adjournment, fixes a new record date for the adjourned meeting),
until a quorum shall be present, in person or by proxy. At any adjourned
meeting at which a quorum shall be present, in person or by proxy, any
business may be transacted which may have been transacted at the original
meeting had a quorum been present; provided that, if the adjournment is for
more than 30 days or if after the adjournment a new record date is fixed
2
<PAGE>
for the adjourned meeting, a notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote at the adjourned meeting.
2.7 REQUIRED VOTE; WITHDRAWAL OF QUORUM. When a quorum is present at any
meeting, the vote of the holders of at least a majority of the outstanding
shares entitled to vote who are present, in person or by proxy, shall decide
any question brought before such meeting, unless the question is one on
which, by express provision of statute, the certificate of incorporation of
the Corporation, or these bylaws, a different vote is required, in which case
such express provision shall govern and control the decision of such
question. The stockholders present at a duly constituted meeting may
continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
2.8 METHOD OF VOTING: PROXIES. Except as otherwise provided in the
certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each
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 three years from the
date of its execution, unless otherwise provided in the proxy. If no date is
stated in a proxy, such proxy shall be presumed to have been executed on the
date of the meeting at which it is to be voted. 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 or unless
otherwise made irrevocable by law.
2.9 RECORD DATE. (a) 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 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 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, for any such
determination of stockholders, such date in any case to be not more than 60
days and not less than ten days prior to such meeting nor more than 60 days
prior to any other action. If no record date is fixed:
(i) 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.
(ii) 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.
(iii) 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,
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however, that the board of directors may fix a new record date for the
adjourned meeting.
(b) 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 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 law or these bylaws, 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 in the State of Delaware, principal place of business, or
such officer or agent 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 law or
these bylaws, 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.
2.10 CONDUCT OF MEETING. The Chairman of the Board, if such office has
been filled, and, if not or if the Chairman of the Board is absent or
otherwise unable to act, the President shall preside at all meetings of
stockholders. The Secretary shall keep the records of each meeting of
stockholders. In the absence or inability to act of any such officer, such
officer's duties shall be performed by the officer given the authority to act
for such absent or non-acting officer under these bylaws or by some person
appointed by the meeting.
2.11 INSPECTORS. The board of directors may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If any of the inspectors so appointed shall fail to appear
or act, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors. Each
inspector, 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
shall determine the number of shares of capital stock of the Corporation
outstanding and the voting power of each, the number of shares represented at
the meeting, the existence of a quorum, and the validity and effect of proxies
and shall receive votes, ballots, or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and tabulate
all votes, ballots, or consents, determine the results, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request, or matter determined by them and shall
execute certificate of any fact found by them. No director or candidate for the
office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
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ARTICLE THREE: DIRECTORS
3.1 MANAGEMENT. The business and property of the Corporation shall be
managed by the board of directors. Subject to the restrictions imposed by law,
the certificate of incorporation of the Corporation, or these bylaws, the board
of directors may exercise all the powers of the Corporation.
3.2 NUMBER; QUALIFICATION; ELECTION; TERM. The number of directors which
shall constitute the entire board of directors shall be not less than one. The
first board of directors shall consist of the number of directors named in the
certificate of incorporation of the Corporation or, if no directors are so
named, shall consist of the number of directors elected by the incorporator(s)
at an organizational meeting or by unanimous written consent in lieu thereof.
Thereafter, within the limits above specified, the number of directors which
shall constitute the entire board of directors shall be determined by resolution
of the board of directors or by resolution of the stockholders at the annual
meeting thereof or at a special meeting thereof called for that purpose. Except
as otherwise required by law, the certificate of incorporation of the
Corporation, or these bylaws, the directors shall be elected at an annual
meeting of stockholders at which a quorum is present. Directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy and entitled to vote on the election of directors. Each director so chosen
shall hold office until the first annual meeting of stockholders held after his
election and until his successor is elected and qualified or, if earlier, until
his death, resignation, or removal from office. None of the directors need be a
stockholder of the Corporation or a resident of the State of Delaware. Each
director must have attained the age of majority.
3.3 CHANGE IN NUMBER. No decrease in the number of directors constituting
the entire board of directors shall have the effect of shortening the term of
any incumbent director.
3.4 REMOVAL. Except as otherwise provided in the certificate of
incorporation of the Corporation or these bylaws, at any meeting of stockholders
called expressly for that purpose, any director or the entire board of directors
may be removed, with or without cause, by a vote of the holders of a majority of
the shares then entitled to vote on the election of directors; provided,
however, that so long as stockholders have the right to cumulate votes in the
election of directors pursuant to the certificate of incorporation of the
Corporation, if less than the entire board of directors is to be removed, no one
of the directors may be removed 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.
3.5 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 the sole
remaining director, and each director so chosen shall hold office until the
first annual meeting of stockholders held after his election and until his
successor is elected and qualified or, if earlier, until his death, resignation,
or removal from office. If there are no directors in office, 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 of directors (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least 10% of the
total number of the
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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. Except as otherwise provided in these bylaws, when
one or more directors shall resign from the board of directors, effective at
a future date, a majority of the directors then in office, including those
who have so resigned, shall have the power to fill such vacancy or vacancies,
the vote thereon to take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold office as provided
in these bylaws with respect to the filling of other vacancies.
3.6 MEETINGS OF DIRECTORS. The directors may hold their meetings and may
have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time to time determine or as shall
be specified in the notice of such meeting or duly executed waiver of notice of
such meeting.
3.7 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 and at the same place as the annual
meeting of stockholders, and no notice of such meeting shall be necessary.
3.8 ELECTION OF OFFICERS. At the first meeting of the board of directors
after each annual meeting of stockholders at which a quorum shall be present,
the board of directors shall elect the officers of the Corporation.
3.9 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.
3.10 SPECIAL MEETINGS. Special meetings of the board of directors shall be
held whenever called by the Chairman of the Board, the President, or any
director.
3.11 NOTICE. The Secretary shall give notice of each special meeting to
each director at least 24 hours before the meeting. Notice of any such
meeting need not be given to any director who shall, either before or after
the meeting, submit a signed waiver of notice or who shall attend such
meeting without protesting, prior to or at its commencement, the lack of
notice to him. 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.
3.12 QUORUM; MAJORITY VOTE. At all meetings of the board of directors, a
majority of the directors fixed in the manner provided in these bylaws shall
constitute a quorum for the transaction of business. If at any meeting of the
board of directors there be less than a quorum present, a majority of those
present or any director solely present may adjourn the meeting from time to time
without further notice. Unless the act of a greater number is required by law,
the certificate of incorporation of the Corporation, or these bylaws, the act of
a majority of the directors present at a meeting at which a quorum is in
attendance shall be the act of the board of directors. At any time that the
certificate of incorporation of the Corporation provides that
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directors elected by the holders of a class or series of stock shall have
more or less than one vote per director on any matter, every reference in
these bylaws to a majority or other proportion of directors shall refer to a
majority or other proportion of the votes of such directors.
3.13 PROCEDURE. At meetings of the board of directors, business shall be
transacted in such order as from time to time the board of directors may
determine. The Chairman of the Board, if such office has been filled, and, if
not or if the Chairman of the Board is absent or otherwise unable to act, the
President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of directors from among the directors present. The Secretary of the
Corporation shall act as the secretary of each meeting of the board of directors
unless the board of directors appoints another person to act as secretary of the
meeting. The board of directors shall keep regular minutes of its proceedings
which shall be placed in the minute book of the Corporation.
3.14 PRESUMPTION OF ASSENT. A director of the Corporation who is present
at the meeting of the board of directors at which action on any corporate matter
is taken shall be presumed to have assented to the action 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 secretary of the
meeting before the adjournment thereof or shall forward any dissent by certified
or 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.
3.15 COMPENSATION. The board of directors shall have the authority to fix
the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 DESIGNATION. The board of directors may, by resolution adopted by a
majority of the entire board of directors, designate one or more committees.
4.2 NUMBER; QUALIFICATION; TERM. Each committee shall consist of one or
more directors appointed by resolution adopted by a majority of the entire board
of directors. The number of committee members may be increased or decreased from
time to time by resolution adopted by a majority of the entire board of
directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal as a committee member or as a
director.
4.3 AUTHORITY. Each committee, to the extent expressly provided in the
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation except to the extent expressly restricted by law,
the certificate of incorporation of the Corporation, or these bylaws.
4.4 COMMITTEE CHANGES. The board of directors shall have the power at any
time to fill vacancies in, to change the membership of, and to discharge any
committee.
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4.5 ALTERNATE MEMBERS OF COMMITTEES. The board of directors may
designate one or more directors as alternate members of any committee. Any
such alternate member may replace any absent or disqualified member at any
meeting of the committee. If no alternate committee members have been so
appointed to a committee or each such alternate committee member is absent or
disqualified, the member or members of such committee 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.
4.6 REGULAR MEETINGS. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.7 SPECIAL MEETINGS. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least two days before such special meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of any committee need be
specified in the notice or waiver of notice of any special meeting.
4.8 QUORUM; MAJORITY VOTE. At meetings of any committee, a majority of
the number of members designated by the board of directors shall constitute a
quorum for the transaction of business. If a quorum is not present at a meeting
of any committee, a majority of the members present may adjourn the meeting from
time to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the certificate of incorporation of
the Corporation, or these bylaws.
4.9 MINUTES. Each committee shall cause minutes of its proceedings to be
prepared and shall report the same to the board of directors upon the request of
the board of directors. The minutes of the proceedings of each committee shall
be delivered to the Secretary of the Corporation for placement in the minute
books of the Corporation.
4.10 COMPENSATION. Committee members may, by resolution of the board of
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.11 RESPONSIBILITY. The designation of any committee and the delegation
of authority to it shall not operate to relieve the board of directors or any
director of any responsibility imposed upon it or such director by law.
ARTICLE FIVE: NOTICE
5.1 METHOD. Whenever by statute, the certificate of incorporation of the
Corporation, or these bylaws, notice is required to be given to any committee
member, director, or
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stockholder and no provision is made as to how such notice shall be given,
personal notice shall not be required and any such notice may be given (a) in
writing, by mail, postage prepaid, addressed to such committee member,
director, or stockholder at his address as it appears on the books or (in the
case of a stockholder) the stock transfer records of the Corporation, or (b)
by any other method permitted by law (including but not limited to overnight
courier service, telegram, telex, or telefax). Any notice required or
permitted to be given by mail shall be deemed to be delivered and given at
the time when the same is deposited in the United States mail as aforesaid.
Any notice required or permitted to be given by overnight courier service
shall be deemed to be delivered and given at the time delivered to such
service with all charges prepaid and addressed as aforesaid. Any notice
required or permitted to be given by telegram, telex, or telefax shall be
deemed to be delivered and given at the time transmitted with all charges
prepaid and addressed as aforesaid.
5.2 WAIVER. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, 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. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 NUMBER; TITLES; TERM OF OFFICE. The officers of the Corporation shall
be a President, a Secretary, and such other officers as the board of directors
may from time to time elect or appoint, including a Chairman of the Board, one
or more Vice Presidents (with each Vice President to have such descriptive
title, if any, as the board of directors shall determine), and a Treasurer. Each
officer shall hold office until his successor shall have been duly elected and
shall have qualified, until his death, or until he shall resign or shall have
been removed in the manner hereinafter provided. Any two or more offices may be
held by the same person. None of the officers need be a stockholder or a
director of the Corporation or a resident of the State of Delaware.
6.2 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 interest 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.
6.3 VACANCIES. Any vacancy occurring in any office of the Corporation (by
death, resignation, removal, or otherwise) may be filled by the board of
directors.
6.4 AUTHORITY. Officers shall have such authority and perform such duties
in the management of the Corporation as are provided in these bylaws or as may
be determined by resolution of the board of directors not inconsistent with
these bylaws.
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6.5 COMPENSATION. The compensation, if any, of officers and agents shall
be fixed from time to time by the board of directors; provided, however, that
the board of directors may delegate the power to determine the compensation
of any officer and agent (other than the officer to whom such power is
delegated) to the Chairman of the Board or the President.
6.6 CHAIRMAN OF THE BOARD. The Chairman of the Board, if elected by the
board of directors, shall have such powers and duties as may be prescribed by
the board of directors. Such officer shall preside at all meetings of the
stockholders and of the board of directors. Such officer may sign all
certificates for shares of stock of the Corporation.
6.7 PRESIDENT. The President shall be the chief executive officer of the
Corporation and, subject to the board of directors, he shall have general
executive charge, management, and control of the properties and operations of
the Corporation in the ordinary course of its business, with all such powers
with respect to such properties and operations as may be reasonably incident
to such responsibilities. If the board of directors has not elected a
Chairman of the Board or in the absence or inability to act of the Chairman
of the Board, the President shall exercise all of the powers and discharge
all of the duties of the Chairman of the Board. As between the Corporation
and third parties, any action taken by the President in the performance of
the duties of the Chairman of the Board shall be conclusive evidence that
there is no Chairman of the Board or that the Chairman of the Board is absent
or unable to act.
6.8 VICE PRESIDENTS. Each Vice President shall have such powers and
duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President, and (in order of their seniority as determined
by the board of directors or, in the absence of such determination, as
determined by the length of time they have held the office of Vice President)
shall exercise the powers of the President during that officer's absence or
inability to act. As between the Corporation and third parties, any action
taken by a Vice President in the performance of the duties of the President
shall be conclusive evidence of the absence or inability to act of the
President at the time such action was taken.
6.9 TREASURER. The Treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate account of receipts and
disbursements, shall deposit all monies and valuable effects in the name and
to the credit of the Corporation in such depository or depositories as may be
designated by the board of directors, and shall perform such other duties as
may be prescribed by the board of directors, the Chairman of the Board, or
the President.
6.10 ASSISTANT TREASURERS. Each Assistant Treasurer shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Treasurers (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they
have held the office of Assistant Treasurer) shall exercise the powers of the
Treasurer during that officer's absence or inability to act.
6.11 SECRETARY. Except as otherwise provided in these bylaws, the
Secretary shall keep the minutes of all meetings of the board of directors
and of the stockholders in books provided for that purpose, and he shall
attend to the giving and service of all notices. He may sign with
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the Chairman of the Board or the President, in the name of the Corporation,
all contracts of the Corporation and affix the seal of the Corporation
thereto. He may sign with the Chairman of the Board or the President all
certificates for shares of stock of the Corporation, and he shall have charge
of the certificate books, transfer books, and stock papers as the board of
directors may direct, all of which shall at all reasonable times be open to
inspection by any director upon application at the office of the Corporation
during business hours. He shall in general perform all duties incident to the
office of the Secretary, subject to the control of the board of directors,
the Chairman of the Board, and the President.
6.12 ASSISTANT SECRETARIES. Each Assistant Secretary shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Secretaries (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they
have held the office of Assistant Secretary) shall exercise the powers of the
Secretary during that officer's absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 CERTIFICATES FOR SHARES. Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or
the President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an Assistant Treasurer. Any and all
signatures on the certificate may be a facsimile and may be sealed with the
seal of the Corporation or a facsimile thereof. If any officer, transfer
agent, or registrar who has signed, or whose facsimile signature has been
placed upon, a certificate has ceased to be such officer, transfer agent, or
registrar before such certificate is issued, such certificate 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. The 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 the number of
shares.
7.2 REPLACEMENT OF LOST OR DESTROYED CERTIFICATES. The board of
directors may direct a new certificate or certificates to be issued in place
of a certificate or certificates theretofore issued by the Corporation and
alleged to have been lost or destroyed, upon the making of an affidavit of
that fact by the person claiming the certificate or certificates representing
shares to be lost 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 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 with a surety or sureties satisfactory to the Corporation
in such sum as it may direct as indemnity against any claim, or expense
resulting from a claim, that may be made against the Corporation with
respect to the certificate or certificates alleged to have been lost or
destroyed.
7.3 TRANSFER OF SHARES. 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 to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent
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shall issue a new certificate to the person entitled thereto, cancel the old
certificate, and record the transaction upon its books.
7.4 REGISTERED STOCKHOLDERS. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock 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 law.
7.5 REGULATIONS. 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 stock of the Corporation.
7.6 LEGENDS. The board of directors shall have the power and authority to
provide that certificates representing shares of stock bear such legends as the
board of directors deems appropriate to assure that the Corporation does not
become liable for violations of federal or state securities laws or other
applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 DIVIDENDS. Subject to provisions of law and the certificate of
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and payment
shall be at the discretion of the board of directors.
8.2 RESERVES. There may be created by the board of directors out of funds
of the Corporation legally available therefor such reserve or reserves as the
directors from time to time, in their discretion, consider proper to provide for
contingencies, to equalize dividends, or to repair or maintain any property of
the Corporation, or for such other purpose as the board of directors shall
consider beneficial to the Corporation, and the board of directors may modify or
abolish any such reserve in the manner in which it was created.
8.3 BOOKS AND RECORDS. The Corporation shall keep correct and complete
books and records of account, shall keep minutes of the proceedings of its
stockholders and board of directors and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 FISCAL YEAR. The fiscal year of the Corporation shall be fixed by the
board of directors; provided, that if such fiscal year is not fixed by the board
of directors and the selection of the fiscal year is not expressly deferred by
the board of directors, the fiscal year shall be the calendar year.
8.5 SEAL. The seal of the Corporation shall be such as from time to time
may be approved by the board of directors.
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8.6 RESIGNATIONS. Any director, committee member, or officer may resign by
so stating at any meeting of the board of directors or by giving written notice
to the board of directors, the Chairman of the Board, the President, or the
Secretary. Such resignation shall take effect at the time specified therein or,
if no time is specified therein, immediately upon its receipt. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
8.7 SECURITIES OF OTHER CORPORATIONS. The Chairman of the Board, the
President, or any Vice President of the Corporation shall have the power and
authority to transfer, endorse for transfer, vote, consent, or take any other
action with respect to any securities of another issuer which may be held or
owned by the Corporation and to make, execute, and deliver any waiver, proxy, or
consent with respect to any such securities.
8.8 TELEPHONE MEETINGS. Stockholders (acting for themselves or through a
proxy), members of the board of directors, and members of a committee of the
board of directors may participate in and hold a meeting of such stockholders,
board of directors, or committee by means of a conference telephone or similar
communications equipment by means of which persons participating in the meeting
can hear each other, and 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 on the ground that the meeting is not lawfully
called or convened.
8.9 ACTION WITHOUT A MEETING. (a) Unless otherwise provided in the
certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the 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, shall be signed by the holders (acting for themselves or
through a proxy) 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 the holders of 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. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated consent delivered in the
manner required by this Section 8.9(a) to the Corporation, written consents
signed by a sufficient number of holders to take action are 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, principal place
of business, or such officer or agent shall be by hand or by certified or
registered mail, return receipt requested.
(b) Unless otherwise restricted by the certificate of incorporation of the
Corporation or by these bylaws, any action required or permitted to be taken at
a meeting of the board of directors, or of any committee of the board of
directors, may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by all the
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<PAGE>
directors or all the committee members, as the case may be, entitled to vote
with respect to the subject matter thereof, and such consent shall have the
same force and effect as a vote of such directors or committee members, as
the case may be, and may be stated as such in any certificate or document
filed with the Secretary of State of the State of Delaware or in any
certificate delivered to any person. Such consent or consents shall be filed
with the minutes of proceedings of the board or committee, as the case may be.
8.10 INVALID PROVISIONS. If any part of these bylaws shall be held invalid
or inoperative for any reason, the remaining parts, so far as it is possible and
reasonable, shall remain valid and operative.
8.11 MORTGAGES, ETC. With respect to any deed, deed of trust, mortgage, or
other instrument executed by the Corporation through its duly authorized officer
or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage, or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the board of directors
authorizing such execution expressly state that such attestation is necessary.
8.12 HEADINGS. The headings used in these bylaws have been inserted for
administrative convenience only and do not constitute matter to be construed in
interpretation.
8.13 REFERENCES. Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 AMENDMENTS. These bylaws may be altered, amended, or repealed or new
bylaws may be adopted by the stockholders or by the board of directors at any
regular meeting of the stockholders or the board of directors or at any special
meeting of the stockholders or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new bylaws be contained in the
notice of such special meeting.
The undersigned, being the Secretary of the Corporation, hereby certifies
that the foregoing bylaws were adopted by the consent of the board of directors
of the Corporation as of August 17, 1994.
\s\ Paul L. Barrett
---------------------------------------------
Paul L. Barrett, Secretary
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<PAGE>
CERTIFICATE OF INCORPORATION
OF
RBP OF TEXAS, INC.
I, the undersigned natural person acting as an incorporator of a
corporation (hereinafter called the "Corporation") under the General Corporation
Law of the State of Delaware (the "DGCL"), do hereby adopt the following
Certificate of Incorporation for the Corporation:
FIRST: The name of the corporation is RBP of Texas, Inc.
SECOND: The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, Delaware 19801, County of New Castle. The name of the registered
agent of the Corporation at such address is The Corporation Trust Company.
THIRD: The purpose for which the Corporation is organized is to
engage in any and all lawful acts or activity for which corporations may be
organized under the DGCL. The Corporation will have perpetual existence.
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1,000 shares, par value $.01 per share,
designated Common Stock.
FIFTH: The name of the incorporator is George L. Diamond, and the
mailing address of such incorporator is True Rohde & Sewell, Eighty-Eighty
Central, Ninth Floor, Dallas, Texas 75206-1887.
SIXTH: The number of directors constituting the initial board of
directors is three, and the names and addresses of the persons who are to serve
as directors until the first annual meeting of stockholders or until their
successors are elected and qualified are as follows:
<PAGE>
NAME ADDRESS
---- -------
David G. Fiore 2550 Walnut Hill Lane, Suite 200
Dallas, Texas 75229
Thomas W. Sturgess 750 N. St. Paul Street, Suite 1200
Dallas, Texas 75201
Frederick B. Hegi, Jr. 750 N. St. Paul Street, Suite 1200
Dallas, Texas 75201
SEVENTH: Directors of the Corporation need not be elected by written
ballot unless the bylaws of the Corporation otherwise provide.
EIGHTH: The directors of the Corporation shall have the power to
adopt, amend and repeal the bylaws of the Corporation.
NINTH: No contract or transaction between the Corporation and one
or more of its directors, officers or stockholders, or between the Company and
any person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers or stockholders are directors, officers or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified by the board of directors, a committee thereof, or the
stockholders.
2
<PAGE>
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the board of directors or of a committee which authorizes
the contract or transaction.
TENTH: The Corporation shall indemnify any person who was, is or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, 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, to the
fullest extent permitted under the DGCL, as the same exists or may hereafter be
amended. Such right shall be a contract right and as such shall run to the
benefit of any director or officer who is elected and accepts the position of
director or officer of the Corporation or elects to continue to serve as a
director or officer of the Corporation while this Article Tenth is in effect.
Any repeal or amendment of this Article Tenth shall be prospective only and
shall not limit the rights of any such director or officer or the obligations of
the Corporation with respect to any claim arising from or related to the
services of such director or officer in any of the foregoing capacities prior to
any such repeal or amendment to this Article Tenth. Such right shall include
the right to be paid by the Corporation expenses incurred in defending any such
proceeding in advance of its final disposition to the maximum extent permitted
under the DGCL, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within sixty (60) days after a written claim has been received by
the Corporation, 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 also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense are not permitted under the
DGCL, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its board of
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<PAGE>
directors or any committee thereof, independent legal counsel, or stockholders)
to have made its determination prior to the commencement of such action that
indemnification of, or advancement of costs of defense to, the claimant is
permissible in the circumstances nor an actual determination by the Corporation
(including its board of directors or any committee thereof, independent legal
counsel, or stockholders) that such indemnification or advancement is not
permissible shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death of
any person having a right of indemnification under the foregoing provisions,
such right shall inure to the benefit of his or her heirs, executors,
administrators and personal representatives. The rights conferred above shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, bylaw, resolution of stockholders or directors,
agreement, or otherwise.
Without limiting the generality of the foregoing, to the extent permitted
by then applicable law, the grant of mandatory indemnification pursuant to this
Article Tenth shall extend to proceedings involving the negligence of such
person.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, any appeal in such an action, suit or proceeding,
and any inquiry or investigation that could lead to such an action, suit or
proceeding.
ELEVENTH: A director of the Corporation shall not be personally 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
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper benefit. Any repeal or
amendment of this Article Eleventh by the stockholders of the Corporation shall
be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation arising from an act or
omission occurring prior to the time of such repeal or amendment. In addition
to the circumstances in which a director of the Corporation is not personally
liable as set forth
4
<PAGE>
in the foregoing provisions of this Article Eleventh, a director shall not be
liable to the Corporation or its stockholders to such further extent as
permitted by any law hereafter enacted, including, without limitation, any
subsequent amendment to the DGCL.
TWELFTH: The Corporation expressly elects not to be governed by
Section 203 of the DGCL.
I, the undersigned, for the purpose of forming the Corporation under the
laws of the State of Delaware, do make, file and record this Certificate of
Incorporation and do certify that this is my act and deed and that the facts
stated herein are true and, accordingly, I do hereunto set my hand this 17th day
of April, 1995.
\s\ George L. Diamond
-------------------------------------------
George L. Diamond
<PAGE>
BYLAWS
OF
RBP OF TEXAS, INC.
A Delaware Corporation
<PAGE>
BYLAWS
OF
RBP OF TEXAS, INC.
A Delaware Corporation
TABLE OF CONTENTS
PAGE
----
ARTICLE ONE: OFFICES
1.1 REGISTERED OFFICE AND AGENT . . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 PLACE OF MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 VOTING LIST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 REQUIRED VOTE; WITHDRAWAL OF QUORUM. . . . . . . . . . . . . . . . . . . 4
2.8 METHOD OF VOTING: PROXIES. . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 RECORD DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 CONDUCT OF MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 INSPECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE THREE: DIRECTORS
3.1 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 NUMBER; QUALIFICATION; ELECTION; TERM. . . . . . . . . . . . . . . . . . 7
3.3 CHANGE IN NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 REMOVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 MEETINGS OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 FIRST MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 ELECTION OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 QUORUM; MAJORITY VOTE. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.13 PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 PRESUMPTION OF ASSENT. . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.15 COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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<PAGE>
ARTICLE FOUR: COMMITTEES
4.1 DESIGNATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 NUMBER; QUALIFICATION; TERM. . . . . . . . . . . . . . . . . . . . . . . 11
4.3 AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 COMMITTEE CHANGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 ALTERNATE MEMBERS OF COMMITTEES. . . . . . . . . . . . . . . . . . . . . 11
4.6 REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 QUORUM; MAJORITY VOTE. . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.9 MINUTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 RESPONSIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE FIVE: NOTICE
5.1 METHOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE SIX: OFFICERS
6.1 NUMBER; TITLES; TERM OF OFFICE . . . . . . . . . . . . . . . . . . . . . 13
6.2 REMOVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 CHAIRMAN OF THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.7 PRESIDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.8 VICE PRESIDENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.9 TREASURER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.10 ASSISTANT TREASURERS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.11 SECRETARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.12 ASSISTANT SECRETARIE . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 CERTIFICATES FOR SHARES. . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 REPLACEMENTS OF LOST OR DESTROYED CERTIFICATES . . . . . . . . . . . . . 17
7.3 TRANSFER OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.4 REGISTERED STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . 17
7.5 REGULATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.6 LEGENDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 RESERVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ii
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8.3 BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.5 SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.6 RESIGNATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.7 SECURITIES OF OTHER CORPORATIONS . . . . . . . . . . . . . . . . . . . . 19
8.8 TELEPHONE MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.9 ACTION WITHOUT A MEETING . . . . . . . . . . . . . . . . . . . . . . . . 19
8.10 INVALID PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.11 MORTGAGES, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.12 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.13 REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.14 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
iii
<PAGE>
BYLAWS
OF
RBP OF TEXAS, INC.
A Delaware Corporation
PREAMBLE
These bylaws are subject to, and governed by, the General Corporation Law
of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of RBP of Texas, Inc., a Delaware corporation (the
"Corporation"). In the event of a direct conflict between the provisions of
these bylaws and the mandatory provisions of the Delaware General Corporation
Law or the provisions of the certificate of incorporation of the Corporation,
such provisions of the Delaware General Corporation Law or the certificate of
incorporation of the Corporation, as the case may be, will be controlling.
ARTICLE ONE: OFFICES
1.1 REGISTERED OFFICE AND AGENT. The registered office and registered
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State of
the State of Delaware.
1.2 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 as the business of the Corporation may
require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 ANNUAL MEETING. An annual meeting of stockholders of the Corporation
shall be held each calendar year on such date and at such time as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting or in a duly executed waiver
<PAGE>
of notice of such meeting. At such meeting, the stockholders shall elect
directors and transact such other business as may properly be brought before
the meeting.
2.2 SPECIAL MEETING. A special meeting of the stockholders may be called
at any time by the Chairman of the Board, the President, the board of directors,
and shall be called by the President or the Secretary at the request in writing
of the stockholders of record of not less than ten percent of all shares
entitled to vote at such meeting or as otherwise provided by the certificate of
incorporation of the Corporation. A special meeting shall be held on such date
and at such time as shall be designated by the person(s) calling the meeting and
stated in the notice of the meeting or in a duly executed waiver of notice of
such meeting. Only such business shall be transacted at a special meeting as
may be stated or indicated in the notice of such meeting or in a duly executed
waiver of notice of such meeting.
2.3 PLACE OF MEETINGS. An annual meeting of stockholders may be held at
any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within or
without the State of Delaware designated in the notice of the meeting or a duly
executed waiver of notice of such meeting. Meetings of stockholders shall be
held at the principal office of the Corporation unless another place is
designated for meetings in the manner provided herein.
2.4 NOTICE. Written or printed notice stating the place, day, and time
of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not
less than ten nor more than 60 days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the
Secretary, or the officer or person(s) calling the meeting, to each
stockholder of record entitled to vote at such meeting. If such notice is to
be sent by mail, it shall be directed to such stockholder at his address as
it appears on the records of the Corporation, unless he shall have filed with
the Secretary of the Corporation a written request that notices to him be
mailed to some other address, in which case it shall be directed to him at
such other address. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall attend such meeting in
person or by proxy and shall not, at the beginning of such meeting, object to
the
2
<PAGE>
transaction of any business because the meeting is not lawfully called or
convened, or who shall, either before or after the meeting, submit a signed
waiver of notice, in person or by proxy.
2.5 VOTING LIST. At least ten days before each meeting of stockholders,
the Secretary or other officer of the Corporation who has charge of the
Corporation's stock ledger, either directly or through another officer appointed
by him or through a transfer agent appointed by the board of directors, shall
prepare a complete list of stockholders entitled to vote thereat, arranged in
alphabetical order and showing the address of each stockholder and number of
shares registered in the name of each stockholder. For a period of ten days
prior to such meeting, such list shall be kept on file at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of meeting or a duly executed waiver of notice of such meeting or, if not
so specified, at the place where the meeting is to be held and shall be open to
examination by any stockholder during ordinary business hours. Such list shall
be produced at such meeting and kept at the meeting at all times during such
meeting and may be inspected by any stockholder who is present.
2.6 QUORUM. The holders of a majority of the outstanding shares entitled
to vote on a matter, present in person or by proxy, shall constitute a quorum at
any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these bylaws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders, the
stockholders entitled to vote thereat who are present, in person or by proxy,
or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other than
announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 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 adjourned meeting.
3
<PAGE>
2.7 REQUIRED VOTE; WITHDRAWAL OF QUORUM. When a quorum is present at any
meeting, the vote of the holders of at least a majority of the outstanding
shares entitled to vote who are present, in person or by proxy, shall decide any
question brought before such meeting, unless the question is one on which, by
express provision of statute, the certificate of incorporation of the
Corporation, or these bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such question. The
stockholders present at a duly constituted meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
2.8 METHOD OF VOTING: PROXIES. Except as otherwise provided in the
certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each
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 three years from the date of
its execution, unless otherwise provided in the proxy. If no date is stated in
a proxy, such proxy shall be presumed to have been executed on the date of the
meeting at which it is to be voted. 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 or unless otherwise made
irrevocable by law.
2.9 RECORD DATE. (a) 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 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 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, for any such
determination of stockholders, such date in any case to be not more than 60
days and not less than ten days prior to such meeting nor more than 60 days
prior to any other action. If no record date is fixed:
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(i) 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.
(ii) 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.
(iii) 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.
(b) 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 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 law or these bylaws, 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 in the State of Delaware, principal place of business, or such officer or
agent 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 law or these bylaws, the record
date for determining stockholders entitled to consent to
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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.
2.10 CONDUCT OF MEETING. The Chairman of the Board, if such office has
been filled, and, if not or if the Chairman of the Board is absent or
otherwise unable to act, the President shall preside at all meetings of
stockholders. The Secretary shall keep the records of each meeting of
stockholders. In the absence or inability to act of any such officer, such
officer's duties shall be performed by the officer given the authority to act
for such absent or non-acting officer under these bylaws or by some person
appointed by the meeting.
2.11 INSPECTORS. The board of directors may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If any of the inspectors so appointed shall fail to appear
or act, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors.
Each inspector, 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
shall determine the number of shares of capital stock of the Corporation
outstanding and the voting power of each, the number of shares represented at
the meeting, the existence of a quorum, and the validity and effect of proxies
and shall receive votes, ballots, or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and tabulate
all votes, ballots, or consents, determine the results, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request, or matter determined by them and shall
execute a certificate of any fact found by them. No director or candidate for
the office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
ARTICLE THREE: DIRECTORS
3.1 MANAGEMENT. The business and property of the Corporation shall be
managed by the board of directors. Subject to the restrictions imposed by law,
the certificate of
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incorporation of the Corporation, or these bylaws, the board of directors may
exercise all the powers of the Corporation.
3.2 NUMBER; QUALIFICATION; ELECTION; TERM. The number of directors which
shall constitute the entire board of directors shall be not less than one. The
first board of directors shall consist of the number of directors named in the
certificate of incorporation of the Corporation or, if no directors are so
named, shall consist of the number of directors elected by the incorporator(s)
at an organizational meeting or by unanimous written consent in lieu thereof.
Thereafter, within the limits above specified, the number of directors which
shall constitute the entire board of directors shall be determined by resolution
of the board of directors or by resolution of the stockholders at the annual
meeting thereof or at a special meeting thereof called for that purpose. Except
as otherwise required by law, the certificate of incorporation of the
Corporation, or these bylaws, the directors shall be elected at an annual
meeting of stockholders at which a quorum is present. Directors shall be
elected by a plurality of the votes of the shares present in person or
represented by proxy and entitled to vote on the election of directors. Each
director so chosen shall hold office until the first annual meeting of
stockholders held after his election and until his successor is elected and
qualified or, if earlier, until his death, resignation, or removal from office.
None of the directors need be a stockholder of the Corporation or a resident of
the State of Delaware. Each director must have attained the age of majority.
3.3 CHANGE IN NUMBER. No decrease in the number of directors constituting
the entire board of directors shall have the effect of shortening the term of
any incumbent director.
3.4 REMOVAL. Except as otherwise provided in the certificate of
incorporation of the Corporation or these bylaws, at any meeting of stockholders
called expressly for that purpose, any director or the entire board of directors
may be removed, with or without cause, by a vote of the holders of a majority of
the shares then entitled to vote on the election of directors; provided,
however, that so long as stockholders have the right to cumulate votes in the
election of directors pursuant to the certificate of incorporation of the
Corporation, if less than the entire board of directors is to be removed, no one
of the directors may be removed if the votes cast
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against his removal would be sufficient to elect him if then cumulatively
voted at an election of the entire board of directors.
3.5 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 the
sole remaining director, and each director so chosen shall hold office until the
first annual meeting of stockholders held after his election and until his
successor is elected and qualified or, if earlier, until his death, resignation,
or removal from office. If there are no directors in office, 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 of directors (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least 10% 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. Except as otherwise provided in these bylaws,
when one or more directors shall resign from the board of directors, effective
at a future date, a majority of the directors then in office, including those
who have so resigned, shall have the power to fill such vacancy or vacancies,
the vote thereon to take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold office as provided in
these bylaws with respect to the filling of other vacancies.
3.6 MEETINGS OF DIRECTORS. The directors may hold their meetings and may
have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time to time determine or as shall
be specified in the notice of such meeting or duly executed waiver of notice of
such meeting.
3.7 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,
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immediately after and at the same place as the annual meeting of
stockholders, and no notice of such meeting shall be necessary.
3.8 ELECTION OF OFFICERS. At the first meeting of the board of directors
after each annual meeting of stockholders at which a quorum shall be present,
the board of directors shall elect the officers of the Corporation.
3.9 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.
3.10 SPECIAL MEETINGS. Special meetings of the board of directors shall be
held whenever called by the Chairman of the Board, the President, or any
director.
3.11 NOTICE. The Secretary shall give notice of each special meeting to
each director at least 24 hours before the meeting. Notice of any such meeting
need not be given to any director who shall, either before or after the meeting,
submit a signed waiver of notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice to him. 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.
3.12 QUORUM; MAJORITY VOTE. At all meetings of the board of directors, a
majority of the directors fixed in the manner provided in these bylaws shall
constitute a quorum for the transaction of business. If at any meeting of the
board of directors there be less than a quorum present, a majority of those
present or any director solely present may adjourn the meeting from time to time
without further notice. Unless the act of a greater number is required by law,
the certificate of incorporation of the Corporation, or these bylaws, the act of
a majority of the directors present at a meeting at which a quorum is in
attendance shall be the act of the board of directors. At any time that the
certificate of incorporation of the Corporation provides that directors elected
by the holders of a class or series of stock shall have more or less than one
vote
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per director on any matter, every reference in these bylaws to a majority or
other proportion of directors shall refer to a majority or other proportion
of the votes of such directors.
3.13 PROCEDURE. At meetings of the board of directors, business shall
be transacted in such order as from time to time the board of directors may
determine. The Chairman of the Board, if such office has been filled, and, if
not or if the Chairman of the Board is absent or otherwise unable to act, the
President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of directors from among the directors present. The Secretary of
the Corporation shall act as the secretary of each meeting of the board of
directors unless the board of directors appoints another person to act as
secretary of the meeting. The board of directors shall keep regular minutes of
its proceedings which shall be placed in the minute book of the Corporation.
3.14 PRESUMPTION OF ASSENT. A director of the Corporation who is present
at the meeting of the board of directors at which action on any corporate matter
is taken shall be presumed to have assented to the action 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 secretary of the
meeting before the adjournment thereof or shall forward any dissent by certified
or 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.
3.15 COMPENSATION. The board of directors shall have the authority to fix
the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 DESIGNATION. The board of directors may, by resolution adopted by a
majority of the entire board of directors, designate one or more committees.
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4.2 NUMBER; QUALIFICATION; TERM. Each committee shall consist of one or
more directors appointed by resolution adopted by a majority of the entire board
of directors. The number of committee members may be increased or decreased
from time to time by resolution adopted by a majority of the entire board of
directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal as a committee member or as a
director.
4.3 AUTHORITY. Each committee, to the extent expressly provided in the
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation except to the extent expressly restricted by law,
the certificate of incorporation of the Corporation, or these bylaws.
4.4 COMMITTEE CHANGES. The board of directors shall have the power at any
time to fill vacancies in, to change the membership of, and to discharge any
committee.
4.5 ALTERNATE MEMBERS OF COMMITTEES. The board of directors may designate
one or more directors as alternate members of any committee. Any such alternate
member may replace any absent or disqualified member at any meeting of the
committee. If no alternate committee members have been so appointed to a
committee or each such alternate committee member is absent or disqualified, the
member or members of such committee 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.
4.6 REGULAR MEETINGS. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.7 SPECIAL MEETINGS. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special
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meeting, to be given to each committee member at least two days before such
special meeting. Neither the business to be transacted at, nor the purpose
of, any special meeting of any committee need be specified in the notice or
waiver of notice of any special meeting.
4.8 QUORUM; MAJORITY VOTE. At meetings of any committee, a majority of
the number of members designated by the board of directors shall constitute a
quorum for the transaction of business. If a quorum is not present at a meeting
of any committee, a majority of the members present may adjourn the meeting from
time to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the certificate of incorporation of
the Corporation, or these bylaws.
4.9 MINUTES. Each committee shall cause minutes of its proceedings to be
prepared and shall report the same to the board of directors upon the request of
the board of directors. The minutes of the proceedings of each committee shall
be delivered to the Secretary of the Corporation for placement in the minute
books of the Corporation.
4.10 COMPENSATION. Committee members may, by resolution of the board of
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.11 RESPONSIBILITY. The designation of any committee and the delegation
of authority to it shall not operate to relieve the board of directors or any
director of any responsibility imposed upon it or such director by law.
ARTICLE FIVE: NOTICE
5.1 METHOD. Whenever by statute, the certificate of incorporation of the
Corporation, or these bylaws, notice is required to be given to any committee
member, director, or stockholder and no provision is made as to how such notice
shall be given, personal notice shall
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not be required and any such notice may be given (a) in writing, by mail,
postage prepaid, addressed to such committee member, director, or stockholder
at his address as it appears on the books or (in the case of a stockholder)
the stock transfer records of the Corporation, or (b) by any other method
permitted by law (including but not limited to overnight courier service,
telegram, telex, or telefax). Any notice required or permitted to be given
by mail shall be deemed to be delivered and given at the time when the same
is deposited in the United States mail as aforesaid. Any notice required or
permitted to be given by overnight courier service shall be deemed to be
delivered and given at the time delivered to such service with all charges
prepaid and addressed as aforesaid. Any notice required or permitted to be
given by telegram, telex, or telefax shall be deemed to be delivered and
given at the time transmitted with all charges prepaid and addressed as
aforesaid.
5.2 WAIVER. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, 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. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 NUMBER; TITLES; TERM OF OFFICE. The officers of the Corporation shall
be a President, a Secretary, and such other officers as the board of directors
may from time to time elect or appoint, including a Chairman of the Board, one
or more Vice Presidents (with each Vice President to have such descriptive
title, if any, as the board of directors shall determine), and a Treasurer.
Each officer shall hold office until his successor shall have been duly elected
and shall have qualified, until his death, or until he shall resign or shall
have been removed in the manner hereinafter provided. Any two or more offices
may be held by the same person.
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None of the officers need be a stockholder or a director of the Corporation
or a resident of the State of Delaware.
6.2 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 interest 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.
6.3 VACANCIES. Any vacancy occurring in any office of the Corporation (by
death, resignation, removal, or otherwise) may be filled by the board of
directors.
6.4 AUTHORITY. Officers shall have such authority and perform such duties
in the management of the Corporation as are provided in these bylaws or as may
be determined by resolution of the board of directors not inconsistent with
these bylaws.
6.5 COMPENSATION. The compensation, if any, of officers and agents shall
be fixed from time to time by the board of directors; provided, however, that
the board of directors may delegate the power to determine the compensation of
any officer and agent (other than the officer to whom such power is delegated)
to the Chairman of the Board or the President.
6.6 CHAIRMAN OF THE BOARD. The Chairman of the Board, if elected by the
board of directors, shall have such powers and duties as may be prescribed by
the board of directors. Such officer shall preside at all meetings of the
stockholders and of the board of directors. Such officer may sign all
certificates for shares of stock of the Corporation.
6.7 PRESIDENT. The President shall be the chief executive officer of the
Corporation and, subject to the board of directors, he shall have general
executive charge, management, and control of the properties and operations of
the Corporation in the ordinary course of its business, with all such powers
with respect to such properties and operations as may be reasonably incident to
such responsibilities. If the board of directors has not elected a Chairman of
the
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Board or in the absence or inability to act of the Chairman of the Board,
the President shall exercise all of the powers and discharge all of the duties
of the Chairman of the Board. As between the Corporation and third parties, any
action taken by the President in the performance of the duties of the Chairman
of the Board shall be conclusive evidence that there is no Chairman of the Board
or that the Chairman of the Board is absent or unable to act.
6.8 VICE PRESIDENTS. Each Vice President shall have such powers and
duties as may be assigned to him by the board of directors, the Chairman of the
Board, or the President, and (in order of their seniority as determined by the
board of directors or, in the absence of such determination, as determined by
the length of time they have held the office of Vice President) shall exercise
the powers of the President during that officer's absence or inability to act.
As between the Corporation and third parties, any action taken by a Vice
President in the performance of the duties of the President shall be conclusive
evidence of the absence or inability to act of the President at the time such
action was taken.
6.9 TREASURER. The Treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate account of receipts and
disbursements, shall deposit all monies and valuable effects in the name and to
the credit of the Corporation in such depository or depositories as may be
designated by the board of directors, and shall perform such other duties as may
be prescribed by the board of directors, the Chairman of the Board, or the
President.
6.10 ASSISTANT TREASURERS. Each Assistant Treasurer shall have such powers
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President. The Assistant Treasurers (in the order of their
seniority as determined by the board of directors or, in the absence of such a
determination, as determined by the length of time they have held the office of
Assistant Treasurer) shall exercise the powers of the Treasurer during that
officer's absence or inability to act.
6.11 SECRETARY. Except as otherwise provided in these bylaws, the
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books provided
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for that purpose, and he shall attend to the giving and service of all
notices. He may sign with the Chairman of the Board or the President, in the
name of the Corporation, all contracts of the Corporation and affix the seal
of the Corporation thereto. He may sign with the Chairman of the Board or
the President all certificates for shares of stock of the Corporation, and he
shall have charge of the certificate books, transfer books, and stock papers
as the board of directors may direct, all of which shall at all reasonable
times be open to inspection by any director upon application at the office of
the Corporation during business hours. He shall in general perform all
duties incident to the office of the Secretary, subject to the control of the
board of directors, the Chairman of the Board, and the President.
6.12 ASSISTANT SECRETARIES. - Each Assistant Secretary shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Secretaries (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they have
held the office of Assistant Secretary) shall exercise the powers of the
Secretary during that officer's absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 CERTIFICATES FOR SHARES. Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or the
President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an Assistant Treasurer. Any and all signatures
on the certificate may be a facsimile and may be sealed with the seal of the
Corporation or a facsimile thereof. If any officer, transfer agent, or
registrar who has signed, or whose facsimile signature has been placed upon, a
certificate has ceased to be such officer, transfer agent, or registrar before
such certificate is issued, such certificate 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. The 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 the number of shares.
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7.2 REPLACEMENTS OF LOST OR DESTROYED CERTIFICATES. The board of
directors may direct a new certificate or certificates to be issued in place
of a certificate or certificates theretofore issued by the Corporation and
alleged to have been lost or destroyed, upon the making of an affidavit of
that fact by the person claiming the certificate or certificates representing
shares to be lost 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 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 with a surety or sureties satisfactory to the Corporation
in such sum as it may direct as indemnity against any claim, or expense
resulting from a claim, that may be made against the Corporation with respect
to the certificate or certificates alleged to have been lost or destroyed.
7.3 TRANSFER OF SHARES. 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 to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 REGISTERED STOCKHOLDERS. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock 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 law.
7.5 REGULATIONS. 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 stock of the Corporation.
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7.6 LEGENDS. The board of directors shall have the power and authority to
provide that certificates representing shares of stock bear such legends as the
board of directors deems appropriate to assure that the Corporation does not
become liable for violations of federal or state securities laws or other
applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 DIVIDENDS. Subject to provisions of law and the certificate of
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and
payment shall be at the discretion of the board of directors.
8.2 RESERVES. There may be created by the board of directors out of funds
of the Corporation legally available therefor such reserve or reserves as the
directors from time to time, in their discretion, consider proper to provide for
contingencies, to equalize dividends, or to repair or maintain any property of
the Corporation, or for such other purpose as the board of directors shall
consider beneficial to the Corporation, and the board of directors may modify or
abolish any such reserve in the manner in which it was created.
8.3 BOOKS AND RECORDS. The Corporation shall keep correct and complete
books and records of account, shall keep minutes of the proceedings of its
stockholders and board of directors and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 FISCAL YEAR. The fiscal year of the Corporation shall be fixed by the
board of directors; provided, that if such fiscal year is not fixed by the board
of directors and the selection of the fiscal year is not expressly deferred by
the board of directors, the fiscal year shall be the calendar year.
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8.5 SEAL. The seal of the Corporation shall be such as from time to time
may be approved by the board of directors.
8.6 RESIGNATIONS. Any director, committee member, or officer may resign
by so stating at any meeting of the board of directors or by giving written
notice to the board of directors, the Chairman of the Board, the President, or
the Secretary. Such resignation shall take effect at the time specified therein
or, if no time is specified therein, immediately upon its receipt. Unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
8.7 SECURITIES OF OTHER CORPORATIONS. The Chairman of the Board, the
President, or any Vice President of the Corporation shall have the power and
authority to transfer, endorse for transfer, vote, consent, or take any other
action with respect to any securities of another issuer which may be held or
owned by the Corporation and to make, execute, and deliver any waiver, proxy, or
consent with respect to any such securities.
8.8 TELEPHONE MEETINGS. Stockholders (acting for themselves or through a
proxy), members of the board of directors, and members of a committee of the
board of directors may participate in and hold a meeting of such stockholders,
board of directors, or committee by means of a conference telephone or similar
communications equipment by means of which persons participating in the meeting
can hear each other, and 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 on the ground that the meeting is not lawfully
called or convened.
8.9 ACTION WITHOUT A MEETING. (a) Unless otherwise provided in the
certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the 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, shall be signed by the holders (acting for themselves or
through a proxy) of
19
<PAGE>
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 the
holders of 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. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent
and no written consent shall be effective to take the corporate action
referred to therein unless, within sixty days of the earliest dated consent
delivered in the manner required by this Section 8.9(a) to the Corporation,
written consents signed by a sufficient number of holders to take action are
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, principal place of business, or such officer or agent shall be by
hand or by certified or registered mail, return receipt requested.
(b) Unless otherwise restricted by the certificate of incorporation of the
Corporation or by these bylaws, any action required or permitted to be taken at
a meeting of the board of directors, or of any committee of the board of
directors, may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by all the directors or all
the committee members, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect as
a vote of such directors or committee members, as the case may be, and may be
stated as such in any certificate or document filed with the Secretary of State
of the State of Delaware or in any certificate delivered to any person. Such
consent or consents shall be filed with the minutes of proceedings of the board
or committee, as the case may be.
8.10 INVALID PROVISIONS. If any part of these bylaws shall be held invalid
or inoperative for any reason, the remaining parts, so far as it is possible and
reasonable, shall remain valid and operative.
20
<PAGE>
8.11 MORTGAGES, ETC. With respect to any deed, deed of trust, mortgage, or
other instrument executed by the Corporation through its duly authorized officer
or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage, or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the board of directors
authorizing such execution expressly state that such attestation is necessary.
8.12 HEADINGS. The headings used in these bylaws have been inserted for
administrative convenience only and do not constitute matter to be construed in
interpretation.
8.13 REFERENCES. Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 AMENDMENTS. These bylaws may be altered, amended, or repealed or new
bylaws may be adopted by the stockholders or by the board of directors at any
regular meeting of the stockholders or the board of directors or at any special
meeting of the stockholders or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new bylaws be contained in the
notice of such special meeting.
The undersigned, being the Secretary of the Corporation, hereby certifies
that the foregoing bylaws were adopted by the consent of the board of directors
of the Corporation as of April 19th, 1995.
\s\ Virgil D. Lowe
--------------------------------------------------
Virgil D. Lowe, Secretary
21
<PAGE>
ARTICLES OF INCORPORATION
OF
CLEARSPAN COMPONENTS, INC.
We, the undersigned natural persons of the age of twenty-one years or more,
acting as incorporators of a corporation under the Mississippi Business
Corporation Act, adopt the following Articles of Incorporation for such
corporation:
FIRST: The name of the corporation is CLEARSPAN COMPONENTS, INC.
SECOND: The period of its duration is ninety-nine (99) years.
THIRD: The specific purpose or purposes for which the corporation is
organized stated in general terms are: To buy, rent, lease, or otherwise
acquire, own, hold, improve, develop, speculate and deal in all property or
property interests, real, personal and mixed, wheresoever located; and to sell,
convey, mortgage, pledge, rent, lease, exchange, transfer and otherwise dispose
of all such property or property interests; to build, develop, operate, rent,
and lease property for residential, commercial or industrial purposes, and for
the lodging, maintenance and entertainment of any and all persons or businesses
whatsoever; to plan, acquire materials for, build, manufacture, sell, and
otherwise deal in roof trusses, doors, cabinets, and all other products and
housing and building components, for residential, commercial and industrial use;
and to do and perform all things necessary or desirable for the accomplishment
of said corporate purposes, including but not limited to, all of the general
corporate powers provided under Section 5309-04 of the Mississippi Code of 1942,
as Amended and Re-compiled.
FOURTH: The aggregate number of shares which the corporation shall have
authority to issue is 100,000 shares of the par value of One Hundred & No/100
Dollars ($100.00) each.
FIFTH: The corporation will not commence business until consideration of
the value of at least $1,000 has been received for the issuance of shares.
1
<PAGE>
SIXTH: Provisions granting to shareholders the preemptive right to acquire
additional or treasury shares of the corporation are: Shareholders shall have
the preemptive right to acquire any additional shares which may be issued or
sold by the corporation in proportion to the respective shareholder's ownership
of stock, as shown by current corporate stock records as of any specified
distribution or sale date, which date shall be determined by the Board of
Directors of the corporation.
SEVENTH: The post office address of its initial registered office is P.O.
Box 4201 (West Station) Old U.S. Highway #80 at 5th Street, Meridian,
Mississippi, and the name of its initial registered agent at such address is
James L. McRae.
EIGHTH: The number of directors constituting the initial board of
directors of the corporation, which must be not less than three (3), is three
(3) and the names and addresses of the persons who are to serve as directors
until the first annual meeting of shareholders or until their successors are
elected and shall qualify are:
NAME STREET AND POST OFFICE ADDRESS
Robert L. McRae 2214-14th Street, Meridian, Mississippi
James L. McRae 2214-14th Street, Meridian, Mississippi
M.H. Bounds 2214-14th Street, Meridian, Mississippi
NINTH: The name and post office address of each incorporator is:
NAME STREET AND POST OFFICE ADDRESS
Robert L. McRae 2214-14th Street, Meridian, Mississippi
James L. McRae 2214-14th Street, Meridian, Mississippi
M.H. Bounds 2214-14th Street, Meridian, Mississippi
2
<PAGE>
Dated September 12, 1968
\s\ Robert L. McRae
--------------------------------------
\s\ James L. McRae
--------------------------------------
\s\ M. H. Bounds
--------------------------------------
Incorporators
3
<PAGE>
ARTICLES OF AMENDMENT TO
THE ARTICLES OF INCORPORATION OF
CLEARSPAN COMPONENTS, INC.
PURSUANT to the provisions of Section 61 of the Mississippi Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is CLEARSPAN COMPONENTS, INC.
SECOND: The following amendment to the Articles of Incorporation was
adopted by the shareholders of the corporation on May 25, 1983, in the manner
prescribed by the Mississippi Business Corporation Act:
FIRST: The name of the corporation is TIMBER TECH, INC.
THIRD: The number of shares of the corporation outstanding at the time of
such adoption was 3,417; and the number of shares entitled to vote thereon was
3,417.
FOURTH: The designation of number of outstanding shares of each class
entitled to vote thereon as a class were as follows: NONE.
FIFTH: The number of shares voted for such amendment was 3,417; and the
number of shares voted against such amendment was 0.
<PAGE>
SIXTH: The number of shares of each class entitled to vote thereon as a
class voted for and against such amendment, respectively, was: NONE.
SEVENTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in the
amendment shall be affected, is as follows: NO CHANGE.
EIGHTH: The manner in which such amendment effects a change in the amount
of stated capital, and the amount of stated capital (expressed in dollars) as
changed by such amendment, are as follows: NO CHANGE.
THIS the 25th day of May, 1983.
CLEARSPAN COMPONENTS, INC.
By: \s\ George S. Thumlert
---------------------------------------
, President
By: \s\ Winston L. Adkins
-----------------------------------
, Secretary
<PAGE>
BY-LAWS OF CLEARSPAN COMPONENTS, INC.
ARTICLE I - OFFICES
The principal office of the corporation in the State of Mississippi shall
be located in the City of Meridian, Lauderdale County, Mississippi. The
corporation shall have such offices, within or without the State of Mississippi
as the Board of Directors may designate or as the business of the corporation
may require from time to time.
The corporation will have a registered office in the State of Mississippi
which may be, but need not be, identical with the principal office in the State
of Mississippi; and the address of the registered office may be changed from
time to time by the Board of Directors.
ARTICLE II - STOCKHOLDERS
Section 1 - Annual Meeting. The annual meeting of the stockholders shall
be on the first Monday of December of each year at the hour of 10:00 A. M. for
the purpose of electing Directors and for the transaction of such other business
as may come before the meeting. If the election of Directors shall not be held
on the day designated herein, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as may be convenient.
Section 2 - Special Meeting. Special meetings of the stockholders for any
purpose or purposes unless otherwise prescribed by statute, may be called by the
President or by the Board of Directors and shall be called by the President at
the request of the holders of not less than 1/l0th of all of the outstanding
shares of the corporation entitled to vote at the meeting.
Section 3 - Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Mississippi, as the place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors. If no designation of place of meeting is
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made, the place of meeting shall be the registered office of the corporation in
the State of Mississippi.
Section 4 - Notice of Meeting. Written or printed notice stating the
place, day and hour of the meeting, and in case of a special meeting, the
purpose or purposes for which such meeting is called, shall be delivered
personally or sent by certified mail to each stockholder of record entitled to
vote, such delivery to be made not less than ten (10) days nor more than fifty
(50) days before date of such meeting. Such notice to corporate stockholders
shall be given by delivery in the manner aforesaid to each Director of any such
corporate stockholders. The attendance of a stockholder at a meeting shall
constitute a waiver of notice of such meeting, except where he attends for the
express purpose of objecting to transaction of business.
Section 5 - Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of the stockholders or any adjournment thereof, or stockholders entitled
to receive payment of any dividend, or in order to make a determination of
stockholders for any other purpose, the Board of Directors may provide that the
stock transfer book shall be closed for a stated period, which period shall not
exceed fifty (50) days. If the stock transfer books are not closed in the above
prescribed manner, the date on which notice of the meeting is mailed or the date
on which the resolution of the Board of Directors declaring dividend is adopted,
as the case may be, shall be record date for determination of stockholders.
Section 6 - Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum of a meeting of the stockholders. If less than a majority
of the outstanding shares are present at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without notice, until a
majority of shares shall be represented.
Section 7 - Proxies. At all meetings of stockholders, a stockholder may
vote by proxy executed in writing. Such proxy shall be filed with the
Secretary of the corporation before or
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<PAGE>
at the time of the meeting. No proxy shall be valid after eleven months from
the date of its execution, unless otherwise provided in the proxy.
Section 8 - Voting of Shares and Cumulative Voting. Each outstanding
share entitled to vote shall be entitled to one vote upon each matter submitted
for vote at a stockholders' meeting; provided, however, that at each election
for Directors, each stockholder entitled to vote at such election shall have the
right to vote, in person or by proxy, the number of shares owned by him for as
many persons as there are Directors to be elected and for whose election he has
a right to vote, or every such stockholder may cumulate his votes by giving one
candidate as many votes as the number of such directors multiplied by the number
of such stockholder's shares of stock shall equal, or by distributing such votes
in the same manner among any number of candidates.
Section 9 - Voting of Shares by Certain Stockholders. Shares standing in
the name of another corporation may be voted by such officers, agent, or proxy
as the By-Laws of such corporation may prescribe, or in the absence of such
provision, as the Board of Directors of such corporation may determine or
prescribe.
Shares held by an administrator, executor, guardian or conservator, may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver
without transfer thereof into his name, if authority so to do be contained in an
appropriate order of the Court by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter, the pledgee shall be entitled to vote the shares.
3
<PAGE>
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 10 - Informa1 Action by Stockholders. Any action required to be
taken at a meeting of the stockholders, or any other action which may be taken
at a meeting of the stockholders, may be taken without a meeting of the
stockholders, may be taken without a meeting if a consent in writing, setting
forth the action so taken shall be signed by all of the stockholders entitled to
vote with respect to the subject matter thereof.
ARTICLE III - BOARD OF DIRECTORS
Section 1 - General Powers. The business and affairs of the corporation
shall be managed by its Board of Directors.
Section 2 - Number, Tenure and Qualifications. The number of Directors of
the corporation shall be not less than three (3) nor more than five (5). Each
Director shall hold office until the next annual meeting of the stockholders and
until his successor shall have been elected and qualified. Directors need not
be residents of the State of Mississippi or stockholders of the corporation.
The number of the members of the Board of Directors shall be determined
only by election of the stockholders under the provisions of these by-laws. Any
vacancy occurring on the Board of Directors between annual meetings shall be
filled by election at the next annual meeting of the stockholders or at a
special meeting of the stockholders called for that purpose.
Section 3 - Regular Meetings. A regular meeting of the 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 the stockholders. The Board of
Directors may provide, by resolution, the time and place either within or
without the State of Mississippi for the holding of additional regular meetings
without other notice than such resolution.
4
<PAGE>
Section 4 - Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the President or any two Directors.
Notice of any special meeting shall be given at least ten (10) days
previously thereto by written notice delivered personally or mailed to each
Director. The attendance of a Director at a meeting shall constitute waiver of
notice of such meeting, except where a Director attends such meeting for the
express purpose of objecting to the transaction of any business.
Section 5 - Quorum. Sixty (60%) per cent of the number of Directors shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors; but if less than such majority be present at a meeting, a majority
of the Directors present may adjourn the meeting from time to time without
further notice.
The act of 60% of the full membership of the Board of Directors shall be
the act of the Board of Directors.
Section 6 - Compensation and Presumption of Assent. No compensation shall
be allowed members of the Board of Directors for acting in such capacity. A
director who is present at a meeting of the Board of Directors shall be presumed
to have assented to the action taken at such meeting unless his dissent shall be
entered in the minutes.
ARTICLE IV - OFFICERS
Section 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 or assistant officers or managers
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 that
no person shall hold the offices of President and Vice President or the offices
of President and Secretary at the same time.
Section 2 - Election and Term of Office. The officers of the corporation
shall be elected annually by the Board of Directors at their first meeting held
after each annual meeting of the
5
<PAGE>
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as may be convenient. 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.
Section 3 - Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by said Board whenever in its judgment the
best interest of the corporation would be served thereby. Such removal shall
not prejudice the contract rights, if any, of the person so removed.
Section 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.
Section 5 - President. 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. He shall preside at all meeting of the stockholders
and the Board of Directors. He may sign, with the Secretary or any other proper
officer of the corporation thereunto authorized by the Board of Directors,
certificates for shares of the corporation, any deeds, mortgages, bond,
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 by-laws 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.
Section 6 - The Vice President. In the absence of the President or in the
event of his death, or 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 at the time of their election, or in the absence of any
designation, then in the order of their election) shall perform the powers of
6
<PAGE>
and be subject to all the restrictions upon the President. Any Vice President
may sign, with the Secretary or 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.
Section 7 - The Secretary. The Secretary shall: (a) Keep the minutes of
the stockholders' meetings and of the Board of Directors' meetings in one or
more books provided for that purpose; (b) See that all notices are duly given in
accordance with the provisions of these by-laws as required by law; (c) Be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal, is duly authorized; (d) Keep
a register of the post office address of each stockholder which shall be
furnished to the Secretary by such stockholder; (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; (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 the Board
of Directors.
Section 8 - The Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors shall determine. He
shall: (a) Have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipt 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; and (b) In general, perform all 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.
Section 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
7
<PAGE>
certificates for shares of the corporation, the issuance of which shall have
been authorized by a resolution of the Board of Directors. The Assistant
Treasurers shall respectively, if required by the Board of Directors, give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the Board of Directors shall determine. 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.
Section 10 - 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 V - CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1 - Certificates for Shares. Certificates representing shares of
the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President and by the Secretary or an Assistant. All certificates for shares
shall be consecutively numbered or otherwise identified. The name and address
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 stock transfer books of the
corporation. All certificates surrendered to the corporation for transfer shall
be cancelled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and cancelled, except
that in case of a lost, destroyed, or mutilated certificate a new one may be
issued therefor upon such terms and indemnity to the corporation as the Board of
Directors may prescribe.
Section 2 - Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the corporation,
and on surrender for cancellation of the certificate for such shares. The
person
8
<PAGE>
in whose name shares stand on the books of the corporation shall be deemed by
the corporation to be the owner thereof for all purposes.
ARTICLE VI - WAIVER OF NOTICE
Whenever any notice is required to be given to any stockholder or Director
of the corporation under the provisions of these by-laws, waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
VII - FISCAL YEAR AND SEAL
The Board of Directors shall fix by resolution the beginning date and
closing date of the corporation's fiscal year, and may change the same from time
to time. Further, the Board of Directors shall provide an appropriate corporate
seal which shall be circular in form and shall have the name of the corporation
subscribed thereon.
VIII - AMENDMENTS
These by-laws may be altered, amended, or repealed and new by-laws may be
adopted by a majority vote of the Directors of the corporation at any regular or
special meeting of the Directors.
Upon motion made, duly seconded and unanimously passed, the following were
elected as officers of the corporation to serve until the next annual meeting of
the Directors or until their successors shall have been elected and qualified:
President - James L. McRae
Vice-President - M. H. Bounds
Secretary-Treasurer - Robert L. McRae
9
<PAGE>
Books for the subscription to the capital stock of the corporation were
opened, and the following stock subscriptions were received:
James L. McRae - 4 shares @ $100.00 per share
M. H. Bounds - 4 shares @ $100.00 per share
Robert L. McRae - 4 shares @ $100.00 per share
The stock subscriptions were paid for in full at the meeting, so that the
corporation was entitled to commence business.
After full discussion and upon motion duly made and seconded, the following
resolution was unanimously passed by the above listed stockholders, and all
present, to-wit:
"RESOLVED that James L. McRae, M. H. Bounds, and Robert L. McRae of
Meridian, Mississippi, be and they hereby are elected as Directors of
Clearspan Components, Inc., they being the same slate of Directors
named in the Articles of Incorporation of said corporation; and said
slate of three Directors shall serve for one year and until their
successors shall have been elected and qualified."
The Secretary of the Company was instructed to see to publishing and
recording of the Corporate Charter, and to obtain a corporate seal, issue stock,
provide a minute book, and take all other steps and actions necessary to the
commencement of corporate business.
All present agreed that the registered office and principal place of
business of the Corporation would be on Old U. S. Highway #80 at 5th Street in
Meridian, Mississippi (P. O. Box 4201 - West Station); and that the registered
agent at such address would be James L. McRae.
Upon motion duly made and seconded, the following resolution was
unanimously passed, to-wit:
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"RESOLVED that the Officers of the Corporation be and they hereby are
authorized and directed to negotiate for and purchase from Bounds &
McRae Building Company all of the assets and liabilities of the wood
working enterprise known as Clearspan Components, located on Old S.
Highway #80 at 5th Street in Meridian, Mississippi, including but not
limited to all buildings and improvements, all furniture, fixtures,
machinery, equipment and inventory, and also the Lessee's interest in
the land utilized by said enterprise; such purchase to be paid for by
issuance of the Corporation's Note Payable."
There being no further business to come before the meeting, the same was
adjourned, subject to call.
\s\ James L. McRae
---------------------------------------
James L. McRae, President,
Incorporator and Director
\s\ M. H. Bounds
---------------------------------------
M. H. Bounds, Vice-President,
Incorporator and Director
\s\ Robert L. McRae
---------------------------------------
Robert L. McRae, Secretary - Treasurer,
Incorporator and Director
11
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INDENTURE
Dated as of May 9, 1997
Among
RELIANT BUILDING PRODUCTS, INC., as Issuer,
The GUARANTORS Named herein
and
BANK ONE, COLUMBUS, NA, as Trustee
__________________
$70,000,000
10 7/8% Senior Subordinated Notes due 2004, Series A
10 7/8% Senior Subordinated Notes due 2004, Series B
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
- --------------- ---------
Section 310(a)(1).......................................... 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A.
(a)(5).......................................... 7.08, 7.10.
(b)............................................. 7.08; 7.10; 13.02
(c)............................................. N.A.
Section 311(a)............................................. 7.11
(b)............................................. 7.11
(c)............................................. N.A.
Section 312(a)............................................. 2.05
(b)............................................. 13.03
(c)............................................. 13.03
Section 313(a)............................................. 7.06
(b)(1).......................................... 7.06
(b)(2).......................................... 7.06
(c)............................................. 7.06; 13.02
(d)............................................. 7.06
Section 314(a)............................................. 4.11; 4.12; 13.02
(b)............................................. N.A.
(c)(1).......................................... 13.04
(c)(2).......................................... 13.04
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e)............................................. 13.05
(f)............................................. N.A.
Section 315(a)............................................. 7.01(b)
(b)............................................. 7.05; 13.02
(c)............................................. 7.01(a)
(d)............................................. 7.01(c)
(e)............................................. 6.11
Section 316(a)(last sentence).............................. 2.09
(a)(1)(A)....................................... 6.05
(a)(1)(B)....................................... 6.04
(a)(2).......................................... N.A.
(b)............................................. 6.07
(c)............................................. 10.04
Section 317(a)(1).......................................... 6.08
(a)(2).......................................... 6.09
(b)............................................. 2.04
Section 318(a)............................................. 13.01
________________
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
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SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. . . . . . . . . . . 20
SECTION 1.03. Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.02. Execution and Authentication.. . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.03. Registrar and Paying Agent.. . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.04. Paying Agent To Hold Assets in Trust.. . . . . . . . . . . . . . . . . 23
SECTION 2.05. Securityholder Lists.. . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.06. Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.07. Replacement Securities.. . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.08. Outstanding Securities.. . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.09. Treasury Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.10. Temporary Securities.. . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.11. Cancellation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.12. Defaulted Interest.. . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.13. CUSIP Number.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.14. Deposit of Moneys. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.15. Book-Entry Provisions for Global Securities. . . . . . . . . . . . . . 26
SECTION 2.16. Registration of Transfers and Exchanges. . . . . . . . . . . . . . . . 27
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.. . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.02. Selection of Securities To Be Redeemed.. . . . . . . . . . . . . . . . 31
SECTION 3.03. Notice of Redemption.. . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.04. Effect of Notice of Redemption.. . . . . . . . . . . . . . . . . . . . 32
SECTION 3.05. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.06. Securities Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities. . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.02. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . 33
SECTION 4.03. Transactions with Affiliates.. . . . . . . . . . . . . . . . . . . . . 33
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SECTION 4.04. Limitation on Indebtedness.. . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.05. Disposition of Proceeds of Asset Sales.. . . . . . . . . . . . . . . . 35
SECTION 4.06. Limitation on Restricted Payments. . . . . . . . . . . . . . . . . . . 37
SECTION 4.07. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.08. Payment of Taxes and Other Claims. . . . . . . . . . . . . . . . . . . 39
SECTION 4.09. Notice of Defaults.. . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.10. Maintenance of Properties and Insurance. . . . . . . . . . . . . . . . 40
SECTION 4.11. Compliance Certificate.. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.12. Provision of Financial Information.. . . . . . . . . . . . . . . . . . 41
SECTION 4.13. Waiver of Stay, Extension or Usury Laws. . . . . . . . . . . . . . . . 41
SECTION 4.14. Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.15. Limitation on Senior Subordinated Indebtedness.. . . . . . . . . . . . 42
SECTION 4.16. Limitations on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.17. Designation of Unrestricted Subsidiaries.. . . . . . . . . . . . . . . 43
SECTION 4.18. Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.19. Guaranty of Notes by Restricted Subsidiaries.. . . . . . . . . . . . . 44
SECTION 4.20. Limitation on the Sale or Issuance of Equity Interests of
Restricted Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.21. Limitation on Lines of Business. . . . . . . . . . . . . . . . . . . . 45
SECTION 4.22. Payments for Consent.. . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Sale of Assets, etc.. . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.02 Successor Corporation Substituted.. . . . . . . . . . . . . . . . . . . 46
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.02. Acceleration.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.03. Other Remedies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.04. Waiver of Past Default.. . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.05. Control by Majority. . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.06. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.07. Rights of Holders To Receive Payment.. . . . . . . . . . . . . . . . . 50
SECTION 6.08. Collection Suit by Trustee.. . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.09. Trustee May File Proofs of Claim.. . . . . . . . . . . . . . . . . . . 50
SECTION 6.10. Priorities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.11. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 7.02. Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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SECTION 7.03. Individual Rights of Trustee.. . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.04. Trustee's Disclaimer.. . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.05. Notice of Defaults.. . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.06. Reports by Trustee to Holders. . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.07. Compensation and Indemnity.. . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.08. Replacement of Trustee.. . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.09. Successor Trustee by Merger, etc.. . . . . . . . . . . . . . . . . . . 56
SECTION 7.10. Eligibility; Disqualification. . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.11. Preferential Collection of Claims Against Company. . . . . . . . . . . 56
ARTICLE EIGHT
SUBORDINATION OF SECURITIES
SECTION 8.01. Securities Subordinated to Senior Indebtedness.. . . . . . . . . . . . 57
SECTION 8.02. No Payment on Securities in Certain Circumstances. . . . . . . . . . . 57
SECTION 8.03. Payment Over of Proceeds upon Dissolution, etc.. . . . . . . . . . . . 58
SECTION 8.04. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 8.05. Obligations of Company Unconditional.. . . . . . . . . . . . . . . . . 59
SECTION 8.06. Notice to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.07. Reliance on Judicial Order or Certificate of Liquidating Agent.. . . . 60
SECTION 8.08. Trustee's Relation to Senior Indebtedness. . . . . . . . . . . . . . . 61
SECTION 8.09. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness. . . . . . . . . . . . . . . 61
SECTION 8.10. Securityholders Authorize Trustee To Effectuate Subordination of
Securities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8.11. This Article Not To Prevent Events of Default. . . . . . . . . . . . . 61
SECTION 8.12. Trustee's Compensation Not Prejudiced. . . . . . . . . . . . . . . . . 61
SECTION 8.13. No Waiver of Subordination Provisions. . . . . . . . . . . . . . . . . 62
SECTION 8.14. Subordination Provisions Not Applicable to Money Held in Trust for
Securityholders; Payments May Be Paid Prior to Dissolution.. . . . . . 62
SECTION 8.15. Acceleration of Securities.. . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE NINE
DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations.. . . . . . . . . . . . . . . . . 62
SECTION 9.02. Application of Trust Money.. . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.03. Repayment to Company.. . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.04. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders. . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.02. With Consent of Holders.. . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.03. Compliance with Trust Indenture Act.. . . . . . . . . . . . . . . . . 67
SECTION 10.04. Revocation and Effect of Consents.. . . . . . . . . . . . . . . . . . 67
SECTION 10.05. Notation on or Exchange of Securities.. . . . . . . . . . . . . . . . 67
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SECTION 10.06. Trustee To Sign Amendments, etc.. . . . . . . . . . . . . . . . . . 68
ARTICLE ELEVEN
GUARANTY
SECTION 11.01. Unconditional Guaranty. . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.02. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.03. Release of a Guarantor. . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.04. Limitation of Guarantor's Liability.. . . . . . . . . . . . . . . . 69
SECTION 11.05. Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.06. Execution of Security Guaranty. . . . . . . . . . . . . . . . . . . 70
SECTION 11.07. Subordination of Subrogation and Other Rights.. . . . . . . . . . . 70
ARTICLE TWELVE
SUBORDINATION OF GUARANTY
SECTION 12.01. Guaranty Obligations Subordinated to Guarantor Senior
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 12.02. No Payment on Guaranties in Certain Circumstances.. . . . . . . . . 70
SECTION 12.03. Payment Over of Proceeds upon Dissolution, etc. . . . . . . . . . . 71
SECTION 12.04. Subrogation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.05. Obligations of Guarantors Unconditional.. . . . . . . . . . . . . . 73
SECTION 12.06. Notice to Trustee.. . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.07. Reliance on Judicial Order or Certificate of Liquidating Agent. . . 74
SECTION 12.08. Trustee's Relation to Guarantor Senior Indebtedness.. . . . . . . . 74
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions of the
Guarantors or Holders of Guarantor Senior Indebtedness. . . . . . . 75
SECTION 12.10. Securityholders Authorize Trustee To Effectuate Subordination of
Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.11. This Article Not To Prevent Events of Default.. . . . . . . . . . . 75
SECTION 12.12. Trustee's Compensation Not Prejudiced.. . . . . . . . . . . . . . . 75
SECTION 12.13. No Waiver of Guaranty Subordination Provisions. . . . . . . . . . . 75
SECTION 12.14. Payments May Be Paid Prior to Dissolution.. . . . . . . . . . . . . 76
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls. . . . . . . . . . . . . . . . . . . . 76
SECTION 13.02. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13.03. Communications by Holders with Other Holders. . . . . . . . . . . . 77
SECTION 13.04. Certificate and Opinion as to Conditions Precedent. . . . . . . . . 77
SECTION 13.05. Statements Required in Certificate or Opinion.. . . . . . . . . . . 78
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.. . . . . . . . . . . . . 78
SECTION 13.07. Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 13.08. No Recourse Against Others. . . . . . . . . . . . . . . . . . . . . 78
SECTION 13.09. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 13.10. Counterpart Originals.. . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 13.11. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 13.12. No Adverse Interpretation of Other Agreements.. . . . . . . . . . . 79
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SECTION 13.13. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
EXHIBIT A Form of Series A Security. . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Series B Security. . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Form of Legend for Global Securities . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D Form of Transfer Certificate . . . . . . . . . . . . . . . . . . . . . . D-1
EXHIBIT E Form of Transfer Certificate for Institutional Accredited Investors. . . E-1
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NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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<PAGE>
INDENTURE dated as of May 9, 1997, among RELIANT BUILDING PRODUCTS,
INC., a Delaware corporation and formerly named Redman Building Products, Inc.
(the "COMPANY"), the GUARANTORS named herein and BANK ONE, COLUMBUS, NA, as
trustee (the "TRUSTEE").
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person (a)
assumed in connection with an Acquisition from such Person or (b) existing at
the time such Person becomes a Restricted Subsidiary or is merged or
consolidated with or into the Company or any Restricted Subsidiary.
"ACQUIRED PERSON" means, with respect to any specified Person,
any other Person which merges with or into or becomes a Subsidiary of such
specified Person.
"ACQUISITION" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or
any Restricted Subsidiary to any other Person, or any acquisition or purchase
of Equity Interests of any other Person by the Company or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be consolidated with or merged with or into
the Company or any Restricted Subsidiary or (ii) any acquisition by the
Company or any Restricted Subsidiary of the assets of any Person which
constitute substantially all of an operating unit or line of business of such
Person or which is otherwise outside of the ordinary course of business.
"ADDITIONAL INTEREST" has the meaning provided in Section 4(a)
of the Registration Rights Agreement.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "CONTROL" (including, with correlative meanings, 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 or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise; PROVIDED, HOWEVER, that (i) beneficial ownership of 10.0% or
more of the then outstanding Equity Interests of a Person shall be deemed to
be control for purposes of Section 4.03; and (ii) no individual, other than
a director of the Company or an officer of the Company with a policy making
function, shall be deemed an Affiliate of the Company or any of its
Subsidiaries, solely by reason of such individual's employment, position or
responsibilities by or with respect to the Company or any of its Subsidiaries.
"AFFILIATE TRANSACTION" see Section 4.03.
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"AGENT" means any Registrar, Paying Agent or co-Registrar.
"ASSET SALE" means any direct or indirect sale, conveyance,
transfer, lease (that has the effect of a disposition) or other disposition
(including, without limitation, any merger, consolidation or sale-leaseback
transaction) to any Person other than the Company or a Wholly Owned
Restricted Subsidiary, in one transaction or a series of related
transactions, of (i) any Equity Interest of any Restricted Subsidiary; (ii)
any material license, franchise or other authorization of the Company or any
Restricted Subsidiary; (iii) any assets of the Company or any Restricted
Subsidiary which constitute substantially all of an operating unit or line of
business of the Company or any Restricted Subsidiary; or (iv) any other
property or asset of the Company or any Restricted Subsidiary outside of the
ordinary course of business (including the receipt of proceeds paid on
account of the loss of or damage to any property or asset and awards of
compensation for any asset taken by condemnation, eminent domain or similar
proceedings). For purposes of this definition the term "Asset Sale" shall not
include (a) any transaction consummated in compliance with Section 5.01 and
the creation of any Lien not prohibited by Section 4.18; PROVIDED, HOWEVER,
that any transaction consummated in compliance with Section 5.01 involving a
sale, conveyance, assignment, transfer, lease or other disposition of less
than all of the properties or assets of the Company and the Restricted
Subsidiaries shall be deemed to be an Asset Sale with respect to the
properties or assets of the Company and Restricted Subsidiaries that are not
so sold, conveyed, assigned, transferred, leased or otherwise disposed of in
such transaction; (b) sales of property or equipment that has become worn
out, obsolete or damaged or otherwise unsuitable for use in connection with
the business of the Company or any Restricted Subsidiary, as the case may be;
(c) any transaction consummated in compliance with Section 4.06; and (d)
sales of accounts receivable for cash at Fair Market Value. In addition,
solely for purposes of Section 4.05, any sale, conveyance, transfer, lease or
other disposition of any property or asset, whether in one transaction or a
series of related transactions, involving assets with a Fair Market Value not
in excess of $1.0 million in any fiscal year shall be deemed not to be an
Asset Sale.
"ATEMCO" means the joint venture created by the ATEMCO Joint
Venture Agreement.
"ATEMCO JOINT VENTURE AGREEMENT" means the Joint Venture
Agreement of ATEMCO dated as of March 3, 1982 among the Company, Tower
Extrusions, Inc. and MEB Enterprises, Inc., as amended and in effect from
time to time.
"BANKRUPTCY LAW" see Section 6.01.
"BOARD OF DIRECTORS" means the Board of Directors of Holdings,
the Company or any Guarantor, as the case may be, or any authorized committee
of such Board of Directors.
"BOARD RESOLUTION" means, with respect to any Person, a duly
adopted resolution of the Board of Directors of such Person.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person, at
the time any determination thereof is to be made, the amount of the liability
in respect of a capital lease that would at such time be so required to be
capitalized on the balance sheet of such Person in accordance with GAAP.
"CASH EQUIVALENTS" means: (a) U.S. dollars; (b) securities
issued or directly and fully guaranteed or insured by the U.S. government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition; (c) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital
<PAGE>
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and surplus in excess of $500 million; (d) repurchase obligations with a term
of not more than seven days for underlying securities of the types described
in clauses (b) and (c) entered into with any financial institution meeting
the qualifications specified in clause (c) above; and (e) commercial paper
rated P-1, A-1 or the equivalent thereof by Moody's Investors Service, Inc.
or Standard & Poor's Corporation, respectively, and in each case maturing
within six months after the date of acquisition.
"CHANGE OF CONTROL" means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Company or
Holdings): (i) prior to the first public offering of Voting Equity Interests
of Holdings or the Company, either (x) the Permitted Holders cease to be the
"beneficial owner" or "beneficial owners" (as defined in Rule 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of at least a majority of
the total voting power of the then outstanding Voting Equity Interests of
Holdings or of the Company, or (y) the Permitted Holders cease to be entitled
by voting power, contract or otherwise to elect or cause the election of
directors of Holdings or the Company having a majority of the total voting
power of the Board of Directors of Holdings or the Company, as the case may
be, in each case, whether as a result of issuance of securities of Holdings
or the Company, as the case may be, any merger, consolidation, liquidation or
dissolution of Holdings or the Company, as the case may be, any direct or
indirect transfer of securities by any Permitted Holder or otherwise; (ii)
following the first public offering of Voting Equity Interests of Holdings or
the Company, any Person (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act, including any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (i) above, except that a
Person shall be deemed to have "beneficial ownership" of all shares that any
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time, upon the happening of an event
or otherwise), directly or indirectly, of more than 35% of the total voting
power of the then outstanding Voting Equity Interests of Holdings or the
Company; PROVIDED, HOWEVER, that the Permitted Holders beneficially own (as
defined in clause (i) above), directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the then outstanding Voting
Equity Interests of Holdings or the Company, as the case may be, than such
other Person and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors of Holdings or the Company, as the case may be; (iii) Holdings or
the Company consolidates with, or merges with or into, another Person (other
than the Company or any Wholly Owned Restricted Subsidiary) or Holdings or
any of its Subsidiaries sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of the assets of Holdings and
its Subsidiaries (determined on a consolidated basis) to any Person (other
than the Company or any Wholly Owned Restricted Subsidiary) or the Company or
the Restricted Subsidiaries sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of the assets of the Company
and the Restricted Subsidiaries (determined on a consolidated basis) to any
Person (other than the Company or a Wholly Owned Restricted Subsidiary),
other than any such transaction where immediately after such transaction the
Person or Persons that beneficially owned (as defined in clause (i) above,
except that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time, upon the happening
of an event or otherwise) immediately prior to such transaction, directly or
indirectly, the then outstanding Voting Equity Interests of Holdings or the
Company, as the cause may be, beneficially own (as so determined), directly
or indirectly, a majority of the total voting power of the then outstanding
Voting Equity Interests of the surviving or transferee Person; or (iv) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of Holdings or the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of Holdings or the Company,
as the case may be, was approved by a vote of a majority of the directors of
Holdings or the Company, as the case may be, then still in office who were
either directors at the beginning of such period or whose election or
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nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of Holdings or the Company, as
the case may be, then in office. For purposes of clause (i) and clause (ii)
above, Permitted Holders shall be deemed to beneficially own any Voting Equity
Interests of an entity (the "SPECIFIED ENTITY") held by any other entity (the
"PARENT ENTITY") so long as the Permitted Holders beneficially own, directly or
indirectly, a majority of the voting power of the then outstanding Voting Equity
Interests of the parent entity.
"CHANGE OF CONTROL DATE" see Section 4.14.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company"
shall mean such successor.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or
order signed in the name of the Company by its Chairman of the Board, its
Vice Chairman of the Board, its President, a Vice President or its Treasurer,
and by an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"CONSOLIDATED COVERAGE RATIO" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated EBITDA for the
four quarter period of the most recent four consecutive fiscal quarters
ending prior to the date of such determination (the "FOUR QUARTER PERIOD") to
(ii) Consolidated Interest Expense for such Four Quarter Period; PROVIDED,
HOWEVER, that (1) if the Company or any Restricted Subsidiary has incurred
any Indebtedness since the beginning of such Four Quarter Period that remains
outstanding on such date of determination or if the transaction giving rise
to the need to calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such
Four Quarter Period shall be calculated after giving effect on a PRO FORMA
basis to such Indebtedness as if such Indebtedness had been Incurred on the
first day of such Four Quarter Period and the discharge of any other
Indebtedness repaid, repurchased or otherwise discharged with the proceeds of
such new Indebtedness as if such discharge had occurred on the first day of
such Four Quarter Period, (2) if since the beginning of such Four Quarter
Period the Company or any Restricted Subsidiary shall have made any Asset
Sale, the Consolidated EBITDA for such Four Quarter Period shall be reduced
by an amount equal to the Consolidated EBITDA (if positive) directly
attributable to the assets that are the subject of such Asset Sale for such
Four Quarter Period or increased by an amount equal to the Consolidated
EBITDA (if negative) directly attributable thereto for such Four Quarter
Period and Consolidated Interest Expense for such Four Quarter Period shall
be reduced by an amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness of the Company or any Restricted Subsidiary
repaid, repurchased or otherwise discharged with respect to the Company and
its continuing Restricted Subsidiaries in connection with such Asset Sale for
such Four Quarter Period (or, if the Equity Interests of any Restricted
Subsidiary are sold, the Consolidated Interest Expense for such Four Quarter
Period directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent the Company and its continuing Restricted
Subsidiaries are no longer liable for such Indebtedness after such sale), (3)
if since the beginning of such Four Quarter Period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment
in any Restricted Subsidiary (or any Person that becomes a Restricted
Subsidiary) or an acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an operating unit of
a business, Consolidated EBITDA and Consolidated Interest Expense for such
Four Quarter Period shall be calculated after giving PRO FORMA effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such Four Quarter Period, and (4) if
since the beginning of such Four Quarter Period any Person (that subsequently
became a Restricted Subsidiary or was
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merged with or into the Company or any Restricted Subsidiary since the
beginning of such Four Quarter Period) shall have made any Asset Sale or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (2) or (3) above if made by the Company or a Restricted
Subsidiary during such Four Quarter Period, Consolidated EBITDA and
Consolidated Interest Expense for such Four Quarter Period shall be
calculated after giving PRO FORMA effect thereto as if such Asset Sale,
Investment or acquisition of assets occurred on, with respect to any
Investment or acquisition, the first day of such Four Quarter Period and,
with respect to any Asset Sale, the day prior to the first day of such Four
Quarter Period. For purposes of this definition, whenever PRO FORMA effect
is to be given to an acquisition of assets, 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 good faith by a responsible financial or
accounting officer of the Company. 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 agreement under which Interest Rate Protection Obligations are
outstanding applicable to such Indebtedness if such agreement under which
such Interest Rate Protection Obligations are outstanding has a remaining
term as at the date of determination in excess of 12 months).
"CONSOLIDATED EBITDA" means, for any period, the Consolidated
Net Income for such period, PLUS the following to the extent deducted in
calculating such Consolidated Net Income: (i) Consolidated Income Tax
Expense for such period; (ii) Consolidated Interest Expense for such period;
(iii) depreciation and depletion expense for such period; (iv) amortization
expense for such period; and (v) all other non-cash items reducing
Consolidated Net Income for such period (other than any non-cash item
requiring an accrual or a reserve for cash disbursements in any future
period).
"CONSOLIDATED INCOME TAX EXPENSE" means, with respect to the
Company for any period, the provision for federal, state, local and foreign
income taxes payable by the Company and the Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to the
Company for any period, without duplication, the sum of (i) the interest
expense of the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, including,
without limitation, (a) any amortization of debt discount; (b) the net cost
under Interest Rate Protection Obligations (including any amortization of
discounts); (c) the interest portion of any deferred payment obligation; (d)
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing; and (e) all capitalized
interest and all accrued interest; (ii) the interest component of Capitalized
Lease Obligations paid, accrued and/or scheduled to be paid or accrued by the
Company and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP; and (iii) dividends and
distributions in respect of Disqualified Equity Interests actually paid in
cash by the Company during such period as determined on a consolidated basis
in accordance with GAAP; PROVIDED, HOWEVER, that there shall be excluded
therefrom the amortization of deferred financing costs in connection with the
Transaction.
"CONSOLIDATED NET INCOME" means, for any period, the consolidated
net income (loss) of the Company and the Restricted Subsidiaries; PROVIDED,
HOWEVER, that there shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person if such person is not a Restricted
Subsidiary, except that (A) the Company's equity in the net income of any
such Person for such period shall be included in such Consolidated Net Income
up to the aggregate amount of cash actually distributed by such Person during
such period to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to a
Restricted Subsidiary, to the limitations contained in clause (iii) below)
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and (B) the Company's equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included in determining
such Consolidated Net Income; (ii) any net income (loss) of any person
acquired by the Company or a Restricted Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition; (iii) any
net income (loss) of any Restricted Subsidiary if such Restricted Subsidiary
is subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Restricted Subsidiary,
directly or indirectly, to the Company except that (A) the Company's equity
in the net income of any such Restricted Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
that could have been distributed by such Restricted Subsidiary during such
period (regardless of any waiver) to the Company or another Restricted
Subsidiary as a dividend (subject, in the case of a dividend that could have
been made to another Restricted Subsidiary, to the limitation contained in
this clause) and (B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in determining such
Consolidated Net Income; (iv) any gain or loss realized upon the sale or
other disposition of any asset of the Company or the Restricted Subsidiaries
(including pursuant to any sale/leaseback transaction) that is 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 Equity Interests of any
Person; (v) any extraordinary gain or loss; and (vi) the cumulative effect of
a change in accounting principles.
"CONSULTING AGREEMENT" means the Consulting Agreement dated as
of May 9, 1997 by and between the Company and George Group, as amended and in
effect from time to time.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address
of the Trustee specified in Section 13.02 or such other address as the
Trustee may give notice to the Company.
"CUSTODIAN" see Section 6.01.
"DEFAULT" means any event that is, or with the passage of time
or the giving of notice or both would become, an Event of Default.
"DEFEASANCE TRUST PAYMENT" see Section 8.01.
"DEPOSITORY" means, with respect to the Securities issued in the
form of one or more Global Securities, The Depository Trust Company or
another Person designated as Depository by the Company, which must be a
clearing agency registered under the Exchange Act.
"DESIGNATED GUARANTOR SENIOR INDEBTEDNESS" means, with respect
to any Guarantor, (a) any Indebtedness of such Guarantor outstanding under
the Senior Credit Facility and (b) any other Guarantor Senior Indebtedness of
such Guarantor which, at the time of determination, has an aggregate
principal amount outstanding, together with any commitments to lend
additional amounts, of at least $15.0 million, if the instrument governing
such Guarantor Senior Indebtedness expressly states that such Indebtedness is
"Designated Guarantor Senior Indebtedness" for purposes of this Indenture and
a Board Resolution setting forth such designation by the Company has been
filed with the Trustee.
"DESIGNATED SENIOR INDEBTEDNESS" means (a) any Indebtedness of
the Company outstanding under the Senior Credit Facility and (b) any other
Senior Indebtedness which, at the time of determination, has an aggregate
principal amount outstanding, together with any commitments to lend
additional amounts, of at least $15.0 million, if the instrument governing
such Senior Indebtedness expressly states that such Indebtedness is
"Designated Senior Indebtedness" for purposes of this Indenture and a Board
Resolution setting forth such designation by the Company has been filed with
the Trustee.
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"DESIGNATION" see Section 4.17.
"DESIGNATION AMOUNT" see Section 4.17.
"DISPOSITION" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets.
"DISQUALIFIED EQUITY INTEREST" means any Equity Interest which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder thereof), or upon
the happening of any event, matures or is mandatorily redeemable, pursuant to
a sinking fund obligation or otherwise, or redeemable, at the option of the
holder thereof, in whole or in part, or exchangeable into Indebtedness on or
prior to the earlier of the Final Maturity Date or the date on which no
Securities remain outstanding.
"EQUITY INTEREST" in any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate stock or other
equity p articipations, including partnership interests, whether general or
limited, in such Person, including any Preferred Equity Interests.
"EVENT OF DEFAULT" see Section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"EXCHANGE SECURITIES" means the 10 7/8% Senior Subordinated
Notes due 2004, Series B, to be issued in exchange for the Initial Securities
pursuant to the Registration Rights Agreement.
"EXISTING INDEBTEDNESS" means any Indebtedness of the Company
and the Restricted Subsidiaries in existence on the Issue Date until such
amounts are repaid.
"EXPIRATION DATE" has the eaning set forth in the definition of
"OFFER TO PURCHASE" below.
"FAIR MARKET VALUE" means, with respect to any asset, the price
(after taking into account any liabilities relating to such assets) which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of which is
under any compulsion to complete the transaction; PROVIDED, HOWEVER, that the
Fair Market Value of any such asset or assets shall be determined
conclusively by the Board of Directors of the Company acting in good faith,
and shall be evidenced by a Board Resolution delivered to the Trustee.
"FINAL MATURITY DATE" means May 1, 2004.
"FOUR QUARTER PERIOD" has the meaning set forth in the
definition of "CONSOLIDATED COVERAGE RATIO" above.
"FUNDING GUARANTOR" see Section 11.05.
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"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at
the date of determination and which are consistently applied for all
applicable periods.
"GEORGE GROUP" means George Group Inc., a Texas corporation, and
its successors.
"GLOBAL SECURITIES" means one or more IAI Global Securities and
144A Global Securities.
"GUARANTEE" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part
or all of such obligation and (ii) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any
way the payment or performance (or payment of damages in the event of
non-performance) of all or any part of such obligation, including, without
limiting the foregoing, the payment of amounts drawn down by letters of
credit. A guarantee shall include, without limitation, any agreement to
maintain or preserve any other Person's financial condition or to cause any
other Person to achieve certain levels of operating results.
"GUARANTOR" means (i) each of RBP of Arizona, Inc., a Delaware
corporation, RBP Custom Glass, Inc., a Delaware corporation, Timber Tech,
Inc., a Mississippi corporation, RBP Trans, Inc., a Delaware corporation, RBP
Fenesco, Inc., a Delaware corporation, LeVan Builders Supply Company, Inc.,
an Oklahoma corporation, and RBP of Texas, Inc., a Delaware corporation, and
their respective successors, and (ii) each other Restricted Subsidiary,
formed, created or acquired before or after the Issue Date, required to
become a Guarantor pursuant to Section 4.19.
"GUARANTOR BLOCKAGE PERIOD" see Section 12.02(a).
"GUARANTOR PAYMENT BLOCKAGE NOTICE" see Section 12.02(a).
"GUARANTOR SENIOR INDEBTEDNESS" means, with respect to any
Guarantor, at any date, (a) all Obligations of such Guarantor under the
Senior Credit Facility; (b) all Interest Rate Protection Obligations of such
Guarantor; (c) all Obligations of such Guarantor under stand-by letters of
credit; and (d) all other Indebtedness of such Guarantor for borrowed money,
including principal, premium, if any, and interest (including Post-Petition
Interest) on such Indebtedness unless the instrument under which such
Indebtedness of such Guarantor for money borrowed is Incurred expressly
provides that such Indebtedness for money borrowed is not senior or superior
in right of payment to such Guarantor's Guaranty, and all renewals,
extensions, modifications, amendments or refinancings thereof.
Notwithstanding the foregoing, Guarantor Senior Indebtedness shall not
include (a) to the extent that it may constitute Indebtedness, any Obligation
for Federal, state, local or other taxes; (b) any Indebtedness between or
among such Guarantor and any Subsidiary of the Company; (c) to the extent
that it may constitute Indebtedness, any Obligation in respect of any trade
payable Incurred for the purchase of goods or materials, or for services
obtained, in the ordinary course of business; (d) that portion of any
Indebtedness that is Incurred in violation of this Indenture; PROVIDED,
HOWEVER, that such Indebtedness shall be deemed not to have been Incurred in
violation of this Indenture for purposes of this clause (d) if (i) the
holder(s) of such Indebtedness or their representative or the Company shall
have furnished to the Trustee an opinion of independent legal counsel
unqualified in all material respects, addressed to the Trustee (which legal
counsel may, as to matters of fact, rely upon an Officers' Certificate of the
Company) to the effect that the Incurrence of such Indebtedness does not
violate the provisions of this Indenture or (ii) in the case of any
Obligations under the Senior Credit Facility, the holder(s) of such
Obligations or their agent or representative shall have received a
representation from the Company to the effect that the Incurrence of such
Indebtedness
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does not violate the provisions of this Indenture; (e) Indebtedness evidenced
by such Guarantor's Guaranty; (f) Indebtedness of such Guarantor that is
expressly subordinate or junior in right of payment to any other Indebtedness
of such Guarantor; (g) to the extent that it may constitute Indebtedness, any
obligation owing under leases (other than Capitalized Lease Obligations) or
management agreements; (h) any obligation that by operation of law is
subordinate to any general unsecured obligations of such Guarantor; and (i)
any Existing Indebtedness.
"GUARANTY" see Section 11.01.
"HOLDERS" means the registered holder of any Security.
"HOLDINGS" means RBPI Holding Corporation, a Delaware
corporation, and its successors.
"IAI GLOBAL SECURITY" means a permanent global security in
registered form representing the aggregate principal amount of Securities
sold to Institutional Accredited Investors.
"INCUR" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (including by conversion,
exchange or otherwise), assume, guarantee or otherwise become liable in
respect of such Indebtedness or other obligation or the recording, as
required pursuant to GAAP or otherwise, of any such Indebtedness or other
obligation on the balance sheet of such Person (and "INCURRENCE," "INCURRED"
and "INCURRING" shall have meanings correlative to the foregoing).
Indebtedness of any Acquired Person or any of its Subsidiaries existing at
the time such Acquired Person becomes a Restricted Subsidiary (or is merged
into or consolidated with the Company or any Restricted Subsidiary), whether
or not such Indebtedness was Incurred in connection with, as a result of, or
in contemplation of, such Acquired Person becoming a Restricted Subsidiary
(or being merged into or consolidated with the Company or any Restricted
Subsidiary), shall be deemed Incurred at the time any such Acquired Person
becomes a Restricted Subsidiary or merges into or consolidates with the
Company or any Restricted Subsidiary.
"INDEBTEDNESS" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person
and whether or not contingent, (a) every obligation of such Person for money
borrowed; (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses; (c) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person; (d) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable
Incurred in the ordinary course of business and payable in accordance with
industry practices, or other accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith); (e) every Capital Lease Obligation of such Person; (f) every net
obligation under interest rate swap or similar agreements or foreign currency
hedge, exchange or similar agreements of such Person; (g) every obligation of
the type referred to in clauses (a) through (f) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or indirectly, as
obligor, guarantor or otherwise; and (h) any and all deferrals, renewals,
extensions and refundings of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (a)
through (g) above. Indebtedness (a) shall never be calculated taking into
account any cash and cash equivalents held by such Person; (b) shall not
include obligations of any Person (x) arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business, provided that such obligations are extinguished within two Business
Days of their incurrence, (y) resulting from the endorsement of negotiable
instruments for
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collection in the ordinary course of business and consistent with past
business practices and (z) under stand-by letters of credit to the extent
collateralized by cash or cash equivalents; (c) which provides that an amount
less than the principal amount thereof shall be due upon any declaration of
acceleration thereof shall be deemed to be Incurred or outstanding in an
amount equal to the accreted value thereof at the date of determination; (d)
shall include the liquidation preference and any mandatory redemption payment
obligations in respect of any Disqualified Equity Interests of the Company or
any Restricted Subsidiary; and (e) shall not include obligations under
performance bonds, performance guarantees, surety bonds and appeal bonds,
letters of credit or similar obligations, incurred in the ordinary course of
business.
"INDENTURE" means this Indenture, as amended or supplemented
from time to time.
"INDEPENDENT FINANCIAL ADVISOR" means a nationally recognized,
accounting, appraisal, investment banking firm or consultant that is, in the
judgment of the Company's Board of Directors, qualified to perform the task
for which it has been engaged (i) which does not, and whose directors,
officers and employees or Affiliates do not, have a direct or indirect
financial interest in the Company and (ii) which, in the judgment of the
Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"INITIAL SECURITIES" means the 10 7/8% Senior Subordinated Notes
due 2004, Series A, of the Company.
"INITIAL PURCHASERS" means Chase Securities Inc. and CIBC Wood
Gundy Securities Corp.
"INSOLVENCY OR LIQUIDATION PROCEEDING" means, with respect to
any Person, any liquidation, dissolution or winding up of such Person, or any
bankruptcy, reorganization, insolvency, receivership or similar proceeding
with respect to such Person, whether voluntary or involuntary.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is
an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"INTEREST" means, with respect to the Securities, the sum of any
cash interest and any Additional Interest on the Securities.
"INTEREST PAYMENT DATE" means each semiannual interest payment
date on May 1 and November 1 of each year, commencing November 1, 1997.
"INTEREST RATE PROTECTION OBLIGATIONS" means, with respect to
any Person, the Obligations of such Person under (i) interest rate swap
agreements, interest rate cap agreements and interest rate collar agreements,
and (ii) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"INTEREST RECORD DATE" for the interest payable on any Interest
Payment Date (except a date for payment of defaulted interest) means the
April 15 or October 15 (whether or not a Business Day), as the case may be,
immediately preceding such Interest Payment Date.
"INVESTMENT" means, with respect to any Person, any direct or
indirect loan, advance, guarantee or other extension of credit or capital
contribution to (by means of transfers of cash or other property or assets to
others or payments for property or services for the account or use of others,
or otherwise), or pur-
<PAGE>
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chase or acquisition of capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by, any other Person. The
amount of any Investment shall be the original cost of such Investment, PLUS
the cost of all additions thereto, and MINUS the amount of any portion of
such Investment repaid to such Person in cash as a repayment of principal or
a return of capital, as the case may be, but without any other adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment. In determining the amount of any Investment
involving a transfer of any property or asset other than cash, such property
shall be valued at its Fair Market Value at the time of such transfer, as
determined in good faith by the Board of Directors (or comparable body) of
the Person making such transfer.
"ISSUE DATE" means the original issue date of the Securities,
May 9, 1997.
"LIEN" means any lien, mortgage, charge, security interest,
hypothecation, assignment for security or encumbrance of any kind (including
any conditional sale or capital lease or other title retention agreement, any
lease in the nature thereof and any agreement to give any security interest).
"NET CASH PROCEEDS" means the aggregate proceeds in the form of
cash or Cash Equivalents received by the Company or any Restricted Subsidiary
in respect of any Asset Sale, including all cash or Cash Equivalents received
upon any sale, liquidation or other exchange of proceeds of Asset Sales
received in a form other than cash or Cash Equivalents, net of (a) the direct
costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof; (b) taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements); (c) amounts required to be
applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that were the subject of such Asset Sale; (d) amounts deemed, in good
faith, appropriate by the Board of Directors of the Company to be provided as
a reserve, in accordance with GAAP, against any liabilities associated with
such assets which are the subject of such Asset Sale (provided that the
amount of any such reserves shall be deemed to constitute Net Cash Proceeds
at the time such reserves shall have been released or are not otherwise
required to be retained as a reserve); and (e) with respect to Asset Sales by
Restricted Subsidiaries, the portion of such cash payments attributable to
Persons holding a minority interest in such Restricted Subsidiary.
"OBLIGATIONS" means any principal, interest (including, without
limitation, Post-Petition Interest), penalties, fees, indemnifications,
reimbursement obligations, damages and other liabilities payable under the
documentation governing any Indebtedness.
"OFFER" has the meaning set forth in the definition of "OFFER TO
PURCHASE" below.
"OFFER TO PURCHASE" means a written offer (the "OFFER") sent by
or on behalf of the Company by first-class mail, postage prepaid, to each
holder at his address appearing in the register for the Securities on the
date of the Offer offering to purchase up to the principal amount of
Securities specified in such Offer at the purchase price specified in such
Offer (as determined pursuant to this Indenture). Unless otherwise required
by applicable law, the Offer shall specify an expiration date (the
"EXPIRATION DATE") of the Offer to Purchase, which shall be not less than 20
Business Days nor more than 60 days after the date of such Offer, and a
settlement date (the "PURCHASE DATE") for purchase of Securities to occur no
later than five Business Days after the Expiration Date. The Company shall
notify the Trustee at least 15 Business Days (or such shorter period as is
acceptable to the Trustee) prior to the mailing of the Offer of the Company's
obligation to make an Offer to Purchase, and the Offer shall be mailed by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company. The Offer shall contain all the information required
by applicable law to be included therein. The Offer shall also contain
information concerning the business of the Com-
<PAGE>
-12-
pany and its Subsidiaries which the Company in good faith believes will
enable such Holders to make an informed decision with respect to the Offer to
Purchase (which at a minimum will include (i) the most recent annual and
quarterly financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the document
required to be filed with the Trustee pursuant to this Indenture (which
requirements may be satisfied by delivery of such documents together with the
Offer), (ii) a description of material developments in the Company's business
subsequent to the date of the latest of such financial statements referred to
in clause (i) (including a description of the events requiring the Company to
make the Offer to Purchase), and (iii) if applicable, appropriate PRO FORMA
financial information concerning the Offer to Purchase and the events
requiring the Company to make the Offer to Purchase. The Offer shall contain
all instructions and materials necessary to enable such Holders to tender
Securities pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of this Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the outstanding Securities
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined pursuant to the Section of this Indenture requiring the Offer to
Purchase) (the "PURCHASE AMOUNT");
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Securities accepted for payment (as specified
pursuant to this Indenture) (the "PURCHASE PRICE");
(5) that the holder may tender all or any portion of the Securities
registered in the name of such holder and that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Securities are to be surrendered for
tender pursuant to the Offer to Purchase;
(7) that interest on any Security not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will continue to
accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Security being accepted for payment pursuant to the Offer
to Purchase and that interest thereon shall cease to accrue on and after
the Purchase Date;
(9) that each Holder electing to tender all or any portion of a
Security pursuant to the Offer to Purchase will be required to surrender
such Security at the place or places specified in the Offer prior to the
close of business on the Expiration Date (such Security being, if the
Company or the Trustee so requires, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing);
(10) that Holders will be entitled to withdraw all or any portion of
Securities tendered if the Company (or its Paying Agent) receives, not
later than the close of business on the fifth Business
<PAGE>
-13-
Day next preceding the Expiration Date, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Security the Holder tendered, the certificate number of the Security the
Holder tendered and a statement that such Holder is withdrawing all or a
portion of his tender;
(11) that (a) if Securities in an aggregate principal amount less than
or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such
Securities and (b) if Securities in an aggregate principal amount in excess
of the Purchase Amount are tendered and not withdrawn pursuant to the Offer
to Purchase, the Company shall purchase Securities having an aggregate
principal amount equal to the Purchase Amount on a PRO RATA basis (with
such adjustments as may be deemed appropriate so that only Securities in
denominations of $1,000 principal amount or integral multiples thereof
shall be pur chased); and
(12) that in the case of any Holder whose Security is purchased only
in part, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, in an aggregate principal amount equal to and in exchange for the
unpurchased portion of the Security so tendered.
An Offer to Purchase shall be governed by and effected in
accordance with the provisions above pertaining to any Offer.
"OFFICER" means the Chairman, any Vice Chairman, the President,
any Vice President, the Chief Financial Officer, the Treasurer, or the
Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer or Assistant Secretary
of the Company complying with Sections 13.04 and 13.05.
"144A GLOBAL SECURITY" means a permanent global security in
registered form representing the aggregate principal amount of Securities
sold in reliance on Rule 144A.
"OPINION OF COUNSEL" means a written opinion from legal counsel
who is reasonably acceptable to the Trustee. The counsel may be an employee
of or counsel to the Company or the Trustee.
"PARTICIPANT" has the meaning set forth in Section 2.15.
"PAYING AGENT" has the meaning provided in Section 2.03.
"PAYMENT BLOCKAGE NOTICE" see Section 8.02(a).
"PAYMENT BLOCKAGE PERIOD" see Section 8.02(a).
"PERMITTED HOLDER" means (i) any of Keystone, Inc., a Texas
corporation, Oak Hill Partners, Inc., a New York corporation, Arbor
Investors, L.L.C., a California limited liability company, Group 31, Inc., a
Texas corporation, and their respective Affiliates on the Issue Date; (ii)
any of the Permitted Transferees of the Persons referred to in clause (i);
and (iii) any Person or group controlled by each or any of the Persons
referred to in clauses (i) and (ii).
<PAGE>
-14-
"PERMITTED INDEBTEDNESS" see Section 4.04.
"PERMITTED INVESTMENTS" means (a) Cash Equivalents; (b)
Investments in prepaid expenses, negotiable instruments held for collection
and lease, utility and workers' compensation, performance and other similar
deposits; (c) loans and advances to employees made in the ordinary course of
business not to exceed $1.0 million in the aggregate at any one time
outstanding; (d) Interest Rate Protection Obligations; (e) bonds, notes,
debentures or other securities received as a result of Asset Sales permitted
under Section 4.05 not to exceed 25% of the total consideration for such
Asset Sales; (f) transactions with officers, directors and employees of the
Company or any Restricted Subsidiary entered into in ordinary course of
business (including compensation or employee benefit arrangements with any
such director or employee) and consistent with past business practices; (g)
Investments existing as of the Issue Date and any amendment, extension,
renewal or modification thereof to the extent that any such amendment,
extension, renewal or modification does not require the Company or any
Restricted Subsidiary to make any additional cash or non-cash payments or
provide additional services in connection therewith; (h) any Investment to
the extent that the consideration therefor consists of Qualified Equity
Interests of the Company; (i) any Investment consisting of a guarantee
permitted under clause (e) of the second paragraph of Section 4.04; and (j)
any Investment in ATEMCO required pursuant to the ATEMCO Joint Venture
Agreement not to exceed the Company's PRO RATA share of capital contributions
based on its ownership of Equity Interests in ATEMCO and in any event not to
exceed $100,000 in any fiscal year (provided that all other holders of Equity
Interests in ATEMCO are also simultaneously making Investments in ATEMCO
pursuant to the ATEMCO Joint Venture Agreement based on their PRO RATA share
of required capital contributions based on their ownership of Equity
Interests in ATEMCO).
"PERMITTED JUNIOR SECURITIES" means any securities of the
Company or any other Person that are (i) equity securities without special
covenants or (ii) subordinated in right of payment to all Senior Indebtedness
or Guarantor Senior Indebtedness, as the case may be, that may at the time be
outstanding, to substantially the same extent as, or to a greater extent
than, the Securities or the Guaranties, as the case may be, are subordinated
as provided in this Indenture, in any event pursuant to a court order so
providing and as to which (a) the rate of interest on such securities shall
not exceed the effective rate of interest on the Securities on the date of
this Indenture, (b) such securities shall not be entitled to the benefits of
covenants or defaults materially more beneficial to the holders of such
securities than those in effect with respect to the Securities on the date of
this Indenture and (c) such securities shall not provide for amortization
(including sinking fund and mandatory prepayment provisions) commencing prior
to the date six months following the final scheduled maturity date of the
Senior Indebtedness or Guarantor Senior Indebtedness, as the case may be (as
modified by the plan of reorganization or readjustment pursuant to which such
securities are issued).
"PERMITTED LIENS" means (a) Liens on property of a Person
existing at the time such Person is merged into or consolidated with the
Company 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 the Company or any Restricted
Subsidiary other than the property or assets subject to the Liens prior to
such merger or consolidation; (b) Liens imposed by law such as carriers',
warehousemen's and mechanics' Liens and other similar Liens arising in the
ordinary course of business which secure payment of obligations not more than
60 days past due or which are being contested in good faith and by
appropriate proceedings; (c) Liens existing on the Issue Date; (d) Liens
securing only the Securities; (e) Liens in favor of the Company or any
Restricted Subsidiary so long as held by the Company or any Restricted
Subsidiary; (f) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently conducted;
PROVIDED, HOWEVER, that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor; (g)
easements, reservation of rights of way, restrictions and other similar
easements, licenses, re-
<PAGE>
-15-
strictions on the use of properties, or minor imperfections of title that in
the aggregate are not material in amount and do not in any case materially
detract from the properties subject thereto or interfere with the ordinary
conduct of the business of the Company and the Restricted Subsidiaries; (h)
Liens resulting from the deposit of cash or notes in connection with
contracts, tenders or expropriation proceedings, or to secure workers'
compensation, surety or appeal bonds, costs of litigation when required by
law and public and statutory obligations or obligations under franchise
arrangements entered into in the ordinary course of business; (i) Liens
securing Indebtedness consisting of Capitalized Lease Obligations, Purchase
Money Indebtedness, mortgage f inancings, industrial revenue bonds or other
monetary obligations, in each case incurred solely 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 the Company or the Restricted
Subsidiaries, or repairs, additions or improvements to such assets; PROVIDED,
HOWEVER, that (I) such Liens secure Indebtedness in an amount not in excess
of the original purchase price or the original cost of any such assets or
repair, addition or improvement thereto (plus an amount equal to the
reasonable fees and expenses in connection with the incurrence of such
Indebtedness), (II) such Liens do not extend to any other assets of the
Company or the Restricted Subsidiaries (and, in the case of repair, addition
or improvements to any such assets, such Lien extends only to the assets (and
improvements thereto or thereon) repaired, added to or improved), (III) the
Incurrence of such Indebtedness is permitted by Section 4.04, and (IV) such
Liens attach within 90 days of such purchase, construction, installation,
repair, addition or improvement; (j) Liens to secure any refinancings,
renewals, extensions, modifications or replacements (for purposes of this
definition, collectively, a "REFINANCING") (or successive refinancings), 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); (k) Liens securing letters of credit
entered into in the ordinary course of business and consistent with past
business practice; (l) Liens on and pledges of the Equity Interests of any
Unrestricted Subsidiary securing any Indebtedness of such Unrestricted
Subsidiary.
"PERMITTED TRANSFEREE" means, with respect to any Person: (a)
in the case of any Person who is a natural person, such individual's spouse
or children, any trust for such individual's benefit or the benefit of such
individual's spouse or children, or any corporation or partnership in which
the direct and beneficial owner of all of the Equity Interests is such Person
or such individual's spouse or children or any trust for the benefit of such
Persons; and (b) in the case of any Person who is a natural person, the
heirs, executors, administrators or personal representatives upon the death
of such Person or upon the incompetency or disability of such Person for
purposes of the protection and management of such individual's assets.
"PERSON" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"PHYSICAL SECURITIES" means one or more certificated Securities
in registered form.
"POST-PETITION INTEREST" means, with respect to any Senior
Indebtedness of any Person, all interest accrued or accruing on such
Indebtedness after the commencement of any Insolvency or Liquidation
Proceeding against such Person in accordance with and at the contract rate
(including, without limitation, any rate applicable upon default) specified
in the agreement or instrument creating, evidencing or governing such
Indebtedness, whether or not, pursuant to applicable law or otherwise, the
claim for such interest is allowed as a claim in such Insolvency or
Liquidation Proceeding.
"PREFERRED EQUITY INTEREST," in any Person, means an Equity
Interest of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribu-
<PAGE>
-16-
tion of assets upon any voluntary or involuntary liquidation or dissolution
of such Person, over Equity Interests of any other class in such Person.
"PRINCIPAL" of a debt security means the principal of the
security, plus, when appropriate, the premium, if any, on the security.
"PRIVATE EXCHANGE SECURITIES" have the meaning provided in
Sections 2(b) of the Registration Rights Agreement.
"PRIVATE PLACEMENT LEGEND" means the legend initially set forth
on the Initial Securities in the form set forth on EXHIBIT A hereto.
"PUBLIC EQUITY OFFERING" means, with respect to the Company or
Holdings, an underwritten public offering of Qualified Equity Interests of
the Company or Holdings, as the case may be, pursuant to an effective
registration statement filed under the Securities Act (excluding registration
statements filed on Form S-8).
"PUBLIC MARKET" means any time after (x) a Public Equity
Offering has been consummated and (y) at least 15% of the total issued and
outstanding Qualified Equity Interests of the Company or Holdings, as the
case may be, has been distributed by means of an effective registration
statement under the Securities Act.
"PURCHASE AMOUNT" has the meaning set forth in the definition of
"OFFER TO PURCHASE" above.
"PURCHASE AGREEMENT" means the Purchase Agreement dated as of
May 5, 1997 by and among the Company, the Guarantors and the Initial
Purchasers.
"PURCHASE DATE" has the meaning set forth in the definition of
"OFFER TO PURCHASE" above.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company
or any Restricted Subsidiary Incurred for the purpose of financing all or any
part of the purchase price or the cost of construction or improvement of any
property; PROVIDED, HOWEVER, that the aggregate principal amount of such
Indebtedness does not exceed the lesser of the Fair Market Value of such
property or such purchase price or cost, including any refinancing of such
Indebtedness that does not increase the aggregate principal amount (or
accreted amount, if less) thereof as of the date of refinancing.
"PURCHASE PRICE" has the meaning set forth in the definition of
"OFFER TO PURCHASE" above.
"QUALIFIED EQUITY INTEREST" in any Person means any Equity
Interest in such Person other than any Disqualified Equity Interest.
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" means a "qualified
institutional buyer" as that term is defined in Rule 144A under the
Securities Act.
"REDEMPTION DATE," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
<PAGE>
-17-
"REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this
Indenture as set forth in the form of Security annexed hereto as EXHIBIT A.
"REGISTRAR" see Section 2.03.
"REGISTRATION" means a registered exchange offer for the
Securities by the Company or other registration of the Securities under the
Securities Act pursuant to and in accordance with the terms of the
Registration Rights Agreement.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated as of May 9, 1997 by and among the Company, the Guarantors
and the Initial Purchasers.
"RELATED BUSINESS" means those businesses in which the Company
or any of the Restricted Subsidiaries is engaged on the date of this
Indenture, or that are reasonably related or incidental thereto.
"REQUIRED FILING DATES" see Section 4.12.
"RESTRICTED INVESTMENT" means any Investment other than a
Permitted Investment.
"RESTRICTED PAYMENTS" see Section 4.06.
"RESTRICTED SECURITY" has the meaning set forth in Rule
144(a)(3) under the Securities Act; PROVIDED, HOWEVER, that the Trustee shall
be entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether any Security is a Restricted Security.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company that
has not been designated by the Board of Directors of the Company, by a Board
Resolution of the Company delivered to the Trustee, as an Unrestricted
Subsidiary pursuant to Section 4.17. Any such designation may be revoked by
a Board Resolution of the Company delivered to the Trustee, subject to the
provisions of Section 4.17.
"REVOCATION" see Section 4.17.
"RULE 144A" means Rule 144A under the Securities Act.
"SEC" or "COMMISSION" means the Securities and Exchange
Commission.
"SECURITIES" means, collectively, the Initial Securities, the
Private Exchange Securities and the Unrestricted Securities treated as a
single class of securities, as amended or supplemented from time to time in
accordance with the terms of this Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"SECURITIES AMOUNT" see Section 4.05.
"SECURITIES PORTION OF UNUTILIZED NET CASH PROCEEDS" see Section
4.05.
<PAGE>
-18-
"SECURITY GUARANTEE" means the Form of Security Guarantee of
each Guarantor to be endorsed on each of the Securities substantially in the
form of EXHIBIT A (in the case of an Initial Security) or EXHIBIT B (in the
case of an Exchange Security) hereto.
"SENIOR CREDIT FACILITY" means the Credit Agreement, dated as of
May 9, 1997, among the Company, the lenders named therein, and The Chase
Manhattan Bank, as Administrative Agent, including any deferrals, renewals,
extensions, replacements, refinancings or refundings thereof, or amendments,
modifications or supplements thereto and any agreement providing therefor,
whether by or with the same or any other lender, creditor, group of lenders
or group of creditors, and including related notes, guarantee and note
agreements and other instruments and agreements executed in connection
therewith.
"SENIOR INDEBTEDNESS" means, at any date, (a) all Obligations of
the Company under the Senior Credit Facility; (b) all Interest Rate
Protection Obligations of the Company; (c) all Obligations of the Company
under stand-by letters of credit; and (d) all other Indebtedness of the
Company for borrowed money, including principal, premium, if any, and
interest (including Post-Petition Interest) on such Indebtedness, unless the
instrument under which such Indebtedness of the Company for money borrowed is
Incurred expressly provides that such Indebtedness for money borrowed is not
senior or superior in right of payment to the Securities, and all renewals,
extensions, modifications, amendments or refinancings thereof.
Notwithstanding the foregoing, Senior Indebtedness shall not include (a) to
the extent that it may constitute Indebtedness, any Obligation for federal,
state, local or other taxes; (b) any Indebtedness between or among the
Company and any Subsidiary of the Company; (c) to the extent that it may
constitute Indebtedness, any Obligation in respect of any trade payable
Incurred for the purchase of goods or materials, or for services obtained, in
the ordinary course of business; (d) that portion of any Indebtedness that is
Incurred in violation of this Indenture; PROVIDED, HOWEVER, that such
Indebtedness shall be deemed not to have been Incurred in violation of this
Indenture for purposes of this clause (d) if (I) the holder(s) of such
Indebtedness or their representative or the Company shall have furnished to
the Trustee an opinion of independent legal counsel, unqualified in all
material respects, addressed to the Trustee (which legal counsel may, as to
matters of fact, rely upon an Officers' Certificate of the Company) to the
effect that the Incurrence of such Indebtedness does not violate the
provisions of this Indenture or (II) in the case of any Obligations under the
Senior Credit Facility, the holder(s) of such Obligations or their agent or
representative shall have received a representation from the Company to the
effect that the Incurrence of such Indebtedness does not violate the
provisions of this Indenture; (e) Indebtedness evidenced by the Securities;
(f) Indebtedness of the Company that is expressly subordinate or junior in
right of payment to any other Indebtedness of the Company; (g) to the extent
that it may constitute Indebtedness, any obligation owing under leases (other
than Capitalized Lease Obligations) or management agreements; (h) any
obligation that by operation of law is subordinate to any general unsecured
obligations of the Company and (i) any Existing Indebtedness.
"SIGNIFICANT RESTRICTED SUBSIDIARY" means, at any date of
determination, (a) any Restricted Subsidiary that, together with its
Subsidiaries that constitute Restricted Subsidiaries (i) for the most recent
fiscal year of the Company accounted for more than 5.0% of the consolidated
revenues of the Company and the Restricted Subsidiaries or (ii) as of the end
of such fiscal year, owned more than 5.0% of the consolidated assets of the
Company and the Restricted Subsidiaries, all as set forth on the consolidated
financial statements of the Company and the Restricted Subsidiaries for such
year prepared in conformity with GAAP, and (b) any Restricted Subsidiary
which, when aggregated with all other Restricted Subsidiaries that are not
otherwise Significant Restricted Subsidiaries and as to which any event
described in clause (f), (g), (h), or (i) of Section 6.01 has occurred, would
constitute a Significant Restricted Subsidiary under clause (a) of this
definition.
<PAGE>
-19-
"STATED MATURITY," when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"SUBORDINATED INDEBTEDNESS" means, with respect to the Company
or any Guarantor, any Indebtedness of the Company or such Guarantor, as the
case may be, which is expressly subordinated in right of payment to the
Securities or such Guarantor's Guaranty, as the case may be.
"SUBSIDIARY" means, with respect to any Person, (a) any
corporation of which the outstanding Voting Equity Interests having at least
a majority of the votes entitled to be cast in the election of directors
shall at the time be owned, directly or indirectly, by such Person, or (b)
any other Person of which at least a majority of Voting Equity Interests are
at the time, directly or indirectly, owned by such first named Person.
"SURVIVING PERSON" means, with respect to any Person involved in
or that makes any Disposition, the Person formed by or surviving such
Disposition or the Person to which such Disposition is made.
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as
of May 9, 1997 by and among Holdings, the Company and certain of the
Company's Subsidiaries, as amended and in effect from time to time.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb), as amended, as in effect on the date of this
Indenture (except as provided in Section 10.03) until such time as the
Indenture is qualified under the TIA, and thereafter as in effect on the date
on which the Indenture is qualified under the TIA.
"TRANSACTION" means the acquisition by Reliant Partners, L.P.,
Reliant Partners II, L.P. and certain senior executive officers of the
Company of all the outstanding common stock of Holdings from the stockholder
of Holdings for aggregate consideration of $90.2 million consisting of (i)
$30.1 million in cash to be paid to such stockholders; (ii) $9.8 million of
notes to be issued by Holdings to such stockholders; (iii) the repayment of
$44.3 million of certain Indebtedness of the Company (which Indebtedness
shall not be "Existing Indebtedness" for purposes of this Indenture); and
(iv) the redemption of $6.0 million of preferred stock of Holdings.
"TRUSTEE" means the party named as such in the first paragraph
of this Indenture until a successor replaces it in accordance with the
provisions of this Indenture and thereafter means such successor.
"TRUST OFFICER" means any officer within the corporate trust
department (or any successor group of the Trustee) including any vice
president, assistant vice president, assistant secretary or any other officer
or assistant officer of the Trustee customarily performing functions similar
to those performed by the persons who at that time shall be such officers,
and also means, with respect to a particular corporate trust matter, any
other officer to whom such trust matter is referred because of his knowledge
of and familiarity with the particular subject.
"UNITED STATES GOVERNMENT OBLIGATIONS" means direct non-callable
obligations of the United States for the payment of which the full faith and
credit of the United States is pledged.
"UNRESTRICTED SECURITIES" means one or more Securities that do
not and are not required to bear the Private Placement Legend in the form set
forth in EXHIBIT A hereto, including, without limitation, the
<PAGE>
-20-
Exchange Securities and any Securities registered under the Securities Act
pursuant to and in accordance with the Registration Rights Agreement.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company
designated as such pursuant to Section 4.17. Any such designation may be
revoked by a Board Resolution of the Company delivered to a Trustee, subject
to the provisions of Section 4.17.
"UNUTILIZED NET CASH PROCEEDS" see Section 4.05(a).
"VOTING EQUITY INTERESTS" means Equity Interests in a
corporation or other Person with voting power under ordinary circumstances
entitling the holders thereof to elect the Board of Directors or other
governing body of such corporation or Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the
sum of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required
scheduled payment of principal, including payment of final maturity, in
respect thereof, by (ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment, by (b) the then outstanding aggregate principal amount of such
Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted
Subsidiary all of the outstanding Voting Equity Interests (other than
directors' qualifying shares) of which are owned, directly or indirectly, by
the Company.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the SEC.
"INDENTURE SECURITIES" means the Securities.
"INDENTURE SECURITY HOLDER" means a Securityholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.
"OBLIGOR" on the indenture securities means the Company or any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
and not otherwise defined herein have the meanings assigned to them therein.
<PAGE>
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SECTION 1.03. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in effect from time to time, and any other reference in this
Indenture to "generally accepted accounting principles" refers to GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. FORM AND DATING.
The Initial Securities and the Trustee's certificate of
authentication thereof shall be substantially in the form of EXHIBIT A
hereto, which is hereby incorporated in and expressly made a part of this
Indenture. The Exchange Securities and the Trustee's certificate of
authentication thereof shall be substantially in the form of EXHIBIT B
hereto, which is hereby incorporated in and expressly made a part of this
Indenture. The Securities may have notations, legends or endorsements
(including the Security Guarantee) required by law, stock exchange rule or
usage. The Company and the Trustee shall approve the form of the Securities
and any notation, legend or endorsement (including the Security Guarantee) on
them. Each Security shall be dated the date of its issuance and shall show
the date of its authentication.
Securities offered and sold in reliance on Rule 144A and
Securities offered and sold to Institutional Accredited Investors shall be
issued initially in the form of one or more Global Securities, substantially
in the form set forth in EXHIBIT A hereto, deposited with the Trustee, as
custodian for the Depository, duly executed by the Company and authenticated
by the Trustee as hereinafter provided with the Guaranties of the Guarantors
endorsed thereon and shall bear the legend set forth in EXHIBIT C hereto.
The aggregate principal amount of the Global Securities may from time to time
be increased or decreased by adjustments made on the records of the Trustee,
as custodian for the Depository, as hereinafter provided.
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SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers, or an Officer and an Assistant Secretary, shall
sign, or one Officer shall sign and one Officer or an Assistant Secretary
(each of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Securities for the Company by manual
or facsimile signature.
If an Officer or an Assistant Secretary whose signature is on a
Security was an Officer or an Assistant Secretary, as the case may be, at the
time of such execution but no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate (i) Initial Securities for
original issue in an aggregate principal amount not to exceed $70,000,000,
(ii) Private Exchange Securities from time to time only in exchange for a
like principal amount of Initial Securities and (iii) Unrestricted Securities
from time to time only in exchange for (A) a like principal amount of Initial
Securities or (B) a like principal amount of Private Exchange Securities, in
each case upon a written order of the Company in the form of an Officers'
Certificate. Each such written order shall specify the amount of Securities
to be authenticated and the date on which the Securities are to be
authenticated, whether the Securities are to be Initial Securities, Private
Exchange Securities or Unrestricted Securities and whether the Securities are
to be issued as Physical Securities or Global Securities and such other
information as the Trustee may reasonably request. The aggregate principal
amount of Securities outstanding at any time may not exceed $70,000,000,
except as provided in Sections 2.07 and 2.08.
Notwithstanding the foregoing, all Securities issued under this
Indenture shall vote and consent together on all matters (as to which any of
such Securities may vote or consent) as one class and no series of Securities
will have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. Unless otherwise
provided in the appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture
to authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Company and Affiliates of the Company.
The Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange (the "REGISTRAR"),
(b) Securities may be presented or surrendered for payment (the "PAYING
AGENT") and (c) notices and demands in respect of the Securities and this
Indenture may be served. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company, upon notice to
the Trustee, may appoint one or more co-Registrars and one or more additional
Paying Agents. The term "PAYING AGENT" includes any additional Paying Agent.
Except as provided herein, the Company or any Guarantor may act as Paying
Agent, Registrar or co-Registrar.
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The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of
the name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such and shall be entitled to appropriate compensation in
accordance with Section 7.07.
The Company initially appoints the Trustee as Registrar and
Paying Agent until such time as the Trustee has resigned or a successor has
been appointed.
SECTION 2.04. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for
the benefit of Holders or the Trustee all assets held by the Paying Agent for
the payment of principal of, or interest on, the Securities, and shall notify
the Trustee of any Default by the Company in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held
by it to the Trustee and account for any assets disbursed and the Trustee may
at any time during the continuance of any payment Default, upon written
request to a Paying Agent, require such Paying Agent to distribute all assets
held by it to the Trustee and to account for any assets distributed. Upon
distribution to the Trustee of all assets that shall have been delivered by
the Company to the Paying Agent (if other than the Company), the Paying Agent
shall have no further liability for such assets. If the Company, any
Guarantor or any of their respective Affiliates acts as Paying Agent, it
shall, on or before each due date of the principal of or interest on the
Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
SECTION 2.05. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of Holders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee before each Interest Record Date and at such other times as
the Trustee may request in writing a list as of such date and in such form as
the Trustee may reasonably require of the names and addresses of Holders,
which list may be conclusively relied upon by the Trustee.
SECTION 2.06. TRANSFER AND EXCHANGE.
Subject to the provisions of Sections 2.15 and 2.16, when
Securities are presented to the Registrar or a co-Registrar with a request to
register the transfer of such Securities or to exchange such Securities for
an equal principal amount of Securities of other authorized denominations of
the same series, the Registrar or co-Registrar shall register the transfer or
make the exchange as requested if its requirements for such transaction are
met; PROVIDED, HOWEVER, that the Securities surrendered for transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing. To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Securities at
the Registrar's or co-Registrar's written request. No service charge shall be
made for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or
<PAGE>
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other governmental charge payable upon exchanges or transfers pursuant to
Section 2.02, 2.10, 3.06, 4.05, 4.14, or 10.05). The Registrar or
co-Registrar shall not be required to register the transfer or exchange of
any Security (i) during a period beginning at the opening of business 15 days
before the mailing of a notice of redemption of Securities and ending at the
close of business on the day of such mailing and (ii) selected for redemption
in whole or in part pursuant to Article Three hereof, except the unredeemed
portion of any Security being redeemed in part.
Prior to the registration of any transfer by a Holder as
provided herein, the Company, the Trustee and any Agent of the Company shall
treat the person in whose name the Security is registered as the owner
thereof for all purposes whether or not the Security shall be overdue, and
neither the Company, the Trustee nor any such Agent shall be affected by
notice to the contrary. Any Holder of a beneficial interest in a Global
Security shall, by acceptance of such beneficial interest in a Global
Security, agree that transfers of beneficial interests in such Global
Security may be effected only through a book-entry system maintained by the
Depository (or its agent), and that ownership of a beneficial interest in a
Global Security shall be required to be reflected in a book entry.
SECTION 2.07. REPLACEMENT SECURITIES.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate
a replacement Security if the Trustee's requirements for replacement of
Securities are met. If required by the Company or the Trustee, such Holder
must provide an indemnity bond or other indemnity, sufficient in the judgment
of both the Company and the Trustee, to protect the Company, the Trustee and
any Agent from any loss which any of them may suffer if a Security is
replaced The Company may charge such Holder for its reasonable out-of-pocket
expenses in replacing a Security, including reasonable fees and expenses of
counsel.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. OUTSTANDING SECURITIES.
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation and those described in this Section 2.08 as
not outstanding. Subject to Section 2.09, a Security does not cease to be
outstanding because the Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced
Security is held by a BONA FIDE purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant
to Section 2.07.
If on a Redemption Date, Purchase Date or the Final Maturity
Date the Paying Agent holds money sufficient to pay all of the principal and
interest due on the Securities payable on that date, and is not prohibited
from paying such money to the Holders pursuant to the terms of this
Indenture, then on and after that date such Securities cease to be
outstanding and interest on them ceases to accrue.
<PAGE>
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SECTION 2.09. TREASURY SECURITIES.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, the Guarantors or any of their respective
Affiliates shall be disregarded, except that, for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
waiver or consent, only Securities that a Trust Officer of the Trustee
actually knows are so owned shall be disregarded.
The Company shall notify the Trustee, in writing, when it, any
Guarantor or any of its Affiliates repurchases or otherwise acquires
Securities, of the aggregate principal amount of such Securities so
repurchased or otherwise acquired.
SECTION 2.10. TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities upon
receipt of a written order of the Company in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of temporary
Securities to be authenticated and the date on which the temporary Securities
are to be authenticated.
Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate upon receipt of a
written order of the Company pursuant to Section 2.02 definitive Securities
in exchange for temporary Securities.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent, and no one else, shall cancel, and at the written direction of the
Company, dispose of and deliver evidence of such disposal of all Securities
surrendered for transfer, exchange, payment or cancellation. Subject to
Section 2.07, the Company may not issue new Securities to replace Securities
that it has paid or delivered to the Trustee for cancellation. If the
Company or any Guarantor shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. DEFAULTED INTEREST.
The Company shall pay interest on overdue principal from time to
time on demand at the rate of interest then borne by the Securities. The
Company shall, to the extent lawful, pay interest on overdue installments of
interest (without regard to any applicable grace periods) from time to time
on demand at the rate of interest then borne by the Securities.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest, plus (to the extent lawful)
any interest payable on the defaulted interest to the Persons who are Holders
on a subsequent special record date, which date shall be the fifteenth day
preceding the date fixed by the Company for the payment of defaulted interest
or the next succeeding Business Day if such date is not a Business Day. At
least 15 days before the subsequent special record date, the Company shall
mail to each Holder,
<PAGE>
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with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior
to the expiration of the 30-day period set forth in Section 6.01(b) shall be
paid to Holders as of the Interest Record Date for the Interest Payment Date
for which interest has not been paid.
SECTION 2.13. CUSIP NUMBER.
The Company in issuing the Securities will use a "CUSIP" number
and the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; PROVIDED , HOWEVER, that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed
on the Securities. The Company shall promptly notify the Trustee of any
changes in CUSIP numbers.
SECTION 2.14. DEPOSIT OF MONEYS.
Prior to 10:00 a.m. New York City time on each Interest Payment
Date, Redemption Date, Purchase Date and the Final Maturity Date, the Company
shall deposit with the Paying Agent in immediately available funds money
sufficient to make cash payments, if any, due on such Interest Payment Date,
Redemption Date, Purchase Date or Final Maturity Date, as the case may be, in
a timely manner which permits the Paying Agent to remit payment to the
Holders on such Interest Payment Date, Redemption Date, Purchase Date or
Final Maturity Date, as the case may be.
SECTION 2.15. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES.
(a) The Global Securities initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be
delivered to the Trustee as custodian for such Depository and (iii) bear
legends as set forth in EXHIBIT C.
Members of, or participants in, the Depository ("PARTICIPANTS")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Security, and the Depository may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner
of the Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent
of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depository or
impair, as between the Depository and Participants, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
(b) Transfers of Global Securities shall be limited to
transfers in whole, but not in part, to the Depository, its successors or
their respective nominees. Interests of beneficial owners in the Global
Securities may be transferred or exchanged for Physical Securities in
accordance with the rules and procedures of the Depository and the provisions
of Section 2.16; PROVIDED, HOWEVER, that Physical Securities shall be
transferred to all beneficial owners in exchange for their beneficial
interests in Global Securities if (i) the Depository notifies the Company
that it is unwilling or unable to continue as Depository for any Global
Security and a successor Depository is not appointed by the Company within 90
days of such notice or (ii) an Event of De-
<PAGE>
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fault has occurred and is continuing and the Registrar has received a request
from the Depository to issue Physical Securities.
(c) In connection with the transfer of Global Securities as
an entirety to beneficial owners pursuant to paragraph (b) of this Section
2.15, the Global Securities shall be deemed to be surrendered to the Trustee
for cancellation, and the Company shall execute, and the Trustee shall upon
written instructions from the Company authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount of
Physical Securities of authorized denominations.
(d) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to
paragraph (c) of this Section 2.15 shall, except as otherwise provided by
Section 2.16, bear the Private Placement Legend.
(e) The Holder of any Global Security may grant proxies and
otherwise authorize any Person, including Participants and Persons that may
hold interests through Participants, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.16. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) TRANSFER AND EXCHANGE OF PHYSICAL SECURITIES. When
Physical Securities are presented to the Registrar or co-Registrar with a
request:
(i) to register the transfer of the Physical Securities; or
(ii) to exchange such Physical Securities for an equal principal
amount of Physical Securities of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the
exchange as requested if the requirements under this Indenture as set forth
in this Section 2.16 for such transactions are met; PROVIDED, HOWEVER, that
the Physical Securities presented or surrendered for Registration of transfer
or exchange:
(I) shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(II) in the case of Physical Securities the offer and sale of
which have not been registered under the Securities Act, such Physical
Securities shall be accompanied, in the sole discretion of the Company,
by the following additional information and documents, as applicable:
(A) if such Physical Security is being delivered to the
Registrar or co-Registrar by a Holder for Registration in
the name of such Holder, without transfer, a certification
from such Holder to that effect (substantially in the form
of EXHIBIT D hereto); or
(B) if such Physical Security is being transferred to a QIB in
accordance with Rule 144A, a certification to that effect
(substantially in the form of EXHIBIT D hereto); or
(C) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a
certification to that effect (substantially in the form of
EXHIBIT D
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hereto) and a transferee letter of representation
substantially in the form of EXHIBIT E hereto and, at the
option of the Company, an Opinion of Counsel reasonably
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(D) if such Physical Security is being transferred in reliance
on Rule 144 under the Securities Act, delivery of a
certification to that effect (substantially in the form of
EXHIBIT D hereto) and, at the option of the Company, an
Opinion of Counsel reasonably satisfactory to the Company
to the effect that such transfer is in compliance with the
Securities Act; or
(E) if such Physical Security is being transferred in reliance
on another exemption from the registration requirements of
the Securities Act, a certification to that effect
(substantially in the form of EXHIBIT D hereto) and, at the
option of the Company, an Opinion of Counsel reasonably
acceptable to the Company to the effect that such transfer
is in compliance with the Securities Act.
(b) RESTRICTIONS ON TRANSFER OF A PHYSICAL SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Physical Security the offer and
sale of which has not been registered under the Securities Act may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the
Registrar or co-Registrar of a Physical Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to
the Registrar or co-Registrar, together with:
(A) certification, substantially in the form of EXHIBIT D
hereto, that such Physical Security is being transferred
(I) to a QIB or (II) to an Accredited Investor and, with
respect to (II), at the option of the Company, an Opinion
of Counsel reasonably acceptable to the Company to the
effect that such transfer is in compliance with the
Securities Act; and
(B) written instructions directing the Registrar or
co-Registrar to make, or to direct the Depository to make,
an endorsement on the applicable Global Security to reflect
an increase in the aggregate amount of the Securities
represented by the Global Security,
then the Registrar or co-Registrar shall cancel such Physical Security and
cause, or direct the Depository to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar
or co-Registrar, the principal amount of Securities represented by the
applicable Global Security to be increased accordingly. If no 144A Global
Security or IAI Global Security, as the case may be, is then outstanding, the
Company shall, unless either of the events in the proviso to Section 2.15(b)
have occurred and are continuing, issue and the Trustee shall, upon written
instructions from the Company in accordance with Section 2.02, authenticate
such a Global Security in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depository in accordance with this Indenture (including
the restrictions on transfer set forth herein) and the procedures of the
Depository therefor. Upon receipt by the Registrar or Co-Registrar of
written instructions, or such other instruction as is customary for the
Depository, from the Depository or its nominee, requesting the Registration
of transfer of an interest in a
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144A Global Security or an IAI Global Security, as the case may be, to
another type of Global Security, together with the applicable Global
Securities (or, if the applicable type of Global Security required to
represent the interest as requested to be transferred is not then
outstanding, only the Global Security representing the interest being
transferred), the Registrar or Co-Registrar shall cancel such Global
Securities (or Global Security) and the Company shall issue and the Trustee
shall, upon written instructions from the Company in accordance with Section
2.02, authenticate new Global Securities of the types so cancelled (or the
type so cancelled and applicable type required to represent the interest as
requested to be transferred) reflecting the applicable increase and decrease
of the principal amount of Securities represented by such types of Global
Securities, giving effect to such transfer. If the applicable type of Global
Security required to represent the interest as requested to be transferred is
not outstanding at the time of such request, the Company shall issue and the
Trustee shall, upon written instructions from the Company in accordance with
Section 2.02, authenticate a new Global Security of such type in principal
amount equal to the principal amount of the interest requested to be
transferred.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL SECURITY FOR
A PHYSICAL SECURITY.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Physical Security; PROVIDED, HOWEVER, that prior to the Registration, a
transferee that is a QIB or Institutional Accredited Investor may not
exchange a beneficial interest in Global Security for a Physical
Security. Upon receipt by the Registrar or co-Registrar of written
instructions, or such other form of instructions as is customary for the
Depository, from the Depository or its nominee on behalf of any Person
(subject to the previous sentence) having a beneficial interest in a
Global Security and upon receipt by the Trustee of a written order or
such other form of instructions as is customary for the Depository or the
Person designated by the Depository as having such a beneficial interest
containing registration instructions and, in the case of any such
transfer or exchange of a beneficial interest in Securities the offer and
sale of which have not been registered under the Securities Act, the
following additional information and documents:
(A) if such beneficial interest is being transferred in
reliance on Rule 144 under the Securities Act, delivery of
a certification to that effect (substantially in the form
of EXHIBIT D hereto) and, at the option of the Company, an
Opinion of Counsel reasonably satisfactory to the Company
to the effect that such transfer is in compliance with the
Securities Act; or
(B) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to that
effect (substantially in the form of EXHIBIT D hereto) and,
at the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect that
such transfer is in compliance with the Securities Act,
then the Registrar or co-Registrar will cause, in accordance with the
standing instructions and procedures existing between the Depository and
the Registrar or co-Registrar, the aggregate principal amount of the
applicable Global Security to be reduced and, following such reduction,
the Company will execute and, upon receipt of an authentication order in
the form of an Officers' Certificate in accordance with Section 2.02,
the Trustee will authenticate and deliver to the transferee a Physical
Security in the appropriate principal amount.
(ii) Securities issued in exchange for a beneficial interest in
a Global Security pursuant to this Section 2.16(d) shall be registered in
such names and in such authorized denominations as the
<PAGE>
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Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Registrar or co-Registrar
in writing. The Registrar or co-Registrar shall deliver such Physical
Securities to the Persons in whose names such Physical Securities are so
registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL
SECURITIES. Notwithstanding any other provisions of this Indenture, a Global
Security may not be transferred as a whole except by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or any such nominee
to a successor Depository or a nominee of such successor Depository.
(f) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar or co-Registrar shall deliver Securities that do not bear the
Private Placement Legend. Upon the transfer, exchange or replacement of
Securities bearing the Private Placement Legend, the Registrar or
co-Registrar shall deliver only Securities that bear the Private Placement
Legend unless, and the Trustee is hereby authorized to deliver Securities
without the Private Placement Legend if, (i) there is delivered to the
Trustee an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions
of the Securities Act;(ii) such Security has been sold pursuant to an
effective registration statement under the Securities Act (including pursuant
to a Registration); or (iii) the date of such transfer, exchange or
replacement is two years after the later of (x) the Issue Date and (y) the
last date that the Company or any affiliate (as defined in Rule 144 under the
Securities Act) of the Company was the owner of such Securities (or any
predecessor thereto).
(g) GENERAL. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Security
only as provided in this Indenture.
The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between or
among Participants or beneficial owners of interest in any Global Security)
other than to require delivery of such certificates and other documentation
or evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.15 or this
Section 2.16. The Company shall have the right to inspect and make copies of
all such letters, notices or other written communications at any reasonable
time upon the giving of reasonable written notice to the Registrar
<PAGE>
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ARTICLE THREE
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company wants to redeem Securities pursuant to paragraph
5, 6 or 7 of the Securities at the applicable redemption price set forth
thereon, it shall notify the Trustee in writing of the Redemption Date and
the principal amount of Securities to be redeemed. The Company shall give
such notice to the Trustee at least 60 days before the Redemption Date
(unless a shorter notice shall be agreed to by the Trustee in writing),
together with an Officers' Certificate stating that such redemption will
comply with the conditions contained herein.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed pursuant
to paragraph 5 of the Securities, the Trustee shall select the Securities to
be redeemed in compliance with the requirements of the national securities
exchange, if any, on which the Securities are listed or, if the Securities
are not then listed on a national securities exchange, on a PRO RATA basis,
by lot or in such other manner as the Trustee shall deem fair and
appropriate. Selection of the Securities to be redeemed pursuant to
paragraph 6 of the Securities shall be made by the Trustee only on a PRO RATA
basis or on as nearly a PRO RATA basis as is practicable (subject to the
procedures of the Depository) based on the aggregate principal amount of
Securities held by each Holder. The Trustee shall make the selection from the
Securities then outstanding, subject to redemption and not previously called
for redemption.
The Trustee may select for redemption pursuant to paragraph 5 or
6 of the Securities portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities
and portions of them the Trustee so selects shall be in amounts of $1,000
principal amount or integral multiples thereof. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail a notice of redemption by first-class mail to
each Holder whose Securities are to be redeemed at such Holder's registered
address; PROVIDED, HOWEVER, that notice of a redemption pursuant to paragraph
6 of the Securities shall be mailed to each Holder whose Securities are to be
redeemed no later than 60 days after the date of the Closing of the relevant
Public Equity Offering of Holdings or the Company.
Each notice of redemption shall identify the Securities to be
redeemed (including the CUSIP number thereon) and shall state:
(1) the Redemption Date;
(2) the redemption price;
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(3) the name and address of the Paying Agent to which the
Securities are to be surrendered for redemption;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date and the only remaining right of the
Holders is to receive payment of the redemption price upon surrender to
the Paying Agent; and
(6) in the case of any redemption pursuant to paragraph 5 or 6
of the Securities, if any Security is being redeemed in part, the
portion of the principal amount of such Security to be redeemed and
that, after the Redemption Date, upon surrender of such Security, a new
Security or Securities in principal amount equal to the unredeemed
portion thereof will be issued.
At the Company's request, the Trustee shall give the notice of
redemption on behalf of the Company, in the Company's name and at the
Company's expense.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once a notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the
redemption price. Upon surrender to the Paying Agent, such Securities shall
be paid at the redemption price, plus accrued interest thereon, if any, to
the Redemption Date, but interest installments whose maturity is on or prior
to such Redemption Date shall be payable to the Holders of record at the
close of business on the relevant Interest Record Date.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
At least one Business Day before the Redemption Date, the
Company shall deposit with the Paying Agent (or if the Company is its own
Paying Agent, shall, on or before the Redemption Date, segregate and hold in
trust) money sufficient to pay the redemption price of and accrued interest,
if any, on all Securities to be redeemed on that date other than Securities
or portions thereof called for redemption on that date which have been
delivered by the Company to the Trustee for cancellation.
If any Security surrendered for redemption in the manner
provided in the Securities shall not be so paid on the Redemption Date due to
the failure of the Company to deposit with the Paying Agent money sufficient
to pay the redemption price thereof, the principal and accrued and unpaid
interest, if any, thereon shall, until paid or duly provided for, bear
interest as provided in Sections 2.12 and 4.01 with respect to any payment
default.
SECTION 3.06. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for the Holder a new Security equal in principal
amount to the unredeemed portion of the Security surrendered.
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ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES.
The Company shall pay the principal of and interest on the
Securities in the manner provided in the Securities and the Registration
Rights Agreement. An installment of principal or interest shall be considered
paid on the date due if the Trustee or Paying Agent (other than the Company,
a Guarantor or any of their respective Affiliates) holds on that date money
designated for and sufficient to pay the installment in full and is not
prohibited from paying such money to the Holders of the Securities pursuant
to the terms of this Indenture.
The Company shall pay cash interest on overdue principal at the
same rate per annum borne by the Securities. The Company shall pay cash
interest on overdue installments of interest at the same rate per annum borne
by the Securities, to the extent lawful, as provided in Section 2.12.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, The City
of New York, the office or agency required under Section 2.03. The Company
shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 13. The Company hereby initially designates the Trustee at
its address set forth in Section 13.02 as its office or agency in The Borough
of Manhattan, The City of New York, for such purposes.
SECTION 4.03. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, conduct any business or
enter into any transaction (or series of related transactions) with or for
the benefit of any of their respective Affiliates or any officer, director or
employee of the Company or any Restricted Subsidiary (each an "AFFILIATE
TRANSACTION"), unless (i) such Affiliate Transaction is on terms which are no
less favorable to the Company or such Restricted Subsidiary, as the case may
be, than would be available in a comparable transaction with an unaffiliated
third party, (ii) if such Affiliate Transaction (or series of related
Affiliate Transactions) involves aggregate payments or other consideration
having a Fair Market Value in excess of $1.0 million, such Affiliate
Transaction is in writing and a majority of the disinterested members of the
Board of Directors of the Company shall have approved such Affiliate
Transaction and determined that such Affiliate Transaction complies with the
foregoing provisions and (iii) if such Affiliate Transaction (or series of
related Affiliate Transactions) involves aggregate payments or other
consideration having a Fair Market Value in excess of $5.0 million, the
Company shall have obtained a written opinion from an Independent Financial
Advisor (filed with the Trustee) stating that the terms of such Affiliate
Transaction are fair, from a financial point of view, to the Company or the
Restricted Subsidiary involved in such Affiliate Transaction, as the case may
be.
Notwithstanding the foregoing, the restrictions set forth in
this Section 4.03 shall not apply to (i) transactions with or among the
Company and any Wholly Owned Restricted Subsidiary or between or among Wholly
Owned Restricted Subsidiaries; (ii) customary directors' fees,
indemnification and similar ar-
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rangements, consulting fees, employee salaries, bonuses or employment
agreements, compensation or employee benefit arrangements and incentive
arrangements with any officer, director or employee of the Company or any
Restricted Subsidiary entered into in the ordinary course of business
(including customary benefits thereunder) and payments under any
indemnification arrangements permitted by applicable law; (iii) any
transactions undertaken pursuant to any contractual obligations in existence
on the Issue Date (as in effect on the Issue Date); (iv) the issue and sale
by the Company to its stockholders of Qualified Equity Interests; (v) any
Restricted Payments made in compliance with Section 4.06; (vi) loans and
advances to officers, directors and employees of the Company or any
Restricted Subsidiary for travel, entertainment, moving and other relocation
expenses, in each case made in the ordinary course of business; (vii) the
Incurrence of intercompany Indebtedness permitted pursuant to clause (d) of
the second paragraph of Section 4.04; (viii) the pledge of Equity Interests
of Unrestricted Subsidiaries to support the Indebtedness thereof; (ix) the
Tax Sharing Agreement, as in effect on the Issue Date; and (x) any
transaction with the George Group pursuant to the Consulting Agreement, as in
effect on the Issue Date, not to exceed $2.0 million in any fiscal year
(exclusive of reimbursement of expenses).
SECTION 4.04. LIMITATION ON INDEBTEDNESS.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, Incur any Indebtedness
(including Acquired Indebtedness) or issue any Disqualified Equity Interests,
except for Permitted Indebtedness; PROVIDED, HOWEVER, that the Company and
any Restricted Subsidiary that is a Guarantor may Incur Indebtedness and the
Company may issue Disqualified Equity Interests if, at the time of and
immediately after giving PRO FORMA effect to such Incurrence of Indebtedness
or issuance of Disqualified Equity Interests and the application of the
proceeds therefrom, the Consolidated Coverage Ratio would be greater than 2.0
to 1.0.
The foregoing limitations will not apply to the Incurrence by
the Company or any Restricted Subsidiary that is a Guarantor of any of the
following (collectively, "PERMITTED INDEBTEDNESS"), each of which shall be
given independent effect:
(a) Indebtedness under the Securities;
(b) Existing Indebtedness;
(c) Indebtedness pursuant to the Senior Credit Facility in an
aggregate principal amount at any one time outstanding not to exceed the sum
of (A) the greater of (i) $25.0 million and (ii) the sum of (a) 85% of the
Net Amount of Eligible Receivables (as defined in the Senior Credit Facility
as in effect on the Issue Date whether or not the Senior Credit Facility is
in effect on the date of determination), PLUS (b) 50% of Eligible Inventory
(as defined in the Senior Credit Facility as in effect on the Issue Date
whether or not the Senior Credit Facility is in effect on the date of
determination), PLUS (B) any amounts outstanding under the Senior Credit
Facility that utilize subparagraph (i) of this paragraph of this Section 4.04;
(d) Indebtedness of any Restricted Subsidiary owed to and held
by the Company or any Wholly Owned Restricted Subsidiary and Indebtedness of
the Company owed to and held by any Wholly Owned Restricted Subsidiary which
is unsecured and subordinated in right of payment to the payment and
performance of the Company's obligations under any Senior Indebtedness, this
Indenture and the Securities; PROVIDED, HOWEVER, that an Incurrence of
Indebtedness that is not permitted by this clause (d) shall be deemed to have
occurred upon (i) any sale or other disposition of any Indebtedness of the
Company or any Restricted Subsidiary referred to in this clause (d) to a
Person (other than the Company or any Wholly Owned Restricted
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Subsidiary), (ii) any sale or other disposition of Equity Interests of any
Wholly Owned Restricted Subsidiary which holds Indebtedness of the Company or
another Restricted Subsidiary such that such Wholly Owned Restricted
Subsidiary ceases to be a Wholly Owned Restricted Subsidiary, or (iii) the
designation of a Wholly Owned Restricted Subsidiary which holds Indebtedness
of the Company or any other Restricted Subsidiary as an Unrestricted
Subsidiary;
(e) the Guaranties and guarantees by any Guarantor of
Indebtedness of the Company; PROVIDED, HOWEVER, that if such guarantee is of
Subordinated Indebtedness, then the Guaranty of such Guarantor shall be
senior to such Guarantor's guarantee of Subordinated Indebtedness;
(f) Interest Rate Protection Obligations of the Company
relating to Indebtedness of the Company (which Indebtedness (i) bears
interest at fluctuating interest rates and (ii) is otherwise permitted to be
Incurred under this Section 4.04); PROVIDED, HOWEVER, that the notional
principal amount of such Interest Rate Protection Obligations does not exceed
the principal amount of the Indebtedness to which such Interest Rate
Protection Obligations relate;
(g) Purchase Money Indebtedness and Capitalized Lease
Obligations which do not exceed $10.0 million in the aggregate at any one
time outstanding;
(h) Indebtedness or Disqualified Equity Interests to the extent
representing a replacement, renewal, refinancing or extension (collectively,
a "REFINANCING") of outstanding Indebtedness or Disqualified Equity Interests
Incurred in compliance with the Consolidated Coverage Ratio of the first
paragraph of this Section 4.04 or clause (a) or (b) of this paragraph of this
Section 4.04; PROVIDED, HOWEVER, that (i) any such refinancing shall not
exceed the sum of the principal amount (or accreted amount (determined in
accordance with GAAP), if less) of the Indebtedness or Disqualified Equity
Interests being refinanced, PLUS the amount of accrued interest or dividends
thereon, PLUS the amount of any reasonably determined prepayment premium
necessary to accomplish such refinancing and such reasonable fees and
expenses incurred in connection therewith; (ii) Indebtedness representing a
refinancing of Indebtedness other than Senior Indebtedness shall have a
Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being refinanced; (iii)
Indebtedness that is PARI PASSU with the Securities may only be refinanced
with Indebtedness that is made PARI PASSU with or subordinate in right of
payment to the Securities and Subordinated Indebtedness or Disqualified
Equity Interests may only be refinanced with Subordinated Indebtedness or
Disqualified Equity Interests; and (iv) no Restricted Subsidiary that is not
a Guarantor may Incur Indebtedness to refinance Indebtedness of the Company;
and
(i) in addition to the items referred to in clauses (a) through
(h) above, Indebtedness of the Company (including any Indebtedness under the
Senior Credit Facility that utilizes this subparagraph (i)) having an
aggregate principal amount not to exceed $15.0 million at any time
outstanding.
SECTION 4.05. DISPOSITION OF PROCEEDS OF ASSET SALES.
(a) The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, make any Asset Sale, unless
(i) the Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair
Market Value of the assets sold or otherwise disposed of and (ii) at least
75% of such consideration consists of (A) cash or Cash Equivalents, (B)
properties and capital assets to be owned by the Company or any Restricted
Subsidiary and to be used in a Related Business, or (C) Equity Interests in
any Person which thereby becomes a Wholly Owned Restricted Subsidiary whose
assets consist primarily of properties and capital assets used in a Related
Business.
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The amount of any (i) Indebtedness (other than any Subordinated Indebtedness)
of the Company or any Restricted Subsidiary that is actually assumed by the
transferee in such Asset Sale and from which the Company and the Restricted
Subsidiaries are fully released shall be deemed to be cash for purposes of
determining the percentage of cash consideration received by the Company or
the Restricted Subsidiaries and (ii) notes or other similar obligations
received by the Company or the Restricted Subsidiaries from such transferee
that are immediately converted, sold or exchanged (or are converted, sold or
exchanged within thirty days of the related Asset Sale) by the Company or the
Restricted Subsidiaries into cash shall be deemed to be cash, in an amount
equal to the net cash proceeds realized upon such conversion, sale or
exchange for purposes of determining the percentage of cash consideration
received by the Company or the Restricted Subsidiaries.
The Company or such Restricted Subsidiary, as the case may be,
may (i) apply the Net Cash Proceeds of any Asset Sale within 365 days of
receipt thereof to repay Senior Indebtedness and permanently reduce any
related commitment, or (ii) commit in writing to acquire, construct or
improve properties and capital assets to be owned by the Company or any
Restricted Subsidiary and to be used in a Related Business and so apply such
Net Cash Proceeds within 365 days after the receipt thereof.
To the extent all or part of the Net Cash Proceeds of any Asset
Sale are not applied within 365 days of such Asset Sale as described in
clause (i) or (ii) of the immediately preceding paragraph (such Net Cash
Proceeds, the "UNUTILIZED NET CASH PROCEEDS"), the Company shall, within 20
days after such 365th day, make an Offer to Purchase all outstanding
Securities up to a maximum principal amount (expressed as a multiple of
$1,000) of Securities equal to such Unutilized Net Cash Proceeds. Such Offer
to Purchase shall be made at a purchase price in cash equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any,
to the Purchase Date; PROVIDED, HOWEVER, that the Offer to Purchase may be
deferred until there are aggregate Unutilized Net Cash Proceeds equal to or
in excess of $5.0 million, at which time the entire amount of such Unutilized
Net Cash Proceeds, and not just the amount in excess of $5.0 million, shall
be applied as required pursuant to this paragraph. Each Holder shall be
entitled to tender all or any portion of the Securities owned by such Holder
pursuant to the Offer to Purchase, subject to the requirement that any
portion of a Security tendered must be tendered in an integral multiple of
$1,000 principal amount and subject to any pro ration among tendering Holders
as described in paragraph (b) below.
(b) With respect to any Offer to Purchase effected pursuant to
this Section 4.05, among the Securities, to the extent the aggregate
principal amount of Securities tendered pursuant to such Offer to Purchase
exceeds the Unutilized Net Cash Proceeds to be applied to the repurchase
thereof, such Securities shall be purchased PRO RATA based on the aggregate
principal amount of such Securities tendered by each Holder. To the extent
the Unutilized Net Cash Proceeds exceed the aggregate amount of Securities
tendered by the Holders of the Securities pursuant to such Offer to Purchase,
the Company may retain and utilize any portion of the Unutilized Net Cash
Proceeds not applied to repurchase the Securities for any purpose consistent
with the other terms of this Indenture.
(c) On or prior to the Purchase Date specified in the Offer to
Purchase, the Company shall (i) subject to paragraph (b) of this Section 4.05,
accept for payment all Securities validly tendered pursuant to the Offer, (ii)
deposit with the Paying Agent or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 2.04, money sufficient
to pay the Purchase Price of all Securities or portions thereof so accepted and
(iii) deliver or cause to be delivered to the Trustee for cancellation all
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company. The Paying
Agent (or the Company, if so acting) shall promptly mail or deliver to Holders
of Securities so accepted, payment in an amount equal to the Purchase Price for
such Securities, and the Trustee shall promptly authenticate and mail or deliver
to each Holder of Securities a new Security or Se-
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curities equal in principal amount to any unpurchased portion of the Security
surrendered as requested by the Holder. Any Security not accepted for
payment shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Offer on or
as soon as practicable after the Purchase Date.
(d) In the event that the Company makes an Offer to Purchase
the Securities, the Company shall comply with any applicable securities laws
and regulations, including any applicable requirements of Section 14(e) of,
and Rule 14e-1 under, the Exchange Act, and any violation of the provisions
of this Indenture relating to such Offer to Purchase occurring as a result of
such compliance shall not be deemed a Default or an Event of Default.
SECTION 4.06. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or any other distribution on
any Equity Interests of the Company or any Restricted Subsidiary or
make any payment or distribution to the direct or indirect holders (in
their capacities as such) of Equity Interests of the Company or any
Restricted Subsidiary (other than any dividends, distributions and
payments made to the Company or any Restricted Subsidiary and dividends
or distributions payable to any Person solely in Qualified Equity
Interests of the Company or in options, warrants or other rights to
purchase Qualified Equity Interests of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company or any Restricted Subsidiary (other
than any such Equity Interests owned by the Company or any Restricted
Subsidiary);
(iii) purchase, redeem, defease or retire for value, or make
any principal payment on, prior to any scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Subordinated
Indebtedness (other than any Subordinated Indebtedness held by the
Company or any Wholly Owned Restricted Subsidiary); or
(iv) make any Investment (other than Permitted Investments) in
any Person (other than in the Company, any Restricted Subsidiary or a
Person that becomes a Restricted Subsidiary, or is merged with or into
or consolidated with the Company or a Restricted Subsidiary (provided
the Company or a Restricted Subsidiary is the survivor) as a result of
or in connection with such Investment);
(such payments or any other actions (other than any exception thereto)
described in (i), (ii), (iii) or (iv), each a "RESTRICTED PAYMENT"), unless
(a) no Default or Event of Default shall have occurred and be
continuing at the time or immediately after giving effect to such Restricted
Payment;
(b) immediately after giving effect to such Restricted Payment,
the Company would be able to Incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the Consolidated Coverage Ratio of the
first paragraph of Section 4.04; and
(c) immediately after giving effect to such Restricted Payment,
the aggregate amount of all Restricted Payments declared or made on or after
the Issue Date does not exceed an amount equal to the sum
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of (1) 50% of cumulative Consolidated Net Income determined for the period
(taken as one period) from the beginning of the first fiscal quarter
commencing after the Issue Date and ending on the last day of the most recent
fiscal quarter immediately preceding the date of such Restricted Payment for
which consolidated financial information of the Company is available (or if
such cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss), PLUS (2) the aggregate net cash proceeds received by the Company
either (x) as capital contributions to the Company after the Issue Date or
(y) from the issue and sale (other than to a Restricted Subsidiary) of its
Qualified Equity Interests after the Issue Date (excluding the net proceeds
from any issuance and sale of Qualified Equity Interests financed, directly
or indirectly, using funds borrowed from the Company or any Restricted
Subsidiary until and to the extent such borrowing is repaid), PLUS, (3) the
principal amount (or accreted amount (determined in accordance with GAAP), if
less) of any Indebtedness of the Company or any Restricted Subsidiary
Incurred after the Issue Date which has been converted into or exchanged for
Qualified Equity Interests of the Company, PLUS (4) in the case of the
disposition or repayment of any Investment constituting a Restricted Payment
made after the Issue Date, an amount (to the extent not included in the
computation of Consolidated Net Income) equal to the lesser of: (x) the
return of capital with respect to such Investment and (y) the amount of such
Investment which was treated as a Restricted Payment, in either case, less
the cost of the disposition of such Investment and net of taxes, PLUS (5) so
long as the Designation thereof was treated as a Restricted Payment made
after the Issue Date, with respect to any Unrestricted Subsidiary that has
been redesignated as a Restricted Subsidiary after the Issue Date in
accordance with Section 4.17, the Company's proportionate interest in the net
worth of such Subsidiary in an amount equal to the excess of (x) the total
assets of such Subsidiary, valued on an aggregate basis at Fair Market Value,
over (y) the total liabilities of such Subsidiary, determined in accordance
with GAAP (and provided that such amount shall not in any case exceed the
Designation Amount with respect to such Restricted Subsidiary upon its
Designation), PLUS (6) (to the extent not included in the computation of
Consolidated Net Income) the amount of cash dividends or cash distributions
(other than to pay taxes) received from any Unrestricted Subsidiary since the
Issue Date, MINUS (7) the greater of (x) $0 and (y) the Designation Amount
(measured as of the date of Designation) with respect to any Subsidiary of
the Company which has been designated as an Unrestricted Subsidiary after the
Issue Date in accordance with Section 4.17.
The foregoing provisions will not prevent (i) the payment of any
dividend or distribution on, or redemption of, Equity Interests within 60
days after the date of declaration of such dividend or distribution or the
giving of such formal notice of such redemption, if at the date of such
declaration or giving of such formal notice such payment or redemption would
comply with the provisions of this Indenture; (ii) the purchase, redemption,
retirement or other acquisition of any Equity Interests of the Company in
exchange for, or out of the net cash proceeds of the substantially concurrent
issue and sale (other than to a Restricted Subsidiary) of, Qualified Equity
Interests of the Company; PROVIDED, HOWEVER, that any such net cash proceeds
and the value of any Qualified Equity Interests issued in exchange for such
retired Equity Interests are excluded from clause (c)(2) of the preceding
paragraph (and were not included therein at any time); (iii) the purchase,
redemption, retirement, defeasance or other acquisition of Subordinated
Indebtedness, or any other payment thereon, made in exchange for, or out of
the net cash proceeds of, a substantially concurrent issue and sale (other
than to a Restricted Subsidiary) of (x) Qualified Equity Interests of the
Company; PROVIDED, HOWEVER, that any such net cash proceeds and the value of
any Qualified Equity Interests issued in exchange for Subordinated
Indebtedness are excluded from clauses (c)(2) and (c)(3) of the preceding
paragraph (and were not included therein at any time) or (y) other
Subordinated Indebtedness having no stated maturity for the payment of
principal thereof prior to the Final Maturity Date; (iv) any Investment to
the extent that the consideration therefor consists of the net cash proceeds
of the substantially concurrent issue and sale (other than to a Restricted
Subsidiary) of Qualified Equity Interests of the Company; PROVIDED; HOWEVER,
that any such net cash proceeds are excluded from clause (c)(2) of the
preceding paragraph (and were not included therein at any time); (v) the
purchase, redemption or other acquisition, cancellation or retirement for
value of Equity Inter-
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ests, or options, warrants, equity appreciation rights or other rights to
purchase or acquire Qualified Equity Interests, of the Company or any
Restricted Subsidiary, or similar securities, held by officers or employees
or former officers or employees of the Company or any Restricted Subsidiary
(or their estates or beneficiaries under their estates), upon death,
disability, retirement or termination of employment, or dividends by the
Company to Holdings to effect the same in respect of its Qualified Equity
Interests, not to exceed $3.0 million in the aggregate since the Issue Date;
(vi) Restricted Payments not to exceed $2.0 million in the aggregate since
the Issue Date; (vii) payments to Holdings to pay general and administrative
expenses of Holdings not to exceed $500,000 in any fiscal year; or (viii)
dividends by the Company to Holdings in an amount not to exceed $16.1 million
in the aggregate since the Issue Date to effect the Transaction; PROVIDED,
HOWEVER, that in the case of each of clauses (ii), (iii), (iv), (v), (vi) and
(vii) no Default or Event of Default shall have occurred and be continuing or
would arise therefrom.
In determining the amount of Restricted Payments permissible
under this covenant, amounts expended pursuant to clauses (i), (v), (vi) and
(vii) of the immediately preceding paragraph shall be included as Restricted
Payments and amounts expended pursuant to clauses (ii), (iii), (iv) and
(viii) shall be excluded. The amount of any non-cash Restricted Payment
shall be deemed to be equal to the Fair Market Value thereof at the date of
the making of such Restricted Payment.
SECTION 4.07. CORPORATE EXISTENCE.
Subject to Article Five, the Company shall do or shall cause to
be done all things necessary to preserve and keep in full force and effect
its corporate existence and the corporate, partnership or other existence of
each Restricted Subsidiary in accordance with the respective organizational
documents of each such Restricted Subsidiary and the rights (charter and
statutory) and material franchises of the Company and the Restricted
Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to
preserve any such right or franchise, or the corporate existence of any
Restricted Subsidiary, if the Board of Directors of the Company shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of the Company and the Restricted Subsidiaries, taken as a
whole, and that the loss thereof is not, and will not be, adverse in any
material respect to the Holders; PROVIDED, FURTHER, HOWEVER, that a
determination of the Board of Directors of the Company shall not be required
in the event of a merger of one or more Wholly Owned Restricted Subsidiaries
of the Company with or into another Wholly Owned Restricted Subsidiary of the
Company or another Person, if the surviving Person is a Wholly Owned
Restricted Subsidiary of the Company organized under the laws of the United
States or a State thereof or of the District of Columbia.
SECTION 4.08. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all material taxes,
assessments and governmental charges levied or imposed upon the Company or
any Restricted Subsidiary or upon the income, profits or property of the
Company or any Restricted Subsidiary and (2) all lawful claims for labor,
materials and supplies which, in each case, if unpaid, might by law become a
material liability, or Lien upon the property, of the Company or any
Restricted Subsidiary; PROVIDED, HOWEVER, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which appropriate
provision has been made.
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SECTION 4.09. NOTICE OF DEFAULTS.
(a) In the event that any Indebtedness of the Company or any of
its Subsidiaries is declared due and payable before its maturity because of
the occurrence of any default (or any event which, with notice or lapse of
time, or both, would constitute such a default) under such Indebtedness, the
Company shall promptly give written notice to the Trustee of such
declaration, the status of such default or event and what action the Company
is taking or proposes to take with respect thereto.
(b) Upon becoming aware of any Default or Event of Default, the
Company shall promptly deliver an Officers' Certificate to the Trustee
specifying the Default or Event of Default.
SECTION 4.10. MAINTENANCE OF PROPERTIES AND INSURANCE.
(a) The Company shall cause all material properties owned by or
leased to it or any Restricted Subsidiary and used or useful in the conduct of
its business or the business of any Restricted Subsidiary to be maintained and
kept in normal condition, repair and working order and supplied with all
necessary equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; PROVIDED,
HOWEVER, that nothing in this Section 4.10 shall prevent the Company or any
Restricted Subsidiary from discontinuing the use, operation or maintenance of
any of such properties, or disposing of any of them, if such discontinuance or
disposal is, in the judgment of the Board of Directors or of the board of
directors of the Restricted Subsidiary concerned, or of an officer (or other
agent employed by the Company or of any Restricted Subsidiary) of the Company
or such Restricted Subsidiary having managerial responsibility for any such
property, desirable in the conduct of the business of the Company or any
Restricted Subsidiary, and if such discontinuance or disposal is not adverse in
any material respect to the Holders.
(b) The Company shall maintain, and shall cause the Restricted
Subsidiaries to maintain, insurance with responsible carriers against such
risks and in such amounts, and with such deductibles, retentions,
self-insured amounts and co-insurance provisions, as are customarily carried
by similar businesses of similar size, including property and casualty loss,
and workers' compensation insurance.
SECTION 4.11. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee within 45 days after
the end of each of the first three fiscal quarters of the Company and within
90 days after the close of each fiscal year a certificate signed by the
principal executive officer, principal financial officer or principal
accounting officer stating that a review of the activities of the Company has
been made under the supervision of the signing officers with a view to
determining whether a Default or Event of Default has occurred and whether or
not the signers know of any Default or Event of Default by the Company that
occurred during such fiscal quarter or fiscal year. If they do know of such a
Default or Event of Default, the certificate shall describe all such Defaults
or Events of Default, their status and the action the Company is taking or
proposes to take with respect thereto. The first certificate to be delivered
by the Company pursuant to this Section 4.11 shall be for the fiscal quarter
ending June 27, 1997.
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SECTION 4.12. PROVISION OF FINANCIAL INFORMATION.
Whether or not the Company is subject to Section 13(a) or 15(d)
of the Exchange Act, or any successor provision thereto, the Company shall
file with the SEC (if permitted by SEC practice and applicable law and
regulations) the annual reports, quarterly reports and other documents which
the Company would have been required to file with the SEC pursuant to such
Section 13(a) or 15(d) or any successor provision thereto if the Company were
so subject, such documents to be filed with the SEC on or prior to the
respective dates (the "REQUIRED FILING DATES") by which the Company would
have been required so to file such documents if the Company were so subject.
The Company shall also in any event (a) within 15 days of each Required
Filing Date (whether or not permitted or required to be filed with the SEC)
(i) transmit (or cause to be transmitted) by mail to all Holders, as their
names and addresses appear in the Security Register, without cost to such
Holders, and (ii) file with the Trustee, copies of the annual reports,
quarterly reports and other documents which the Company is required to file
with the SEC pursuant to the preceding sentence, or, if such filing is not so
permitted, information and data of a similar nature, and (b) if,
notwithstanding the preceding sentence, filing such documents by the Company
with the SEC is not permitted by SEC practice or applicable law or
regulations, promptly upon written request supply copies of such documents to
any Holder. In addition, for so long as any Securities remain outstanding,
the Company will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, and, to any
beneficial holder of Securities, if not obtainable from the SEC, information
of the type that would be filed with the SEC pursuant to the foregoing
provisions, upon the request of any such holder. The Company will also
comply with Section 314(a) of the TIA.
SECTION 4.13. WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each of the Company and the Guarantors covenants (to the extent
that it may lawfully do so) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any
stay or extension law or any usury law or other law, which would prohibit or
forgive the Company or such Guarantor from paying all or any portion of the
principal of and/or interest, if any, on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company and each Guarantor hereby expressly
waives all benefit or advantage of any such law, and covenants that it shall
not hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 4.14. CHANGE OF CONTROL.
(a) Following the occurrence of a Change of Control (the date
of such occurrence being the "CHANGE OF CONTROL DATE"), the Company shall
notify the Holders of the Securities of such occurrence in the manner
prescribed by this Indenture and shall, unless the Company shall have elected
to redeem the Securities prior to May 1, 2001 upon a Change of Control as
permitted by paragraph 7 of the Securities, within 20 days after the Change
of Control Date, make an Offer to Purchase all Securities then outstanding at
a purchase price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Purchase
Date (subject to the right of Holders of record on the relevant Interest
Record Date to receive interest due on the relevant Interest Payment Date).
The Company's obligations may be satisfied if a third party makes the Offer
to Purchase in the manner, at the times and otherwise in compliance with the
requirements of this Indenture applicable to an Offer to Purchase made by the
Company and purchases all Securities validly tendered and not withdrawn under
such Offer to Purchase. Each Holder shall be entitled to tender all or any
portion of the Securities owned by such Holder pursuant to the Offer to
Purchase, subject to
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the requirement that any portion of a Security tendered must be tendered in
an integral multiple of $1,000 principal amount.
(b) On or prior to the Purchase Date specified in the Offer to
Purchase, the Company shall (i) accept for payment all Securities or portions
thereof validly tendered pursuant to the Offer, (ii) deposit with the Paying
Agent or, if the Company is acting as its own Paying Agent, segregate and
hold in trust as provided in Section 2.04, money sufficient to pay the
Purchase Price of all Securities or portions thereof so accepted and (iii)
deliver or cause to be delivered to the Trustee for cancellation all
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company. The
Paying Agent (or the Company, if so acting) shall promptly mail or deliver to
Holders of Securities so accepted, payment in an amount equal to the Purchase
Price for such Securities, and the Trustee shall promptly authenticate and
mail or deliver to each Holder of Securities a new Security or Securities
equal in principal amount to any unpurchased portion of the Security
surrendered as requested by the Holder. Any Security not accepted for payment
shall be promptly mailed or delivered by the Company to the Holder thereof.
The Company shall publicly announce the results of the Offer on or as soon as
practicable after the Purchase Date.
(c) If the Company makes an Offer to Purchase, the Company will
comply with all applicable tender offer laws and regulations, including, to
the extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act,
and any other applicable Federal or state securities laws and regulations and
any applicable requirements of any securities exchange on which the
Securities are listed, and any violation of the provisions of this Indenture
relating to such Offer to Purchase occurring as a result of such compliance
shall not be deemed a Default or an Event of Default.
SECTION 4.15. LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS.
(a) The Company shall not, directly or indirectly, Incur any
Indebtedness that by its terms would expressly rank senior in right of
payment to the Securities and expressly rank subordinate in right of payment
to any Senior Indebtedness.
(b) The Company shall not permit any Guarantor to, and no
Guarantor shall, directly or indirectly, Incur any Indebtedness that by its
terms would expressly rank senior in right of payment to the Guaranty of such
Guarantor and expressly rank subordinate in right of payment to any Guarantor
Senior Indebtedness of such Guarantor.
SECTION 4.16. LIMITATIONS ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions to the Company or any other Restricted Subsidiary on its Equity
Interests or with respect to any other interest or participation in, or
measured by, its profits, or pay any Indebtedness owed to the Company or any
other Restricted Subsidiary, (b) make loans or advances to, or guarantee any
Indebtedness or other obligations of, the Company or any other Restricted
Subsidiary, or (c) transfer any of its properties or assets to the Company or
any other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) the Senior Credit Facility, or any other
agreement of the Company or the Restricted Subsidiaries outstanding on the
Issue Date, in each case as in effect on the Issue Date, and any amendments,
restatements, renewals, replacements or refinancings thereof; PROVIDED,
HOWEVER, that any such amendment, restatement, renewal, replacement or
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refinancing is no more restrictive in the aggregate with respect to such
encumbrances or restrictions than those contained in the Senior Credit
Facility on the Issue Date; (ii) applicable law; (iii) any instrument
governing Indebtedness or Equity Interests of an Acquired Person acquired by
the Company or any Restricted Subsidiary as in effect at the time of such
acquisition (except to the extent such Indebtedness was Incurred by such
Acquired Person in connection with, as a result of or in contemplation of
such acquisition); PROVIDED, HOWEVER, that such encumbrances and restrictions
are not applicable to the Company or any Restricted Subsidiary, or the
properties or assets of the Company or any Restricted Subsidiary, other than
the Acquired Person; (iv) customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices; (v) Purchase Money Indebtedness for property acquired in the
ordinary course of business that only imposes encumbrances and restrictions
on the property so acquired; (vi) any agreement for the sale or disposition
of the Equity Interests or assets of any Restricted Subsidiary; PROVIDED,
HOWEVER, that such encumbrances and restrictions described in this clause
(vi) are only applicable to such Restricted Subsidiary or assets, as
applicable, and any such sale or disposition is made in compliance with
Section 4.05 to the extent applicable thereto; (vii) refinancing Indebtedness
permitted under clause (h) of the second paragraph of Section 4.04; PROVIDED,
HOWEVER, that such encumbrances and restrictions contained in the agreements
governing such Indebtedness are no more restrictive in the aggregate than
those contained in the agreements governing the Indebtedness being refinanced
immediately prior to such refinancing; (viii) this Indenture; or (ix) any
such customary encumbrance or restriction existing under any other security
agreement, instrument or document hereafter in effect; PROVIDED, HOWEVER,
that the terms and conditions of any such encumbrance or restriction are not
more restrictive than those contained in the Senior Credit Facility as in
effect on the Issue Date.
SECTION 4.17. DESIGNATION OF UNRESTRICTED SUBSIDIARIES.
(a) The Company may designate after the Issue Date any
Subsidiary of the Company as an "Unrestricted Subsidiary" under this
Indenture (a "DESIGNATION") only if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation;
(ii) at the time of and after giving effect to such
Designation, the Company could Incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the Consolidated Coverage
Ratio of the first paragraph of Section 4.04; and
(iii) the Company would be permitted to make an Investment
(other than a Permitted Investment) at the time of Designation
(assuming the effectiveness of such Designation) pursuant to the first
paragraph of Section 4.06 in an amount (the "DESIGNATION AMOUNT") equal
to the Fair Market Value of the Company's proportionate interest in the
net worth of such Subsidiary on such date in an amount equal to the
excess of (x) the total assets of such Subsidiary, valued on an
aggregate basis at Fair Market Value, over (y) the total liabilities of
such Subsidiary, determined in accordance with GAAP.
Neither the Company nor any Restricted Subsidiary shall at any
time (x) provide credit support for, subject any of its property or assets
(other than the Equity Interests of any Unrestricted Subsidiary) to the
satisfaction of, or guarantee, any Indebtedness of any Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness), (y) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary, or (z) be directly or indirectly liable for any
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity upon the
occurrence of a default with respect to any Indebtedness of any Unrestricted
Subsidiary, except for any non-recourse guarantee given solely
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to support the pledge by the Company or any Restricted Subsidiary of the
capital stock of any Unrestricted Subsidiary. All Subsidiaries of
Unrestricted Subsidiaries shall be automatically deemed to be Unrestricted
Subsidiaries.
(b) The Company may revoke any Designation of a Subsidiary as
an Unrestricted Subsidiary (a "REVOCATION") if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation;
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred for all purposes of this
Indenture; and
(iii) any transaction (or series of related transactions)
between such Subsidiary and any of its Affiliates that occurred while
such Subsidiary was an Unrestricted Subsidiary would be permitted by
Section 4.03 as if such transaction (or series of related transactions)
had occurred at the time of such Revocation.
Upon the effectiveness of any such Revocation, the Company
shall cause such Subsidiary to become a Guarantor pursuant to and in
accordance with Section 4.19.
All Designations and Revocations must be evidenced by Board
Resolutions of the Company, delivered to the Trustee certifying compliance
with the foregoing provisions.
SECTION 4.18. LIMITATION ON LIENS.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, Incur any Liens of any kind
against or upon any of their respective properties or assets now owned or
hereafter acquired, or any proceeds therefrom or any income or profits
therefrom, to secure any Indebtedness, unless contemporaneously therewith
effective provision is made, in the case of the Company, to secure the
Securities and all other amounts due under the Indenture, and in the case of
a Restricted Subsidiary which is a Guarantor, to secure such Restricted
Subsidiary's Guaranty and all other amounts due under the Indenture, equally
and ratably with such Indebtedness (or, in the event that such Indebtedness
is subordinated in right of payment to the Securities or such Restricted
Subsidiary's Guaranty, prior to such Indebtedness) with a Lien on the same
properties and assets securing such Indebtedness for so long as such
Indebtedness is secured by such Lien, except for (i) Liens securing any
Senior Indebtedness or any guarantee of Senior Indebtedness by any Restricted
Subsidiary that is a Guarantor and (ii) Permitted Liens.
SECTION 4.19. GUARANTY OF NOTES BY RESTRICTED SUBSIDIARIES.
The Company shall cause each Restricted Subsidiary (other than
a Guarantor) formed, created or acquired after the Issue Date to guarantee
all of the Company's Obligations under the Securities and this Indenture on
the terms set forth in Article Eleven; PROVIDED, HOWEVER, that the guarantee
of such Restricted Subsidiary shall be subordinated in right of payment to
all Guarantor Senior Indebtedness of such Restricted Subsidiary pursuant to
the subordination provisions of Article Twelve. The Company shall cause each
such Restricted Subsidiary to (i) execute and deliver to the Trustee a
supplemental indenture in form reasonably satisfactory to the Trustee
pursuant to which such Restricted Subsidiary shall become a party to this
Indenture as a Guarantor and thereby unconditionally guarantee all of the
Company's Obligations under the Securities and this Indenture on the terms
set forth in Article Eleven and Article Twelve hereof, (ii) execute and
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deliver to the Trustee a Security Guarantee in accordance with Section 11.06
and (iii) deliver to the Trustee an opinion of counsel that each of such
supplemental indenture and Security Guarantee has been duly authorized,
executed and delivered by such Restricted Subsidiary and constitutes a legal,
valid, binding and enforceable obligation of such Restricted Subsidiary
(which opinion may be subject to customary assumptions and qualifications).
Thereafter, such Restricted Subsidiary shall (unless released in accordance
with the terms of this Indenture) be a Guarantor for all purposes of this
Indenture.
SECTION 4.20. LIMITATION ON THE SALE OR ISSUANCE OF EQUITY
INTERESTS OF RESTRICTED SUBSIDIARIES.
The Company shall not sell any Equity Interest of a Restricted
Subsidiary, and shall not cause or permit any Restricted Subsidiary, directly
or indirectly, to issue or sell any Equity Interests, except: (a) to the
Company or a Wholly Owned Restricted Subsidiary; or (b) if, immediately after
giving effect to such issuance or sale, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary. Notwithstanding the foregoing,
the Company is permitted to sell all the Equity Interests of a Restricted
Subsidiary so long as the Company complies with Section 4.05.
SECTION 4.21. LIMITATION ON LINES OF BUSINESS.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary, directly or indirectly to, engage in any business
outside the building products business other than a Related Business.
SECTION 4.22. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of the
Securities, this Indenture or the Registration Rights Agreement unless such
consideration is offered to be paid or agreed to be paid to all Holders that
consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. MERGERS, SALE OF ASSETS, ETC.
(a) The Company shall not consolidate with or merge with or
into (whether or not the Company is the Surviving Person) any other entity
and the Company shall not and shall not cause or permit any Restricted
Subsidiary to, sell, convey, assign, transfer, lease or otherwise dispose of
all or substantially all of the Company's properties and assets (determined
on a consolidated basis for the Company and the Restricted Subsidiaries) to
any entity in a single transaction or series of related transactions, unless:
(i) either (x) the Company shall be the Surviving Person or (y) the
Surviving Person (if other than the Company) shall be a corporation organized
and validly existing under the laws of the United States of America or any
State thereof or the District of Columbia, and shall, in any such case,
expressly assume by a supplemental indenture, the due and punctual payment of
the principal of, premium, if any, and interest on all the Securities and the
per-
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formance and observance of every covenant of this Indenture and the
Registration Rights Agreement to be performed or observed on the part of the
Company; (ii) immediately thereafter, no Default or Event of Default shall
have occurred and be continuing; and (iii) immediately after giving effect to
any such transaction involving the Incurrence by the Company or any
Restricted Subsidiary, directly or indirectly, of additional Indebtedness
(and treating any Indebtedness not previously an obligation of the Company or
any Restricted Subsidiary in connection with or as a result of such
transaction as having been Incurred at the time of such transaction), the
Surviving Person could Incur, on a PRO FORMA basis after giving effect to
such transaction as if it had occurred at the beginning of the four quarter
period immediately preceding such transaction for which consolidated
financial statements of the Company are available, at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) under the
Consolidated Coverage Ratio of the first paragraph of Section 4.04.
Notwithstanding the foregoing clause (iii) of the immediately
preceding paragraph, any Restricted Subsidiary may consolidate with, merge
into or transfer all or part of its properties and assets to the Company.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all the properties and assets of one or
more Restricted Subsidiaries the Equity Interests of which constitutes all or
substantially all the properties and assets of the Company shall be deemed to
be the transfer of all or substantially all the properties and assets of the
Company.
(b) No Guarantor (other than a Guarantor whose Guaranty is to
be released in accordance with the terms of Section 11.03) shall 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 (i) the Surviving Person (if other than such
Guarantor) is a corporation organized and validly existing under the laws of
the United States, any State thereof or the District of Columbia; (ii) the
Surviving Person (if other than such Guarantor) expressly assumes by a
supplemental indenture all the obligations of such Guarantor under its
Guaranty and the performance and observance of every covenant of the
Indenture and the Registration Right Agreement to be performed or observed by
such Guarantor, (iii) at the time of and immediately after such Disposition,
no Default or Event of Default shall have occurred and be continuing; and
(iv) immediately after giving effect to any such transaction involving the
Incurrence by such Guarantor, directly or indirectly, of additional
Indebtedness (and treating any Indebtedness not previously an obligation of
such Guarantor in connection with or as a result of such transaction as
having been Incurred at the time of such transaction), the Company could
Incur, on a PRO FORMA basis after giving effect to such transaction as if it
had occurred at the beginning of the four quarter period immediately
preceding such transaction for which consolidated financial statements of the
Company are available, at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the Consolidated Coverage Ratio of the first
paragraph of Section 4.04; PROVIDED, HOWEVER, that clause (iv) of this
paragraph shall not be a condition to a merger or consolidation of a
Guarantor if such merger or consolidation only involves the Company and/or
one or more other Guarantors.
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED.
In the event of any transaction (other than a lease) described
in and complying with the conditions listed in Section 5.01 in which the
Company or a Guarantor, as the case may be, is not the Surviving Person and
the Surviving Person is to assume all the Obligations of the Company under
the Securities, this Indenture and the Registration Rights Agreement or of
such Guarantor under its Guaranty, the Indenture and the Registration Rights
Agreement, as the case may be, pursuant to a supplemental indenture, such
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or
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such Guarantor, as the case may be, and the Company shall be discharged from
its Obligations under this Indenture and the Securities or such Guarantor
shall be discharged from its Obligations under the Indenture and its
Guaranty, as the case may be.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following shall be an "Event of Default" for
purposes of this Indenture:
(a) failure to pay principal of any Security when due (whether
or not prohibited by the provisions of Article Eight);
(b) failure to pay any interest on any Security when due,
continued for 30 days or more (whether or not prohibited by the
provisions of Article Eight);
(c) default in the payment of principal of or interest on any
Security required to be purchased pursuant to any Offer to Purchase
required by this Indenture when due and payable or failure to pay on the
Purchase Date the Purchase Price for any Security validly tendered
pursuant to any Offer to Purchase (whether or not prohibited by the
provisions of Article Eight);
(d) failure to perform or comply with any of the provisions of
Section 5.01;
(e) failure to perform any other covenant, warranty or
agreement of the Company under this Indenture or in the Securities or of
the Guarantors under this Indenture or in the Guaranties;
(f) default or defaults under the terms of one or more
instruments evidencing or securing Indebtedness of the Company or any of
its Significant Restricted Subsidiaries having an outstanding principal
amount of $5.0 million or more individually or in the aggregate that has
resulted in the acceleration of the payment of such Indebtedness or
failure by the Company or any of its Significant Restricted Subsidiaries
to pay principal when due at the stated maturity of any such
Indebtedness; PROVIDED, HOWEVER, that it shall not be an Event of Default
if such Indebtedness shall have been repaid in full or such acceleration
shall have been rescinded within 20 days of the payment default in
respect thereof or such acceleration, as the case may be;
(g) the rendering of a final judgment or judgments (not subject
to appeal) against the Company or any of its Significant Restricted
Subsidiaries in an amount of $5.0 million or more (net of any amounts
covered by reputable and creditworthy insurance companies) which remains
undischarged or unstayed for a period of 60 days after the date on which
the right to appeal has expired;
(h) the Company or any Significant Restricted Subsidiary
pursuant to or within the meaning of any Bankruptcy Law: (i) admits in
writing its inability to pay its debts generally as they become due; (ii)
commences a voluntary case or proceeding; (iii) consents to the entry of
an order for relief against it in an involuntary case or proceeding; (iv)
consents or acquiesces in the institution of a bank-
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ruptcy or insolvency proceeding against it; (v) consents to the
appointment of a Custodian of it or for all or substantially all of its
property; or (vi) makes a general assignment for the benefit of its
creditors, or any of them takes any action to authorize or effect any of
the foregoing;
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (i) is for relief against the Company or
any Significant Restricted Subsidiary in an involuntary case or
proceeding; (ii) appoints a Custodian of the Company or any Significant
Restricted Subsidiary for all or substantially all of its property; or
(iii) orders the liquidation of the Company or any Significant Restricted
Subsidiary; and in each case the order or decree remains unstayed and in
effect for 60 days; PROVIDED, HOWEVER, that if the entry of such order or
decree is appealed and dismissed on appeal, then the Event of Default
hereunder by reason of the entry of such order or decree shall be deemed
to have been cured;
(j) other than as provided in or pursuant to any Guaranty or
the Indenture, any Guaranty ceases to be in full force and effect or is
declared null and void and unenforceable or found to be invalid or any
Guarantor denies its liability under its Guaranty (other than by reason
of a release of such Guarantor from its Guaranty in accordance with the
terms of the Indenture and such Guaranty.
The term "BANKRUPTCY LAW" means Title 11, U.S. Code or any
similar Federal, state or foreign law for the relief of debtors. The term
"CUSTODIAN" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
A Default under clause (e) of this Section 6.01 is not an Event
of Default until the Trustee notifies the Company, or the Holders of at least
25% in principal amount of the outstanding Securities notify the Company and
the Trustee, of the Default in writing and the Company does not cure the
Default within 30 days after receipt of the notice. The notice must specify
the Default, demand that it be remedied and state that the notice is a
"Notice of Default." Such notice shall be given by the Trustee if so
requested by the Holders of at least 25% in principal amount of the
Securities then outstanding. When a Default is cured, it ceases.
SECTION 6.02. ACCELERATION.
If an Event of Default with respect to the Securities (other
than an Event of Default specified in clause (h) or (i) of Section 6.01 with
respect to the Company) occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of the outstanding Securities
by notice in writing to the Company (and to the Trustee if given by the
Holders) may declare the unpaid principal of and accrued interest to the date
of acceleration on all outstanding Securities to be due and payable
immediately and, upon any such declaration, such principal amount and accrued
interest, notwithstanding anything contained in this Indenture or the
Securities to the contrary, shall become immediately due and payable;
PROVIDED, HOWEVER, that so long as the Senior Credit Facility shall be in
full force, if an Event of Default shall have occurred and be continuing
(other than an Event of Default specified in clause (h) or (i) of Section
6.01 with respect to the Company), the Securities shall not become due and
payable until the earlier to occur of (x) five Business Days following
delivery of a written notice by the Trustee of such acceleration of the
Securities to the agent under the Senior Credit Facility and (y) the
acceleration (IPSO FACTO or otherwise) of any Indebtedness under the Senior
Credit Facility.
If an Event of Default specified in clause (h) or (i) of Section
6.01 with respect to the Company occurs, all unpaid principal of and accrued
interest on all outstanding Securities shall IPSO FACTO become immediately
due and payable without any declaration or other act on the part of the
Trustee or any Holder.
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After a declaration of acceleration, but before a judgment or
decree of the money due in respect of the Securities has been obtained, the
Holders of not less than a majority in aggregate principal amount of the
Securities then outstanding by written notice to the Trustee may rescind an
acceleration and its consequences if all existing Events of Default (other
than the nonpayment of principal of and interest on the Securities which has
become due solely by virtue of such acceleration) have been cured or waived
and if the rescission would not conflict with any judgment or decree. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy maturing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULT.
Subject to Sections 2.09, 6.07 and 10.02, prior to the
declaration of acceleration of the Securities, the Holders of not less than a
majority in aggregate principal amount of the outstanding Securities by
written notice to the Trustee may waive an existing Default or Event of
Default and its consequences, except a Default in the payment of principal of
or interest on any Security as specified in clauses (a), (b) and (c) of
Section 6.01 or a Default in respect of any term or provision of this
Indenture that may not be amended or modified without the consent of each
Holder affected as provided in Section 10.02. The Company shall deliver to
the Trustee an Officers' Certificate stating that the requisite percentage of
Holders have consented to such waiver and attaching copies of such consents.
In case of any such waiver, the Company, the Trustee and the Holders shall be
restored to their former positions and rights hereunder and under the
Securities, respectively. This paragraph of this Section 6.04 shall be in
lieu of Section 316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the
TIA is hereby expressly excluded from this Indenture and the Securities, as
permitted by the TIA.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred
for every purpose of this Indenture and the Securities, but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Subject to Section 2.09, the Holders of a majority in principal
amount of the outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of another
Securityholder, or that may involve the Trustee in personal liability;
PROVIDED, HOWEVER, that the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction. In the event
the Trustee takes any action or follows any direction pursuant to this
Indenture, the Trustee
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shall be entitled to indemnification satisfactory to it in its sole
discretion against any loss or expense caused by taking such action or
following such direction. This Section 6.05 shall be in lieu of Section
316(a)(1)(A) of the TIA, and such Section 316(a)(1)(A) of the TIA is hereby
expressly excluded from this Indenture and the Securities, as permitted by
the TIA.
SECTION 6.06. LIMITATION ON SUITS.
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(i) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount
of the outstanding Securities make a written request to the Trustee to
pursue a remedy;
(iii) such Holder or Holders offer and, if requested, provide
to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(v) during such 60-day period the Holders of a majority in
principal amount of the outstanding Securities do not give the Trustee
a direction which, in the opinion of the Trustee, is inconsistent with
the request.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
such other Securityholder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right
of any Holder to receive payment of principal of or interest on a Security,
on or after the respective due dates expressed in the Security, or to bring
suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in payment of principal or interest
specified in Section 6.01(a), (b) or (c) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or any other obligor on the Securities for the
whole amount of principal and accrued interest remaining unpaid, together
with interest overdue on principal and to the extent that payment of such
interest is lawful, interest on overdue installments of interest, in each
case at the rate PER ANNUM borne by the Securities and such further amount as
shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
S-ecurityholders allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Securities), its
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creditors or its property and shall be entitled and empowered to collect and
receive any monies or other property payable or deliverable on any such
claims and to distribute the same, and any Custodian in any such judicial
proceedings is hereby authorized by each Securityholder to make such payments
to the Trustee and, in the event that the Trustee shall consent to the making
of such payments directly to the Securityholders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel, and any other amounts due the
Trustee under Section 7.07. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money or property pursuant to this
Article Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Securities
for principal and interest, respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Securityholders pursuant to
this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section 6.11 shall not apply to a
suit by the Trustee, a suit by a Holder or group of Holders of more than 10%
in aggregate principal amount of the outstanding Securities, or to any suit
instituted by any Holder for the enforcement or the payment of the principal
or interest on any Securities on or after the respective due dates expressed
in the Security.
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If a Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of a Default:
(1) The Trustee shall not be liable except for the
performance of such duties as are specifically set forth herein; and
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions conforming to the requirements of this Indenture;
however, in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall examine such certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01;
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or take any action at the request or direction of
Holders if it shall have reasonable grounds for believing that repayment of
such funds is not assured to it or it does not receive from such Holders an
indemnity satisfactory to it in its sole discretion against such risk,
liability, loss, fee or expense which might be incurred by it in compliance
with such request or direction.
(e) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section
7.01.
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(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate and/or an Opinion of Counsel, which shall
conform to the provisions of Section 13.05. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through attorneys and agents of its
selection and shall not be responsible for the misconduct or negligence of
any agent or attorney (other than an agent who is an employee of the Trustee)
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel and the advice or
opinion of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) Any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution.
(g) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Securityholders pursuant to this Indenture, unless
such S e c urityholders shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
(h) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney.
(i) The Trustee shall not be deemed to have notice of any Event
of Default unless a Trust Officer of the Trustee has actual knowledge thereof
or unless the Trustee shall have received written notice thereof at the
Corporate Trust Office of the Trustee, and such notice references the
Securities and this Indenture.
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SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not Trustee,
subject to Section 7.10 hereof. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in this Indenture or any document issued in connection with the sale
of Securities or any statement in the Securities other than the Trustee's
certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or an Event of Default occurs and is continuing and
the Trustee knows of such Defaults or Events of Default, the Trustee shall
mail to each Securityholder notice of the Default or Event of Default within
30 days after the occurrence thereof. Except in the case of a Default or an
Event of Default in payment of principal of or interest on any Security or a
Default or Event of Default in complying with Section 5.01, the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interest of
Securityholders. This Section 7.05 shall be in lieu of the proviso to Section
315(b) of the TIA and such proviso to Section 315(b) of the TIA is hereby
expressly excluded from this Indenture and the Securities, as permitted by
the TIA.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
If required by TIA Section 313(a), within 60 days after each
May 15 beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to each Securityholder a report dated as of such May 15
that complies with TIA Section 313(a). The Trustee also shall comply with
TIA Section 313(b), (c) and (d).
A copy of each such report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange, if any, on
which the Securities are listed.
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from time to time agree in
writing for its services. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances (including fees, disbursements and expenses of its agents and
counsel) incurred or made by it in addition to the compensation for its
services except any such disbursements, expenses and advances as may be
attributable to the Trustee's negligence or bad faith. Such expenses shall
include the reasonable compensation, disbursements and expenses of the
Trus-
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tee's agents, accountants, experts and counsel and any taxes or other
expenses incurred by a trust created pursuant to Section 9.01 hereof.
The Company shall indemnify the Trustee for, and hold it
harmless against any and all loss, damage, claims, liability or expense,
including taxes (other than franchise taxes imposed on the Trustee and taxes
based upon, measured by or determined by the income of the Trustee), arising
out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder, except to the extent that such
loss, damage, claim, liability or expense is due to its own negligence or bad
faith. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. However, the failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense (and may employ its own counsel) at the
Company's expense; PROVIDED, HOWEVER, THAT the Company's reimbursement
obligation with respect to counsel employed by the Trustee will be limited to
the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its
written consent, which consent shall not be unreasonably withheld. The
Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee as a result of the violation of this
Indenture by the Trustee.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a Lien prior to the Securities against all money
or property held or collected by the Trustee, in its capacity as Trustee,
except money or property held in trust to pay principal of or interest on
particular Securities or the Purchase Price or redemption price of any
Securities to be purchased pursuant to an Offer to Purchase or redeemed.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(h) or (i) occurs, the expenses
(including the reasonable fees and expenses of its agents and counsel) and
the compensation for the services shall be preferred over the status of the
Holders in a proceeding under any Bankruptcy Law and are intended to
constitute expenses of administration under any Bankruptcy Law. The Company's
obligations under this Section 7.07 and any claim arising hereunder shall
survive the resignation or removal of any Trustee, the discharge of the
Company's obligations pursuant to Article Nine and any rejection or
termination under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
The Trustee may resign at any time by so notifying the Company
in writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Trustee and the Company
in writing and may appoint a successor Trustee with the Company's consent.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent under
any Bankruptcy Law;
(c) a custodian or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly
appoint a successor Trustee. Within one year after the successor Trustee
takes office, the Holders of a majority in principal amount of the Securities
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. As promptly as
practicable after that, the retiring Trustee shall transfer, after payment of
all sums then owing to the Trustee pursuant to Section 7.07, all property
held by it as Trustee to the successor Trustee, subject to the Lien provided
in Section 7.07, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company
or the Holders of at least 10% in principal amount of the outstanding
Securities may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to,
another corporation or banking corporation, the resulting, surviving or
transferee corporation or banking corporation without any further act shall
be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee which shall be
eligible to act as Trustee under TIA Sections 310(a)(1) and 310(a)(2). The
Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition. If the
Trustee has or shall acquire any "conflicting interest" within the meaning of
TIA Section 310(b), the Trustee and the Company shall comply with the
provisions of TIA Section 310(b); PROVIDED, HOWEVER, THAT there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 7.10, the Trustee shall resign immediately in the
manner and with the effect hereinbefore specified in this Article Seven.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated therein.
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ARTICLE EIGHT
SUBORDINATION OF SECURITIES
SECTION 8.01. SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and the Trustee and each
Holder of the Securities by his acceptance thereof likewise covenant and
agree, that all Securities shall be issued subject to the provisions of this
Article Eight; and each person holding any Security, whether upon original
issue or upon transfer, assignment or exchange thereof, accepts and agrees
that all payments of the principal of and interest on the Securities by the
Company shall, to the extent and in the manner set forth in this Article
Eight, be subordinated and junior in right of payment to the prior payment in
full in cash of all amounts payable under Senior Indebtedness.
SECTION 8.02. NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities and excluding any payment from
funds held in trust for the benefit of Holders pursuant to Article Nine (a
"DEFEASANCE TRUST PAYMENT")) by or on behalf of the Company of principal of
or interest on the Securities, whether pursuant to the terms of the
Securities, upon acceleration, pursuant to an Offer to Purchase or otherwise,
shall be made if, at the time of such payment, there exists a default in the
payment of all or any portion of the obligations on any Designated Senior
Indebtedness, whether at maturity, on account of mandatory redemption or
prepayment, acceleration or otherwise, and such default shall not have been
cured or waived or the benefits of this sentence waived by or on behalf of
the holders of such Designated Senior Indebtedness. In addition, during the
continuance of any non-payment event of default with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
immediately accelerated, and upon receipt by the Trustee of written notice (a
"PAYMENT BLOCKAGE NOTICE" ) from the holder or holders of such Designated
Senior Indebtedness or the trustee or agent acting on behalf of such
Designated Senior Indebtedness, then, unless and until such non-payment event
of default has been cured or waived or has ceased to exist or such Designated
Senior Indebtedness has been discharged or repaid in full in cash or the
benefits of these provisions have been waived by the holders of such
Designated Senior Indebtedness, no direct or indirect payment (excluding any
payment or distribution of Permitted Junior Securities and excluding any
Defeasance Trust Payment) shall be made by or on behalf of the Company of
principal of or interest on the Securities, to such Holders, during a period
(a "PAYMENT BLOCKAGE PERIOD") commencing on the date of receipt of such
notice by the Trustee and ending 179 days thereafter.
Notwithstanding anything herein or in the Securities to the
contrary, (x) in no event shall a Payment Blockage Period extend beyond 179
days from the date the Payment Blockage Notice in respect thereof was given,
(y) there shall be a period of at least 181 consecutive days in each 360-day
period when no Payment Blockage Period is in effect and (z) not more than one
Payment Blockage Period may be commenced with respect to the Securities
during any period of 360 consecutive days. No non-payment event of default
that existed or was continuing on the date of commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period (to the extent the holder of Designated Senior
Indebtedness, or trustee or agent, giving notice commencing such Payment
Blockage Period had knowledge of such existing or continuing event of
default) may be, or be made, the basis for the commencement of any other
Payment Blockage Period by the holder or holders of such Designated Senior
Indebtedness or the trustee or agent acting on behalf of such Designated
Senior Indebtedness, whether or not within a period
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of 360 consecutive days, unless such non-payment event of default has been
cured or waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder when such payment is
prohibited by Section 8.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Designated
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Designated Senior
Indebtedness may have been issued, as their respective interests may appear,
but only to the extent that, upon notice from the Trustee to the holders of
Designated Senior Indebtedness that such prohibited payment has been made,
the holders of the Designated Senior Indebtedness (or their representative or
representatives or a trustee or trustees) notify the Trustee in writing of
the amounts then due and owing on the Designated Senior Indebtedness, if any,
and only the amounts specified in such notice to the Trustee shall be paid to
the holders of Designated Senior Indebtedness.
SECTION 8.03. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets or securities of
the Company of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities and
excluding any Defeasance Trust Payment), upon any dissolution or winding-up
or total liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all Senior Indebtedness shall first be paid in full in cash before the
Holders of the Securities or the Trustee on behalf of such Holders shall be
entitled to receive any payment by the Company of the principal of or
interest on the Securities, or any payment by the Company to acquire any of
the Securities for cash, property or securities, or any distribution with
respect to the Securities of any cash, property or securities (excluding any
payment or distribution of Permitted Junior Securities and excluding any
Defeasance Trust Payment). Before any payment may be made by, or on behalf
of, the Company of the principal of or interest on the Securities upon any
such dissolution or winding-up or total liquidation or reorganization, any
payment or distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities and excluding any Defeasance
Trust Payment), to which the Holders of the Securities or the Trustee on
their behalf would be entitled, but for the subordination provisions of this
Indenture, shall be made by the Company or by any receiver, trustee in
bankruptcy, liquidation trustee, agent or other Person making such payment or
distribution, directly to the holders of the Senior Indebtedness (PRO RATA to
such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders) or their representatives or to the trustee or trustees
or agent or agents under any agreement or indenture pursuant to which any of
such Senior Indebtedness may have been issued, as their respective interests
may appear, to the extent necessary to pay all such Senior Indebtedness in
full in cash after giving effect to any prior or concurrent payment,
distribution or provision therefor to or for the holders of such Senior
Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of
assets or securities of the Company of any kind or character, whether in
cash, property or securities (excluding any payment or distribution of
Permitted Junior Securities and excluding any Defeasance Trust Payment),
shall be received by the Trustee or any Holder of Securities at a time when
such payment or distribution is prohibited by Section 8.03(a) and before all
obligations in respect of Senior Indebtedness are paid in full in cash, such
payment or distribution shall be received and held in trust for the benefit
of, and shall be paid over or delivered to, the holders of Senior
Indebtedness (PRO RATA to such holders on the basis of the respective amounts
of Senior Indebtedness held by such holders) or their respective
representatives, or to the trustee or trustees or agent or agents under any
indenture pursuant to which any of
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such Senior Indebtedness may have been issued, as their respective interests
may appear, for application to the payment of Senior Indebtedness remaining
unpaid until all such Senior Indebtedness has been paid in full in cash after
giving effect to any prior or concurrent payment, distribution or provision
therefor to or for the holders of such Senior Indebtedness.
The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution
of the Company following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided in Article Five shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of
this Section 8.03 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions
stated in Article Five.
SECTION 8.04. SUBROGATION.
Upon the payment in full in cash of all Senior Indebtedness, or
provision for payment, the Holders of the Securities shall be subrogated to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company made on such
Senior Indebtedness until the principal of and interest on the Securities
shall be paid in full in cash; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holders of the Securities or the
Trustee on their behalf would be entitled except for the provisions of this
Article Eight, and no payment over pursuant to the provisions of this Article
Eight to the holders of Senior Indebtedness by Holders of the Securities or
the Trustee on their behalf shall, as between the Company, its creditors
other than holders of Senior Indebtedness, and the Holders of the Securities,
be deemed to be a payment by the Company to or on account of the Senior
Indebtedness. It is understood that the provisions of this Article Eight are
and are intended solely for the purpose of defining the relative rights of
the Holders of the Securities, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article Eight shall have been applied, pursuant to the provisions of this
Article Eight, to the payment of all amounts payable under Senior
Indebtedness, then and in such case, the Holders of the Securities shall be
entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount required to make payment in full in cash of such Senior
Indebtedness.
SECTION 8.05. OBLIGATIONS OF COMPANY UNCONDITIONAL.
Nothing contained in this Article Eight or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders of the Securities
the principal of and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Securities and
creditors of the Company other than the holders of the Senior Indebtedness,
nor shall anything herein or therein prevent the Holder of any Security or
the Trustee on their behalf from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights,
if any, under this Article Eight of the holders of the Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
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Without limiting the generality of the foregoing, nothing
contained in this Article Eight shall restrict the right of the Trustee or
the Holders of Securities to take any action to declare the Securities to be
due and payable prior to their stated maturity pursuant to Section 6.01 or to
pursue any rights or remedies hereunder; PROVIDED, HOWEVER, that all Senior
Indebtedness then due and payable shall first be paid in full in cash before
the Holders of the Securities or the Trustee are entitled to receive any
direct or indirect payment from the Company of principal of or interest on
the Securities.
SECTION 8.06. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment
to or by the Trustee in respect of the Securities pursuant to the provisions
of this Article Eight. The Trustee shall not be charged with knowledge of the
existence of any event of default with respect to any Senior Indebtedness or
of any other facts which would prohibit the making of any payment to or by
the Trustee unless and until the Trustee shall have received notice in
writing at its Corporate Trust Office to that effect signed by an Officer of
the Company, or by a holder of Senior Indebtedness or trustee or agent
therefor; and prior to the receipt of any such written notice, the Trustee
shall, subject to Article Seven, be entitled to assume that no such facts
exist; PROVIDED, HOWEVER, that if the Trustee shall not have received the
notice provided for in this Section 8.06 at least two Business Days prior to
the date upon which by the terms of this Indenture any moneys shall become
payable for any purpose (including, without limitation, the payment of the
principal of or interest on any Security), then, regardless of anything
herein to the contrary, the Trustee shall have full power and authority to
receive any moneys from the Company and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such prior date. Nothing
contained in this Section 8.06 shall limit the right of the holders of Senior
Indebtedness to recover payments as contemplated by Section 8.03. The Trustee
shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself or itself to be a holder of any Senior
Indebtedness (or a trustee on behalf of, or other representative of, such
holder) to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee or representative on behalf of any such
holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Eight, the Trustee may request such Person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent
to the rights of such Person under this Article Eight, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
SECTION 8.07. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets or securities
referred to in this Article Eight, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate
of the receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, delivered to the Trustee or to
the Holders of the Securities for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article Eight.
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SECTION 8.08. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.
The Trustee and any Paying Agent shall be entitled to all the
rights set forth in this Article Eight with respect to any Senior
Indebtedness which may at any time be held by it in its individual or any
other capacity to the same extent as any other holder of Senior Indebtedness,
and nothing in this Indenture shall deprive the Trustee or any Paying Agent
of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Eight, and no
implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness (except as provided in Section 8.03(b)). The Trustee
shall not be liable to any such holders if the Trustee shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the Company
or to any other person cash, property or securities to which any holders of
Senior Indebtedness shall be entitled by virtue of this Article Eight or
otherwise.
SECTION 8.09. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE
COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.
No right of any present or future holders of any Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with. The provisions of this Article Eight are
intended to be for the benefit of, and shall be enforceable directly by, the
holders of Senior Indebtedness.
SECTION 8.10. SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
SECURITIES.
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article Eight, and appoints the Trustee his attorney-in-fact
for such purposes, including, in the event of any dissolution, winding-up,
total liquidation or reorganization of the Company (whether in bankruptcy,
insolvency, receivership, reorganization or similar proceedings or upon an
assignment for the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of the Company, the filing of a claim
for the unpaid balance of its or his Securities in the form required in those
proceedings.
SECTION 8.11. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article Eight
shall not be construed as preventing the occurrence of an Event of Default
specified in clauses (a), (b) or (c) of Section 6.01.
SECTION 8.12. TRUSTEE'S COMPENSATION NOT PREJUDICED.
Nothing in this Article Eight shall apply to amounts due to the
Trustee pursuant to other sections in this Indenture.
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SECTION 8.13. NO WAIVER OF SUBORDINATION PROVISIONS.
Without in any way limiting the generality of Section 8.09, the
holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Eight or the obligations hereunder of the Holders of the Securities to the
holders of Senior Indebtedness, do any one or more of the following: (a)
change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Senior Indebtedness or any instrument evidencing the
same or any agreement under which Senior Indebtedness is outstanding or
secured; (b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (c) release any
Person liable in any manner for the collection of Senior Indebtedness; and
(d) exercise or refrain from exercising any rights against the Company and
any other Person.
SECTION 8.14. SUBORDINATION PROVISIONS NOT APPLICABLE TO MONEY HELD IN TRUST
FOR SECURITYHOLDERS; PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.
All money and United States Government Obligations deposited in
trust with the Trustee pursuant to and in accordance with Article Nine shall
be for the sole benefit of the Holders and shall not be subject to this
Article Eight.
Nothing contained in this Article Eight or elsewhere in this
Indenture shall prevent (i) the Company, except under the conditions
described in Section 8.02, from making payments of principal of and interest
on the Securities or from depositing with the Trustee any moneys for such
payments or from effecting a termination of the Company's and the Guarantors'
obligations under the Securities and this Indenture as provided in Article
Nine, or (ii) the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal of and interest on the
Securities, to the holders entitled thereto unless at least two Business Days
prior to the date upon which such payment becomes due and payable, the
Trustee shall have received the written notice provided for in Section
8.02(b) or in Section 8.06. The Company shall give prompt written notice to
the Trustee of any dissolution, winding-up, liquidation or reorganization of
the Company.
SECTION 8.15. ACCELERATION OF SECURITIES.
If payment of the Securities is accelerated because of an Event
of Default, the Company shall promptly notify holders of the Senior
Indebtedness of the acceleration.
ARTICLE NINE
DISCHARGE OF INDENTURE
SECTION 9.01. TERMINATION OF COMPANY'S OBLIGATIONS.
Subject to the provisions of Article Eight, the Company may
terminate its and the Guarantors' substantive obligations in respect of the
Securities by delivering all outstanding Securities to the Trustee for
cancellation and paying all sums payable by it on account of principal of and
interest on all Securities or otherwise. In addition to the foregoing,
subject to the provisions of Article Eight with respect to the creation of
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the defeasance trust provided for in the following clause (i), the Company
may, provided that no Default or Event of Default has occurred and is
continuing or would arise therefrom (or, with respect to a Default or Event
of Default specified in Section 6.01(h) or (i), occurs at any time on or
prior to the 91st calendar day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until after such
91st day)) and provided that no default under any Senior Indebtedness would
result therefrom, terminate its and the Guarantors' substantive obligations
in respect of Article Four (other than Sections 4.01, 4.02, 4.07, 4.09, 4.11
and 4.12) and Article Five hereof and any Event of Default specified in
Section 6.01 (d) or (e) by (i) depositing with the Trustee, under the terms
of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay all remaining
Indebtedness on the Securities, (ii) delivering to the Trustee either an
Opinion of Counsel or a ruling directed to the Trustee from the Internal
Revenue Service to the effect that the Holders will not recognize income,
gain or loss for federal income tax purposes as a result of such deposit and
termination of obligations, (iii) delivering to the Trustee an Opinion of
Counsel to the effect that the Company's exercise of its option under this
Section 9.01 will not result in any of the Company, the Trustee or the trust
created by the Company's deposit of funds pursuant to this provision becoming
or being deemed to be an "investment company" under the Investment Company
Act of 1940, as amended (the "INVESTMENT COMPANY ACT"), and (iv) delivering
to the Trustee an Officers' Certificate and an Opinion of Counsel each
stating compliance with all conditions precedent provided for herein. In
addition, subject to the provisions of Article Eight with respect to the
creation of the defeasance trust provided for in the following clause (i),
the Company may, provided that no Default or Event of Default has occurred
and is continuing or would arise therefrom (or, with respect to a Default or
Event of Default specified in Section 6.01(h) or (i), occurs at any time on
or prior to the 91st calendar day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until after such
91st day)) and provided that no default under any Senior Indebtedness would
arise therefrom, terminate all of its and the Guarantors' substantive
obligations in respect of the Securities (including its obligations to pay
the principal of and interest on the Securities and the Guarantors' Guaranty
thereof) by (i) depositing with the Trustee, under the terms of an
irrevocable trust agreement, money or United States Government Obligations
sufficient (without reinvestment) to pay all remaining Indebtedness on the
Securities, (ii) delivering to the Trustee either a ruling directed to the
Trustee from the Internal Revenue Service to the effect that the Holders of
the Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and termination of obligations or an
Opinion of Counsel addressed to the Trustee based upon such a ruling or
based on a change in the applicable Federal tax law since the date of this
Indenture to such effect, (iii) delivering to the Trustee an Opinion of
Counsel to the effect that the Company's exercise of its option under this
Section 9.01 will not result in any of the Company, the Trustee or the trust
created by the Company's deposit of funds pursuant to this provision becoming
or being deemed to be an "investment company" under the Investment Company
Act and (iv) delivering to the Trustee an Officers' Certificate and an
Opinion of Counsel each stating compliance with all conditions precedent
provided for herein.
Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.12, 2.13
and 4.01 (but not with respect to termination of substantive obligations
pursuant to the third sentence of the foregoing paragraph), 4.02, 7.07, 7.08,
9.03 and 9.04 shall survive until the Securities are no longer outstanding.
Thereafter the Company's obligations in Sections 7.07, 9.03 and 9.04 shall
survive.
After such delivery or irrevocable deposit and delivery of an
Officers' Certificate and Opinion of Counsel, the Trustee upon request shall
acknowledge in writing the discharge of the Company's and the Guarantors'
obligations under the Securities and this Indenture except for those
surviving obligations specified above.
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The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the United States
Government Obligations deposited pursuant to this Section 9.01 or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of
outstanding Securities.
SECTION 9.02. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or United States
Government Obligations deposited with it pursuant to Section 9.01, and shall
apply the deposited money and the money from United States Government
Obligations in accordance with this Indenture solely to the payment of
principal of and interest on the Securities.
SECTION 9.03. REPAYMENT TO COMPANY.
Subject to Sections 7.07 and 9.01, the Trustee shall promptly
pay to the Company upon written request any excess money held by it at any
time. The Trustee shall pay to the Company upon written request any money
held by it for the payment of principal or interest that remains unclaimed
for two years; PROVIDED, HOWEVER, that the Trustee before being required to
make any payment may at the expense of the Company cause to be published once
in a newspaper of general circulation in The City of New York or mail to each
Holder entitled to such money notice that such money remains unclaimed and
that, after a date specified therein which shall be at least 30 days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining shall be repaid to the Company. After payment to the Company,
Securityholders entitled to money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates
another person and all liability of the Trustee or Paying Agent with respect
to such money shall thereupon cease.
SECTION 9.04. REINSTATEMENT.
If the Trustee is unable to apply any money or United States
Government Obligations in accordance with Section 9.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
the Company's and the Guarantors' obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 9.01 until such time as the Trustee is permitted to apply
all such money or United States Government Obligations in accordance with
Section 9.01; PROVIDED, HOWEVER, that if the Company has made any payment of
interest on or principal of any Securities because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money or United States
Government Obligations held by the Trustee.
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ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. WITHOUT CONSENT OF HOLDERS.
The Company and the Guarantors, when authorized by a resolution
of their respective Boards of Directors, and the Trustee may amend or
supplement this Indenture or the Securities without notice to or consent of
any Securityholder:
(a) to cure any ambiguity, defect or inconsistency; PROVIDED,
HOWEVER, that such amendment or supplement does not adversely affect the
rights of any Holder;
(b) to effect the assumption by a successor Person of all
obligations of the Company under the Securities and his Indenture in
connection with any transaction complying with Article Five of this
Indenture;
(c) to provide for uncertificated Securities in addition to or
in place of certificated Securities;
(d) to comply with any requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA;
(e) to make any change that would provide any additional
benefit or rights to the Holders;
(f) to make any other change that does not adversely affect the
rights of any Holder under this Indenture;
(g) to evidence the succession of another Person to any
Guarantor and the assumption by any such successor of the covenants of
such Guarantor herein and in the Guaranty in connection with any
transaction complying with Article Five of this Indenture;
(h) to add to the covenants of the Company or the Guarantors
for the benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or any Guarantor;
(i) to secure the Securities pursuant to the requirements of
Section 4.18 or otherwise; or
(j) to reflect the release of a Guarantor from its obligations
with respect to its Guaranty in accordance with the provisions of Section
11.03 and to add a Guarantor pursuant to the requirements of Section 4.19;
PROVIDED, HOWEVER, THAT the Company has delivered to the Trustee an Opinion of
Counsel stating that such amendment or supplement complies with the provisions
of this Section 10.01.
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SECTION 10.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.07, the Company and the Guarantors, when
authorized by a resolution of their respective Boards of Directors, and the
Trustee may amend or supplement this Indenture or the Securities with the
written consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to Section 6.07, the Holders of a majority in
principal amount of the outstanding Securities may waive compliance by the
Company or any Guarantor with any provision of this Indenture or the Securities.
However, without the consent of each Securityholder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.04, may not:
(a) change the Stated Maturity of the principal of or any
installment of interest on any Security or alter the optional redemption
or repurchase provisions of any Security or this Indenture in a manner
adverse to the Holders of the Securities;
(b) reduce the principal amount of any Security;
(c) reduce the rate of or extend the time for payment of
interest on any Security;
(d) change the place or currency of payment of the principal of
or interest on any Security;
(e) modify any provisions of Section 6.04 (other than to add
sections of this Indenture or the Securities subject thereto) or 6.07 or
this Section 10.02 (other than to add sections of this Indenture or the
Securities which may not be amended, supplemented or waived without the
consent of each Securityholder affected);
(f) reduce the percentage of the principal amount of
outstanding Securities necessary for amendment to or waiver of compliance
with any provision of this Indenture or the Securities or for waiver of
any Default;
(g) waive a Default in the payment of the principal of or
interest on or redemption or purchase payment with respect to any
Security (except a rescission of acceleration of the Securities by the
Holders as provided in Section 6.02 and a waiver of the payment default
that resulted from such acceleration);
(h) modify the ranking or priority of the Securities or the
Guaranty in respect of any Guarantor, or modify the definition of Senior
Indebtedness or Guarantor Senior Indebtedness, or amend or modify any of
the provisions of Article Eight or Article Twelve in any manner adverse
to the Holders;
(i) release any Guarantor from any of its obligations under its
Guaranty or this Indenture otherwise than in accordance with this
Indenture; or
(j) modify the provisions relating to any Offer to Purchase
required pursuant to Section 4.05 or 4.14 in a manner materially adverse
to the Holders.
An amendment under this Section 10.02 may not make any change under
Article Eight or Article Twelve hereof that adversely affects in any material
respect the rights of any holder of Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be, then outstanding unless the holders of such
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Senior Indebtedness or Guarantor Senior Indebtedness, as the case may be, (or
any representative thereof authorized to give a consent) shall have consented
to such change.
It shall not be necessary for the consent of the Holders under
this Section 10.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
10.02 becomes effective, the Company shall mail to the Holders affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amendment,
supplement or waiver.
SECTION 10.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 10.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment or waiver becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder
of that Security or portion of that Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. Subject to the following paragraph, any such Holder or
subsequent Holder may revoke the consent as to such Holder's Security or
portion of such Security by notice to the Trustee or the Company received
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities
have consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders of Securities entitled to
consent to any amendment, supplement or waiver. If a record date is fixed,
then, notwithstanding the last sentence of the immediately preceding
paragraph, those persons who were Holders of Securities at such record date
(or their duly designated proxies), and only those persons, shall be entitled
to consent to such amendment, supplement or waiver or to revoke any consent
previously given, whether or not such persons continue to be Holders of such
Securities after such record date. No such consent shall be valid or
effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (a) through (j) of Section 10.02. In that case the amendment,
supplement or waiver shall bind each Holder of a Security who has consented
to it and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security.
SECTION 10.05. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security
about the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new
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Security that reflects the changed terms. Failure to make the appropriate
notation or issue a new Security shall not affect the validity and effect of
such amendment, supplement or waiver.
SECTION 10.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution
of any amendment, supplement or waiver authorized pursuant to this Article
Ten is authorized or permitted by this Indenture and that such amendment,
supplement or waiver constitutes the legal, valid and binding obligation of
the Company and the Guarantors, enforceable in accordance with its terms
(subject to customary exceptions). The Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver which affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise. In signing any amendment, supplement or waiver, the Trustee shall
be entitled to receive an indemnity reasonably satisfactory to it.
ARTICLE ELEVEN
GUARANTY
SECTION 11.01. UNCONDITIONAL GUARANTY.
Each Guarantor hereby unconditionally, jointly and severally,
guarantees (each, a "GUARANTY") to each Holder of a Security authenticated by
the Trustee and to the Trustee and its successors and assigns that: the
principal of and interest on the Securities will be promptly paid in full
when due, subject to any applicable grace period, whether at maturity, by
acceleration or otherwise, and interest on the overdue principal and interest
on any overdue interest on the Securities and all other obligations of the
Company to the Holders or the Trustee hereunder or under the Securities will
be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; subject, however, to the limitations set forth in Section
11.04. Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Securities or this Indenture, the absence of any action to enforce the
same, any waiver or consent by any Holder of the Securities with respect to
any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against
the Company, protest, notice and all demands whatsoever and covenants that
the Guaranty will not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture, and this Guaranty.
If any Holder or the Trustee is required by any court or otherwise to return
to the Company, any Guarantor, or any custodian, trustee, liquidator or other
similar official acting in relation to the Company or any Guarantor, any
amount paid by the Company or any Guarantor to the Trustee or such Holder,
this Guaranty, to the extent theretofore discharged, shall be reinstated in
full force and effect. Each Guarantor further agrees that, as between each
Guarantor, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six for the purpose of this Guaranty,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article Six,
such obligations (whether or not due and payable) shall forth become due and
payable by each Guarantor for the purpose of this Guaranty.
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SECTION 11.02. SEVERABILITY.
In case any provision of this Guaranty shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 11.03. RELEASE OF A GUARANTOR.
If the Securities are defeased in accordance with the terms of
this Indenture, or if Section 5.01(b) is complied with, or if, subject to the
requirements of Section 5.01(a), all or substantially all of the assets of
any Guarantor or all of the Equity Interests of any Guarantor are sold
(including by issuance or otherwise) by the Company in a transaction
constituting an Asset Sale and (x) the Net Cash Proceeds from such Asset Sale
are used in accordance with Section 4.05 or (y) the Company delivers to the
Trustee an Officers' Certificate to the effect that the Net Cash Proceeds
from such Asset Sale shall be used in accordance with Section 4.05 and within
the time limits specified by Section 4.05, then each Guarantor (in the case
of defeasance) or such Guarantor (in the case of compliance with Section
5.01(b) or in the event of a sale or other disposition of all of the Equity
Interests of such Guarantor) or the corporation acquiring such assets (in the
event of a sale or other disposition of all or substantially all of the
assets of such Guarantor) shall be released and discharged from all
obligations under this Article Eleven without any further action required on
the part of the Trustee or any Holder. The Trustee shall, at the sole cost
and expense of the Company and upon receipt at the reasonable request of the
Trustee of an Opinion of Counsel that the provisions of this Section 11.03
have been complied with, deliver an appropriate instrument evidencing such
release upon receipt of a request by the Company accompanied by an Officers'
Certificate certifying as to the compliance with this Section 11.03. Any
Guarantor not so released remains liable for the full amount of principal of
and interest on the Securities and the other obligations of the Company
hereunder as provided in this Article Eleven.
SECTION 11.04. LIMITATION OF GUARANTOR'S LIABILITY.
Each Guarantor, and by its acceptance hereof each Holder and the
Trustee, hereby confirms that it is the intention of all such parties that
the guarantee by such Guarantor pursuant to its Guaranty not constitute a
fraudulent transfer or conveyance for purposes of title 11 of the United
States Code, as amended, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar U.S. Federal or state or other
applicable law. To effectuate the foregoing intention, the Holders and each
Guarantor hereby irrevocably agree that the obligations of each Guarantor
under its Guaranty shall be limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of such Guarantor
and after giving effect to any collections from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guaranty or pursuant to Section 11.05, result in the
obligations of such Guarantor under its Guaranty not constituting such a
fraudulent transfer or conveyance.
SECTION 11.05. CONTRIBUTION.
In order to provide for just and equitable contribution among
the Guarantors, the Guarantors agree, inter se, that in the event any payment
or distribution is made by any Guarantor (a "FUNDING GUARANTOR") under the
Guaranty, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a PRO RATA amount, based on the net assets of each
Guarantor (including the Funding Guarantor), determined in accordance with
GAAP, subject to Section 11.04, for all payments, damages and expenses
incurred by such Funding Guarantor in discharging the Company's obligations
with respect to the Securities or any other Guarantor's obligations with
respect to the Guaranty.
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SECTION 11.06. EXECUTION OF SECURITY GUARANTY.
To further evidence their Guaranty to the Holders, each of the
Guarantors hereby agree to execute a Security Guarantee to be endorsed on
each Security ordered to be authenticated and delivered by the Trustee. Each
Guarantor hereby agrees that its Guaranty set forth in Section 11.01 shall
remain in full force and effect notwithstanding any failure to endorse on
each Security a Security Guarantee. Each such Security Guarantee shall be
signed on behalf of each Guarantor by its Chairman of the Board, its
President or one of its Vice Presidents prior to the authentication of the
Security on which it is endorsed, and the delivery of such Security by the
Trustee, after the authentication thereof hereunder, shall constitute due
delivery of such Security Guarantee on behalf of such Guarantor. Such
signature upon the Security Guarantee may be manual or facsimile signature of
such officer and may be imprinted or otherwise reproduced on the Security
Guarantee, and in case such officer who shall have signed the Security
Guarantee shall cease to be such officer before the Security on which such
Security Guarantee is endorsed shall have been authenticated and delivered by
the Trustee or disposed of by the Company, such Security nevertheless may be
authenticated and delivered or disposed of as though the Person who signed
the Security Guarantee had not ceased to be such officer of such Guarantor.
SECTION 11.07. SUBORDINATION OF SUBROGATION AND OTHER RIGHTS.
Each Guarantor hereby agrees that any claim against the Company
that arises from the payment, performance or enforcement of such Guarantor's
obligations under its Guaranty or this Indenture, including, without
limitation, any right of subrogation, shall be subject and subordinate to,
and no payment with respect to any such claim of such Guarantor shall be made
before, the payment in full in cash of all outstanding Securities in
accordance with the provisions provided therefor in this Indenture.
ARTICLE TWELVE
SUBORDINATION OF GUARANTY
SECTION 12.01. GUARANTY OBLIGATIONS SUBORDINATED TO GUARANTOR SENIOR
INDEBTEDNESS.
Each Guarantor covenants and agrees, and the Trustee and each
Holder of the Securities by his acceptance thereof likewise covenant and
agree, that the Guaranty of such Guarantor shall be issued subject to the
provisions of this Article Twelve; and each person holding any Security,
whether upon original issue or upon transfer, assignment or exchange thereof,
accepts and agrees that all payments of the principal of and interest on the
Securities pursuant to the Guaranty made by or on behalf of any Guarantor
shall, to the extent and in the manner set forth in this Article Twelve, be
subordinated and junior in right of payment to the prior payment in full in
cash of all amounts payable under Guarantor Senior Indebtedness of such
Guarantor.
SECTION 12.02. NO PAYMENT ON GUARANTIES IN CERTAIN CIRCUMSTANCES.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) by or on behalf of any Guarantor
of principal of or interest on the Securities pursuant to such Guarantor's
Guaranty, whether pursuant to the terms of the Securities, upon acceleration
or otherwise, shall be made if, at the time of such payment, there exists a
default in the payment of all or any portion of the obligations on any
Designated Guarantor Senior Indebtedness of such Guarantor, whether at
maturity, on account of
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mandatory redemption or prepayment, acceleration or otherwise, and such
default shall not have been cured or waived or the benefits of this sentence
waived by or on behalf of the holders of such Designated Guarantor Senior
Indebtedness. In addition, during the continuance of any non-payment event
of default with respect to any Designated Guarantor Senior Indebtedness
pursuant to which the maturity thereof may be immediately accelerated, and
upon receipt by the Trustee of written notice (the "GUARANTOR PAYMENT
BLOCKAGE NOTICE") from the holder or holders of such Designated Guarantor
Senior Indebtedness or the trustee or agent acting on behalf of such
Designated Guarantor Senior Indebtedness, then, unless and until such
non-payment event of default has been cured or waived or has ceased to exist
or such Designated Guarantor Senior Indebtedness has been discharged or paid
in full in cash or the benefits of these provisions have been waived by the
holders of such Designated Guarantor Senior Indebtedness, no direct or
indirect payment (excluding any payment or distribution of Permitted Junior
Securities) shall be made by or on behalf of such Guarantor of principal or
interest on the Securities during a period (a "GUARANTOR BLOCKAGE PERIOD")
commencing on the date of receipt of such notice by the Trustee and ending
179 days thereafter.
Notwithstanding anything herein or in the Securities to the
contrary, (x) in no event shall a Guarantor Blockage Period extend beyond 179
days from the date the Guarantor Payment Blockage Notice in respect thereof
was given, (y) there shall be a period of at least 181 consecutive days in
each 360-day period when no Guarantor Blockage Period is in effect and (z)
not more than one Guarantor Blockage Period may be commenced with respect to
any Guarantor during any period of 360 consecutive days. No non-payment
event of default that existed or was continuing on the date of commencement
of any Guarantor Blockage Period with respect to the Designated Guarantor
Senior Indebtedness initiating such Guarantor Blockage Period (to the extent
the holder of Designated Guarantor Senior Indebtedness, or trustee or agent,
giving notice commencing such Guarantor Blockage Period had knowledge of such
existing or continuing event of default) may be, or be made, the basis for
the commencement of any other Guarantor Blockage Period by the holder or
holders of such Designated Guarantor Senior Indebtedness or the trustee or
agent acting on behalf of such Designated Guarantor Senior Indebtedness,
whether or not within a period of 360 consecutive days, unless such
non-payment event of default has been cured or waived for a period of not
less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder when such payment is
prohibited by Section 12.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of such
Designated Guarantor Senior Indebtedness or their respective representatives,
or to the trustee or trustees under any indenture pursuant to which any of
such Designated Guarantor Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that, upon notice
from the Trustee to the holders of such Designated Guarantor Senior
Indebtedness that such prohibited payment has been made, the holders of such
Designated Guarantor Senior Indebtedness (or their representative or
representatives or a trustee or trustees) notify the Trustee in writing of
the amounts then due and owing on such Designated Guarantor Senior
Indebtedness, if any, and only the amounts specified in such notice to the
Trustee shall be paid to the holders of such Designated Guarantor Senior
Indebtedness.
SECTION 12.03. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets or securities of
any Guarantor of any kind or character, whether in cash, property or
securities (excluding any payment or distribution of Permitted Junior
Securities), upon any dissolution or winding-up or total liquidation or
reorganization of such Guarantor, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all Guarantor
Senior Indebtedness of such Guarantor shall first be paid in full in cash
before the Holders of the Securities or the Trustee on behalf of such Holders
shall be entitled to receive any payment by such Guarantor of the
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principal of or interest on the Securities pursuant to such Guarantor's
Guaranty, or any payment to acquire any of the Securities for cash, property
or securities, or any distribution with respect to the Securities of any
cash, property or securities (excluding any payment or distribution of
Permitted Junior Securities). Before any payment may be made by, or on
behalf of, any Guarantor of the principal of or interest on the Securities
upon any such dissolution or winding-up or total liquidation or
reorganization, any payment or distribution of assets or securities of such
Guarantor of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), to
which the Holders of the Securities or the Trustee on their behalf would be
entitled, but for the subordination provisions of this Indenture, shall be
made by such Guarantor or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, directly
to the holders of the Guarantor Senior Indebtedness of such Guarantor (PRO
RATA to such holders on the basis of the respective amounts of such Guarantor
Senior Indebtedness held by such holders) or their representatives or to the
trustee or trustees or agent or agents under any agreement or indenture
pursuant to which any of such Guarantor Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent necessary to
pay all such Guarantor Senior Indebtedness in full in cash after giving
effect to any prior or concurrent payment, distribution or provision therefor
to or for the holders of such Guarantor Senior Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of
assets or securities of any Guarantor of any kind or character, whether in
cash, property or securities (excluding any payment or distribution of
Permitted Junior Securities), shall be received by the Trustee or any Holder
of Securities at a time when such payment or distribution is prohibited by
Section 12.03(a) and before all obligations in respect of the Guarantor
Senior Indebtedness of such Guarantor are paid in full in cash, such payment
or distribution shall be received and held in trust for the benefit of, and
shall be paid over or delivered to, the holders of such Guarantor Senior
Indebtedness (PRO RATA to such holders on the basis of the respective amounts
of such Guarantor Senior Indebtedness held by such holders) or their
respective representatives, or to the trustee or trustees or agent or agents
under any indenture pursuant to which any of such Guarantor Senior
Indebtedness may have been issued, as their respective interests may appear,
for application to the payment of such Guarantor Senior Indebtedness
remaining unpaid until all such Guarantor Senior Indebtedness has been paid
in full in cash after giving effect to any prior or concurrent payment,
distribution or provision therefor to or for the holders of such Guarantor
Senior Indebtedness.
The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution
of any Guarantor following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided in Article Five shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of
this Section 12.03 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions
stated in Article Five.
SECTION 12.04. SUBROGATION.
Upon the payment in full in cash of all Guarantor Senior
Indebtedness of a Guarantor, or provision for payment, the Holders of the
Securities shall be subrogated to the rights of the holders of such Guarantor
Senior Indebtedness to receive payments or distributions of cash, property or
securities of such Guarantor made on such Guarantor Senior Indebtedness until
the principal of and interest on the Securities shall be paid in full in
cash; and, for the purposes of such subrogation, no payments or distributions
to the holders of such Guarantor Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee on their
behalf would be entitled except for the provisions of this Article Twelve,
and no payment over pursuant to the provisions of this Article Twelve to the
holders of such Guarantor Senior In-
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debtedness by Holders of the Securities or the Trustee on their behalf shall,
as between such Guarantor, its creditors other than holders of such Guarantor
Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment by such Guarantor to or on account of such Guarantor Senior
Indebtedness. It is understood that the provisions of this Article Twelve
are and are intended solely for the purpose of defining the relative rights
of the Holders of the Securities, on the one hand, and the holders of
Guarantor Senior Indebtedness of each Guarantor, on the other hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article Twelve shall have been applied, pursuant to the provisions of this
Article Twelve, to the payment of all amounts payable under Guarantor Senior
Indebtedness, then and in such case, the Holders of the Securities shall be
entitled to receive from the holders of such Guarantor Senior Indebtedness
any payments or distributions received by such holders of Guarantor Senior
Indebtedness in excess of the amount required to make payment in full in cash
of such Guarantor Senior Indebtedness.
SECTION 12.05. OBLIGATIONS OF GUARANTORS UNCONDITIONAL.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Securities or the Guaranties is intended to or shall
impair, as among each of the Guarantors and the Holders of the Securities,
the obligation of each Guarantor, which is absolute and unconditional, to pay
to the Holders of the Securities the principal of and interest on the
Securities as and when the same shall become due and payable in accordance
with the terms of the Guaranty of such Guarantor, or is intended to or shall
affect the relative rights of the Holders of the Securities and creditors of
any Guarantor other than the holders of Guarantor Senior Indebtedness of such
Guarantor, nor shall anything herein or therein prevent the Holder of any
Security or the Trustee on their behalf from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article Twelve of the holders of
Guarantor Senior Indebtedness in respect of cash, property or securities of
any Guarantor received upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing
contained in this Article Twelve shall restrict the right of the Trustee or
the Holders of Securities to take any action to declare the Securities to be
due and payable prior to their stated maturity pursuant to Section 6.01 or to
pursue any rights or remedies hereunder; PROVIDED, HOWEVER, that all
Guarantor Senior Indebtedness of any Guarantor then due and payable shall
first be paid in full before the Holders of the Securities or the Trustee are
entitled to receive any direct or indirect payment from such Guarantor of
principal of or interest on the Securities pursuant to such Guarantor's
Guaranty.
SECTION 12.06. NOTICE TO TRUSTEE.
The Company and each Guarantor shall give prompt written notice
to the Trustee of any fact known to the Company or such Guarantor which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article Twelve. The Trustee
shall not be charged with knowledge of the existence of any event of default
with respect to any Guarantor Senior Indebtedness or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and
until the Trustee shall have received notice in writing at its Corporate
Trust Office to that effect signed by an Officer of the Company or such
Guarantor, or by a holder of Guarantor Senior Indebtedness or trustee or
agent therefor; and prior to the receipt of any such written notice, the
Trustee shall, subject to Article Seven, be entitled to assume that no such
facts exist; PROVIDED, HOWEVER, that if the Trustee shall not have received
the notice provided for in this Section 12.06 at least two Business Days
prior to the date upon which by the terms
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of this Indenture any moneys shall become payable for any purpose (including,
without limitation, the payment of the principal of or interest on any
Security), then, regardless of anything herein to the contrary, the Trustee
shall have full power and authority to receive any moneys from any Guarantor
and to apply the same to the purpose for which they were received, and shall
not be affected by any notice to the contrary which may be received by it on
or after such prior date. Nothing contained in this Section 12.06 shall limit
the right of the holders of Guarantor Senior Indebtedness to recover payments
as contemplated by Section 12.03. The Trustee shall be entitled to rely on
the delivery to it of a written notice by a Person representing himself or
itself to be a holder of any Guarantor Senior Indebtedness (or a trustee on
behalf of, or other representative of, such holder) to establish that such
notice has been given by a holder of such Guarantor Senior Indebtedness or a
trustee or representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Twelve, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Guarantor Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this Article
Twelve, and if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
SECTION 12.07. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets or securities of a
Guarantor referred to in this Article Twelve, the Trustee and the Holders of
the Securities shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate
of the receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, delivered to the Trustee or to
the Holders of the Securities for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of Guarantor Senior
Indebtedness of such Guarantor and other indebtedness of such Guarantor, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article Twelve.
SECTION 12.08. TRUSTEE'S RELATION TO GUARANTOR SENIOR INDEBTEDNESS.
The Trustee and any Paying Agent shall be entitled to all the
rights set forth in this Article Twelve with respect to any Guarantor Senior
Indebtedness which may at any time be held by it in its individual or any
other capacity to the same extent as any other holder of Guarantor Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee or any
Paying Agent of any of its rights as such holder.
With respect to the holders of Guarantor Senior Indebtedness,
the Trustee undertakes to perform or to observe only such of its covenants
and obligations as are specifically set forth in this Article Twelve, and no
implied covenants or obligations with respect to the holders of Guarantor
Senior Indebtedness shall be read into this Indenture against the Trustee.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Guarantor Senior Indebtedness (except as provided in Section 12.03(b)). The
Trustee shall not be liable to any such holders if the Trustee shall in good
faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other person cash, property or securities to which any
holders of Guarantor Senior Indebtedness shall be entitled by virtue of this
Article Twelve or otherwise.
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SECTION 12.09. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE
GUARANTORS OR HOLDERS OF GUARANTOR SENIOR INDEBTEDNESS.
No right of any present or future holders of any Guarantor
Senior Indebtedness to enforce subordination as provided herein shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of any Guarantor or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by any Guarantor with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with. The provisions of this Article Twelve are
intended to be for the benefit of, and shall be enforceable directly by, the
holders of Guarantor Senior Indebtedness.
SECTION 12.10. SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
GUARANTY.
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article Twelve, and appoints the Trustee his
attorney-in-fact for such purposes, including, in the event of any
dissolution, winding-up, total liquidation or reorganization of any Guarantor
(whether in bankruptcy, insolvency, receivership, reorganization or similar
proceedings or upon an assignment for the benefit of creditors or otherwise)
tending towards liquidation of the business and assets of such Guarantor, the
filing of a claim for the unpaid balance of its or his Securities in the form
required in those proceedings.
SECTION 12.11. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article Twelve
shall not be construed as preventing the occurrence of an Event of Default
specified in clauses (a), (b) or (c) of Section 6.01.
SECTION 12.12. TRUSTEE'S COMPENSATION NOT PREJUDICED.
Nothing in this Article Twelve shall apply to amounts due to the
Trustee pursuant to other sections in this Indenture.
SECTION 12.13. NO WAIVER OF GUARANTY SUBORDINATION PROVISIONS.
Without in any way limiting the generality of Section 12.09, the
holders of Guarantor Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Twelve or the obligations hereunder of the Holders of the Securities to the
holders of Guarantor Senior Indebtedness, do any one or more of the
following: (a) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Guarantor Senior Indebtedness or any
instrument evidencing the same or any agreement under which Guarantor Senior
Indebtedness is outstanding or secured; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Guarantor Senior Indebtedness; (c) release any Person liable in any manner
for the collection of Guarantor Senior Indebtedness; and (d) exercise or
refrain from exercising any rights against any Guarantor and any other Person.
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SECTION 12.14. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.
Nothing contained in this Article Twelve or elsewhere in this
Indenture shall prevent (i) a Guarantor, except under the conditions
described in Section 12.02, from making payments of principal of and interest
on the Securities, or from depositing with the Trustee any moneys for such
payments, or (ii) the application by the Trustee of any moneys deposited with
it for the purpose of making such payments of principal of and interest on
the Securities, to the holders entitled thereto unless at least two Business
Days prior to the date upon which such payment becomes due and payable, the
Trustee shall have received the written notice provided for in Section
12.02(b) or in Section 12.06. The Guarantors shall give prompt written
notice to the Trustee of any dissolution, winding-up, liquidation or
reorganization of such Guarantor.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
This Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the extent applicable,
be governed by such provisions. If any provision of this Indenture modifies
any TIA provision that may be so modified, such TIA provision shall be deemed
to apply to this Indenture as so modified. If any provision of this Indenture
excludes any TIA provision that may be so excluded, such TIA provision shall
be excluded from this Indenture.
The provisions of TIA Sections 310 through 317 that impose
duties on any Person (including the provisions automatically deemed included
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
SECTION 13.02. NOTICES.
Any notice or communication shall be sufficiently given if in
writing and delivered in person, by facsimile and confirmed by overnight
courier, or mailed by first-class mail addressed as follows:
if to the Company or to the Guarantors:
Reliant Building Products Inc.
3030 LBJ Freeway
Suite 300
Dallas, Texas 75234
Attention: Chief Financial Officer
Facsimile: (972) 979-1030
Telephone: (972) 919-1000
with a copy to:
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Kelly, Hart & Hallman, P.C.
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Attention: Thomas W. Briggs, Esq.
Facsimile: (817) 878-9280
Telephone: (817) 332-2500
if to the Trustee:
Bank One Trust Company, NA
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
Attention: Corporate Trust Administration
Facsimile: (212) 240-8988
Telephone: (212) 240-8862
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed, first-class, postage
prepaid, to a Holder including any notice delivered in connection with TIA
Section 310(b), TIA Section 313(c), TIA Section 314(a) and TIA Section
315(b), shall be mailed to him at his address as set forth on the Security
Register and shall be sufficiently given to him if so mailed within the time
prescribed. To the extent required by the TIA, any notice or communication
shall also be mailed to any Person described in TIA Section 313(c).
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders. Except for a notice to the Trustee, which is deemed given only
when received, if a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b)
with other Securityholders with respect to their rights under this Indenture
or the Securities. The Company, the Trustee, the Registrar and any other
person shall have the protection of TIA Section 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company
shall furnish to the Trustee at the request of the Trustee:
<PAGE>
-78-
(1) an Officers' Certificate in form and substance satisfactory
to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance satisfactory to
the Trustee stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with; PROVIDED,
HOWEVER, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 13.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may make reasonable
rules for its functions.
SECTION 13.07. GOVERNING LAW.
The laws of the State of New York shall govern this Indenture,
the Securities and the Security Guarantees without regard to principles of
conflicts of law.
SECTION 13.08. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the
Company or any Guarantor shall not have any liability for any obligations of
the Company or any Guarantor under the Securities, the Guaranty of such
Guarantor or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability.
<PAGE>
-79-
SECTION 13.09. SUCCESSORS.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of each Guarantor in this
Indenture and such Guarantor's Guaranty shall bind its successor. All
agreements of the Trustee in this Indenture shall bind its successor.
SECTION 13.10. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture, in the Securities or in
the Guaranty shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby, and a Holder shall have no claim therefor
against any party hereto.
SECTION 13.12. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 13.13. LEGAL HOLIDAYS.
If a payment date is a not a Business Day at a place of payment,
payment may be made at that place on the next succeeding Business Day, and no
interest shall accrue for the intervening period.
[Signature Pages Follow]
<PAGE>
S-1
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
RELIANT BUILDING PRODUCTS, INC.
By: /s/ David G. Fiore
-------------------------------------
Name: David G. Fiore
Title: President
RBP OF ARIZONA, INC.
RBP CUSTOM GLASS, INC.
TIMBER TECH, INC.
RBP TRANS, INC.
RBP FENESCO, INC.
LEVAN BUILDERS SUPPLY COMPANY, INC.
RBP OF TEXAS, INC.,
as Guarantors
By: /s/ David G. Fiore
-------------------------------------
Name: David G. Fiore
Title: President
BANK ONE, COLUMBUS, NA, as Trustee
By: /s/ Ted Kravits
-------------------------------------
Name: Ted Kravits
Title: Assistant Vice President
<PAGE>
EXHIBIT A
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR
ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF
$250,000 FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE
IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR
(E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (E)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING
CAUSE (D), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE
OF THIS SECURITY COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUER AND
THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.
A-1
<PAGE>
RELIANT BUILDING PRODUCTS, INC.
10 7/8% SENIOR SUBORDINATED NOTE
DUE MAY 1, 2004, SERIES A
CUSIP NO.:[ ]
NO. [ ] $[ ]
RELIANT BUILDING PRODUCTS, INC., a Delaware corporation and
formerly named Redman Building Products, Inc. (the "COMPANY", which term
includes any successor corporation), for value received promises to pay to
[ ] or registered assigns, the principal sum of [ ] Dollars,
on May 1, 2004.
Interest Payment Dates: May 1 and November 1, commencing on
November 1, 1997.
Interest Record DATES: April 15 and October 15
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officer.
RELIANT BUILDING PRODUCTS, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
Dated: [ ]
A-2
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 10 7/8% Senior Subordinated Notes due May 1,
2004, Series A, described in the within-mentioned indenture.
Dated: [ ]
BANK ONE, COLUMBUS, NA,
as Trustee
By:___________________________________
Authorized Signatory
A-3
<PAGE>
(REVERSE OF SECURITY)
RELIANT BUILDING PRODUCTS, INC.
10 7/8% SENIOR SUBORDINATED NOTE
DUE MAY 1, 2004, SERIES A
1. INTEREST.
RELIANT BUILDING PRODUCTS, INC., a Delaware corporation and
formerly named Redman Building Products, Inc. (the "COMPANY"), promises to
pay interest on the principal amount of this Security at the rate per annum
shown above. Cash interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
May 9, 1997. The Company will pay interest semi-annually in arrears on each
Interest Payment Date, commencing November 1, 1997. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The company shall pay interest on overdue principal from time
to time on demand and on overdue installments of interest (without regard to
any applicable grace periods) to the extent lawful from time to time on
demand, in each case at the rate borne by the securities
2. METHOD OF PAYMENT.
The Company shall pay interest on the Securities (except
defaulted interest) to the persons who are the registered Holders at the
close of business on the Interest Record Date immediately preceding the
Interest Payment Date even if the Securities are cancelled on registration of
transfer or registration of exchange after such Interest Record Date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company shall pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of
public and private debts ("U.S. LEGAL TENDER"). However, the Company may pay
principal and interest by wire transfer of Federal funds (provided that the
paying Agent shall have received wire instructions on or prior to the
relevant Interest Record Date), or interest by check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, Bank One, Columbus, NA (the "TRUSTEE") will act as
Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Registrar.
4. INDENTURE AND GUARANTEES.
The Company issued the Securities under an Indenture, dated as
of May 9, 1997 (the "INDENTURE"), by and among the Company, the Guarantors
and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. This Security is one of a duly
authorized issue of Securities of the Company designated as its 10 7/8%
Senior Subordinated Notes due 2004, Series A (the "INITIAL SECURITIES"),
limited (except as otherwise provided in the Indenture) in aggregate
principal amount to
A-4
<PAGE>
$70,000,000, Which may be issued under the Indenture. The Securities include
the Initial Securities, the Private Exchange Securities (as defined in the
indenture) and the Unrestricted Securities (as defined below) issued in
exchange for the Initial Securities pursuant to the Registration Rights
Agreement. The Initial Securities and the Unrestricted Securities are
treated as a single class of securities under the Indenture. The Terms of
the Securities include those stated in the Indenture and those made part of
the indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture (except as otherwise indicated in the Indenture) until such time as
the Indenture is qualified under the TIA, and thereafter as in effect on the
date on which the indenture is qualified under the TIA. Notwithstanding
anything to the contrary herein, the Securities are subject to all such
terms, and holders of Securities are referred to the Indenture and the TIA
for a statement of them. The Securities are general unsecured obligations of
the Company. The Securities are subordinated in right of payment to all
Senior Indebtedness of the Company to the extent and in the manner provided
in the Indenture. Each Holder of a Security, by accepting a Security, agrees
to such subordination, authorizes the Trustee to give effect to such
subordination and appoints the Trustee as attorney-in-fact for such purpose.
Payment on the Securities is guaranteed (each, a "GUARANTY"),
on a senior subordinated basis, jointly and severally, by each Restricted
Subsidiary of the Company existing on the Issue Date (each, a "GUARANTOR")
pursuant to Article Eleven and Article Twelve of the Indenture. In addition,
the Indenture requires the Company to cause each Restricted Subsidiary
formed, created or acquired after the Issue Date to become a party to the
Indenture as a Guarantor and guarantee payment on the Securities pursuant to
Article Eleven and Article Twelve of the Indenture. In certain
circumstances, the Guaranties may be released.
5. OPTIONAL REDEMPTION.
The Securities will be redeemable at the option of the
Company, in whole or in part, at any time on or after May 1, 2001, at the
redemption prices (expressed as a percentage of principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the Redemption
Date (subject to the right of holders of record on the relevant Interest
Record Date to receive interest due on the relevant Interest Payment Date) if
redeemed during the 12-month period commencing on May 1 of the years
indicated below:
Year Percentage
---- ----------
2001 105.438%
2002 102.719%
2003 and thereafter 100.000%
6. OPTIONAL REDEMPTION UPON PUBLIC EQUITY OFFERINGS.
In addition, at any time and from time to time on or prior to
May 1, 2000, the Company may redeem in the aggregate up to 35% of the
originally issued aggregate principal amount of the Securities with the net
cash proceeds of one or more Public Equity Offerings by Holdings (to the
extent that the net cash proceeds thereof are contributed to the equity
capital of the Company) or the Company after which there is a Public Market,
at a redemption price in cash equal to 110.875% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Interest
Record Date to receive interest due on the relevant Interest Payment Date);
PROVIDED, HOWEVER, that at least 65% of the originally issued aggregate
principal amount of the Securities must remain outstanding immediately after
giving effect to each such redemption (excluding any Securities held by the
Company or any of its Affiliates). Notice of any such redemption must be
given within 60 days after the date of the closing of the relevant Public
Equity Offering of Holdings or the Company.
A-5
<PAGE>
7. OPTIONAL REDEMPTION UPON CHANGE OF CONTROL.
At any time on or prior to May 1, 2001, the Securities may be
redeemed as a whole at the option of the Company upon the occurrence of a
Change of Control (but in no event more than 90 days after the occurrence of
such Change of Control) at a redemption price equal to 100% of the principal
amount thereof, plus the Applicable Premium (as defined below) as of, and
accrued but unpaid interest, if any, to, the Redemption Date (subject to the
right of Holders of record on the relevant Interest Record Date to receive
interest due on the relevant Interest Payment Date).
"APPLICABLE PREMIUM" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1) the
redemption price of such Security at May 1, 2001 (such redemption price being
described under paragraph 5 of this Security), PLUS (2) all required interest
payments (excluding accrued but unpaid interest) due on such Security through
May 1, 2001, computed using a discount rate equal to the Treasury Rate (as
defined below) plus 75 basis points, over (B) the then-outstanding principal
amount of such Security.
"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 Redemption Date (or, if such Statistical Release is no longer
published, any publicly available source or similar market data)) most nearly
equal to the period from the Redemption Date to May 1, 2001; PROVIDED,
HOWEVER, that if the period from the Redemption Date to May 1, 2001 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 the Redemption Date to May 1,
2001 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.
8. NOTICE OF REDEMPTION.
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select
for redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities
and portions of them the Trustee so selects shall be in amounts of $1,000
principal amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal
amount equal to the unredeemed portion thereof will be issued in the name of
the Holder thereof upon cancellation of the original Security. On and after
the Redemption Date, interest will cease to accrue on Securities or portions
thereof called for redemption so long as the Company has deposited with the
Paying Agent for the Securities funds in satisfaction of the redemption price
pursuant to the Indenture and the Paying Agent is not prohibited from paying
such funds to the Holders pursuant to the terms of the Indenture.
9. CHANGE OF CONTROL OFFER.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall, unless the
Company shall have elected to redeem the Notes
A-6
<PAGE>
prior to May 1, 2001 upon a Change of Control as permitted by paragraph 7 of
this Security, within 20 days after the Change of Control Date, make an Offer
to Purchase all Securities then outstanding at a purchase price in cash equal
to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Purchase Date (subject to the right of
Holders of record on the relevant Interest Record Date to receive interest
due on the relevant Interest Payment Date).
10. LIMITATION ON DISPOSITION OF ASSETS.
The Company is, subject to certain conditions, obligated to make an
Offer to Purchase Securities at a purchase price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any,
to the Purchase Date (subject to the right of Holders of record on the
Interest Relevant Record Date to receive interest due on the relevant
Interest Payment Date) with the proceeds of certain asset dispositions.
11. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Securities or portions thereof selected for
redemption, except the unredeemed portion of any security being redeemed in
part.
12. PERSONS DEEMED OWNERS.
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
13. UNCLAIMED FUNDS.
If funds for the payment of principal or interest remain unclaimed
for two years, the Trustee and the Paying Agent will repay the funds to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent with respect to such funds shall cease.
14. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.
The Company and the Guarantors may be discharged from their
obligations under the Indenture, the Securities and the Guaranties, except
for certain provisions thereof, and may be discharged from obligations to
comply with certain covenants contained in the Indenture, the Securities and
the Guaranties, in each case upon satisfaction of certain conditions
specified in the Indenture.
15. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture, the Securities and the
Guaranties may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the
Securities then outstanding, and any existing Default or Event of Default or
compliance with any provision may be waived with the consent of the Holders
of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture, the Securities and the Guaranties to,
among other things, cure any ambiguity, defect
A-7
<PAGE>
or inconsistency, provide for uncertificated Securities in addition to or in
place of certificated Securities or comply with any requirements of the SEC
in connection with the qualification of the Indenture under the TIA, or make
any other change that does not materially adversely affect the rights of any
Holder of a Security.
16. RESTRICTIVE COVENANTS.
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and the Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets,
to permit restrictions on dividends and other payments by Restricted
Subsidiaries to the Company, to consolidate, merge or sell all or
substantially all of its assets, to engage in transactions with affiliates or
certain other related persons or to engage in certain businesses. the
limitations are subject to a number of important qualifications and
exceptions. The Company must report quarterly to the Trustee on compliance
with such limitations.
17. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately
in the manner and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture, the Securities or the Guaranties
except as provided in the Indenture. The Trustee is not obligated to enforce
the Indenture, the Securities or the Guaranties unless it has received
indemnity satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Securities then outstanding to direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of certain continuing Defaults or Events of Default if it
determines that withholding notice is in their interest.
18. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise
deal with the Company, its Subsidiaries or their respective Affiliates as if
it were not the Trustee.
19. NO RECOURSE AGAINST OTHERS.
No stockholder, director, officer, employee or incorporator, as
such, of the Company or any Guarantor shall have any liability for any
obligation of the Company or any Guarantor under the Securities, the Guaranty
of such Guarantor or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder of a
Security by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Securities and the Guaranties.
20. AUTHENTICATION.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
A-8
<PAGE>
21. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
22. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to
be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
23. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement, the Company will be
obligated upon the occurrence of certain events to consummate an exchange
offer pursuant to which the Holder of this Security shall have the right to
exchange this Security for a 10 7/8% Senior Subordinated Note due 2004,
Series B, of the Company (an "UNRESTRICTED SECURITY") which have been
registered under the Securities Act, in like principal amount and having
terms identical in all material respects to the Initial Securities. The
Holders shall be entitled to receive certain additional interest payments in
the event such exchange offer is not consummated and upon certain other
conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
24. GOVERNING LAW.
The laws of the State of New York shall govern the Indenture, this
Security and any Guaranty thereof without regard to principles of conflicts
of laws.
A-9
<PAGE>
[FORM OF SECURITY GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (as defined in the Indenture referred to in the
Security upon which this notation is endorsed) hereby unconditionally
guarantees on a senior subordinated basis (such guaranty by the Guarantor
being referred to herein as the "Guaranty") the due and punctual payment of
the principal of, premium, if any, and interest on the Securities, whether at
maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal, premium and interest on the Securities,
and the due and punctual performance of all other obligations of the Company
to the Holders or the Trustee, all in accordance with the terms set forth in
Article Eleven of the Indenture.
The obligations of the Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guaranty and the Indenture are expressly set
forth, and are expressly subordinated and subject in right of payment to the
prior payment in full of all Guarantor Senior Indebtedness (as defined in the
Indenture) of such Guarantor, to the extent and in the manner provided in
Article Eleven and Article Twelve of the Indenture, and reference is hereby
made to such Indenture for the precise terms of the Guaranty therein made.
This Security Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which
this Security Guarantee is noted shall have been executed by the Trustee
under the Indenture by the manual signature of one of its authorized officers.
This Security Guarantee shall be governed by and construed in
accordance with the laws of the State of New York without regard to
principles of conflicts of law.
This Security Guarantee is subject to release upon the terms set
forth in the Indenture.
RBP OF ARIZONA, INC.
RBP CUSTOM GLASS, INC.
TIMBER TECH, INC.
RBP TRANS, INC.
RBP FENESCO, INC.
LEVAN BUILDERS SUPPLY COMPANY, INC.
RBP OF TEXAS, INC.
By:
------------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- ------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint_______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
------------------------ -----------------------------------
(Signed exactly as name appears
on the other side of this Security)
SIGNATURE GUARANTEE:
---------------------------------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantee
program reasonably acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $
--------------
Dated: Signed:
------------------------ -----------------------------------
(Signed exactly as name appears
on the other side of this Security)
SIGNATURE GUARANTEE:
---------------------------------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantee
program reasonably acceptable to the Trustee)
<PAGE>
EXHIBIT B
[FORM OF SERIES B SECURITY]
RELIANT BUILDING PRODUCTS, INC.
10 7/8% Senior Subordinated Note
due May 1, 2004, Series B
CUSIP No.:[ ]
No. [ ] $[ ]
RELIANT BUILDING PRODUCTS, INC., a Delaware corporation and formerly
named Redman Building Products, Inc. (the "COMPANY", which term includes any
successor corporation), for value received promises to pay to [ ] or
registered assigns, the principal sum of [ ] Dollars, on May 1, 2004.
Interest Payment Dates: May 1 and November 1, commencing on
November 1, 1997.
Interest Record Dates: April 15 and October 15
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officer.
RELIANT BUILDING PRODUCTS, INC.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
Dated: [ ]
B-1
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 10 7/8% Senior Subordinated Notes due May 1, 2004,
Series B, described in the within-mentioned Indenture.
Dated: [ ]
BANK ONE, COLUMBUS, NA,
as Trustee
By:
---------------------------------
Authorized Signatory
B-2
<PAGE>
(REVERSE OF SECURITY)
RELIANT BUILDING PRODUCTS, INC.
10 7/8% Senior Subordinated Note
due May 1, 2004, Series B
1. INTEREST.
RELIANT BUILDING PRODUCTS, INC., a Delaware corporation and formerly
named Redman Building Products, Inc. (the "COMPANY"), promises to pay
interest on the principal amount of this security at the rate per annum shown
above. Cash interest on the Securities will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from May 9,
1997. The Company will pay interest semi-annually in arrears on each
Interest Payment Date, commencing November 1, 1997. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal from time to
time on demand and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful from time to time on demand,
in each case at the rate borne by the Securities
2. METHOD OF PAYMENT.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of
business on the Interest Record Date immediately preceding the Interest
Payment Date even if the Securities are cancelled on registration of transfer
or registration of exchange after such interest Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in money of the United States that
at the time of payment is legal tender for payment of public and private
debts ("U.S. LEGAL TENDER"). However, the Company may pay principal and
interest by wire transfer of Federal funds (provided that the Paying Agent
shall have received wire instructions on or prior to the relevant Interest
Record Date), or interest by check payable in such U.S. Legal Tender. the
Company may deliver any such interest payment to the Paying Agent or to a
Holder at the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, Bank One, Columbus, NA (the "Trustee") will act as Paying
Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to the Holders. The Company or any of its Subsidiaries may,
subject to certain exceptions, act as Registrar.
4. INDENTURE AND GUARANTEES.
The Company issued the Securities under an Indenture, dated as of
May 9, 1997 (the "INDENTURE"), by and among the Company, the Guarantors and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. This Security is one of a duly authorized
issue of Securities of the Company designated as its 10 7/8% Senior
Subordinated Notes due 2004, Series B (the "UNRESTRICTED SECURITIES"),
limited (except as otherwise provided in the Indenture) in aggregate principal
B-3
<PAGE>
amount to $70,000,000, which may be issued under the Indenture. The
Securities include the 10 7/8% Senior Subordinated Notes due 2004, Series A
(the "INITIAL SECURITIES"), the Private Exchange Securities (as defined in
the Indenture) and the Unrestricted Securities. The Initial Securities, the
Private Exchange Securities and the Unrestricted Securities are treated as a
single class of securities under the Indenture. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture (except
as otherwise indicated in the Indenture) until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the
contrary herein, the Securities are subject to all such terms, and holders of
Securities are referred to the Indenture and the TIA for a statement of them.
The Securities are general unsecured obligations of the Company. The
Securities are subordinated in right of payment to all Senior Indebtedness of
the Company to the extent and in the manner provided in the Indenture. Each
Holder of a Security, by accepting a Security, agrees to such subordination,
authorizes the Trustee to give effect to such subordination and appoints the
Trustee as attorney-in-fact for such purpose.
Payment on the Securities is guaranteed (each, a "GUARANTY"), on a
senior subordinated basis, jointly and severally, by each Restricted
Subsidiary of the Company existing on the Issue Date (each, a "GUARANTOR")
pursuant to Article Eleven and Article Twelve of the Indenture. In addition,
the Indenture requires the Company to cause each Restricted Subsidiary
formed, created or acquired after the Issue Date to become a party to the
Indenture as a Guarantor and guarantee payment on the Securities pursuant to
Article Eleven and Article Twelve of the Indenture. In certain
circumstances, the Guaranties may be released.
5. OPTIONAL REDEMPTION.
The Securities will be redeemable at the option of the Company, in
whole or in part, at any time on or after May 1, 2001, at the redemption
prices (expressed as a percentage of principal amount) set forth below, plus
accrued and unpaid interest thereon, if any, to the Redemption Date (subject
to the right of holders of record on the relevant Interest Record Date to
receive interest due on the relevant Interest Payment date) if redeemed
during the 12-month period commencing on May 1 of the years indicated below:
Year Percentage
---- ----------
2001 105.438%
2002 102.719%
2003 and thereafter 100.000%
6. OPTIONAL REDEMPTION UPON PUBLIC EQUITY OFFERINGS.
In addition, at any time and from time to time on or prior to May 1,
2000, the Company may redeem in the aggregate up to 35% of the originally
issued aggregate principal amount of the Securities with the net cash
proceeds of one or more Public Equity Offerings by Holdings (to the extent
that the net cash proceeds thereof are contributed to the equity capital of
the Company) or the Company after which there is a Public Market, at a
redemption price in cash equal to 110.875% of the principal amount thereof,
plus accrued and unpaid interest thereon, if any, to the Redemption Date
(subject to the right of Holders of record on the relevant Interest Record
Date to receive interest due on the relevant Interest Payment Date);
PROVIDED, HOWEVER, that at least 65% of the originally issued aggregate
principal amount of the Securities must remain outstanding immediately after
giving effect to each such redemption (excluding any Securities held by the
Company or any of its Affiliates). Notice of any such redemption must be
given within 60 days after the date of the closing of the relevant Public
Equity Offering of Holdings or the Company.
B-4
<PAGE>
7. OPTIONAL REDEMPTION UPON CHANGE OF CONTROL.
At any time on or prior to May 1, 2001, the Securities may be redeemed
as a whole at the option of the Company upon the occurrence of a Change of
Control (but in no event more than 90 days after the occurrence of such Change
of Control) at a redemption price equal to 100% of the principal amount thereof,
plus the Applicable Premium (as defined below) as of, and accrued but unpaid
interest, if any, to, the Redemption Date (subject to the right of Holders of
record on the relevant Interest Record Date to receive interest due on the
relevant Interest Payment Date).
"APPLICABLE PREMIUM" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1) the
redemption price of such Security at May 1, 2001 (such redemption price being
described under paragraph 5 of this Security), PLUS (2) all required interest
payments (excluding accrued but unpaid interest) due on such Security through
May 1, 2001, computed using a discount rate equal to the Treasury Rate (as
defined below) plus 75 basis points, over (B) the then-outstanding principal
amount of such Security.
"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 Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source or similar market data)) most nearly equal to the period from
the Redemption Date to May 1, 2001; PROVIDED, HOWEVER, that if the period from
the Redemption Date to May 1, 2001 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 the Redemption Date to May 1, 2001 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.
8. NOTICE OF REDEMPTION.
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select for
redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal
amount equal to the unredeemed portion thereof will be issued in the name of
the Holder thereof upon cancellation of the original Security. On and after
the Redemption Date, interest will cease to accrue on Securities or portions
thereof called for redemption so long as the Company has deposited with the
Paying Agent for the Securities funds in satisfaction of the redemption price
pursuant to the Indenture and the Paying Agent is not prohibited from paying
such funds to the Holders pursuant to the terms of the Indenture.
9. CHANGE OF CONTROL OFFER.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall, unless the
Company shall have elected to redeem the Notes
B-5
<PAGE>
prior to May 1, 2001 upon a Change of Control as permitted by paragraph 7 of
this Security, within 20 days after the Change of Control Date, make an Offer
to Purchase all Securities then outstanding at a purchase price in cash equal
to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Purchase Date (subject to the right of
Holders of record on the relevant Interest Record Date to receive interest
due on the relevant Interest Payment Date).
10. LIMITATION ON DISPOSITION OF ASSETS.
The Company is, subject to certain conditions, obligated to make an
Offer to Purchase Securities at a purchase price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Purchase Date (subject to the right of Holders of record on the Interest
Relevant Record Date to receive interest due on the relevant Interest Payment
Date) with the proceeds of certain asset dispositions.
11. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption, except the
unredeemed portion of any security being redeemed in part.
12. PERSONS DEEMED OWNERS.
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
13. UNCLAIMED FUNDS.
If funds for the payment of principal or interest remain unclaimed for
two years, the Trustee and the Paying Agent will repay the funds to the Company
at its written request. After that, all liability of the Trustee and such
Paying Agent with respect to such funds shall cease.
14. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.
The Company and the Guarantors may be discharged from their obligations
under the Indenture, the Securities and the Guaranties, except for certain
provisions thereof, and may be discharged from obligations to comply with
certain covenants contained in the Indenture, the Securities and the Guaranties,
in each case upon satisfaction of certain conditions specified in the Indenture.
15. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture, the Securities and the
Guaranties may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture, the Securities and the Guaranties to, among other things, cure
any ambiguity, defect
B-6
<PAGE>
or inconsistency, provide for uncertificated Securities in addition to or in
place of certificated Securities or comply with any requirements of the SEC in
connection with the qualification of the Indenture under the TIA, or make any
other change that does not materially adversely affect the rights of any Holder
of a Security.
16. RESTRICTIVE COVENANTS.
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and the Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
to the Company, to consolidate, merge or sell all or substantially all of its
assets, to engage in transactions with affiliates or certain other related
persons or to engage in certain businesses. The limitations are subject to a
number of important qualifications and exceptions. The Company must report
quarterly to the Trustee on compliance with such limitations.
17. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture, the Securities or the Guaranties except as
provided in the Indenture. The Trustee is not obligated to enforce the
Indenture, the Securities or the Guaranties unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
18. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
19. NO RECOURSE AGAINST OTHERS.
No stockholder, director, officer, employee or incorporator, as such,
of the Company or any Guarantor shall have any liability for any obligation of
the Company or any Guarantor under the Securities, the Guaranty of such
Guarantor or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder of a Security by accepting
a Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities and the Guaranties.
20. AUTHENTICATION.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
B-7
<PAGE>
21. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), AND U/G/M/A (= Uniform Gifts
to Minors Act).
22. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
23. GOVERNING LAW.
The laws of the State of New York shall govern the Indenture, this
Security and any Guaranty thereof without regard to principles of conflicts of
laws.
B-8
<PAGE>
[FORM OF SECURITY GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (as defined in the Indenture referred to in the Security
upon which this notation is endorsed) hereby unconditionally guarantees on a
senior subordinated basis (such guaranty by the Guarantor being referred to
herein as the "Guaranty") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.
The obligations of the Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guaranty and the Indenture are expressly set forth,
and are expressly subordinated and subject in right of payment to the prior
payment in full of all Guarantor Senior Indebtedness (as defined in the
Indenture) of such Guarantor, to the extent and in the manner provided in
Article Eleven and Article Twelve of the Indenture, and reference is hereby made
to such Indenture for the precise terms of the Guaranty therein made.
This Security Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which
this Security Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized officers.
This Security Guarantee shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
This Security Guarantee is subject to release upon the terms set forth
in the Indenture.
RBP OF ARIZONA, INC.
RBP CUSTOM GLASS, INC.
TIMBER TECH, INC.
RBP TRANS, INC.
RBP FENESCO, INC.
LEVAN BUILDERS SUPPLY COMPANY, INC.
RBP OF TEXAS, INC.
By:
-----------------------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- -------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint
--------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
DATED: SIGNED:
------------------- ---------------------------------
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
-----------------------------------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $
-------------
Dated: Your Signature:
------------------- ----------------------------------
(Signed exactly as name appears on
the other side of this Security)
Signature Guarantee:
-----------------------------------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
EXHIBIT C
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.16 OF THE INDENTURE.
C-1
<PAGE>
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
RE: 10 7/8% Senior Subordinated Notes due 2004
(THE "SECURITIES"), OF RELIANT BUILDING PRODUCTS, INC.
This Certificate relates to $_______ principal amount of Securities
held in the form of* ___ a beneficial interest in a Global Security or* _______
Physical Securities by ______ (the "TRANSFEROR").
The Transferor:*
/ / has requested by written order that the Registrar deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Physical Security or Physical Securities in definitive, registered form of
authorized denominations and an aggregate number equal to its beneficial
interest in such Global Security (or the portion thereof indicated above); or
/ / has requested that the Registrar by written order to exchange or
register the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of the Securities does not require Registration under the Securities
Act of 1933, as amended (the "ACT"), because*:
/ / Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16 of the Indenture).
/ / Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
/ / Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act) which delivers a certificate to the Trustee in the form of
EXHIBIT E to the Indenture.
/ / Such Security is being transferred in reliance on Rule 144 under the
Act.
/ / Such Security is being transferred in reliance on and in compliance
with an exemption from the Registration requirements of the Act other than Rule
144A or Rule 144 under the Act to a person other than an institutional
"accredited investor." [An Opinion of Counsel to the effect that such transfer
does not require Registration under the Securities Act accompanies this
certification.]
______________________________
[INSERT NAME OF TRANSFEROR]
By: __________________________
[Authorized Signatory]
Date: _____________
*Check applicable box.
D-1
<PAGE>
EXHIBIT E
FORM OF TRANSFEREE LETTER OF REPRESENTATION
Reliant Building Products, Inc.
c/o Bank One Trust Company, N.A.
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
Attention: Corporate Trust Administrator
Dear Sirs:
This certificate is delivered to request a transfer of $________
principal amount of the 10 7/8% Senior Subordinated Notes due 2004 (the "Notes")
of Reliant Building Products, Inc. (the "Company"). Upon transfer, the Notes
would be registered in the name of the new beneficial owner as follows:
Name:
---------------------------------------
Address:
------------------------------------
Taxpayer ID Number:
-------------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the "Securities
Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Notes and we
invest in or purchase securities similar to the Notes in the normal course of
our business. We and any accounts for which we are acting are each able to bear
the economic risk of our or its investment.
2. We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Notes to offer, sell or otherwise
transfer such Notes prior to the date which is two years after the later of the
date of original issue and the last date on which the Company or any affiliate
of the Company was the owner of such Notes (or any predecessor thereto) (the
"RESALE RESTRICTION TERMINATION DATE") only (a) to the Company, (b) pursuant to
a registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A (a "QIB") that purchases for its own account or for the
account of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) to an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is
E-1
<PAGE>
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Notes of
$250,000 or (e) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our property or the property of
such investor account or accounts be at all times within our or their control
and in compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed to
be made pursuant to clause (d) above prior to the Resale Restriction Termination
Date, the transferor shall deliver a letter from the transferee substantially in
the form of this letter to the Company and the Trustee, which shall provide,
among other things, that the transferee is an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act and that it is acquiring such Notes for investment purposes and
not for distribution in violation of the Securities Act. Each purchaser
acknowledges that the Company and the Trustee reserve the right prior to any
offer, sale or other transfer prior to the Resale Restriction Termination Date
of the Notes pursuant to clause (d) or (e) above to require the delivery of an
opinion of counsel, certificates and/or other information satisfactory to the
Company and the Trustee.
Dated: ______________________ TRANSFEREE: _________________________
By: ____________________________________
E-2
<PAGE>
REGISTRATION RIGHTS AGREEMENT
among
RELIANT BUILDING PRODUCTS, INC.,
THE GUARANTORS NAMED HEREIN
and
CHASE SECURITIES INC.
and
CIBC WOOD GUNDY SECURITIES CORP.
Dated May 9, 1997
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is dated as of
May 9, 1997, by and among RELIANT BUILDING PRODUCTS, INC., a Delaware
corporation and formerly named Redman Building Products, Inc. (the
"COMPANY"), RBP OF ARIZONA, INC., a Delaware corporation, RBP CUSTOM GLASS,
INC., a Delaware corporation, TIMBER TECH, INC., a Mississippi corporation,
RBP TRANS, INC., a Delaware corporation, RBP FENESCO, INC., a Delaware
corporation, LEVAN BUILDERS SUPPLY COMPANY, INC., an Oklahoma corporation,
and RBP OF TEXAS, INC., a Delaware corporation (collectively with each of the
Company's subsidiaries formed or acquired after the Closing Date required to
become a guarantor hereunder, the "GUARANTORS," and, together with the
Company, the "ISSUERS"), and CHASE SECURITIES INC. and CIBC WOOD GUNDY
SECURITIES CORP. (together, the "INITIAL PURCHASERS").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of May 5, 1997, by and among the Issuers and the Initial
Purchasers (the "PURCHASE AGREEMENT") relating to the sale by the Issuers to
the Initial Purchasers of $70,000,000 aggregate principal amount of the
Company's 10 7/8% Senior Subordinated Notes due 2004 (the "NOTES"). The
Notes have been guaranteed (the "Guaranties") on a senior subordinated basis
by each of the Guarantors. In order to induce the Initial Purchasers to
enter into the Purchase Agreement, the Issuers have agreed to provide the
registration rights set forth in this Agreement for the equal benefit of the
Initial Purchasers and their respective direct and indirect transferees. The
execution and delivery of this Agreement is a condition to the Initial
Purchasers' obligation to purchase the Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
ADDITIONAL INTEREST: See Section 4(a).
ADVICE: See the last paragraph of Section 5.
APPLICABLE PERIOD: See Section 2(b).
CLOSING DATE: The Closing Date as defined in the Purchase Agreement.
COMPANY: See the introductory paragraph to this Agreement.
EFFECTIVENESS DATE: The 120th day after the Closing Date;
PROVIDED, HOWEVER, that, with respect to the Initial Shelf Registration
Statement, (i) if the Filing Date in respect thereof is fewer than 60 days
prior to the 120th day after the Closing Date, then the Effectiveness Date in
respect thereof shall be the 60th day after such Filing Date and (ii) if the
Filing Date is after the filing of the Exchange Offer Registration Statement
with the SEC, then the Effectiveness Date in respect thereof shall be the
60th day after such Filing Date.
EFFECTIVENESS PERIOD: See Section 3.
EVENT DATE: See Section 4.
<PAGE>
-2-
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
EXCHANGE OFFER: See Section 2(a).
EXCHANGE OFFER REGISTRATION STATEMENT: See Section 2(a).
EXCHANGE SECURITIES: See Section 2(a).
EXPIRATION DATE: See Section 2(a).
FILING DATE: The 60th day after the Closing Date; PROVIDED, HOWEVER,
that, with respect to the Initial Shelf Registration Statement, (i) if a Shelf
Registration Event shall have occurred fewer than 30 days prior to the 60th day
after the Closing Date, then the Filing Date in respect thereof shall be the
30th day after such Shelf Registration Event and (ii) if a Shelf Registration
Event shall have occurred after the filing of the Exchange Offer Registration
Statement with the SEC, then the Filing Date in respect thereof shall be the
30th day after such Shelf Registration Event.
GUARANTIES: See the second introductory paragraph to this Agreement.
GUARANTORS: See the introductory paragraph to this Agreement.
HOLDER: Any record holder of Registrable Securities.
INDEMNIFIED PERSON: See the third paragraph of Section 7.
INDEMNIFYING PERSON: See the third paragraph of Section 7.
INDENTURE: The Indenture, dated as of May 9, 1997, between the
Company, the Guarantors and Bank One, Columbus, NA, as trustee, pursuant to
which the Notes are being issued, as amended or supplemented from time to time
in accordance with the terms thereof.
INITIAL PURCHASERS: See the introductory paragraph to this
Agreement.
INITIAL SHELF REGISTRATION STATEMENT: See Section 3(a).
INSPECTORS: See Section 5(o).
ISSUE DATE: The date of original issuance of the Notes.
ISSUERS: Section introductory paragraph to this Agreement.
NASD: See Section 5(t).
NOTES: See the second introductory paragraph to this Agreement.
PARTICIPANT: See the first paragraph of Section 7.
<PAGE>
-3-
PARTICIPATING BROKER-DEALER: See Section 2(b).
PERSON: An individual, corporation, limited or general partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
PRIVATE EXCHANGE: See Section 2(b).
PRIVATE EXCHANGE SECURITIES: See Section 2(b).
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
PURCHASE AGREEMENT: See the second introductory paragraph to this
Agreement.
RECORDS: See Section 5(o).
REGISTRABLE SECURITIES: The Notes upon original issuance thereof and
at all times subsequent thereto, each Exchange Security as to which Section
2(c)(v) hereof is applicable upon original issuance and at all times subsequent
thereto and, if issued, the Private Exchange Securities, until in the case of
any such Notes, Exchange Securities or Private Exchange Securities, as the case
may be, (i) a Registration Statement (other than, with respect to any Exchange
Security as to which Section 2(c)(v) hereof is applicable, the Exchange Offer
Registration Statement) covering such Notes, Exchange Securities or Private
Exchange Securities has been declared effective by the SEC and such Notes,
Exchange Securities or Private Exchange Securities, as the case may be, have
been disposed of in accordance with such effective Registration Statement, (ii)
such Notes, Exchange Securities or Private Exchange Securities, as the case may
be, are sold in compliance with Rule 144, (iii) such Note has been exchanged
for an Exchange Security pursuant to the Exchange Offer and Section 2(c)(v) is
not applicable thereto, or (iv) such Notes, Exchange Securities or Private
Exchange Securities, as the case may be, cease to be outstanding.
REGISTRATION STATEMENT: Any registration statement of the Issuers,
including, but not limited to, the Exchange Offer Registration Statement, that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
RULE 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
<PAGE>
-4-
RULE 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
RULE 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
SHELF NOTICE: See Section 2(c).
SHELF REGISTRATION STATEMENT: See Section 3(b).
SHELF REGISTRATION EVENT: See Section 2(c).
SUBSEQUENT SHELF REGISTRATION STATEMENT: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
TRUSTEE: The trustee under the Indenture and, if applicable, the
trustee under any indenture governing the Exchange Securities and Private
Exchange Securities (if any).
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. EXCHANGE OFFER
(a) The Issuers agree to file with the SEC, on or before the Filing
Date, an offer to exchange (the "EXCHANGE OFFER") any and all of the Registrable
Securities for a like aggregate principal amount of senior subordinated debt
securities of the Company which are identical to the Notes and are guaranteed,
jointly and severally, by each of the Guarantors with terms identical to the
Guaranties (the "EXCHANGE SECURITIES") (and which are entitled to the benefits
of a trust indenture that is substantially identical to the Indenture (other
than such changes as are necessary to comply with any requirements of the SEC to
effect or maintain the qualification of such trust indenture under the TIA) and
which has been qualified under the TIA), except that the Exchange Securities
shall have been registered pursuant to an effective Registration Statement under
the Securities Act and shall contain no restrictive legend thereon. The
Exchange Offer will be registered under the Securities Act on the appropriate
form (the "EXCHANGE OFFER REGISTRATION STATEMENT") and will comply with all
applicable tender offer rules and regulations under the Exchange Act. Each of
the Issuers agrees to use its best efforts (i) to cause the Exchange Offer
Registration Statement to become effective and to commence the Exchange Offer on
or prior to the Effectiveness Date, (ii) to keep the Exchange Offer open for 30
days (or longer if required by applicable law) (the last day of such period, the
"EXPIRATION DATE") and (iii) to exchange Exchange Securities for all Notes
validly tendered and not withdrawn pursuant to the Exchange Offer on or prior to
the fifth day following the Expiration Date.
Each Holder who participates in the Exchange Offer will be deemed to
represent that any Exchange Securities received by it will be acquired in the
ordinary course of its business, that at the time of the
<PAGE>
-5-
consummation of the Exchange Offer such Holder will have no arrangement with
any Person to participate in the distribution of the Exchange Securities in
violation of the provisions of the Securities Act and that such Holder is not
an affiliate of any of the Issuers within the meaning of the Securities Act.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, MUTATIS
MUTANDIS, solely with respect to Registrable Securities that are Private
Exchange Securities, Exchange Securities to which Section 2(c)(v) is applicable
and Exchange Securities held by Participating Broker-Dealers, and the Issuers
shall have no further obligation to register Registrable Securities (other than
Private Exchange Securities and other than Exchange Securities as to which
Section 2(c)(v) hereof applies) pursuant to Section 3 of this Agreement. No
securities other than the Exchange Securities shall be included in the Exchange
Offer Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the Staff of the SEC (and
publicly disseminated) with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Securities received by such broker-dealer in the
Exchange Offer (a "PARTICIPATING BROKER-DEALER"). Such "Plan of Distribution"
section shall also allow the use of the prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange Securities.
Each of the Issuers shall use its best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirements of the
Securities Act for at least 180 days following the first bona fide offering of
securities under such Registration Statement (or such shorter time as such
Persons must comply with such requirements in order to resell the Exchange
Securities) (the "APPLICABLE PERIOD").
If, prior to consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having, or which are reasonably likely to be
determined to have, the status of an unsold allotment in the initial
distribution, the Issuers upon the request of such Initial Purchaser shall,
simultaneously with the delivery of the Exchange Securities in the Exchange
Offer, issue and deliver to such Initial Purchaser, in exchange (the "PRIVATE
EXCHANGE") for the Notes held by such Initial Purchaser, a like principal amount
of debt securities of the Company that are identical to the Exchange Securities
and are guaranteed, jointly and severally, by each of the Guarantors with terms
identical to the Guaranties (the "PRIVATE EXCHANGE SECURITIES") (and which are
issued pursuant to the same indenture as the Exchange Securities) (except for
the placement of a restrictive legend on such Private Exchange Securities). The
Private Exchange Securities shall bear the same CUSIP number as the Exchange
Securities. Interest on the Exchange Securities and Private Exchange Securities
will accrue from the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or, if no interest has been paid on
the Notes, from the Issue Date.
Any indenture under which the Exchange Securities or the Private
Exchange Securities will be issued shall provide that the holders of any of the
Exchange Securities and the Private Exchange Securities will vote and consent
together on all matters to which such holders are entitled to vote or consent as
one class and that none of the holders of the Exchange Securities and the
Private Exchange Securities will have the right to vote or consent as a separate
class on any matter.
<PAGE>
-6-
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Company reasonably determines in
good faith, after consultation with counsel, that it is not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not commenced on or prior to the
Effectiveness Date, (iii) the Exchange Offer is, for any reason, not
consummated on or prior to the 5th day after the Expiration Date, (iv) any
Holder of Private Exchange Securities so requests, or (v) in the case of any
Holder that participates in the Exchange Offer, such Holder does not receive
Exchange Securities on the date of the exchange that may be sold without
restriction under state and federal securities laws (the occurrence of any such
event, a "SHELF REGISTRATION EVENT"), then, in the case of each of clauses (i)
through (v) of this sentence, the Company shall promptly deliver to the Holders
and the Trustee notice thereof (the "SHELF NOTICE") and thereafter the Issuers
shall file an Initial Shelf Registration Statement pursuant to Section 3.
3. SHELF REGISTRATION
If a Shelf Registration Event has occurred (and whether or not an
Exchange Offer Registration Statement has been filed with the SEC or has become
effective or the Exchange Offer has been consummated), then:
(a) INITIAL SHELF REGISTRATION STATEMENT. The Issuers shall promptly
prepare and file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Securities (the "INITIAL SHELF REGISTRATION STATEMENT"). The Issuers shall file
with the SEC the Initial Shelf Registration Statement on or prior to the Filing
Date. The Initial Shelf Registration Statement shall be on Form S-1 or another
appropriate form, if available, permitting registration of such Registrable
Securities for resale by such holders in the manner designated by them
(including, without limitation, in one or more underwritten offerings). The
Issuers shall not permit any securities other than the Registrable Securities to
be included in the Initial Shelf Registration Statement or any Subsequent Shelf
Registration Statement (as defined below). Each of the Issuers shall use their
best efforts to cause the Initial Shelf Registration Statement to be declared
effective under the Securities Act on or prior to the Effectiveness Date, and to
keep the Initial Shelf Registration Statement continuously effective under the
Securities Act until the date which is 24 months from the Closing Date, or such
shorter period ending when (i) all Registrable Securities covered by the Initial
Shelf Registration Statement have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration Statement or (ii) a Subsequent
Shelf Registration Statement covering all of the Registrable Securities has been
declared effective under the Securities Act (such 24 month or shorter period,
the "EFFECTIVENESS PERIOD").
(b) SUBSEQUENT SHELF REGISTRATION STATEMENTS. If the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement ceases to
be effective for any reason at any time during the Effectiveness Period (other
than because of the sale of all of the securities registered thereunder), each
of the Issuers shall use their best efforts to obtain the prompt withdrawal of
any order suspending the effectiveness thereof, and in any event the Issuers
shall within 45 days of such cessation of effectiveness amend the Shelf
Registration Statement in a manner reasonably expected to obtain the withdrawal
of the order suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Securities (a "SUBSEQUENT SHELF REGISTRATION STATEMENT"). If a Subsequent Shelf
Registration Statement is filed, each of the Issuers shall use their best
efforts to cause the Subsequent Shelf Registration Statement to be declared
effective as soon as reasonably practicable after such filing and to keep such
Registration Statement continuously effective until the end of the Effectiveness
Period. As used herein the term "SHELF REGISTRATION STATEMENT" means the Initial
Shelf Registration Statement and any Subsequent Shelf Registration Statement.
(c) SUPPLEMENTS AND AMENDMENTS. The Issuers shall promptly supplement
and amend the Shelf Registration Statement if required by the rules, regulations
or instructions applicable to the registration
<PAGE>
-7-
form used for such Shelf Registration Statement, if required by the
Securities Act, or if reasonably requested by the Holders of a majority in
aggregate principal amount of the Registrable Securities covered by such
Registration Statement or by any underwriter of such Registrable Securities.
4. ADDITIONAL INTEREST
(a) The Issuers and the Initial Purchasers agree that the Holders of
Notes will suffer damages if the Issuers fail to fulfill their obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, the Company agrees to pay,
as liquidated damages, additional interest on the Notes ("ADDITIONAL INTEREST")
under the circumstances and to the extent set forth below (each of which shall
be given independent effect):
(i) if either the Exchange Offer Registration Statement or the Initial
Shelf Registration Statement has not been filed on or prior to the Filing
Date (unless, with respect to the Exchange Offer Registration Statement, a
Shelf Event described in clause (i) of Section 2(c) shall have occurred
prior to the Filing Date), Additional Interest shall accrue on the Notes
over and above the stated interest in an amount equal to $0.05 per week (or
any part thereof) per $1,000 principal amount of Notes for the first
90 days immediately following such date, such Additional Interest
increasing by an additional $0.05 per week (or any part thereof) per
$1,000 principal amount of the Notes at the beginning of each subsequent
90-day period;
(ii) if either the Exchange Offer Registration Statement or the
Initial Shelf Registration Statement is not declared effective by the SEC
on or prior to the Effectiveness Date (unless, with respect to the Exchange
Offer Registration Statement, a Shelf Event described in clause (i) of
Section 2(c) shall have occurred), Additional Interest shall accrue on the
Notes over and above the stated interest in an amount equal to $0.05 per
week (or any part thereof) per $1,000 principal amount of Notes for the
first 90 days immediately following such date, such Additional Interest
increasing by an additional $0.05 per week (or any part thereof) per $1,000
principal amount of the Notes at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Issuers have not exchanged Exchange Securities for all
Notes validly tendered and not withdrawn in accordance with the terms of
the Exchange Offer on or prior to the fifth day after the Expiration Date,
or (B) the Exchange Offer Registration Statement ceases to be effective at
any time prior to the Expiration Date, or (C) if applicable, any Shelf
Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time during the
Effectiveness Period, then Additional Interest shall accrue on the Notes
over and above the stated interest in an amount equal to $0.05 per week (or
any part thereof) per $1,000 principal amount of the Notes for the first 90
days commencing on (x) the sixth day after the Expiration Date, in the case
of (A) above, or (y) the day the Exchange Offer Registration Statement
ceases to be effective in the case of (B) above, or (z) the day such Shelf
Registration Statement ceases to be effective in the case of (C) above,
such Additional Interest increasing by an additional $0.05 per week (or any
part thereof) per $1,000 principal amount of the Notes at the beginning of
each such subsequent 90-day period;
PROVIDED, HOWEVER, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate $0.50 per week per $1,000 principal amount of
the Notes; PROVIDED, FURTHER, HOWEVER, that (1) upon the filing of the Exchange
Offer Registration Statement or a Shelf Registration Statement as required
hereunder (in the case of clause (i) of this Section 4(a)), (2) upon the
effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement as required hereunder (in the case of clause (ii) of this
Section 4(a)) or (3)
<PAGE>
-8-
upon the exchange of Exchange Securities for all Notes validly tendered and
not withdrawn (in the case of clause (iii)(A) of this Section 4(a)), or upon
the effectiveness of the Exchange Offer Registration Statement which had
ceased to remain effective (in the case of clause (iii)(B) of this Section
4(a)), or upon the effectiveness of the Shelf Registration Statement which
had ceased to remain effective (in the case of clause (iii)(C) of this
Section 4(a)), Additional Interest on the Notes as a result of such clause
(or the relevant subclause thereof), as the case may be, shall cease to
accrue (but any accrued amount shall be payable).
(b) The Company shall notify the Trustee within one business day
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "EVENT DATE"). The Company shall
pay the Additional Interest due on the Registrable Securities by depositing with
the Trustee, in trust, for the benefit of the Holders thereof, on or before the
applicable semi-annual interest payment date, immediately available funds in
sums sufficient to pay the Additional Interest then due to Holders of
Registrable Securities. Each obligation to pay Additional Interest shall be
deemed to accrue immediately following the occurrence of the applicable Event
Date. Any accrued Additional Interest amount shall be due and payable on each
interest payment date immediately after the applicable Event Date to the record
Holder of Registrable Securities entitled to receive the interest payment to be
made on such date as set forth in the Indenture. The parties hereto agree that
the Additional Interest provided for in this Section 4 constitutes a reasonable
estimate of the damages that may be incurred by Holders of Registrable
Securities by reason of the failure of a Shelf Registration Statement or
Exchange Offer Registration Statement to be filed or declared effective, or a
Shelf Registration Statement or an Exchange Offer Registration Statement to
remain effective, as the case may be, in accordance with this Section 4.
(c) Each of the Guarantors, jointly and severally, guarantee the
payment of the Additional Interest to the same extent and in the same manner as
the guarantee provisions set forth in the Indenture, which provisions are
incorporated herein by reference MUTATIS MUTANDIS.
5. REGISTRATION PROCEDURES
In connection with the registration of any Registrable Securities
pursuant to Sections 2 or 3 hereof, each of the Issuers shall use their best
efforts to effect such registrations to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Issuers shall:
(a) prepare and file with the SEC on or before the Filing Date, a
Registration Statement or Registration Statements as prescribed by Section 2
or 3, and to use their best efforts to cause each such Registration Statement
to become effective and remain effective as provided herein, provided that,
if (1) such filing is pursuant to Section 3, or (2) a Prospectus contained in
an Exchange Offer Registration Statement filed pursuant to Section 2 is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities during the Applicable
Period, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Issuers shall furnish to and afford
the Holders of the Registrable Securities and each such Participating
Broker-Dealer, as the case may be, covered by such Registration Statement,
their counsel and the managing underwriters, if any, a reasonable opportunity
to review copies of all such documents (including copies of any documents to
be incorporated by reference therein and all exhibits thereto) proposed to be
filed (at least five days prior to such filing); the Issuers shall not file
any Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded a reasonable
opportunity to review prior to the filing of such document, if the Holders of
a majority in aggregate principal amount of the Registrable Securities
covered by such Registration Statement, or each such
<PAGE>
-9-
Participating Broker-Dealer, as the case may be, their counsel, or the
managing underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration Statement or Exchange
Offer Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the Effectiveness
Period, in the case of a Shelf Registration Statement, or until the later of
the Expiration Date and the Applicable Period, in the case of the Exchange
Offer Registration Statement; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to it with respect to the disposition of all securities covered by
such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities
being sold by a Participating Broker-Dealer covered by any such Prospectus;
(c) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, notify the selling Holders of
Registrable Securities, or each such Participating Broker-Dealer, as the case
may be, their counsel and the managing underwriters, if any, promptly (but
in any event within five business days), and confirm such notice in writing,
(i) when a Prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or
any post-effective amendment, when the same has become effective (including
in such notice a written statement that any Holder may, upon request, obtain,
without charge, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and
exhibits); (ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose; (iii) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of
the Registrable Securities the representations and warranties of any of the
Issuers contained in any agreement (including any underwriting agreement)
contemplated by Section 5(n) below cease to be true and correct; (iv) of the
receipt by any of the Issuers of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securities or the Exchange
Securities to be sold by any Participating Broker-Dealer for offer or sale in
any jurisdiction, or the initiation or threatening of any proceeding for such
purpose; (v) of the happening of any event or any information becoming known
that makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein
by reference untrue in any material respect or that requires the making of
any changes in such Registration Statement, Prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading,
and that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that such notification need not specifically identify such event if
notification of the occurrence thereof would, in the Company's reasonable
judgment, involve the disclosure of confidential non-public information; and
(vi) of the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate;
<PAGE>
-10-
(d) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, use their best efforts to prevent
the issuance of any order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any of the
Registrable Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer for sale in any jurisdiction, and, if any such
order is issued, to use their best efforts to obtain the withdrawal of any
such order at the earliest possible moment;
(e) if a Shelf Registration Statement is filed pursuant to Section
3 and if requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Registrable Securities being
sold in connection with an underwritten offering, (i) promptly incorporate in
a prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, or such Holders or their respective counsel
reasonably request to be included therein; and (ii) make all required filings
of such prospectus supplement or such post-effective amendment as soon as
reasonably practicable after the Company has received notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment;
(f) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, furnish to each selling Holder of
Registrable Securities and to each such Participating Broker-Dealer who so
requests and upon request to their respective counsel and each managing
underwriter, if any, without charge, one conformed copy of the Registration
Statement or Registration Statements and each post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference and all
exhibits;
(g) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, deliver to each selling Holder of
Registrable Securities, or each such Participating Broker-Dealer, as the case
may be, their counsel, and the underwriters, if any, without charge, as many
copies of the Prospectus or Prospectuses (including each form of preliminary
prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably request;
and, subject to the last paragraph of this Section 5, each of the Issuers
hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Registrable Securities
or each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in connection with the
offering and sale of the Registrable Securities covered by or the sale by
Participating Broker-Dealers of the Exchange Securities pursuant to such
Prospectus and any amendment or supplement thereto ;
(h) prior to any public offering of Registrable Securities or any
delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, use their best efforts to register
or qualify, and to cooperate with the selling Holders of Registrable
Securities or each such Participating Broker-Dealer, as the case may be, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities or Exchange Securities, as the
case may be, for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriters reasonably request in
<PAGE>
-11-
writing, PROVIDED , HOWEVER, that where Exchange Securities held by
Participating Broker-Dealers or Registrable Securities are offered other than
through an underwritten offering, the Issuers shall cause their counsel to
(i) perform Blue Sky investigations and file registrations and qualifications
required to be filed pursuant to this Section 5(h); (ii) use their best
efforts to keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is
required to be kept effective hereunder; and (iii) do any and all other acts
or things necessary or advisable to enable the disposition in such
jurisdictions of the Exchange Securities held by Participating Broker-Dealers
or the Registrable Securities covered by the applicable Registration
Statement, PROVIDED, FURTHER, HOWEVER, that none of the Issuers shall in any
case be required to (A) qualify generally to do business in any jurisdiction
where it is not then so qualified, (B) take any action that would subject it
to general service of process in any such jurisdiction where it is not then
so subject or (C) subject itself to taxation in excess of a nominal dollar
amount in any such jurisdiction;
(i) if a Shelf Registration Statement is filed pursuant to Section
3, cooperate with the selling Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust Company; and enable such
Registrable Securities to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or Holders may
reasonably request;
(j) use their best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities, except as may be required solely
as a consequence of the nature of such selling Holder's business, in which
case the Issuers will cooperate in all reasonable respects with the filing of
such Registration Statement and the granting of such approvals;
(k) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 5(c)(v) or 5(c)(vi) above, as promptly as
practicable prepare and (subject to Section 5(a) above) file with the SEC,
solely at the expense of the Issuers, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein
by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold
thereunder or to the purchasers of the Exchange Securities to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(l) use their best efforts to cause the Registrable Securities
covered by a Registration Statement or the Exchange Securities, as the case
may be, to be rated with the appropriate rating agencies, if so requested by
the Holders of a majority in aggregate principal amount of Registrable
Securities covered by such Registration Statement or a Participating
Broker-Dealer selling Exchange Securities, as the case may be, or the
managing underwriters, if any;
(m) prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the Trustee with printed
certificates for the Registrable Securities in a form eligible for deposit
with The Depository Trust Company; and (ii) provide a CUSIP number for the
Registrable Securities;
<PAGE>
-12-
(n) in connection with an underwritten offering of Registrable
Securities pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings and take all
such other actions as are reasonably requested by the managing underwriters
in order to expedite or facilitate the registration or the disposition of
such Registrable Securities, and in such connection, (i) make such
representations and warranties to the underwriters, with respect to the
business of the Issuers and their subsidiaries and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings, and confirm the same if
and when reasonably requested; (ii) use their best efforts to obtain opinions
of counsel to the Issuers and updates thereof in form and substance
reasonably satisfactory to the managing underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested
in underwritten offerings and such other matters as may be reasonably
requested by underwriters; (iii) use their best efforts to obtain "cold
comfort" letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriters from the independent certified
public accountants of the Issuers (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company or any of its subsidiaries for which
financial statements and financial data are, or are required to be, included
in the Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten offerings
and such other matters as reasonably requested by underwriters; and (iv) if
an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures comparable to those set forth in
Section 7 hereof (or such other provisions and procedures reasonably
acceptable to the Holders of a majority in aggregate principal amount of
Registrable Securities covered by such Registration Statement and the
managing underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section, all of which shall be done at each
closing under such underwriting agreement, or as and to the extent required
thereunder;
(o) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, subject to the prior receipt by the
Company of undertakings to use reasonable efforts to preserve the
confidentiality of any information disclosed by the Issuers pursuant hereto
in form and substance reasonably satisfactory to the Company, make available
for inspection by any selling Holder of such Registrable Securities being
sold, or each such Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of Registrable Securities,
if any, and any attorney, accountant or other agent retained by any such
selling Holder or each such Participating Broker-Dealer, as the case may be,
or underwriter (collectively, the "INSPECTORS"), at the offices where
normally kept, during reasonable business hours, all relevant financial and
other records, pertinent corporate documents and properties of the Issuers
and their subsidiaries (collectively, the "RECORDS") as shall be necessary to
enable them to exercise any applicable due diligence responsibilities, and
cause the officers, directors and employees of the Issuers and their
subsidiaries to supply all information in each case requested by any such
Inspector in connection with such Registration Statement; PROVIDED, HOWEVER,
that records which the Company determines, in good faith, to be confidential
and any Records which the Company notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement; (ii) the release of such Records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction; (iii)
the information in such Records has been made generally available to the
public; or (iv) release thereof is necessary or advisable in connection with
any action, suit or proceeding involving any Holder or other Inspector;
<PAGE>
-13-
(p) provide for an indenture trustee for the Registrable Securities
or the Exchange Securities, as the case may be, and cause the Indenture or
the trust indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange
Offer or the first Registration Statement relating to the Registrable
Securities; and in connection therewith, cooperate with the trustee under any
such indenture and the holders of the Registrable Securities to effect such
changes to such indenture as may be required for such indenture to be so
qualified in accordance with the terms of the TIA; and execute, and use their
best efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required
to be filed with the SEC to enable such indenture to be so qualified in a
timely manner;
(q) comply with all applicable rules and regulations of the SEC to
the extent and so long as they are applicable to the Exchange Offer
Registration Statement or the Shelf Registration Statement and make generally
available to their securityholders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Securities are sold to underwriters
in a firm commitment or best efforts underwritten offering; and (ii) if not
sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month periods;
(r) upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company in customary form, relating to
the Exchange Securities or the Private Exchange Securities, as the case may
be, addressed to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer or the Private Exchange, as
the case may be, and which includes an opinion that (i) each of the Issuers
have duly authorized, executed and delivered the Exchange Securities and
Private Exchange Securities, the Guaranties to be endorsed thereon and the
related indenture; and (ii) each of the Exchange Securities or the Private
Exchange Securities, as the case may be, the Guaranties endorsed thereon and
the related indenture and guarantees thereunder constitute legal, valid and
binding obligations of each of the Issuers party thereto, enforceable against
each of the Issuers party thereto in accordance with their respective terms
(with customary exceptions);
(s) if an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Securities by Holders to the
Company (or to such other Person as directed by the Company) in exchange for
the Exchange Securities or the Private Exchange Securities, as the case may
be, mark, or caused to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be; in no
event shall such Registrable Securities be marked as paid or otherwise
satisfied;
(t) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association
of Securities Dealers, Inc. (the "NASD"); and
(u) use their best efforts to take all other steps necessary to
effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or
<PAGE>
-14-
Participating Broker-Dealer and the distribution of such Registrable
Securities or Exchange Securities to be sold by such Participating
Broker-Dealer, as the case may be, as the Issuers may, from time to time,
reasonably request. The Issuers may exclude from such registration the
Registrable Securities or Exchange Securities of any selling Holder or
Participating Broker-Dealer, as the case may be, who unreasonably fails to
furnish such information within a reasonable time after receiving such
request.
Each Holder of Registrable Securities and each Participating
Broker-Dealer agrees by acquisition of such Registrable Securities or
Exchange Securities to be sold by such Participating Broker-Dealer, as the
case may be, that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii), 5(c)(iv),
5(c)(v) or 5(c)(vi), such Holder will forthwith discontinue disposition of
such Registrable Securities covered by such Registration Statement or
Prospectus or Exchange Securities to be sold by such Participating
Broker-Dealer, as the case may be, until such holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 5(k), or
until it is advised in writing (the "ADVICE") by the Company that the use of
the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto.
6. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuers shall be borne by the Issuers
whether or not the Exchange Offer Registration Statement or a Shelf
Registration Statement is filed or becomes effective, including, without
limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the
NASD in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel) in such
jurisdictions (x) where the holders of Registrable Securities are located, in
the case of the Exchange Securities, or (y) as provided in Section 5(h), in
the case of Registrable Securities to be sold in a public offering or
Exchange Securities to be sold by a Participating Broker-Dealer during the
Applicable Period)); (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities or Exchange
Securities in a form eligible for deposit with The Depository Trust Company
and of printing prospectuses if the printing of prospectuses is requested by
the managing underwriters, if any, or, in respect of Registrable Securities
or Exchange Securities to be sold by any Participating Broker-Dealer during
the Applicable Period, by the Holders of a majority in aggregate principal
amount of the Registrable Securities included in any Registration Statement
or a Participating Broker-Dealer selling Exchange Securities, as the case may
be); (iii) messenger, telephone and delivery expenses incurred by the
Issuers; (iv) fees and disbursements of counsel for the Issuers and
reasonable fees and disbursements of special counsel for the sellers of
Registrable Securities (subject to the provisions of Section 6(b)); (v) fees
and disbursements of all independent certified public accountants referred to
in Section 5(n)(iii) (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance); (vi) the reasonable fees and expenses of any "qualified
independent underwriter" or other independent appraiser participating in an
offering pursuant to Rule 2710 or Rule 2720 of the Conduct Rules of the NASD;
(vii) rating agency fees; (viii) Securities Act liability insurance, if the
Issuers desire such insurance; (ix) fees and expenses of all other Persons
retained by the Issuers; (x) internal expenses of the Issuers (including,
without limitation, all salaries and expenses of officers and employees of
the Issuers performing legal or accounting duties); (xi) the expense of any
annual audit of the Issuers; (xii) the fees and expenses incurred by the
Issuers in connection with the listing of the Registrable Securities on any
securities exchange; and (xiii) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, securities sales agreements, indentures and any other documents
necessary in order to comply with this Agreement.
<PAGE>
-15-
(b) In connection with any Shelf Registration Statement hereunder,
the Issuers shall reimburse the Holders of the Registrable Securities being
registered in such registration for the reasonable fees and disbursements of
not more than one counsel (in addition to appropriate local counsel) chosen
by the Holders of a majority in aggregate principal amount of the Registrable
Securities to be included in such Registration Statement and other reasonable
out-of-pocket expenses of the Holders of Registrable Securities incurred in
connection with the registration of the Registrable Securities.
7. INDEMNIFICATION
Each of the Issuers, jointly and severally, agrees to indemnify and
hold harmless each Holder of Registrable Securities and each Participating
Broker-Dealer selling Exchange Securities during the Applicable Period, the
officers and directors of each such Person, and each Person, if any, who
controls any such Person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "PARTICIPANT"),
from and against any and all losses, claims, damages and liabilities
(including, without limitation, the reasonable legal fees and other expenses
actually incurred in connection with any suit, action or proceeding or any
claim asserted) caused by any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement (or any amendment
thereto) or Prospectus (as amended or supplemented if the Issuers shall have
furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with
information relating to such Holder of Registrable Securities or
Participating Broker-Dealer, as the case may be, furnished to the Company in
writing by such Holder of Registrable Securities or Participating
Broker-Dealer, as the case may be, expressly for use therein; PROVIDED,
HOWEVER, that the foregoing indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Holder of Registrable
Securities or Participating Broker-Dealer, as the case may be (or to the
benefit of any officer or director of, or of any Person controlling, such
Holder of Registrable Securities or Participating Broker-Dealer) from whom
the Person asserting any such losses, claims, damages or liabilities
purchased Registrable Securities or Exchange Securities, as the case may be,
to the extent that such untrue statement or omission or alleged untrue
statement or omission made in such preliminary prospectus is eliminated or
remedied in the related Prospectus (as amended or supplemented if the Issuers
shall have furnished any amendments or supplements thereto) and such
Prospectus does not contain any other untrue statement or omission or alleged
untrue statement or omission of a material fact and, to the extent required
by applicable law, a copy of the related Prospectus (as so amended or
supplemented) shall not have been furnished to such Person at or prior to the
sale of such Registrable Securities or Exchange Securities, as the case may
be, to such Person, unless such failure to furnish was a result of
non-compliance by the Issuers with Section 5(g).
Each Holder of Registrable Securities and each Participating
Broker-Dealer selling Exchange Securities during the Applicable Period will
be required to agree, severally and not jointly, to indemnify and hold
harmless each of the Issuers, its directors, its officers who sign the
Registration Statement and each Person who controls any Issuer within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
to the same extent as the foregoing indemnity from the Issuers to each
Participant, but only with reference to information relating to such Holder
of Registrable Securities or Participating Broker-Dealer, as the case may be,
furnished to the Company in writing by such Holder of Registrable Securities
or Participating Broker-Dealer, as the case may be, expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto, or
any preliminary prospectus. The liability of any such Holder of Registrable
Securities or Participating Broker-Dealer, as the case may be, under this
paragraph shall in no event exceed the proceeds received by such
<PAGE>
-16-
Holder of Registrable Securities or Participating Broker-Dealer, as the case
may be, from sales of Registrable Securities or Exchange Securities, as the
case may be, giving rise to such obligations.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted
against any Person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such Person (the "INDEMNIFIED
PERSON") shall promptly notify the Person against whom such indemnity may be
sought (the "INDEMNIFYING PERSON") in writing, and the Indemnifying Person,
upon request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person
and any others the Indemnifying Person may designate in such proceeding and
shall pay the reasonable fees and expenses incurred by such counsel related
to such proceeding; PROVIDED, HOWEVER, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which
it may have hereunder or otherwise (unless and only to the extent that the
Indemnifying Person was otherwise unaware that such suit, action, proceeding,
claim, or demand shall have been brought or asserted and such failure
actually materially prejudices the Indemnifying Person (through the
forfeiture of substantive rights or defenses)). In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but, other
than in circumstances involving a conflict among Indemnified Persons, the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall
have agreed to the contrary; (ii) the Indemnifying Person has failed within a
reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person; or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to an actual or potential conflict of interest. It is
understood that, other than in circumstances involving a conflict among
Indemnified Persons, the Indemnifying Person shall not, in connection with
any proceeding or related proceeding in the same jurisdiction, be liable for
the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Participants shall be designated in writing by the Holders of Registrable
Securities or Participating Broker-Dealers selling Exchange Securities during
the Applicable Period, as the case may be, who sold a majority in interest of
Registrable Securities or Exchange Securities, as the case may be, sold by
all such Holders of Registrable Securities or Participating Broker-Dealers,
as the case may be. Any such separate firm for the Issuers, its directors,
its officers and such control Persons of the Issuers shall be designated in
writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the Indemnifying Person agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified
Person for reasonable fees and expenses incurred by counsel as contemplated
by the third sentence of this paragraph, the Indemnifying Person agrees that
it shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days
after receipt by such Indemnifying Person of the aforesaid request and (ii)
such Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; PROVIDED,
HOWEVER, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Party is contesting, in good faith, such request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party, unless such settlement includes an unconditional written release of
such Indemnified Person in form and substance satisfactory to the Indemnified
Persons from all liability on claims that are the subject matter of such
proceeding.
<PAGE>
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If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason unavailable to, or
insufficient to hold harmless, an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or liabilities
in such proportion as is appropriate to reflect (i) the relative benefits
received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the initial offering of the
Notes or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements
or omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative benefits received by
the Issuers on the one hand and the Holders of Registrable Securities or
Participating Broker-Dealers selling Exchange Securities during the
Applicable Period, as the case may be, on the other shall be deemed to be in
the same proportion as the total proceeds from the initial offering (net of
discounts and commissions but before deducting expenses) of the Notes
received by the Issuers bears to the total proceeds received by such Holders
of Registrable Securities or Participating Broker-Dealers, as the case may
be, from the sale of Registrable Securities or Exchange Securities, as the
case may be. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Issuers, on the one
hand, or such Holder of Registrable Securities or Participating
Broker-Dealer, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable considerations
appropriate in the circumstances.
The parties shall agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by PRO RATA
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any reasonable legal or other expenses actually incurred by
such Indemnified Person in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 7, in no
event shall a Holder of Registrable Securities or Participating Broker-Dealer
be required to contribute any amount in excess of the amount by which
proceeds received by such Holder of Registrable Securities or Participating
Broker-Dealer, as the case may be, from sales of Registrable Securities or
Exchange Securities, as the case may be, exceeds the amount of any damages
that such Holder of Registrable Securities or Participating Broker-Dealer, as
the case may be, has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
7 will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. RULE 144 AND RULE 144A
Each of the Issuers covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if at
any time any of the Issuers is not required to file such reports, it will,
upon the request of any
<PAGE>
-18-
Holder of Registrable Securities may reasonably request, to the extent
required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 and Rule 144A under the
Securities Act.
9. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Holders of a majority in
aggregate principal amount of such Registrable Securities included in such
offering and reasonably acceptable to the Company.
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements (however the terms applicable to each Holder shall
be identical in all respects) and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements
applicable to all Holders.
10. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by any of the Issuers of
any of its obligations under this Agreement, each Holder of Registrable
Securities, in addition to being entitled to exercise all rights provided
herein, in the Indenture or, in the case of the Initial Purchasers, in the
Purchase Agreement or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Issuers agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. None of the Issuers has, as of the
date hereof, entered into and each shall not, after the date of this
Agreement, enter into any agreement with respect to any of its securities
that is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions
hereof. None of the Issuers has entered into and each will not enter into
any agreement with respect to any of its securities which will grant to any
Person "piggy-back" rights with respect to a Registration Statement.
(c) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Issuers
shall not, directly or indirectly, take any action with respect to the
Registrable Securities as a class that would adversely affect the ability of
the Holders of Registrable Securities to include such Registrable Securities
in a registration undertaken pursuant to this Agreement.
(d) JOINT AND SEVERAL OBLIGATIONS; ADDITION OF GUARANTORS. The
Guarantors agree that their obligations under this agreement are joint and
several. So long as any Registrable Securities remain outstanding, the
Company shall cause each of its subsidiaries that becomes a guarantor of the
Notes under the Indenture to execute and deliver an instrument pursuant to
which such subsidiary agrees to be bound by the provisions of this agreement
as a Guarantor.
<PAGE>
-19-
(e) AMENDMENTS AND WAIVERS. Except as provided in paragraph (d)
above, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, otherwise than with the prior written consent of (A)
the Holders of not less than a majority in aggregate principal amount of the
then outstanding Registrable Securities and (B) in circumstances that would
adversely affect the Participating Broker-Dealers, the Participating
Broker-Dealers holding not less than a majority in aggregate principal amount
of the Exchange Securities held by all Participating Broker-Dealers;
PROVIDED, HOWEVER, that Section 7 and this Section 10(d) may not be amended,
modified or supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any Person who was a Holder or
Participating Broker-Dealer of Registrable Securities or Exchange Securities,
as the case may be, disposed of pursuant to any Registration Statement)
affected by any such amendment, modification or supplement. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders of Registrable
Securities may be given by Holders of at least a majority in aggregate
principal amount of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement.
(f) NOTICES. All notices and other communications (including
without limitation any notices or other communications to the Trustee)
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or
telecopier:
(i) if to a Holder of Registrable Securities, at the most current address
given by the Trustee to the Company; and
(ii) if to the Issuers, at Reliant Building Products, Inc., 3030 LBJ
Freeway, Suite 300, Dallas, Texas 75234, Attention: Chief Financial
Officer.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the trustee under the
Indenture at the address specified in such Indenture.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Securities.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
<PAGE>
-20-
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(l) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their agreement,
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.
(m) SECURITIES HELD BY THE ISSUERS OR ITS AFFILIATES. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by any of the
Issuers or its affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be deemed to be not outstanding for purposes of
determining whether such consent or approval was given by the Holders of such
required percentage.
[Signature Pages Follow]
<PAGE>
S-1
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
RELIANT BUILDING PRODUCTS, INC.
By: /s/ David G. Fiore
-------------------------------------------
Name: David G. Fiore
Title: President
RBP OF ARIZONA, INC.
RBP CUSTOM GLASS, INC.
TIMBER TECH, INC.
RBP TRANS, INC.
RBP FENESCO, INC.
LEVAN BUILDERS SUPPLY COMPANY, INC.
RBP OF TEXAS, INC.
By: /s/ David G. Fiore
-------------------------------------------
Name: David G. Fiore
Title: President
CHASE SECURITIES INC.
By: /s/ Lauren Camp
-------------------------------------------
Name: Lauren Camp
Title: Vice President
CIBC WOOD GUNDY SECURITIES CORP.
By: /s/ Brian S. Gerson
-------------------------------------------
Name: Brian S. Gerson
Title: Managing Director
<PAGE>
[letterhead of]
KELLY, HART & HALLMAN
(a Professional Corporation)
201 Main Street, Suite 2500
Fort Worth, Texas 76102
July 2, 1997
Reliant Building Products, Inc.
3030 LBJ Freeway, Suite 300
Dallas, Texas 75234
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
This firm has acted as legal counsel to Reliant Building Products, Inc., a
Delaware corporation (the "Company"), in connection with the Registration
Statement on Form S-4 (the "Registration Statement") pertaining to the Company's
offering of up to $70,000,000 principal amount of 10-7/8% Series B Senior
Subordinated Notes due 2004 of the Company (together with the guarantees of the
Guarantors (as defined) attached thereto, the "New Notes").
In connection with this opinion, we have made the following assumptions:
(i) all documents submitted to or reviewed by us, including all amendments and
supplements thereto, are accurate and complete and if not originals are true and
correct copies of the originals; (ii) the signatures on each of such documents
by the parties thereto are genuine; (iii) each individual who signed such
documents had the legal capacity to do so; and (iv) all persons who signed such
documents on behalf of a corporation were duly authorized to do so. We have
assumed that there are no amendments, modifications or supplements to such
documents other than those amendments, modifications and supplements that are
known to us.
Based on the foregoing, and subject to the limitations and qualifications
set forth herein, we are of the opinion that:
1. The Company and each of LeVan Builders Supply Company, Inc., an
Oklahoma corporation, RBP of Arizona, Inc., a Delaware corporation, RBP Custom
Glass, Inc., a Delaware corporation, RBP Trans, Inc., a Delaware corporation,
RBP Fenesco, Inc., a Delaware corporation, RBP of Texas, Inc., a Delaware
corporation, and Timber Tech, Inc., a Mississippi corporation (collectively, the
"Guarantors"), were incorporated, exist and are in good standing under the laws
of their respective states of incorporation.
2. The issuance of the New Notes has been duly authorized and, upon the
due execution, authentication and delivery of the New Notes in accordance with
the terms of the Indenture governing the New Notes between the Company, the
Guarantors and Bank One, N.A., as Trustee (the "Indenture"), against the
exchange of a like principal amount of 10-7/8% Series A
<PAGE>
Reliant Building Products, Inc.
July 2, 1997
Page 2
Senior Subordinated Notes due 2004 of the Company (the "Old Notes") in
accordance with the terms and conditions set forth in the Prospectus
constituting a part of the Registration Statement, the New Notes will be
validly issued.
3. Upon the due execution, authentication and delivery of the New
Notes in accordance with the terms of the Indenture, against the exchange of
a like principal amount of Old Notes in accordance with the terms and
conditions set forth in the Prospectus constituting a part of the
Registration Statement, the New Notes will constitute enforceable obligations
of the Company and the Guarantors, except (a) as such enforceability is
limited by applicable bankruptcy, insolvency, fraudulent conveyance and other
debtor relief laws of general applicability and (b) that the remedies of
specific performance and injunctive and other forms of equitable relief are
subject to equitable defenses and to the discretion of the court before which
any proceeding may be brought.
This opinion is further limited and qualified in all respects as follows:
For purposes of rendering the opinion set forth in numbered paragraph 1
above, we have relied solely upon certificates of the Secretary of State of
the States of Delaware, Mississippi and Oklahoma.
For purposes of rendering the opinion set forth in numbered paragraph 2
above, we have, with your permission, assumed that the laws of the States of
Mississippi and Oklahoma are the same as the laws of the State of Delaware.
This opinion is specifically limited to matters of the existing laws of
the United States of America and the General Corporation Law of the State of
Delaware; provided, however, that the opinion in numbered paragraph 2
relating to provisions of the Indenture and the opinion in numbered paragraph
3 relating to the enforceability of the New Notes are each limited solely to
the existing laws of the State of New York. Except as expressly stated in
the foregoing sentence, we express no opinion as to the applicability of the
laws of any other particular jurisdiction to the transactions described in
this opinion.
This opinion is limited to the specific opinions expressly stated
herein, and no other opinion is implied or may be inferred beyond the
specific opinions expressly stated herein.
This opinion is intended solely for your benefit. It is not to be
quoted in whole or in part, disclosed, made available to or relied upon by
any other person, firm or entity without our express prior written consent.
This opinion is based upon our knowledge of the law and facts as of the
date hereof. We assume no duty to update or supplement this opinion to
reflect any facts or circumstances that may hereafter come to our attention
or to reflect any changes in any law that may hereafter occur or become
effective.
<PAGE>
Reliant Building Products, Inc.
July 2, 1997
Page 3
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the heading
"Legal Matters" in the Prospectus constituting a part of the Registration
Statement.
Respectfully submitted,
/s/ Kelly, Hart & Hallman
KELLY, HART & HALLMAN
(a professional corporation)
<PAGE>
STOCKHOLDERS AGREEMENT
dated effective as of May 9, 1997
by and among
RBPI HOLDING CORPORATION
and
EACH OF THE STOCKHOLDERS
REFERRED TO HEREIN
<PAGE>
TABLE OF CONTENTS
1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. General Restrictions on Disposition. . . . . . . . . . . . . . . . . . . 4
3. Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Grant and Exercise of Options. . . . . . . . . . . . . . . . . . . . . . 8
(a) Grant of Options. . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Call Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Exercise of Options . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Restriction on Transfer . . . . . . . . . . . . . . . . . . . . . . 9
(e) Subsequent Transactions . . . . . . . . . . . . . . . . . . . . . . 9
5. Call Options to Investor Stockholders. . . . . . . . . . . . . . . . . . 10
(a) Grant of Call Options to Investor Stockholders. . . . . . . . . . . 10
(b) Exercise of Call Options by Investor Stockholders . . . . . . . . . 10
6. Options in Respect of Divorce. . . . . . . . . . . . . . . . . . . . . . 10
7. Co-Sale Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Tag-Along Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Drag-Along Rights . . . . . . . . . . . . . . . . . . . . . . . . . 11
8. Termination of Restrictions and Options. . . . . . . . . . . . . . . . . 12
9. Stock Certificate Legend . . . . . . . . . . . . . . . . . . . . . . . . 12
10. Certain Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Charter and Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Voting of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Effect of Other Laws and Agreements . . . . . . . . . . . . . . . . 13
(d) Right to Purchase Shares. . . . . . . . . . . . . . . . . . . . . . 13
11. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15. Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
16. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
i
<PAGE>
17. Multiple Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 14
18. Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . 14
19. Continuation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . 15
20. Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
21. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
22. Cumulative Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
23. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
24. Obligations of Stockholder's Spouse. . . . . . . . . . . . . . . . . . . 15
ii
<PAGE>
STOCKHOLDERS AGREEMENT
This Stockholders Agreement ("Agreement") is entered into effective as of
May 9, 1997 (the "Effective Date"), by and among RBPI Holding Corporation, a
Delaware corporation (the "Company"), and the undersigned stockholders of the
Company (the "Stockholders").
RECITALS
A. The Stockholders have acquired shares of the common stock of the
Company, par value $0.01 per share.
B. The Management Stockholders (as defined below) and the Company are
entering into a Registration Rights Agreement (the "Registration Rights
Agreement"), dated as of even date herewith, pursuant to which the Management
Stockholders are being granted certain registration rights.
C. In connection with the acquisition of Shares (as defined below) by the
Stockholders, the Stockholders are entering into this Agreement, which, among
other things, imposes certain restrictions and grants certain rights relating to
the transfer of Shares now or hereafter owned by the Management Stockholders.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
1. DEFINITIONS. (a) As used in this Agreement, the following terms shall
have the respective meanings indicated:
"Affiliate" means any person or entity directly or indirectly
controlling, controlled by or under common control with any other person or
entity.
"Call Option" means the right and option granted by each Management
Stockholder and Other Holder to the Company and certain others to require such
Management Stockholder or Other Holder under circumstances specified herein to
sell all of his Shares to the Company or certain others in accordance with the
terms of this Agreement.
"Cause" means (i) the continued failure of a Management Stockholder to
substantially perform his duties with the Company or any Subsidiary of it (other
than any such failure resulting from Disability), after a demand for substantial
performance is delivered in writing to the Management Stockholder by its Board
of Directors which specifically identifies the manner in which such Management
Stockholder has not substantially performed his duties, (ii) the engaging by a
Management Stockholder in willful, reckless or negligent misconduct which is
injurious to the Company or any Subsidiary of it, monetarily or otherwise, or
(iii) the charging of a Management Stockholder with a felony.
"Deemed Value of the Company" means the positive difference between
(a) the sum of the Enterprise Value of the Company and the amount of the
Company's and the
<PAGE>
Operating Company's cash; and (b) an amount equal to all indebtedness
reflected on the balance sheet of the Company in accordance with GAAP and the
Operating Company.
"Enterprise Value of the Company" means the result obtained by
multiplying (a) the Operating Company's Consolidated EBITDA (as defined in the
Indenture, dated as of even date herewith, pertaining to the Operating Company's
issuance of $70 million aggregate principal amount of senior subordinated notes
due 2004) for the then most recent twelve fiscal months, by (b) the lesser of
(i) 5.4 or (ii) the multiple of twelve-month EBITDA then generally being
utilized to value companies comparable to the Operating Company, as determined
in the sole discretion of the Board of Directors of the Company.
"Derivative Holder" of any Management Stockholder means a person to
whom a Management Stockholder makes a Disposition pursuant to Sections 2(b)(i),
2(b)(ii), 2(b)(iv), or 2(b)(v) hereof.
"Disability" means the Management Stockholder shall have been absent
from his duties with his employer, as a result of the Management Stockholder's
incapacity due to physical or mental illness, for six consecutive months and
that within 30 days after receiving a notice of termination from his employer,
the Management Stockholder shall not have returned to the full-time performance
of his duties. The notice of termination shall be in writing and shall set
forth in reasonable detail the facts claimed to provide the basis for the
employer's determination that a "Disability" exists.
"Disposition" means any sale, transfer, encumbrance, gift, donation,
assignment, pledge, hypothecation, mortgage, creation of a security interest in
or lien on, placement in a trust (voting or otherwise), or other disposition of
any Shares or any interest therein or participation therein, or the stock
certificate or certificates representing any Shares, or any voting trust
certificate or certificates issued with respect to Shares whether voluntary or
involuntary, and whether during an individual Management Stockholder's or Other
Holder's lifetime or upon or after his death, including, but not limited to, any
Disposition by operation of law, by court order, by judicial process, or by
foreclosure, levy or attachment.
"Fair Value" means the result obtained by multiplying (a) the result
obtained by dividing (i) the Deemed Value of the Company by (ii) the number of
Shares outstanding, on a fully-diluted basis, by (b) the number of Shares being
valued.
"Family Group" with respect to a Management Stockholder, means the
Management Stockholder, the Management Stockholder's spouse and children or
grandchildren (whether natural or adopted) and any trust established solely for
the benefit of the Management Stockholder and/or the spouse and/or the children
or grandchildren (whether natural or adopted) of a Management Stockholder.
"Investor Stockholders" means Reliant Partners, L.P. and Reliant
Partners II, L.P.
"Management Stockholders" means the Stockholders who are officers or
key employees of the Company or a Subsidiary of it and are designated as
Management Stockholders on Schedule 1 to this Agreement; officers and key
employees of the Company or a Subsidiary
2
<PAGE>
of it who receive Shares pursuant to any incentive plan; and any
self-directed individual retirement account of a Management Stockholder
("IRA"); provided, however, that (except for the purposes of Section
4(b)(ii)) no person shall be a Management Stockholder after such time as he
(and/or his Derivative Holders) no longer beneficially owns any Shares and he
is no longer employed by the Company or a Subsidiary of it.
"Other Holders" means any Derivative Holders, Third Party Buyers and
persons to whom any Disposition of Shares is made by any Derivative Holder or
Third Party Buyer in accordance with the terms and conditions of this Agreement
(other than pursuant to Section 2(b)(vii) hereof), provided, however, that
neither the Company, any Investor Stockholder nor any Management Stockholder
shall be deemed an "Other Holder."
"Operating Company" means Reliant Building Products, Inc., a Delaware
corporation.
"Pro Rata Part" means, in any particular instance, the proportion that
the number of Shares owned by a Stockholder (assuming for this purpose that all
options, warrants, rights and exchangeable or convertible securities to purchase
or acquire Shares ("Share Equivalents") owned by such Stockholder have been
fully exercised, exchanged or converted) bears to the aggregate number of Shares
owned by all Stockholders (assuming for this purpose that all Share Equivalents
owned by all Stockholders have been fully exercised, exchanged or converted).
"Sale of the Company" means the sale of more than 50% of the Common
Stock, assets or earning power of the Company or more than 50% of the stock,
assets or earning power of the Operating Company to any entity, person or group
(as those terms are used in Section 13(d)(3) of the Securities Exchange Act of
1934) whether through purchase, merger, consolidation, combination or otherwise;
provided, however, that the term "Sale of the Company" shall not include any
such sale to an Affiliate of one or more of the Investor Stockholders unless the
Management Stockholders are required in connection with such sale to terminate
their equity investment in the Company.
"Securities Act of 1933" means the Securities Act of 1933, together
with any amendments thereto and rules and regulations thereunder and any similar
federal statute, rules, or regulations in force in the future.
"Share" means any share of Common Stock. The terms "Share" and
"Common Stock" shall include and apply to any equity security into which the
original Shares and/or Common Stock are converted or for which the original
Shares or Common Stock are exchanged, as well as dividends and other
distributions on Shares of Common Stock that are paid in the form of an equity
security.
"Subsidiary" means, with respect to any person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such person.
3
<PAGE>
"Termination Date" means (i) in the case where the Management
Stockholder's employment is terminated by the Company or any Subsidiary of it
for Disability, 30 days after notice of termination is given to the Management
Stockholder (provided that the Management Stockholder has not returned to the
performance of his duties on a full-time basis during such 30-day period), (ii)
in the case where the Management Stockholder's employment is terminated by the
Company or any Subsidiary of it for any other reason, the date on which the
Company gives notice of termination, (iii) in the case where the Management
Stockholder's employment is terminated voluntarily by the Management
Stockholder, the date of such termination, and (iv) in the case where the
Management Stockholder's employment is terminated due to death, the date of the
Management Stockholder's death.
"Third Party Buyer" means any Proposed Buyer to whom a Disposition of
Offered Shares is made pursuant to Section 3 hereof.
"Transferee" means any person (including an Other Holder) not a party
to this Agreement directly or indirectly receiving Shares, or any interest
therein, or the stock certificate or certificates representing any Shares, or
any voting trust certificate or certificates issued with respect to Shares, from
a Management Stockholder or Other Holder pursuant to a Disposition except
pursuant to Section 2(b)(vii) hereof.
(b) Certain additional terms used in this Agreement are defined in
the Sections indicated opposite such terms below:
"Agreement" Opening Paragraph
"Allocated Shares" Section 6
"Callable Shares" Section 5(b)
"Company" Opening Paragraph
"Company Notice" Section 5(a)
"Company Notice of Acceptance" Section 3(b)
"Divorced Stockholder" Section 6
"Effective Date" Opening Paragraph
"Equity Securities" Section 10(d)
"Exercise Notice" Section 4(c)
"Going Public Date" Section 8
"Initial Company Notice
of Acceptance" Section 3(b)
"Notice of Acceptance" Section 3(b)
"Notice of Divorce" Section 6
"Notice of Proposed Sale" Section 3(a)
"Offered Shares" Section 3(a)
"Proposed Buyer" Section 3(a)
"Proposed Transferor" Section 3
"Registration Rights Agreement" Recital B
"Stockholders" Opening Paragraph
2. GENERAL RESTRICTIONS ON DISPOSITION. (a) During the term of this
Agreement, no Management Stockholder or Other Holder shall directly or
indirectly make a Disposition of
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Shares except as permitted by and in accordance with the provisions of this
Agreement. Except as provided in Section 2(b) hereof, each Disposition
effected, or attempted or purported to be effected, by any of the Management
Stockholders or Other Holders shall require the prior written consent of the
Company. Any Disposition effected, or purported or attempted to be effected,
by a Management Stockholder or Other Holder not in accordance with the terms
and conditions of this Agreement, or to a person who is below 18 years of age
or who has been adjudged incompetent or insane (except Dispositions to the
custodian, guardian or trustee of such persons), or to a person prohibited by
law from holding Shares, shall be void AB INITIO and of no force or effect
and shall not bind the Company.
(b) Notwithstanding the provisions of Section 2(a) hereof, a
Management Stockholder or Other Holder may make a Disposition of any or all of
his Shares as follows:
(i) Any transfer of Shares or title to Shares effected upon the
death of a Management Stockholder or Other Holder through testamentary
disposition or under the laws of intestate succession, provided, however, that
such Shares shall first have been subject to Call Options as provided by Section
4(b) hereof;
(ii) Any transfer of Shares or of title to Shares to a guardian
of the estate of any Management Stockholder or Other Holder incident to
guardianship proceedings resulting from the incapacity or insanity of the
Management Stockholder or Other Holder, provided, however, that such Shares
shall first have been subject to Call Options as provided by Section 4(b)
hereof;
(iii) Any transfer of Shares pursuant to Sections 3, 4, 5, 6
or 7 hereof;
(iv) Any transfer of Shares by a Management Stockholder (or by a
Derivative Holder of such Management Stockholder) to a member of such Management
Stockholder's Family Group, provided, however, that the Management Stockholder
shall retain sole control over the voting, disposition, initiation or
participation in any stockholder litigation, and other decisions with respect to
such Shares;
(v) Any transfer of Shares from an IRA to the beneficiary of
such IRA (which shall be the Management Stockholder) or to another IRA of the
Management Stockholder, provided, however, that the Management Stockholder shall
retain sole control over the voting, disposition, initiation or participation in
any stockholder litigation, and other decisions with respect to such Shares;
(vi) Any Management Stockholder may pledge any or all Shares now
or hereafter owned by him or grant a security interest therein to secure
indebtedness of the Management Stockholder owing to a bank or other financial
institution approved by the Company; provided, however, that any Transferee
pursuant to this Section 2(b)(vi) shall, except with the prior written consent
of the Company, acquire no rights other than a security interest in the Shares
entitling such Transferee to the proceeds from any sale of the Shares pursuant
to the terms of this Agreement (including Sections 3, 4, 5 and 7 hereof, which
shall apply to such Shares) and not title to the Shares or any other rights
incident thereto; and
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(vii) Any transfer of Shares pursuant to the Registration
Rights Agreement.
(c) Notwithstanding the provisions of Section 2(b) hereof, (i) prior
to the consummation of any Disposition referred to in clauses (iii) or (iv)
of Section 2(b) hereof, the Company shall have received the opinion of its
counsel, or counsel reasonably satisfactory to it, that such Disposition does
not require registration under the Securities Act of 1933, or any applicable
state securities laws and (ii) prior to the consummation of any Disposition
referred to in Section 2(b) hereof (other than Section 2(b)(vi) and (vii)),
the Transferee (and such Transferee's spouse) shall, as a condition to its
receipt or acquisition of Shares, execute an appropriate document confirming
that such Transferee (and such Transferee's spouse) takes such Shares subject
to the terms and conditions of this Agreement, including without limitation,
the restrictions contained in this Section 2, the rights of first refusal
provided in Section 3 hereof, the Call Options and other restrictions
provided in Sections 4 and 5 hereof, the options in respect of divorce
provided in Section 6 hereof and the co-sale rights provided in Section 7
hereof. The Company may elect to not give effect on its books to any
Disposition or purported Disposition of Shares held or owned by any
Management Stockholder or Other Holder to any Transferee unless all the
conditions hereof affecting such Disposition shall have been complied with.
(d) If Shares are purchased from the Company by a member of a
Management Stockholder's Family Group, such purchaser shall be deemed to be a
Derivative Holder of suchManagement Stockholder for purposes of this
Agreement.
3. RIGHT OF FIRST REFUSAL. In the event that a Management Stockholder or
Other Holder (the "Proposed Transferor") receives a bona fide offer for the sale
of any or all of his Shares, and he desires to sell any or all of his Shares
pursuant to Section 2(b)(iii) hereof, any such sale shall be effected only
pursuant to the following procedures:
(a) The Proposed Transferor shall prepare a written notice ("Notice
of Proposed Sale") setting forth the number of Shares desired to be sold
("Offered Shares"), the identity and address of the proposed buyer (the
"Proposed Buyer"), the price per share at which the Offered Shares are offered
to be sold, and the other terms and conditions of the proposed sale.
(b) The Proposed Transferor shall deliver the Notice of Proposed Sale
to the Company. If the Company determines to purchase Offered Shares, it shall
give written notice of its acceptance of the Proposed Transferor's offer to the
Proposed Transferor ("Initial Company Notice of Acceptance") within 30 days of
its receipt of such notice. The Initial Company Notice of Acceptance shall set
forth an acceptance of the price and other terms and conditions set forth in the
Notice of Proposed Sale. If the Company determines not to purchase all the
Offered Shares, the Company shall transmit the Notice of Proposed Sale to the
Stockholders within 30 days of its receipt of such notice. Each Stockholder
(other than the Proposed Transferor) shall have the option to purchase some or
all of the Offered Shares at the price and upon the terms and conditions set
forth in the Notice of Proposed Sale. In order to exercise the option to
purchase the Offered Shares, a Stockholder shall give written notice of
acceptance of the Proposed Transferor's offer to the Company ("Notice of
Acceptance") within 30 days of receiving the Notice of Proposed Sale. Each
Notice of Acceptance shall set forth (i)
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an acceptance of the price and other terms and conditions set forth in the
Notice of Proposed Sale and (ii) the minimum and maximum number of Offered
Shares that such Stockholder desires to purchase. For a period of 75 days
after receiving the Notice of Proposed Sale from the Proposed Transferor, the
Company (on behalf of itself and, if applicable, Stockholders) may elect to
purchase all but not less than all the Offered Shares by delivering a written
notice to such effect (the "Company Notice of Acceptance") to the Proposed
Transferor setting forth the number of Offered Shares to be purchased by the
Company and, if applicable, by each Stockholder.
(c) If the Company receives proper Notices of Acceptance which
collectively attempt to exercise options to purchase an aggregate number of
Shares which exceeds the number of Offered Shares (other than Shares to be
purchased by the Company), only a number of such options equal to the number
of Offered Shares (other than Shares to be purchased by the Company) shall be
honored. Options to purchase Shares shall be honored in the following order:
(i) first, all options exercised by the Company; and (ii) second, all options
exercised by Stockholders. If the number of Offered Shares exceeds the
aggregate number of options exercised by the Company pursuant to clause (i)
above, but is not sufficient to permit all the options attempted to be
exercised by Stockholders pursuant to clause (ii) above to be honored, then
the excess number of Offered Shares shall be allocated PRO RATA among such
Stockholders in accordance with the number of shares of Common Stock owned by
each such Stockholder. In no event, shall any Stockholder be required to
purchase more than the maximum number of Offered Shares specified in its
Notice of Acceptance.
(d) The closing of any purchase of any Offered Shares pursuant to
Sections 3(a), 3(b) and 3(c) hereof shall be held at the principal office of
the Company on the date and at the time designated by the Company in the
Company Notice of Acceptance, which such date shall be within 90 days of the
date of the Notice of Proposed Sale received by the Company from the Proposed
Transferor. At the closing, the Proposed Transferor shall (i) represent in
writing that he has good title to the Offered Shares being sold, free and
clear of all liens and (ii) deliver certificates for the Offered Shares in
transferable form and the persons whose options to purchase such Offered
Shares have been honored shall deliver payment therefor.
(e) If the Company or any Stockholder who delivered a timely Notice
of Acceptance fails on the designated closing date to purchase the Offered
Shares allocated to such person pursuant to Section 3(c) hereof, then such
unpurchased Offered Shares shall be reallocated to each of the other persons
who, pursuant to Section 3(c) hereof, would have received an allocation of
such Shares if no Notice of Acceptance had been delivered by the person
failing to purchase the unpurchased Shares.
(f) In the event that the Company has (i) not given the Company
Notice of Acceptance to the Proposed Transferor pursuant to Sections 3(b)
hereof within 75 days after receiving the Notice of Proposed Sale with
respect to Offered Shares, (ii) provided written notice to the Proposed
Transferor that no person intends to exercise his right of first refusal with
respect to Offered Shares, or (iii) given the Company Notice of Acceptance
exercising options for a number of Shares which is less than the number of
Offered Shares, then the Proposed Transferor shall be free for a period of 60
days immediately following such 75-day period to sell the Offered Shares to
the Proposed Buyer specified in the Notice of Proposed Sale at a price and
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upon terms not less favorable to the Proposed Transferor than those offered
in the Notice of Proposed Sale. Similarly, if the Company or any Stockholder
who delivered a timely Notice of Acceptance fails to purchase the Offered
Shares on the designated closing date, and if such Offered Shares cannot be
reallocated pursuant to Section 3(e) hereof, then the Proposed Transferor
shall not be required to sell any Offered Shares to the Company or any
Stockholder and shall be free for a period of 60 days immediately following
the designated closing date to sell the Offered Shares to the Proposed Buyer
specified in the Notice of Proposed Sale at a price and upon terms not less
favorable to the Proposed Transferor than those offered in the Notice of
Proposed Sale. The Offered Shares purchased by the Proposed Buyer shall
continue to be subject to the terms and conditions of this Agreement, as
provided in Section 2(c) hereof.
(g) In the event that a sale of Offered Shares to the Proposed Buyer
pursuant to Section 3(f) hereof is not completed within the applicable time
period provided in Section 3(f) hereof, such Offered Shares shall continue to be
subject to the rights of first refusal, Call Options, options in respect of
divorce, co-sale rights and other restrictions contained in this Agreement.
4. GRANT AND EXERCISE OF OPTIONS.
(a) GRANT OF OPTIONS. Subject to the limitations of this Agreement,
each of the Management Stockholders hereby grants a Call Option to the Company
and certain others, both as described below.
(b) CALL OPTIONS. (i) In the event a Management Stockholder's
employment with the Company or any Subsidiary of it is terminated for any reason
(including voluntary or involuntary, with or without Cause, or as a result of
death or Disability), the Company shall have a Call Option with respect to (A)
all of the Shares owned by such Management Stockholder and (B) all Shares owned
or held by any Other Holders that were transferred to such Other Holder by such
Management Stockholder (or his Derivative Holder) or that were transferred to
such Other Holder by any Other Holder who had directly or indirectly received a
Disposition of such Shares from such Management Stockholder (or his Derivative
Holder). The Call Option pursuant to this Section 4(b)(i) shall be exercisable
at a purchase price equal to Fair Value, determined as of the Termination Date.
(ii) Unless the Call Option under Section 4(b)(i) hereof shall
have become simultaneously exercisable, if a Management Stockholder is adjudged
incompetent or insane, declares bankruptcy, or is the subject of any petition
for involuntary bankruptcy, the Company shall have a Call Option with respect to
(A) all of the Shares owned by such Management Stockholder, whether or not such
Management Stockholder continues to be an employee of the Company or any
Subsidiary of it, and (B) all Shares owned by any Other Holders that were
transferred to such Other Holder by such Management Stockholder (or his
Derivative Holder) or that were transferred to such Other Holder by another
Other Holder who had directly or indirectly received a Disposition of such
Shares from such Management Stockholder (or his Derivative Holder). Similarly,
if an Other Holder dies, is adjudged incompetent or insane, declares bankruptcy
or is the subject of any petition for involuntary bankruptcy, the Company shall
have a Call Option with respect to all of the Shares owned by such Other Holder.
A Call Option pursuant to this Section 4(b)(ii) shall be exercisable at a
purchase price equal to Fair
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Value. For purposes of determining such Fair Value and the times at which
the Call Option can be exercised, the date of the Management Stockholder's or
Other Holder's death, adjudication of incompetency or insanity, declaration
of bankruptcy or filing of a petition for involuntary bankruptcy shall be
deemed the Termination Date.
(iii) The Call Options provided for in Sections 4(b)(i) and
4(b)(ii) hereof shall become exercisable as of the Termination Date of the
Management Stockholder or Other Holder and shall remain exercisable for a period
of 90 days thereafter; provided, however, that in the event of the death of a
Management Stockholder, the period of exercise of the Call Option may be
extended, by written notice given by the Company to the administrator of the
estate or personal representative of such deceased Management Stockholder within
90 days after the Termination Date, to the period ending on the first
anniversary of the Termination Date. The Call Option shall be exercised in the
manner set forth in Section 4(c) hereof.
(c) EXERCISE OF OPTIONS. (i) A Call Option may be exercised by the
Company (or any Investor Stockholder exercising a Call Option pursuant to
Section 5(b) hereof) delivering written notice of exercise ("Exercise Notice")
to the Management Stockholder or Other Holder. The Exercise Notice shall state
the number of Shares to be purchased and designate a closing date for the sale
within 30 days of the date of the Exercise Notice.
(ii) Any closing pursuant to this Section 4 shall be held at the
principal office of the Company on the date and time designated in the Exercise
Notice. There shall be a single closing for all sales in connection with any
event giving rise to a Call Option. At the closing, the Management Stockholder
or other Person selling Shares shall (i) represent in writing that he has good
title to the Offered Shares being sold, free and clear of all liens and (ii)
deliver certificates in transferable form for the Shares to be sold and the
Company (or any Investor Stockholder exercising a Call Option pursuant to
Section 5(b) hereof) shall deliver payment therefor.
(d) RESTRICTION ON TRANSFER. Notwithstanding any other provision of
this Agreement, no Management Stockholder or Other Holder who received Shares
from such Management Stockholder (or from any other Holder who had received such
Shares from such Management Stockholder) may make or purport to make a
Disposition of Shares pursuant to Section 2(b)(iii) hereof for 60 days after
such Management Stockholder receives notice of termination by the Company for
Cause or within 60 days prior to giving notice to the Company of voluntary
termination.
(e) SUBSEQUENT TRANSACTIONS. If a Call Option of the type described
in Section 4(b) is exercised and, within 120 days after such exercise, a written
definitive agreement is entered into for the Sale of the Company or a
registration statement is filed with the Securities and Exchange Commission
covering a public offering of the Common Stock for consideration or at a price
per share that exceeds the price per share paid upon exercise of such Call
Option, the Company shall pay to the Management Stockholder or Derivative
Holder, as the case may be, an amount equal to the excess of (i) the amount such
Management Stockholder or Derivative Holder would have received if such Person's
Shares sold pursuant to such Call Option had been disposed of in such Sale of
the Company or public offering, over (ii) the amount paid to such person upon
exercise of such Call Option; provided, however, that notwithstanding anything
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contained herein to the contrary, this Section 4(e) shall not apply in the
event such Call Option arose as a result of a Management Stockholder's
termination of employment for Cause.
5. CALL OPTIONS TO INVESTOR STOCKHOLDERS.
(a) GRANT OF CALL OPTIONS TO INVESTOR STOCKHOLDERS. If the Company
does not or determines not to exercise its rights pursuant to Section 4 hereof
with respect to Call Options within 30 days after such rights become
exercisable, then any such rights that would have been exercisable by the
Company shall be exercisable by any one or more of the Investor Stockholders at
the same price, at the same times (adjusted for the 30-day delay occasioned by
the period in which the Company could have exercised its Call Option) and
subject to the same procedures that would have applied if the Company had
exercised the Call Option. As soon as practicable after determining that
Investor Stockholders will have the right to exercise Call Options pursuant to
this Section 5(a), the Company shall give written notice (the "Company Notice")
to the Investor Stockholders setting forth the number of Shares subject to the
Call Option, and the price therefor. Investor Stockholders shall elect to
exercise such Call Option by giving an Exercise Notice to the Company within 30
days of delivery of the Company Notice.
(b) EXERCISE OF CALL OPTIONS BY INVESTOR STOCKHOLDERS. If Investor
Stockholders deliver Exercise Notices which collectively attempt to exercise
Call Options for an aggregate number of Shares which exceeds the number of
Shares held by the Management Stockholder and Other Holders whose Shares are
subject to the Call Option ("Callable Shares"), only a number of options equal
to the number of Callable Shares shall be honored. The Call Options shall be
honored in the following order: (A) first, all Call Options that the Company
determines to exercise; and (B) second, all Call Options exercised by the
Investor Stockholders. If the number of Callable Shares exceeds the total
number of Call Options exercised by the Company pursuant to clause (A) above,
but is not sufficient to permit all the additional Call Options attempted to be
exercised by the Investor Stockholders pursuant to clause (B) above to be
honored, then the excess number of Callable Shares shall be allocated PRO RATA
among the Investor Stockholders in accordance with the number of Shares owned by
each such Investor Stockholder. Any Callable Shares in excess of the aggregate
number of Call Options that are exercised shall remain subject to all the terms
and conditions of this Agreement.
6. OPTIONS IN RESPECT OF DIVORCE. In the event of the divorce of any
Management Stockholder or Other Holder (except for the spouse of a Management
Stockholder) ("Divorced Stockholder"), the former spouse of such Divorced
Stockholder shall promptly offer to sell to the Divorced Stockholder, at Fair
Value, all Shares (the "Allocated Shares") transferred by the Divorced
Stockholder to the former spouse as a result of the divorce or otherwise held by
the former spouse (including, without limitation, by direct or indirect
Disposition from the Management Stockholder to such former spouse pursuant to
Section 2(b)(iv) hereof). In the event that the Divorced Stockholder does not
purchase all of such Allocated Shares, the Divorced Stockholder and former
spouse shall promptly give written notice of the divorce to the Secretary of the
Company which shall promptly give written notice to the other Stockholders,
specifying the number of Allocated Shares which the Divorced Stockholder has
declined to purchase ("Notice of Divorce"). The Company and such Stockholders
shall have the option to purchase any or all of the remaining Allocated Shares
from the former spouse of the Divorced Stockholder at Fair Value. Allocated
Shares shall be allocated among the Company and/or the
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Stockholders in accordance with the priorities and procedures contained in
Sections 3(c), 3(d) and 3(e) hereof. In the event that any Management
Stockholder or Other Holder marries following the date of this Agreement, the
new spouse of such Management Stockholder or Other Holder shall immediately
execute an appropriate document confirming that such spouse is subject to the
terms and conditions of this Agreement, including without limitation, the
restrictions contained in Section 2, the rights of first refusal provided in
Section 3 hereof, the Call Options and other restrictions provided in
Sections 4 and 5 hereof, and the co-sale rights provided in Section 7 hereof.
7. CO-SALE RIGHTS.
(a) TAG-ALONG RIGHTS. If the Investor Stockholders propose to make a
Disposition of more than 50% of the Shares owned by the Investor Stockholders
(other than to an Investor Stockholder or to an Affiliate of any Investor
Stockholder), the Company shall notify each Management Stockholder of such
intended Disposition, the terms thereof and the name and address of the proposed
transferee. Each Management Stockholder shall have the right to participate in
the Disposition described in such notice in a manner such that each Stockholder
(including each Management Stockholder and each Investor Stockholder) will be
entitled to sell up to its Pro Rata Part of the total number of Shares that the
Investor Stockholders propose to sell or otherwise dispose of pursuant to such
Disposition. Each Management Stockholder shall have until the 30th day
following such Management Stockholder's receipt of the notice to notify the
Company of its election to participate in such Disposition pursuant to this
Section 7(a). Failure of any Management Stockholder to submit such notice within
the applicable period shall constitute an election on the part of such
Management Stockholder not to participate in such Disposition. Each Investor
Stockholder's portion of the total Shares to be disposed of in such Disposition
shall be reduced to the extent necessary to permit the Management Stockholders
to exercise their rights under this Section 7(a). If any Management Stockholder
elects to sell less than his Pro Rata Part of the total Shares, the Management
Stockholders and the Investor Stockholders shall be entitled to take up the
deficiency in accordance with the priorities and procedures specified in
Sections 3(c), 3(d) and 3(e) hereof. The Disposition shall not be consummated by
the Investor Stockholders unless, simultaneously therewith, each Management
Stockholder who has notified the Company of such Management Stockholder's
election to participate in such Disposition is permitted to sell his Pro Rata
Part of the total Shares (or such lesser amount of the total Shares as such
Management Stockholder may desire) to the transferee stated in the notice for
the consideration and on the terms set forth in the notice. A Management
Stockholder shall participate by delivering to the transferee the Shares to be
sold in the Disposition.
(b) DRAG-ALONG RIGHTS. In the event that the Investor Stockholders
agree to sell or transfer 85% or more of their Shares in a bona fide
arm's-length transaction with an unaffiliated third party, then, upon the demand
of such Investor Stockholders, each Management Stockholder and Other Holder
shall sell or transfer his Pro Rata Part of the total number of Shares that the
Investor Stockholders propose to sell or otherwise transfer pursuant to such
transaction on the same terms and conditions as those on which the Investor
Stockholders have agreed to sell or transfer their Shares.
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8. TERMINATION OF RESTRICTIONS AND OPTIONS. All provisions in
Sections 2, 3, 4 (other than 4(e)), 5, 6 and 7 hereof regarding the Shares
(including the restrictions on Disposition, the rights of first refusal, the
Call Options and the Co-Sale Rights) shall terminate as of the first date
("Going Public Date") (i) following the expiration of any lock-up period in
connection with a Registration Statement (other than a Registration Statement
on Form S-8) filed by the Company for the registration of Common Stock under
the Securities Act of 1933, and (ii) when the gross proceeds to the Company
of such offering are at least $30 million. In each case where an Exercise
Notice or Notice of Acceptance, as the case may be, has been given prior to
the Going Public Date, the parties shall consummate the transaction as
contemplated in such notice and without giving effect to this Section 8.
9. STOCK CERTIFICATE LEGEND. A copy of this Agreement shall be filed
with the secretary of the Company and kept with the Company's records. The
certificates evidencing the Shares (and all certificates issued in exchange
therefor or substitution thereof) held by Management Stockholders shall bear
the following legend so long as the restrictions of this Agreement are in
effect:
THE SALE OR TRANSFER OF THE SHARES EVIDENCED BY THIS CERTIFICATE IS
SUBJECT TO CERTAIN RIGHTS AND RESTRICTIONS, INCLUDING CERTAIN CALL
OPTIONS, AND RIGHTS OF FIRST REFUSAL, CONTAINED IN A STOCKHOLDERS
AGREEMENT DATED AS OF MAY __, 1997, A COPY OF WHICH MAY BE OBTAINED
WITHOUT CHARGE AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMPANY.
Shares held by Investor Stockholders shall bear the following legend as long as
the restrictions of this Agreement are in effect:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RIGHTS AND OBLIGATIONS CONTAINED IN A STOCKHOLDERS AGREEMENT DATED AS
OF MAY __, 1997, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE
CORPORATION AND WHICH WILL BE FURNISHED WITHOUT CHARGE BY THE
CORPORATION TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
10. CERTAIN ACTIONS.
(a) CHARTER AND BYLAWS. Neither the certificate of incorporation nor
the bylaws of the Company shall be amended in any manner which is inconsistent
with the terms of this Agreement unless such amendment is first approved in the
same manner as an amendment to this Agreement is required to be approved under
Section 16 hereof.
(b) VOTING OF SHARES. Each Stockholder agrees to vote its or his
shares of capital stock of the Company at all times in whatever manner is
necessary to effect the purposes of this Agreement, and to refrain from voting
such shares in any manner not consistent with this Agreement.
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(c) EFFECT OF OTHER LAWS AND AGREEMENTS. The rights of the
Management Stockholders and Other Holders and the obligations of the Company
under this Agreement shall be subject to any restrictions on the purchase of
Shares which may be imposed by the General Corporation Law of the State of
Delaware.
(d) RIGHT TO PURCHASE SHARES. Except as otherwise provided herein
and for so long as a Management Stockholder owns Shares and is an employee of
the Company or one of its Subsidiaries, such Management Stockholder (but no
Other Holder) shall have the right, but not the obligation, to purchase or
subscribe for his pro rata share of any of the following proposed to be issued
or sold by the Company: (i) any unissued or treasury shares of any class of
capital stock of the Company (whether now or hereafter authorized), (ii) any
obligations, evidences of indebtedness, or other securities of the Company
convertible into or exchangeable for, or carrying or accompanied by any rights
to receive, purchase, or subscribe to, any such unissued or treasury shares, or
(iii) any right to subscribe to or to receive, or any warrant or option for the
purchase of, any of the foregoing securities (all of the foregoing being called
"Equity Securities"); provided, however, that such Management Stockholder shall
not have any right under this Section 10(d) to purchase or subscribe for any of
the following:
(w) any Equity Securities issued, sold or optioned for compensation
purposes to any director, officer, employee, or consultant of the Company,
as determined by the Board of Directors of the Company in its sole
discretion;
(x) any Equity Securities issued, sold or optioned for consideration
other than cash; or
(y) any Equity Securities issued, sold or optioned after the date of
any expiration or termination of this Agreement; or
(z) any Equity Securities issued, sold or optioned on or prior to the
Effective Date.
11. CAPTIONS. The captions, headings, and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit, amplify,
or modify the terms and provisions hereof.
12. NOTICE. Whenever this Agreement requires or permits any consent,
approval, notice, request or demand from one party to another, the consent,
approval, notice, request or demand must be in writing to be effective and shall
be deemed to be delivered and received (i) if personally delivered or if
delivered by telex or telecopy with telephonic confirmation, when actually
received by the party to whom notice is sent, (ii) if delivered by mail within
the United States (whether actually received or not), at the close of business
on the third business day next following the day when placed in the federal
mail, postage prepaid, certified or registered, addressed to the appropriate
party or parties, at the address of such Party set forth, and with a copy as
specified, on Schedule 2 to this Agreement (or at such other address as such
party may designate by written notice to all other parties in accordance
herewith), or (iii) if delivered by mail to any party located outside the United
States, when received by the party to whom notice is sent.
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13. GOVERNING LAW. THIS AGREEMENT SHALL BE SUBJECT TO AND GOVERNED BY THE
LAWS OF THE STATE OF TEXAS APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE.
14. ASSIGNMENT. This Agreement and all the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, assigns, executors, administrators or successors, but (except
as provided in the final sentence of this Section) neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of the other parties,
except with respect to rights, interests and obligations hereunder which are
binding upon Transferees after Dispositions of Shares permitted by this
Agreement. This Agreement is not intended to confer upon any other person except
the parties hereto any rights or remedies hereunder. Without limiting the
generality of the foregoing, it is understood that the Investor Stockholders may
transfer Shares, including to their respective partners (both general and
limited), and it is agreed that, following any such transfer, this Agreement and
all the applicable provisions hereof shall be binding upon and shall inure to
the benefit of any such transferee (including the partners of the Investor
Stockholders) receiving Shares, in each case without any requirement for the
consent of any party hereto.
15. INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term of this Agreement, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of each such illegal,
invalid or unenforceable provision there shall be added automatically as a part
of this Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
16. AMENDMENTS. This Agreement may be amended, at any time and from time
to time in whole or in part, or terminated, only by an instrument in writing,
duly executed by the Company and the holders of at least a majority of the
Shares beneficially owned by the Management Stockholders and at least a majority
of the Shares beneficially owned by the Investor Stockholders.
17. MULTIPLE COUNTERPARTS. This Agreement has been executed in a number
of identical counterparts, each of which for all purposes is to be deemed an
original, and all of which constitute collectively one Agreement; but in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart. It is not necessary that each Stockholder
execute the same counterpart, so long as identical counterparts are executed by
the Company and each Stockholder.
18. EXECUTION OF DOCUMENTS. Whenever Shares are purchased or transferred
pursuant to this Agreement, the seller or sellers and the buyer or buyers shall
do all things and execute and deliver all documents and make all transfers as
may be necessary to consummate such purchase or transfer in accordance with the
applicable provisions of this Agreement.
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19. CONTINUATION OF RIGHTS. The failure or refusal of a party hereto to
exercise any right granted in this Agreement with respect to any Shares shall
not be deemed a waiver of the right to exercise future rights which may arise
hereunder with respect to such Shares.
20. ENFORCEMENT. It is specifically agreed and understood that monetary
damages would not adequately compensate the Company and the non-breaching
Stockholders for the breach of this Agreement and this Agreement shall therefore
be specifically enforceable, and any breach or threatened breach of this
Agreement shall be the proper subject of a temporary or permanent injunction or
restraining order, without necessity of bond or other security.
21. ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties hereto respecting the subject matter hereof and supersedes all prior
agreements, discussions, and understandings.
22. CUMULATIVE RIGHTS. The rights of the Company under this Agreement are
cumulative and in addition to all similar and other rights of the Company under
other agreements with the Stockholders and others.
23. TERM. Subject to Section 8 hereof, this Agreement shall have a term
of 30 years commencing on the date of this Agreement.
24. OBLIGATIONS OF STOCKHOLDER'S SPOUSE. The spouse of each stockholder
joins in the execution of this Agreement to evidence such spouse's knowledge of
its existence, and such spouse's acknowledgment of and agreement to the
provisions of this Agreement, and to evidence the desire of such spouse to bind
his or her interests, if any, in the Shares to the performance of this
Agreement. Accordingly, each stockholder's spouse agrees that in the event of
his or her death, or the death of the stockholder, or upon the divorce of such
spouse and such stockholder or the occurrence of any other event as herein
provided, the covenants and agreements made in this Agreement shall be, and
hereby are, accepted as binding on him or her individually, and upon all persons
ever to claim under or through him or her. This Section 24 is not intended to,
and shall not be construed as, conferring or creating any interest in Shares in
the spouse of any stockholder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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This Agreement has been executed as of the date first written above.
RBPI HOLDING CORPORATION
By: /s/ David G. Fiore
----------------------------------
Title: President
--------------------------------
RELIANT PARTNERS, L.P.
By: Group 31, Inc., its general partner
By: /s/ W. R. Cotham
-----------------------------
Title: Vice President
--------------------------
RELIANT PARTNERS II, L.P.
By: FW Group Genpar, Inc., its general
partner
By: /s/ W. R. Cotham
----------------------------------
Title: Vice President
-------------------------------
/s/ David G. Fiore
-----------------------------------
DAVID G. FIORE
/s/ Jan Fiore
-----------------------------------
SPOUSE OF DAVID G. FIORE
/s/ Virgil D. Lowe
-----------------------------------
VIRGIL D. LOWE
/s/ Bobby Lowe
-----------------------------------
SPOUSE OF VIRGIL D. LOWE
/s/ Charles E. Still
-----------------------------------
CHARLES E. STILL
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/s/ Cindy Dyer Still
-----------------------------------
SPOUSE OF CHARLES E. STILL
/s/ Jack L. Morris
-----------------------------------
JACK L. MORRIS
/s/ Norma Jean Morris
-----------------------------------
SPOUSE OF JACK L. MORRIS
/s/ James R. Trigg, Jr.
-----------------------------------
JAMES R. TRIGG, JR.
/s/ Renate Trigg
-----------------------------------
SPOUSE OF JAMES R. TRIGG, JR.
/s/ Rodney Vickers
-----------------------------------
RODNEY VICKERS
/s/ Laura A. Vickers
-----------------------------------
SPOUSE OF RODNEY VICKERS
17
<PAGE>
SCHEDULE 1
MANAGEMENT STOCKHOLDERS
David G. Fiore
Virgil D. Lowe
Charles E. Still
Jack L. Morris
James R. Trigg, Jr.
Rodney Vickers
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SCHEDULE 2
NOTICE ADDRESSES
THE COMPANY:
RBPI Holding Corporation
3030 LBJ Freeway, Suite 300
Dallas, Texas 75234
Attention: David Fiore
INVESTOR STOCKHOLDERS:
Reliant Partners, L.P.
201 Main Street, Suite 3100
Fort Worth, Texas 76102
Reliant Partners II, L.P.
201 Main Street, Suite 3100
Fort Worth, Texas 76102
MANAGEMENT STOCKHOLDERS:
David G. Fiore Rodney Vickers
1716 Edgewater Drive 615 Carson Street
Plano, Texas 75075 Bryan, Texas 77801
Virgil D. Lowe Jack L. Morris
1504 Pecos P.O. Box 1922
Southlake, Texas 76092 Galatin, Tennessee 37066
Charles E. Still James R. Trigg, Jr.
2114 Partridge Circle 302 Martingale
Bryan, Texas 77802 Peachtree City, Georgia 30269
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EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
dated effective as of May 9, 1997
by and among
RBPI HOLDING CORPORATION
and
EACH OF THE STOCKHOLDERS
REFERRED TO HEREIN
<PAGE>
TABLE OF CONTENTS
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Piggyback Registration Rights . . . . . . . . . . . . . . . . . . . . 2
(a) Piggyback Registration Rights . . . . . . . . . . . . . . . . . 2
(b) Priority on Registrations . . . . . . . . . . . . . . . . . . . 2
3. Demand Registration Rights. . . . . . . . . . . . . . . . . . . . . . 3
(a) Right to Demand . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Number of Demand Registrations. . . . . . . . . . . . . . . . . 3
(c) Limitation on Demand Registration . . . . . . . . . . . . . . . 3
4. Restrictions on Public Sale by Purchaser. . . . . . . . . . . . . . . 3
5. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . 3
6. Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . 6
7. Indemnification; Contribution . . . . . . . . . . . . . . . . . . . . 6
(a) Indemnification by the Company. . . . . . . . . . . . . . . . . 6
(b) Indemnification by the Selling Management Stockholders. . . . . 7
(c) Conduct of Indemnification Proceedings. . . . . . . . . . . . . 7
(d) Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . 8
(b) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Successors and Assigns. . . . . . . . . . . . . . . . . . . . . 9
(d) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 9
(g) Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 9
(h) Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 9
(i) Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . 9
(j) No Inconsistent Agreements. . . . . . . . . . . . . . . . . . . 9
(k) Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is entered into effective
as of May 9, 1997 (the "Effective Date"), by and among RBPI Holding Corporation,
a Delaware corporation (the "Company"), and the undersigned stockholders of the
Company (individually, a "Management Stockholder" and collectively, the
"Management Stockholders").
This Agreement is made in connection with the Stockholders Agreement, dated
as of even date herewith, by and between the Company and its stockholders (the
"Stockholders Agreement"). In order to induce the Management Stockholders to
enter into the Stockholders Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. DEFINITIONS
Except as set forth below, or as otherwise defined in this Agreement,
all capitalized terms shall have the meanings ascribed to them below:
(a) "Act" means the Securities Act of 1933, as amended, or any other
statute in effect from time to time corresponding to such Act.
(b) "Common Stock" means the shares of common stock, par value $0.01
per share, of the Company.
(c) "Registrable Common Stock" means the Common Stock presently owned
by each Management Stockholder, and any additional shares of Common Stock
acquired by any Management Stockholder after the Effective Date; PROVIDED, that
Common Stock held by a Management Stockholder shall cease to be Registrable
Common Stock, when (i) such Common Stock is sold pursuant to a registration
statement filed under the Act or pursuant to Rule 144 under the Act, or (ii) the
Company delivers to such Management Stockholder an opinion satisfactory to such
Management Stockholder, of counsel satisfactory to such Management Stockholder,
to the effect that such Common Stock may be publicly offered without
registration under the Act without restriction under Rule 144 or otherwise.
(d) "Registration Right Effective Date" means the first date after
the date of closing of the first public offering of Common Stock registered with
the Securities and Exchange Commission under the Act that stockholders of the
Company or the Company can sell Common Stock without violating or requesting a
waiver of any agreements entered into by the Company and/or any stockholder of
the Company and the underwriter(s) for such first public offering of Common
Stock.
<PAGE>
(e) "Selling Management Stockholder" means a Management Stockholder
requesting registration of Common Stock under this Agreement.
2. PIGGYBACK REGISTRATION RIGHTS
(a) PIGGYBACK REGISTRATION RIGHTS. If at any time after the
Registration Right Effective Date the Company at any time proposes to register
any of the Common Stock under the Act for sale for cash including a registration
pursuant to Section 3 hereof (other than a registration on Form S-4, S-8 or any
similar form), it will serve written notice of such proposed registration to the
Management Stockholders at least 30 days before the anticipated filing date;
PROVIDED, HOWEVER, that if the managing underwriter for the proposed public
offering furnishes its written opinion that the inclusion in such offering of
any shares of Registrable Common Stock would materially adversely affect the
price at which securities could be sold, no such notice shall be required.
Written notices served by the Company pursuant to the preceding sentence of this
Section 2(a) shall be referred to hereinafter as "Notices." Subject to the
restrictions and in accordance with the procedures set forth below, the Company
will use its best efforts to include in any registration to which a Notice
relates all Registrable Common Stock with respect to which the Company has
received written requests for inclusion therein within 15 days after the receipt
of the Notice. Nothing set forth herein shall obligate the Company to file any
registration statement unless the Board of Directors approves such filing.
(b) PRIORITY ON REGISTRATIONS.
(i) Notwithstanding the provisions of Section 2(a) hereof, in
the case of an underwritten offering, the managing underwriter or underwriters
of the registration may limit the number of shares of Common Stock included in
the underwriting pursuant to any registration or in the registration, if, in its
or their opinion, the number of shares of Common Stock proposed to be sold in
such underwriting or registration exceeds the number that can be sold without
materially adversely affecting the price at which such securities could be sold.
In the event the number is to be so limited in the underwriting or registration,
a sufficient number of securities shall be eliminated to reduce the total amount
of securities to be included in such underwriting or registration to the amount
recommended by such underwriter. In reducing the amount of securities to be
included in such underwriting or registration, the Company will include in such
underwriting or registration (A) first, all securities the Company proposes to
sell, (B) second, all Registrable Common Stock beneficially owned by the
Management Stockholders requested to be included in the underwriting or
registration and shares of Common Stock of the Company requested to be included
by other holders of Common Stock who have registration rights in respect thereof
PARI PASSU with the registration rights granted hereby, reduced PRO RATA
according to the number of shares of Registrable Common Stock or Common Stock
which are beneficially owned by each such holder and requested to be included in
such registration in good faith with the bona fide intention of selling the
same; and (C) third, other securities requested to be included in such
registration.
(ii) The Company shall use its best efforts to enable the Registrable
Common Stock of the Management Stockholder, if inclusion in a registration and
related underwriting is properly requested, to be included in such registration
and underwriting; PROVIDED, HOWEVER, that the Company shall not be required to
pay additional underwriting or similar fees to procure such
2
<PAGE>
inclusion. If such Selling Management Stockholder's Registrable Common Stock is
not included in the underwriting relating to such registration, the Company
shall nonetheless use its best efforts to enable such Selling Management
Stockholder's Registrable Common Stock to be sold in accordance with the
intended methods of distribution without inclusion in the underwriting, subject
to the provision contained in the preceding sentence.
3. DEMAND REGISTRATION RIGHTS
(a) RIGHT TO DEMAND. At any time after the later to occur of (i)
five years from the Effective Date and (ii) such time as the Company becomes
eligible to use Form S-3 and, in either case, for a period of five years
thereafter, Management Stockholders holding at least 50% of the Registrable
Common Stock may make a written request to the Company for registration under
the Act of all or part of the Registrable Common Stock ("Demand Registration")
as provided herein.
(b) NUMBER OF DEMAND REGISTRATIONS. Subject to and in accordance
with the provisions of Section 3(c), the Management Stockholders are entitled to
one Demand Registration. The incremental expenses of the Demand Registration
shall be borne by the parties registering shares pursuant thereto, pro rata in
accordance with the number of shares being registered by each of them. The
Company shall not be deemed to have effected a Demand Registration unless and
until the Registration Statement pursuant to such Demand Registration is
declared effective and remains in effect until the earlier of (i) the completion
of the distribution and (ii) a period of 120 consecutive days.
(c) LIMITATION ON DEMAND REGISTRATION. The Company shall be entitled
to postpone for a reasonable period of time (not to exceed 90 days) the filing
of any registration statement otherwise required to be prepared and filed by it
pursuant to Section 3(a) hereof if, at the time it receives a request for such
registration, (i) the Company is conducting or about to conduct an offering of
its securities and the Company is advised by its investment banker that such
offering would be affected adversely by the registration so demanded or (ii) the
Board of Directors of the Company shall determine in good faith that such
offering will interfere with a pending or contemplated financing, merger, sale
of assets, recapitalization or other similar corporate action of the Company.
4. RESTRICTIONS ON PUBLIC SALE BY PURCHASER To the extent not
inconsistent with applicable law, the Selling Management Stockholders agree not
to effect any public sale or distribution of Common Stock or a similar security
of the Company or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to, and during the 90-day
period beginning on, the effective date of such registration statement (except
as part of such registration), if and to the extent requested in writing (with
reasonable prior notice), by (i) the Company in the case of a non-underwritten
public offering by the Company, (ii) or the managing underwriter or underwriters
in the case of an underwritten public offering.
5. REGISTRATION PROCEDURES
Whenever any Registrable Common Stock is to be registered pursuant to
Sections 2 or 3 hereof, the Company will use its best efforts to effect the
registration and the sale of such
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<PAGE>
Registrable Common Stock in accordance with the intended method of disposition
of the Selling Management Stockholders as quickly as practicable, and in
connection with any such request and with any Demand Registration, the Company
will as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
which includes the Registrable Common Stock and use its best efforts to cause
such registration statement to become effective;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the registration statement and prospectus used in
connection therewith as may be necessary to keep the registration statement
effective for a period of not less than 120 days (or such shorter period as
shall be necessary to permit the Selling Management Stockholders to complete the
distribution of the Registrable Common Stock to which such registration
statement relates in accordance with their intended methods of distribution) and
to comply with the provisions of the Act and the rules and regulations
thereunder with respect to the disposition of all Registrable Common Stock
covered by the registration statement for the period required to effect the
distribution thereof, but in no event shall the Company be required to do so for
a period of more than 120 days following the effective date of such registration
statement;
(c) furnish to the Selling Management Stockholders and the
underwriter or underwriters, if any, and to counsel to the Selling Management
Stockholders and underwriters, without charge, such number of conformed copies
of the registration statement and any post-effective amendment thereto, upon
request, and such number of copies of the prospectus (including each preliminary
prospectus) and any amendments or supplements thereto, and any documents
incorporated by reference therein, as the Selling Management Stockholders or
such underwriter(s) may reasonably request in order to facilitate the
disposition of the Registrable Common Stock being sold by the Selling Management
Stockholders (it being understood that the Company consents to the use of the
prospectus and any amendment or supplement thereto by the Selling Management
Stockholders and the underwriter or underwriters, if any, in connection with the
offering and sale of the Registrable Common Stock covered by the prospectus or
any amendment or supplement thereto);
(d) notify the Selling Management Stockholders and the underwriters,
if any, at any time when a prospectus relating thereto is required to be
delivered under the Act, when the Company becomes aware of the happening of any
event as a result of which any prospectus included in such registration
statement (as then in effect) contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and, as
promptly as possible thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such prospectus so that, as thereafter
delivered to the Selling Management Stockholders of such Registrable Common
Stock, such prospectus will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(e) on or prior to the date on which the registration statement is
declared effective, use its best efforts to register or qualify the Registrable
Common Stock covered by the registration statement for offer and sale under the
securities or blue sky laws of each state
4
<PAGE>
and other jurisdiction of the United States as the Selling Management
Stockholders or underwriter requests in writing, and to cooperate with the
Selling Management Stockholders, the underwriter or underwriters, if any, and
their counsel, in connection therewith; to use its best efforts to keep each
such registration or qualification effective, including through new filings, or
amendments or renewals, during the period such registration statement is
required to be kept effective and to do any and all other acts or things
necessary or advisable to enable the disposition in all such jurisdictions of
the Registrable Common Stock covered by the applicable registration statement;
provided that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process in any such
jurisdiction where it is not then so subject;
(f) cooperate with the Selling Management Stockholders and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing securities to be sold under the registration statement, and enable
such securities to be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, or the Selling Management
Stockholders may request;
(g) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions (including, without
limitation, delivery of customary legal opinions and officers' certificates) as
the Selling Management Stockholders reasonably request in order to expedite or
facilitate the disposition of such Registrable Common Stock;
(h) make available for inspection by any underwriter participating in
any disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such underwriter, all financial and
other records, pertinent corporate documents and properties of the Company, as
shall be reasonably necessary to enable it to exercise its due diligence
responsibility; and
(i) use its best efforts to obtain a "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by "cold comfort" letters as the Selling
Management Stockholders or the underwriter reasonably request.
The Selling Management Stockholders, upon receipt of any notice from
the Company of the happening of any event of the kind described in subsection
(d) of this Section 5, will immediately discontinue disposition of the
Registrable Common Stock until the Selling Management Stockholders' receipt of
the copies of the supplemented or amended prospectus contemplated by subsection
(d) of this Section 5 and copies of any additional or supplemental filings which
are incorporated by reference in the prospectus, or until it is advised in
writing (the "Advice") by the Company that the use of the prospectus may be
resumed, and, if so directed by the Company, the Selling Management Stockholders
will, or will request the managing underwriter or underwriters if any to,
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in the Selling Management Stockholders' possession,
of the prospectus covering such Registrable Common Stock current at the time of
5
<PAGE>
receipt of such notice. In the event the Company shall give any such notice,
the time periods mentioned in subsection (b) of this Section 5 shall be extended
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Selling Management
Stockholders shall have received (x) the copies of the supplemented or amended
prospectus contemplated by subsection (d) of this Section 5 and copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus, or (y) the Advice.
6. REGISTRATION EXPENSES
Subject to Section 3(b) above, the Company will bear all expenses
incident to the Company's performance of or compliance with this Agreement,
including, without limitation, all Commission and securities exchange or
National Association of Securities Dealers, Inc. registration and filing fees,
fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with determination of
eligibility for investment and blue sky qualifications of the Registrable Common
Stock), printing expenses, messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), fees and disbursements of
counsel for the Company and its independent certified public accountants
(including the expenses of any special audit or "cold comfort" letters required
by or incident to such performance), reasonable fees and disbursements of
counsel for the Selling Management Stockholders, securities acts liability
insurance (if the Company elects to obtain such insurance), the reasonable fees
and expenses of any special experts retained by the Company in connection with
such registration, fees and expenses of other persons retained by the Company
(all such expenses being referred to herein as "Registration Expenses").
7. INDEMNIFICATION; CONTRIBUTION
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify,
protect and hold harmless, to the full extent permitted by law, each Selling
Management Stockholder against all losses, claims, damages, liabilities and
expenses arising out of or based on any untrue or allegedly untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances under
which they were made, not misleading, except to the extent, and only to the
extent, that the same are caused by or contained in any information which the
Selling Management Stockholder furnished in writing to the Company expressly for
use therein or by a Selling Management Stockholder's failure to deliver to a
purchaser of securities a copy of the registration statement, prospectus or
preliminary prospectus or any amendments thereof or supplements thereto at a
time when such Selling Management Stockholder is required by the Act to do so
after the Company has furnished such Selling Management Stockholder with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company will indemnify, protect and hold harmless the underwriters
thereof, selling brokers, dealer managers, and similar securities industries
professionals, their officers, directors, employees, agents and each person who
controls any such person (within the meaning of the Act) to the same extent as
provided above with respect to the indemnification of the Selling Management
Stockholder.
6
<PAGE>
(b) INDEMNIFICATION BY THE SELLING MANAGEMENT STOCKHOLDERS. In
connection with any registration statement in which a Selling Management
Stockholder is participating, such Selling Management Stockholder will furnish
to the Company in writing such customary information with respect to such
Selling Management Stockholder as the Company reasonably requests for use in
connection with any such registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto and agrees to
indemnify, to the extent permitted by law, the Company, its directors,
employees, agents, officers, and each person who controls the Company (within
the meaning of the Act) against all losses, claims, damages, liabilities and
expenses arising out of or based on any untrue or allegedly untrue statement of
a material fact contained in any registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, to the extent, but
only to the extent, that such untrue statement or omission is caused by or
contained in any information which such Selling Management Stockholder furnished
in writing to the Company expressly for use therein or by such Selling
Management Stockholder's failure to deliver to a purchaser of securities a copy
of the registration statement, prospectus, or preliminary prospectus or any
amendments thereof or supplements thereto at a time when such Selling Management
Stockholder is required by the Act to do so after the Company has furnished such
Selling Management Stockholder with a sufficient number of copies of the same.
In no event shall the liability of such Selling Management Stockholder hereunder
be greater in amount than the dollar amount of the net proceeds received by such
Selling Management Stockholder upon the sale of the Registrable Common Stock
giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled to
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such person will claim indemnification or contribution
pursuant to this Agreement and, unless in the reasonable judgment of such
indemnified party a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claim, permit the
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to such indemnified party. Whether or not such defense is assumed
by the indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent will not
be unreasonably withheld or delayed). No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. If the indemnifying party is not entitled to, or elects not to,
assume the defense of a claim, it will not be obligated to pay the fees and
expenses with respect to such claim of more than one counsel for the indemnified
party with respect to which a claim has been asserted (which fees and expenses
will be paid as they are billed to the indemnified party) unless in the
reasonable judgment of such indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of such additional counsel or counsels as shall be
necessary to eliminate such
7
<PAGE>
conflicts in connection with the representation of indemnified parties, such
fees and expenses to be paid as they are billed to the indemnified party.
(d) CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Section 7 is for any reason held to be unenforceable although applicable in
accordance with its terms, the Company and the Selling Management Stockholders,
shall contribute to the losses, claims, damages, liabilities and expenses
described herein, in such proportions so that the portion thereof for which such
Selling Management Stockholder shall be responsible shall be limited to the
portion determined by a court or the parties to any settlement to arise out of
or to be based on any untrue statement of material fact contained in a
registration statement, prospectus, or preliminary prospectus, or any amendment
thereof or supplement thereto or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading, caused
by or contained in any information which such Selling Management Stockholder
furnished in writing to the Company expressly for use therein or by Selling
Management Stockholder's failure to deliver to a purchaser of securities a copy
of the registration statement, prospectus or preliminary prospectus or any
amendments or supplements thereto at a time when such Selling Management
Stockholder is required by the Act to do so after the Company has furnished such
Selling Management Stockholder with a sufficient number of copies of the same,
and the Company shall be responsible for the balance (subject to any other
rights the Company may have against any other selling holder the securities of
which were included in such registration statement, preliminary prospectus,
prospectus, amendment or supplement); PROVIDED, that the liability of such
Selling Management Stockholder shall in no event exceed the net proceeds from
the Registrable Common Stock sold by it thereunder. The Company and the Selling
Management Stockholder agree that it would not be just and equitable if their
respective obligations to contribute were to be determined by pro rata
allocation, by reference to the proceeds realized by them or in any manner which
does not take into account the equitable considerations set forth in this
Section 7(d).
8. MISCELLANEOUS
(a) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of the Management
Stockholders.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by telex or telecopier, registered or
certified mail (return receipt requested), postage prepaid to the parties at
their respective addresses as reflected in the Company's records. Notices sent
by mail shall be effective two days after mailing; notices sent by telex shall
be effective when answered back; notices sent by telecopier shall be effective
when receipt is acknowledged; and notices sent by courier guaranteeing next day
delivery shall be effective on the next business day after timely delivery to
the courier.
8
<PAGE>
(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties;
provided, that, no person, other than the Management Stockholders, who acquire
shares of Registrable Common Stock in a transaction registered under the
Securities Act or effected without registration pursuant to Rule 144 under the
Securities Act shall have any rights or be entitled to any benefit hereunder in
respect of such Registrable Common Stock.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
(g) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Management Stockholders shall be enforceable to the fullest extent permitted by
law.
(h) ENTIRE AGREEMENT. This Agreement supersedes all prior agreements
and understandings between the parties with respect to the subject matter
hereof.
(i) ATTORNEYS' FEES. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof or thereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
(j) NO INCONSISTENT AGREEMENTS. Neither the Company nor any
stockholder will on or after the date of this Agreement enter into any agreement
with respect to the Common Stock which is inconsistent with the rights granted
to the Management Stockholders in this Agreement or otherwise conflicts with the
provisions hereof.
(k) ENFORCEMENT. It is specifically agreed and understood that
monetary damages would not adequately compensate the non-breaching parties for
the breach of this Agreement and this Agreement shall therefore be specifically
enforceable, and any breach or threatened breach of this Agreement shall be the
proper subject of a temporary or permanent injunction or restraining order,
without necessity of bond or other security.
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
COMPANY:
RBPI HOLDING CORPORATION,
a Delaware corporation
By: /s/ David G. Fiore
--------------------------------
Title: President
-----------------------------
MANAGEMENT STOCKHOLDERS:
/s/ David G. Fiore
------------------------------------
DAVID G. FIORE
/s/ Virgil D. Lowe
------------------------------------
VIRGIL D. LOWE
/s/ Charles E. Still
------------------------------------
CHARLES E. STILL
/s/ Jack L. Morris
------------------------------------
JACK L. MORRIS
/s/ James R. Trigg, Jr.
------------------------------------
JAMES R. TRIGG, JR.
/s/ Rodney Vickers
------------------------------------
RODNEY VICKERS
10
<PAGE>
CREDIT AGREEMENT
made and entered into
as of May 9, 1997
by and among
RELIANT BUILDING PRODUCTS, INC.
a Delaware corporation,
EACH OF THE FINANCIAL INSTITUTIONS WHICH IS
A SIGNATORY HERETO OR
WHICH MAY FROM TIME TO TIME
BECOME A PARTY HERETO,
and
THE CHASE MANHATTAN BANK,
a New York banking corporation
as agent for such Financial Institutions
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (together with all amendments, modifications and
supplements hereto and restatements hereof, this "AGREEMENT") is made and
entered into as of May 9, 1997, by and among RELIANT BUILDING PRODUCTS,
INC. ("BORROWER"), a Delaware corporation, EACH OF THE FINANCIAL INSTITUTIONS
WHICH IS A SIGNATORY HERETO OR WHICH MAY FROM TIME TO TIME BECOME A PARTY
HERETO (individually, a "LENDER" and collectively, the "LENDERS") and THE
CHASE MANHATTAN BANK ("CHASE"), a New York banking corporation, as agent for
the Lenders (in such capacity, together with its successors in such capacity,
the "AGENT").
W I T N E S S E T H:
THAT, in consideration of the mutual covenants, agreements and undertakings
herein contained, the parties hereto agree as follows:
I. Definitions.
A. CERTAIN DEFINED TERMS. Unless a particular word or phrase is
otherwise defined or the context otherwise requires, capitalized words and
phrases used in the Loan Documents have the meanings provided below.
ACQUISITION shall mean the purchase by Reliant Partners of all of the
outstanding Stock of RBPI Holding Corporation, a Delaware corporation, pursuant
to the terms of the Acquisition Agreement.
ACQUISITION AGREEMENT shall mean the Stock Purchase Agreement dated
effective as of March 27, 1997, by and between Reliant Partners, as purchaser,
and the various stockholders of RBPI Holding Corporation described in Schedule I
attached to said Stock Purchase Agreement, as sellers.
ACQUISITION DOCUMENTS shall mean the Acquisition Agreement and all
agreements, documents and instruments executed and delivered, or to be executed
and delivered, pursuant thereto or in connection with the Acquisition, in each
case as in effect on the Closing Date.
ADJUSTED LIBOR RATE shall mean, with respect to any LIBOR Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the sum of (a) the product of (i) the LIBOR Rate
in effect for such Interest Period and (ii) Statutory Reserves and (b) the
Applicable Margin.
AFFILIATE of any Person shall mean any other Person which controls or is
controlled by or under common control with such Person. For purposes of this
definition, "control" (including "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person,
<PAGE>
whether through the ownership of securities, by contact or otherwise.
Without limiting the generality of the foregoing, beneficial ownership of
five percent (5%) or more of any class of voting securities of a Person or
five percent (5%) of the outstanding equity interests in such Person shall be
deemed to be control for purposes of compliance with the provisions of
SECTION 7.6 hereof.
AGENT shall have the meaning assigned to such term in the preamble to this
Agreement.
ALTERNATE BASE RATE shall mean, for any day, a rate per annum (rounded
upwards to the nearest 1/16 of 1%) equal to the sum of (a) the greater of (i)
the Prime Rate (computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be) in effect on such day, (ii) the
Federal Funds Effective Rate (computed on the basis of the actual number of days
elapsed over a 360-day year) in effect for such day plus 1/2 of 1%, and (iii)
the Base CD Rate in effect for such day plus 1% and (b) the Applicable Margin.
For purposes of this Agreement, any change in the Alternate Base Rate due to a
change in the Prime Rate, Federal Funds Effective Rate or the Base CD Rate shall
be effective on the effective date of such change in the Prime Rate, Federal
Funds Effective Rate or the Base CD Rate, respectively. If for any reason the
Agent shall have determined (which determination shall be conclusive and
binding, absent manifest error) that it is unable to ascertain the Federal Funds
Effective Rate or Base CD Rate, or both, for any reason, including the inability
or failure of the Agent to obtain sufficient quotations in accordance with the
terms hereof, the Alternate Base Rate shall be determined without regard to
clause (a) or (b), or both, as appropriate, until the circumstances giving rise
to such inability no longer exist.
ALTERNATE BASE RATE BORROWING shall mean, as of any date, that portion of
the principal balance of the Loans bearing interest at the Alternate Base Rate
as of such date.
ANNUAL AUDITED FINANCIAL STATEMENTS shall mean the annual financial
statements of a Person, including all notes thereto, which statements shall
include a balance sheet as of the end of such fiscal year and an income
statement, a retained earnings statement and a statement of cash flows for such
fiscal year, all setting forth in comparative form the corresponding figures
from the previous fiscal year and accompanied by a report and opinion of
independent certified public accountants with a "Big 6" accounting firm or other
accounting firm of similar national standing and reputation, which report shall
not contain any qualification except with respect to new accounting principles
mandated by the Financial Accounting Standards Board and shall state that such
financial statements, in the opinion of such accountants, present fairly, in all
material respects, the financial position of such Person as of the date thereof
and the results of its operations and cash flows for the period covered thereby
in conformity with GAAP. The Annual Audited Financial Statements for the
Borrower and its Subsidiaries should be prepared on both a Consolidated and a
consolidating basis in accordance with GAAP (with such consolidating statements
to be prepared in accordance with GAAP only to the extent normal and customary).
Such statements shall be accompanied by a certificate of such accountants that
in making the appropriate audit and/or investigation in connection with such
report and opinion, such accountants did not become aware of any Default or
Event of Default with respect to any of the financial covenants set forth in
SECTIONS 7.12 through 7.14 hereof, or if in the opinion of such
2
<PAGE>
accountant any such Default or Event of Default exists, a description of the
nature and status thereof.
APPLICABLE COMMITMENT FEE PERCENTAGE shall mean with respect to any Unused
Commitment, a rate per annum of .50%. Commencing with the calculation of the
Interest Coverage Ratio as of the end of the first fiscal quarter of the
Borrower's 1998 fiscal year, the Applicable Commitment Fee Percentage shall be
subject to adjustment, based on the Borrower's compliance with the Interest
Coverage Ratio, as follows:
------------------------------------------------
------------------------------------------------
Per Annum
Interest Coverage Ratio Percentage Rate
------------------------------------------------
LESS THAN OR EQUAL TO 3.50x 0.50%
------------------------------------------------
GREATER THAN 3.50x 0.375%
------------------------------------------------
------------------------------------------------
Such compliance with the Interest Coverage Ratio will be tested by the Agent
quarterly as of the end of each of the Borrower's fiscal quarters, and for
purposes hereof, any adjustment in the respective amounts of the Applicable
Commitment Fee Percentage, whether upward or downward, shall be effective ten
(10) Business Days after the applicable Annual Audited Financial Statements or
Monthly Unaudited Financial Statements of the Borrower have been delivered to
and received by the Agent in accordance with the terms of SECTIONS 6.3(a) and
(b) hereof. The Interest Coverage Ratio for purposes hereof shall be computed
for the four most recent consecutive fiscal quarters of the Borrower ending on
or immediately prior to the applicable date of determination, based on the
Agent's review of the Borrower's most recent Monthly Unaudited Financial
Statements or Annual Audited Financial Statements, as applicable, which are
delivered to and received by the Agent for the immediately preceding four fiscal
quarters of the Borrower in accordance with SECTIONS 6.3(a) and (b) hereof.
Notwithstanding any provision to the contrary set forth in this paragraph, upon
the occurrence of any Default or any Event of Default, any adjustment downward
in the Applicable Commitment Fee Percentage from the initial .50% per annum
percentage rate shall automatically cease and the Applicable Commitment Fee
Percentage shall automatically revert to the .50% per annum percentage rate
amount until such Default or Event of Default is cured to the satisfaction of
the Agent or is waived in writing by the Required Lenders, as applicable.
APPLICABLE LENDING OFFICE shall mean, with respect to each Lender, such
Lender's Domestic Lending Office in the case of an Alternate Base Rate Borrowing
and such Lender's LIBOR Lending Office in the case of a LIBOR Borrowing.
APPLICABLE MARGIN shall mean with respect to any Loan, a rate per annum of
2.50% for LIBOR Borrowings and a rate per annum of 1.50% for Alternate Base Rate
Borrowings. Commencing with the calculation of the Interest Coverage Ratio as
of the end of the first fiscal quarter of the Borrower's 1998 fiscal year, the
Applicable Margin shall be subject to adjustment, based on the Borrower's
compliance with the Interest Coverage Ratio, as follows:
3
<PAGE>
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Per Annum Percentage Per Annum Percentage
for LIBOR for Alternate
Interest Coverage Ratio Borrowings Base Rate Borrowing
- ---------------------------------------------------------------------------
LESS THAN OR EQUAL TO 2.50x 2.50% 1.50%
- ---------------------------------------------------------------------------
GREATER THAN 2.50x 2.25% 1.25%
- ---------------------------------------------------------------------------
GREATER THAN 3.00x 2.00% 1.00%
- ---------------------------------------------------------------------------
GREATER THAN 3.50x 1.75% .75%
- ---------------------------------------------------------------------------
GREATER THAN OR EQUAL TO 4.00x 1.50% .50%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Such compliance with the Interest Coverage Ratio will be tested by the Agent
quarterly as of the end of each of the Borrower's fiscal quarters, and for
purposes hereof, any adjustment in the respective amounts of the Applicable
Margin, whether upward or downward, shall be effective ten (10) Business Days
after the applicable Annual Audited Financial Statements or Monthly Unaudited
Financial Statements of the Borrower have been delivered to and received by the
Agent in accordance with the terms of SECTIONS 6.3(a) and (b) hereof. The
Interest Coverage Ratio for purposes hereof shall be computed for the four most
recent consecutive fiscal quarters of the Borrower ending on or immediately
prior to the applicable date of determination, based on the Agent's review of
the Borrower's most recent Monthly Unaudited Financial Statements or Annual
Audited Financial Statements, as applicable, which are delivered to and received
by the Agent for the immediately preceding four fiscal quarters of the Borrower
in accordance with SECTIONS 6.3(a) and (b) hereof. Notwithstanding any
provision to the contrary set forth in this paragraph, upon the occurrence of
any Default or any Event of Default, any adjustment downward in the Applicable
Margin from the initial 2.50% per annum percentage rate for LIBOR Borrowings and
the initial 1.50% per annum percentage rate for Alternate Base Rate Borrowings
shall automatically cease and the Applicable Margin shall automatically revert
to the 2.50% per annum percentage rate amount for LIBOR Borrowings and the 1.50%
per annum percentage rate amount for Alternate Base Rate Borrowings until such
Default or Event of Default is cured to the satisfaction of the Agent or is
waived in writing by the Required Lenders, as applicable.
APPLICABLE PREPAYMENT FEE PERCENTAGE shall mean with respect to any
termination or reduction of the Total Commitment as follows:
--------------------------------------------------------
--------------------------------------------------------
Year of Termination or Reduction Prepayment Fee
(on or before the applicable Percentage Rate
anniversary of the Closing Date
--------------------------------------------------------
Year 1 1.00%
Year 2 0.75%
Year 3 0.50%
Years 4 and 5 0.00%
--------------------------------------------------------
--------------------------------------------------------
4
<PAGE>
APPLICATIONS shall mean all applications and agreements for Letters of
Credit, or similar instruments or agreements, in Proper Form, now or hereafter
executed by any Person in connection with any Letter of Credit now or hereafter
issued or to be issued under the terms hereof at the request of any Person.
APPROVED INITIAL PUBLIC OFFERING shall mean an initial public offering of
voting Stock of the Borrower or RBPI Holding Corporation, so long as (a) fifty
percent (50%) or more of the aggregate net cash proceeds received by the
Borrower or RBPI Holding Corporation from the issuance of such voting Stock
shall have been applied to reduce the outstanding principal amount of the Senior
Subordinated Debt, and (b) no Default or Event of Default shall have occurred
and be continuing after such initial public offering has been completed.
ASSESSMENT RATE shall mean the annual assessment rate (net of refunds and
rounded upwards, if necessary, to the next 1/16 of 1%) estimated by the Agent
(in good faith, but in no event in excess of statutory or regulatory maximums)
to be payable by the Agent to the Federal Deposit Insurance Corporation (or any
successor) for insurance by such Corporation (or such successor) of time
deposits made in dollars at the Agent's domestic offices during the current
calendar year.
ASSESSMENT AND ACCEPTANCE shall have the meaning ascribed to such item in
SECTION 10.12(c) hereof.
ATEMCO shall mean the joint venture created by the ATEMCO Joint Venture
Agreement.
ATEMCO JOINT VENTURE AGREEMENT shall mean the Joint Venture Agreement of
ATEMCO dated March 3, 1982, by and among the Borrower, Tower Extrusions, Inc.,
and MEB Enterprises, Inc., as amended and in effect from time to time.
AVAILABILITY shall mean at any time (a) the lesser at such time of (i) the
Total Commitment (as such amount may be reduced in accordance with the
provisions of this Agreement) and (ii) the Borrowing Base, LESS (b) the sum of
(i) the aggregate amount of each Lender's Current Sum at such time, (ii) the
aggregate amount of accrued interest outstanding under the Loans at such time,
(iii) all other outstanding Obligations hereunder or any other Loan Documents
which are due and payable at such time, including without limitation,
Commitment Fees, fees related to any Letters of Credit, and legal fees and other
amounts payable under SECTION 10.9 hereof and (iv) $400,000 until the Borrower
has fully complied with and satisfied the provisions of SECTION 6.17 hereof.
BASE CD RATE shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate.
BORROWER shall have the meaning assigned to such term in the preamble of
this Agreement.
BORROWING BASE shall mean, as of any date, the amount of the then most
recent computation of the Borrowing Base, determined by calculating the amount
equal to:
5
<PAGE>
(a) 85% of the Net Amount of Eligible Receivables at such date;
PLUS
(b) the lesser of (i) $10,000,000 and (ii) 50% of the amount of
Eligible Inventory at said date, calculated at the lower of cost
(determined on a FIFO basis) or market.
Notwithstanding anything to the contrary set forth in the immediately preceding
sentence, the Agent reserves the right to adjust downward to a level acceptable
to the Agent in its reasonable discretion the eighty-five percent (85%) advance
rate set forth above for the Net Amount of Eligible Receivables if the
Borrower's average dilution percentage for all Receivables exceeds five percent
(5%). The Borrowing Base will be computed initially hereunder on a monthly
basis (based on all information reasonably available to the Agent, including
without limitation, the periodic reports and listings delivered to the Agent in
accordance with SECTION 6.3(f) hereof), and a monthly Borrowing Base Compliance
Certificate from a Responsible Officer of the Borrower presenting the Borrower's
computation of the Borrowing Base will be periodically delivered to the Agent in
accordance with SECTION 6.3(f) hereof. When and if the daily collection and
application procedure for Receivables is implemented and is continuing in
accordance with the provisions of SECTION 6.15(b) hereof, the Borrowing Base
will be computed on a daily basis (based on all information reasonably available
to the Agent, including without limitation, the periodic reports and listings
delivered to the Agent in accordance with SECTIONS 6.3(f) and 6.15(d) hereof),
and a monthly Borrowing Base Compliance Certificate from a Responsible Officer
of the Borrower shall continue to be periodically delivered to the Agent in
accordance with SECTION 6.3(f) hereof.
BUSINESS DAY shall mean a day when the principal office in New York City of
the Agent is open for business and the Lenders in New York City are generally
open for business; PROVIDED, however, that with respect to LIBOR Borrowings,
BUSINESS DAY shall also mean a day on which transactions in dollar deposits
between lenders may be carried on in the London eurodollar interbank market.
BUSINESS ENTITY shall mean corporations, partnerships, joint ventures,
joint stock associations, business trusts and other business entities.
CAPITAL EXPENDITURES shall mean, for any period for which Capital
Expenditures is calculated, all capital expenditures of the Borrower and its
Subsidiaries, on a Consolidated basis, for such period (including without
limitation, the aggregate amount of Capital Lease Obligations incurred during
such period which are required to be capitalized and reported as a liability on
the consolidated balance sheet of the Borrower and its Subsidiaries), determined
in accordance with GAAP, consistently applied.
CAPITAL LEASE OBLIGATIONS shall mean the obligations of a Person to pay
rent or other amounts under a lease of (or other agreement conveying the right
to use) real and/or personal Property which obligations are required to be
classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP (including Statement of Financial Accounting
6
<PAGE>
Standards No. 13 of the Financial Accounting Standards Board, as amended)
and, for purposes of this Agreement, the amount of such obligations shall be
the capitalized amount thereof, determined in accordance with GAAP (including
such Statement No. 13).
CHANGE OF CONTROL shall mean the occurrence of any of the following at any
time after the Closing Date: (a) the Control Group shall fail to Beneficially
Own, directly or indirectly, in the aggregate more than fifty percent (50%) of
the aggregate voting power of all classes of partnership interests in (1) each
of the Reliant Partners Entities or (2) Reliant Coinvestment Partnership, L.P.;
(b) prior to the consummation of an Approved Initial Public Offering for the
Borrower, the Control Group shall fail to either (i) Beneficially Own, directly
or indirectly, in the aggregate more than fifty percent (50%) of the aggregate
voting power of all classes of Stock of the Borrower, or (ii) cause enough of
the nominees of the Control Group in the aggregate to be elected to the Board of
Directors of the Borrower so as to constitute a majority of such Board of
Directors; (c) prior to the consummation of an Approved Initial Public Offering
for RBPI Holding Corporation, the Control Group shall fail to either (i)
Beneficially Own, directly or indirectly, in the aggregate more than fifty
percent (50%) of the aggregate voting power of all classes of Stock of RBPI
Holding Corporation, or (ii) cause enough of the nominees of the Control Group
in the aggregate to be elected to the Board of Directors of RBPI Holding
Corporation so as to constitute a majority of such Board of Directors; (d)
following the consummation of an Approved Initial Public Offering for the
Borrower, either (i) the Control Group shall fail to either (1) Beneficially
Own, directly or indirectly, in the aggregate more than thirty-five percent
(35%) of the aggregate voting power of all classes of Stock of the Borrower or
(2) allow any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities and Exchange Act of 1934, as amended, including any group acting for
the purpose of acquiring, holding or disposing of securities within the meaning
of Rule 13(d)-5 of the Securities and Exchange Act of 1934), other than members
of the Control Group, to Beneficially Own, directly or indirectly, in the
aggregate more than the aggregate voting power of all classes of Stock of the
Borrower then held by the Control Group, or (ii) the Control Group and the then
current management of the Borrower shall fail to cause enough of their
respective nominees in the aggregate to be elected to the Board of Directors of
the Borrower so as to constitute a majority of the Board of Directors of the
Borrower; (e) following the consummation of an Approved Initial Public Offering
for RBPI Holding Corporation, either (i) the Control Group shall fail to either
(1) Beneficially Own, directly or indirectly, in the aggregate more than
thirty-five percent (35%) of the aggregate voting power of all classes of Stock
of RBPI Holding Corporation, or (2) allow any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934, as
amended, including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13(d)-5 of the Securities and
Exchange Act of 1934), other than members of the Control Group, to Beneficially
Own, directly or indirectly, in the aggregate more than the aggregate voting
power of all classes of Stock of RBPI Holding Corporation then held by the
Control Group, or (ii) the Control Group and the then current management of RBPI
Holding Corporation shall fail to cause enough of their respective nominees in
the aggregate to be elected to the Board of Directors of RBPI Holding
Corporation so as to constitute a majority of the Board of Directors of RBPI
Holding Corporation; (f) RBPI Holding Corporation, Reliant Coinvestment
Partners, L.P. or either of the Reliant Partners Entities consolidates with, or
merges with or into, another Person, or any Person consolidates with, or merges
with or into, RBPI Holding Corporation, Reliant Coinvestment
7
<PAGE>
Partners, L.P. or either of the Reliant Partners Entities; or (g) RBPI
Holding Corporation, Reliant Coinvestment Partners, L.P. or either of the
Reliant Partners Entities sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of the assets of RBPI Holding
Corporation, Reliant Coinvestment Partners, L.P. or either of the Reliant
Partners Entities to any Person. As used herein, "BENEFICIALLY OWN" shall
mean "beneficially own" as defined in Rules 13d-3 and 13d-5 of the Securities
and Exchange Act of 1934, as amended, or any successor provision thereto.
CLOSING DATE shall mean the earlier to occur of (a) the date of the first
Loan under this Agreement or (b) May 9, 1997.
CODE shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.
COLLATERAL shall mean all collateral and security as described in the
Security Documents.
COMMITMENT shall mean, as to any Lender, the obligation of such Lender to
make Loans and incur liability for the Letter of Credit Exposure Amount in an
aggregate principal amount at any one time outstanding up to, but not exceeding,
the amount set forth as such Lender's Commitment in SCHEDULE 1.1 attached hereto
(as the same may be reduced from time to time pursuant to SECTION 2.4 hereof).
COMMITMENT FEE, with respect to any Lender, shall have the meaning assigned
to it in SECTION 2.3(a).
COMMITMENT LETTER shall mean that certain Commitment Letter of the Agent,
TCB and Chase Securities Inc. to Keystone, Inc. and Reliant Partners dated March
17, 1997 and accepted by Keystone, Inc. and Reliant Partners, L.P. as of March
17, 1997, as amended by that certain Side Letter Agreement dated as of March 28,
1997, by and among the Agent, TCB, Chase Securities Inc., Keystone, Inc. and
Reliant Partners.
COMMITMENT PERCENTAGE shall mean, with respect to any Lender, the ratio,
expressed as a percentage, of such Lender's Commitment to the Total Commitment.
CONSEQUENTIAL LOSS shall mean, with respect to (a) the Borrower's payment
of principal of a LIBOR Borrowing on a day other than the last day of the
applicable Interest Period, (b) the Borrower's failure to borrow a LIBOR
Borrowing on the date specified by the Borrower for any reason, or (c) any
cessation of the Adjusted LIBOR Rate to apply to the Loans or any part thereof
pursuant to SECTION 2.9 hereof, in each case whether voluntary or involuntary,
any loss, expense, penalty, premium or liability incurred by any of the Lenders
or the Agent as a result thereof, including without limitation, any interest
paid by any of the Lenders to lenders of funds borrowed by it to make or carry
the Loans and any other costs and expenses sustained or incurred in liquidating
or employing deposits from third parties acquired to effect or maintain the
Loans.
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CONSOLIDATED shall mean, for any Person, as applied to any financial or
accounting term, such term determined on a consolidated basis in accordance
with GAAP (except as otherwise required herein) for such Person and all
Subsidiaries thereof.
CONTINGENT OBLIGATION shall mean, as to any Person, any obligation of
such Person guaranteeing or intended to guarantee the payment or performance
of any Indebtedness, leases, dividends or other obligations (collectively
"primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including without limitation, any
obligation of the Person for whom Contingent Obligations is being determined,
whether or not contingent, (a) to purchase any such primary obligation or
other property constituting direct or indirect security therefor, (b) assume
or contingently agree to become or be secondarily liable in respect of any
such primary obligation, (c) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital
or equity capital for the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (d) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment
of such primary obligation, or (e) otherwise to assure or hold harmless the
owner of such primary obligation against loss in respect thereof; PROVIDED,
HOWEVER, that the term "Contingent Obligation" shall not include endorsements
of checks or other negotiable instruments in the ordinary course of business.
CONTRIBUTION AGREEMENT shall mean that certain Contribution Agreement of
even date herewith, by and among the Borrower and the Current Guarantors, as
the same may be amended, modified, supplemented, restated and joined in
pursuant to a Joinder Agreement, from time to time.
CONTROL GROUP shall mean Keystone, Inc., a Texas corporation, Oak Hill
Partners, Inc., a _____________ corporation, FW Strategic Partners, L.P., a
Delaware limited partnership, Arbor Investors, L.L.C., a Delaware limited
liability company, Group 31, Inc., a Texas corporation, and FW Group Gen Par,
Inc., a Texas corporation, together with the respective Affiliates of such
entities on the Closing Date and the respective Permitted Transferees of any of
such entities or such Affiliates anytime thereafter.
CURRENT GUARANTORS shall mean each of the current Subsidiaries of the
Borrower described in SCHEDULE 5.8 attached hereto, including the Dormant
Subsidiaries.
CURRENT SUM shall mean on any day, as to a particular Lender, the sum of
(a) the outstanding principal balance of such Lender's Note on such day PLUS
(b) the product of (i) such Lender's Commitment Percentage TIMES (ii) the
Letter of Credit Exposure Amount on such day.
DISCONTINUED OPERATIONS shall mean, as of any day, operations of the
Borrower or any of its Subsidiaries which have been discontinued, and which,
as of such day, have been fully terminated, disposed of or liquidated.
DOMESTIC LENDING OFFICE shall mean, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on the signature pages
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hereof, or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
DORMANT SUBSIDIARIES shall mean each of the Subsidiaries of the Borrower
which is listed as a Dormant Subsidiary on SCHEDULE 5.8 attached hereto.
EBITDA shall mean with respect to any Person for any period the sum of
(i) Net Income, (ii) Interest Expense, (iii) depreciation and amortization of
assets, (iv) federal, state and local income taxes, and (v) all other
non-cash items reducing Net Income (other than any non-cash item requiring an
accrual or a reserve for cash disbursements in any future period), in each
case of such Person for such period, computed and calculated in accordance
with GAAP consistently applied.
ELIGIBLE ASSIGNEE shall mean a commercial Lender, a finance company,
insurance company, other financial institution or fund, reasonably acceptable
to the Agent and the Borrower.
ELIGIBLE INVENTORY shall mean raw materials and finished goods inventory
of the Borrower or any of its domestic Subsidiaries (but only to the extent
that such raw materials and finished goods inventory is Collateral hereunder
and is subject to a first priority perfected Lien in favor of the Agent for
the ratable benefit of the Lenders), which are and at all times shall
continue to be acceptable to the Agent in all respects. Standards of
eligibility for raw materials and finished goods inventory may be fixed and
revised from time to time solely by the Agent in the Agent's exclusive
judgment; PROVIDED, that (i) if the daily collection and application
procedures for Receivables are not then in effect in accordance with the
provisions of SECTION 6.15(b) hereof, the Agent shall give the Borrower three
(3) Business Days prior written notice before any change in such standards of
eligibility become effective, and (ii) if the daily collection and
application procedures for Receivables have been implemented and are then
continuing in accordance with the provisions of SECTION 6.15(b) hereof, the
Agent shall give the Borrower written notice within a reasonable time after
the effective date of any change in such standards of eligibility. In
general, without limiting the foregoing, inventory shall in no event be
considered as Eligible Inventory without complying with the following
requirements: (a) such inventory shall be valued in accordance with GAAP and
consist of either raw materials which have been purchased by the Borrower or
any of its domestic Subsidiaries or finished goods which have been purchased
or produced by the Borrower or any such domestic Subsidiary; (b) such
inventory is in good condition, meets all standards imposed by any
Governmental Authority having regulatory authority over it, is not obsolete,
is not work-in-progress inventory, is not returned or damaged, is not scrap
or remnants inventory, is not packaging or shipping supplies or materials and
is currently usable or saleable in the normal course of business of the
Borrower or any of its domestic Subsidiaries; (c) such inventory must not be
considered "slow moving" (i.e.: inventory which has not been sold within 12
months or that portion of inventory in excess of a 12-month supply as
calculated on a trailing 12-month basis); (d) such inventory is not in the
possession of or control of any warehouseman, bailee, or any agent or
processor for or customer of the Borrower or any of its Subsidiaries, unless
such warehouseman, bailee, agent, processor, or customer has subordinated any
Lien it may claim therein pursuant to a written subordination agreement
reasonably acceptable to Agent; (e) except for inventory being shipped to a
customer
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of the Borrower or any of its domestic Subsidiaries (so long as such
inventory is in control of, and is being shipped by, the Borrower or any of
its domestic Subsidiaries), such inventory must not be in transit and must be
housed or stored in the United States at a location owned or leased by the
Borrower or any of its domestic Subsidiaries; (f) if such inventory is housed
or stored at a location which is leased, and not owned by the Borrower or any
of its domestic Subsidiaries, the owner of such leased facility shall have
subordinated any Lien it may claim against such inventory, whether
contractual or statutory, to the Lien which the Agent holds against such
inventory for the ratable benefit of the Lenders pursuant to a written
subordination agreement acceptable to the Agent in all respects; (g) such
inventory must be adequately insured to the reasonable satisfaction of the
Agent pursuant to insurance coverage by SECTION 6.7 hereof; and (h) the Agent
has not deemed such inventory ineligible because the Agent reasonably
considers the value thereof to be impaired or its ability to realize such
value to be insecure. Notwithstanding anything to the contrary contained in
this Agreement or any other Loan Document, no raw materials and finished
goods inventory of any Dormant Subsidiary or any Subsidiary of the Borrower
created or acquired after the Closing Date (including any Subsidiary acquired
pursuant to SECTION 7.4(f)(3) below) shall be included within Eligible
Inventory for purposes hereof, unless and until the Agent shall have
conducted a field examination (at the Borrower's cost and expense) of such
Subsidiary's books, records and operations in order to reasonably satisfy the
Agent that the raw materials and finished goods inventory components of such
Subsidiary generally satisfy the above-described standards of eligibility.
ELIGIBLE RECEIVABLES shall mean, as at any date of determination thereof,
Receivables created by the Borrower or any of its domestic Subsidiaries (but
only to the extent that such Receivables are Collateral hereunder and are
subject to a first priority perfected Lien in favor of the Agent for the ratable
benefit of the Lenders) in the ordinary course of business arising out of the
sale of goods or rendering of services by the Borrower or any such domestic
Subsidiary, which are and at all times shall continue to be acceptable to the
Agent in all respects. Standards of eligibility for Receivables may be fixed
and revised from time to time solely by the Agent in the Agent's exclusive
judgment; PROVIDED, that (i) if the daily collection and application procedures
for Receivables are not then in effect in accordance with the provisions of
SECTION 6.15(b) hereof, the Agent shall give the Borrower three (3) Business
Days prior written notice before any change in such standards of eligibility
become effective, and (ii) if the daily collection and application procedures
for Receivables have been implemented and are then continuing in accordance
with the provisions of SECTION 6.15(b) hereof, the Agent shall give the Borrower
written notice within a reasonable time after the effective date of any change
in such standards of eligibility. In general, without limiting the foregoing,
an Eligible Receivable must comply with all of the following requirements: (a)
all payments due on the Receivable have been billed and invoiced in a timely
fashion and in the normal course of business; (b) no payment is outstanding on
the Receivable for more than 90 days after the date of invoice; (c) the payments
due on 50% or more of all Receivables owing to the Borrower and its Subsidiaries
by the applicable account debtor are less than 90 days past the date of invoice;
(d) the total Receivables owing to the Borrower and its Subsidiaries by the
applicable account debtor constitute 10% or less of the aggregate Receivables
owing to the Borrower and its Subsidiaries by all account debtors, or if the
total Receivables of the applicable account debtor exceed 10% of the aggregate
of all Receivables owing to the Borrower and its Subsidiaries by all account
debtors, the Receivables of the applicable account debtor up to such 10% limit
shall be deemed to constitute
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Eligible Receivables (subject to compliance with all other applicable
standards of eligibility) and the Receivables of the applicable account
debtor exceeding such 10% limit shall be included within Eligible Receivables
(subject to compliance with all other applicable standards of eligibility)
only if the Receivables exceeding such 10% limit are backed or secured by
credit insurance reasonably satisfactory to the Agent in all respects and
such credit insurance has been assigned to the Agent upon terms acceptable to
the Agent in its discretion; (e) the Receivable is free and clear of all
security interests, liens, charges and encumbrances of any nature whatsoever
(except for the Lien in favor of the Agent); (f) the Receivable arose from a
completed, outright and lawful sale of goods, to which title has passed to
the applicable account debtor on an absolute sales basis, or from the
rendering of services by or on behalf of the Borrower or any such domestic
Subsidiary; (g) the Receivable constitutes an "account" within the meaning of
the Uniform Commercial Code of the state in which the Borrower's or such
domestic Subsidiary's principal offices are located; (h) neither the Borrower
nor any of its Subsidiaries is aware that the Receivable arises out of a bill
and hold, consignment, progress billing, promotional, C.O.D. and cash in
advance arrangement or is subject to any setoff, contra, offset, deduction,
dispute, chargeback, credit, counterclaim or other defense arising out of the
transactions represented by the Receivable or independently thereof; (i) the
applicable account debtor has finally accepted the goods or services from the
sale out of which the Receivable arose and has not objected to such account
debtor's liability thereon or returned, rejected or repossessed any of such
goods, except for complaints made or goods returned in the ordinary course of
business for which, in the case of goods returned, goods of equal or greater
value have been shipped in return; (j) the applicable account debtor is not
any Governmental Authority, unless there has been compliance satisfactory to
the Agent in all respects with the Assignment of Claims Act or similar state
statutes; (k) the applicable account debtor is not an Affiliate of the
Borrower or any of its Subsidiaries; (l) the account debtor must be located
in the United States, except for Receivables insured or backed by credit
insurance or a letter of credit in form and substance acceptable to the Agent
in all respects; (m) the Receivable complies with all material Legal
Requirements (including without limitation, all usury laws, fair credit
reporting and billing laws, fair debt collection practices and rules, and
regulations relating to truth in lending and other similar matters); (n) the
Receivable is in full force and effect and constitutes a legal, valid and
binding obligation of the applicable account debtor enforceable in accordance
with the terms thereof; (o) the Receivable is denominated in and provides for
payment by the applicable account debtor in U.S. dollars; (p) the Receivable
has not been and is not required to be charged or written off as
uncollectible in accordance with GAAP; (q) if the Receivable is owing by an
account debtor for which the Borrower or the applicable domestic Subsidiary
must have filed a "Notice of Business Activities Report" or similar report in
a state or states where failure to comply with such filing of notice
precludes bringing suit against the applicable account debtor, the Borrower
or the applicable domestic Subsidiary must have filed such requisite
activities report or other similar report and otherwise be in full compliance
with such Legal Requirement; (r) if the Receivable arises out of a
"backhauling" arrangement, such Receivable shall be only included within
Eligible Receivables (subject to compliance with all other applicable
standards of eligibility) to the extent that the aggregate amount of all
other Eligible Receivables arising out of "backhauling" arrangements does not
exceed $500,000; and (s) the credit standing of the applicable account debtor
in relation to the amount of credit extended has not become unsatisfactory to
the Agent in its reasonable discretion. Notwithstanding anything to the
contrary contained in this Agreement or any other Loan Document, no
Receivables of any Dormant Subsidiary or any Subsidiary of the Borrower
created
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or acquired after the Closing Date (including any Subsidiary acquired
pursuant to SECTION 7.4(f)(3) below) shall be included within Eligible
Receivables for purposes hereof, unless and until the Agent shall have
conducted a field examination (at the Borrower's cost and expense) of such
Subsidiary's books, records and operations in order to reasonably satisfy the
Agent that the Receivables of such Subsidiary generally satisfy the
above-described standards of eligibility.
ENVIRONMENTAL CLAIM shall mean any third party (including any
Governmental Authority) action, lawsuit, claim or proceeding (including
claims or proceedings at common law) which seeks to impose or alleges any
liability for (i) preservation, protection, conservation, pollution,
contamination of, or releases or threatened releases of, Hazardous Substances
into the air, surface water, ground water or land or the clean-up, abatement,
removal, remediation or monitoring of such pollution, contamination or
Hazardous Substances; (ii) generation, recycling, reclamation, handling,
treatment, storage, disposal or transportation of Hazardous Substances; (iii)
exposure to Hazardous Substances; (iv) the safety or health of employees or
other Persons in connection with any of the activities specified in any other
subclause of this definition; or (v) the manufacture, processing,
distribution in commerce, presence or use of Hazardous Substances. An
"ENVIRONMENTAL CLAIM" includes a common law action, as well as a proceeding
to issue, modify or terminate an Environmental Permit, or to adopt or amend a
regulation, to the extent that such a proceeding attempts to redress
violations of the applicable permit, license, or regulation as alleged by any
Governmental Authority.
ENVIRONMENTAL LIABILITIES shall mean all liabilities arising from any
Environmental Claim, Environmental Permit or Requirement of Environmental Law
under any theory of recovery, at law or in equity, and whether based on
negligence, strict liability or otherwise, including: remedial, removal,
response, abatement, restoration (including natural resources),
investigative, or monitoring liabilities, personal injury and damage to
property, natural resources or injuries to persons, and any other related
costs, expenses, losses, damages, penalties, fines, liabilities and
obligations, and all costs and expenses necessary to cause the issuance,
reissuance or renewal of any Environmental Permit including attorney's fees
and court costs. ENVIRONMENTAL LIABILITY shall mean any one of them.
ENVIRONMENTAL PERMIT shall mean any permit, license, approval or other
authorization under any applicable law, regulation and other requirement of
the United States or of any state, municipality or other subdivision thereof
relating to pollution or protection of health or the environment, including
laws, regulations or other requirements relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, Hazardous
Substances or toxic materials or wastes into ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, recycling, presence, use, treatment, storage, disposal,
transport, or handling of wastes, pollutants, contaminants or Hazardous
Substances.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations, rulings and
interpretations adopted by the Internal Revenue Service or the Department of
Labor thereunder.
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ERISA AFFILIATE shall mean any trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary of the
Borrower would be treated as a single employer under the provisions of Title
I or Title IV of ERISA.
EVENT OF DEFAULT shall mean any of the events specified in SECTION 8.1
hereof or otherwise specified as a Default in any other Loan Document,
PROVIDED there has been satisfied any requirement in connection with any such
event for the giving of notice or the lapse of time, or both, and DEFAULT
shall mean any of such events, whether or not any such requirement for the
giving of notice, or the lapse of time, or both, has been satisfied.
EXCESS INTEREST AMOUNT shall have the meaning attributed to such term in
SECTION 2.1 hereof.
FEDERAL FUNDS EFFECTIVE RATE shall mean, for any day, a rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
FINANCIAL OFFICER shall mean, with respect to any Person, the chief
financial officer of such Person.
GAAP shall mean, as to a particular Person, those principles and
practices (a) which are recognized as such by the Financial Accounting
Standards Board or successor organization, (b) which are applied for all
periods after the date hereof in a manner consistent with the manner in which
such principles and practices were applied to the most recent audited
financial statements of the relevant Person furnished to the Agent and the
Lenders, and (c) which are consistently applied for all periods after the
date hereof so as to reflect properly the financial condition, and results of
operations and changes in financial position, of such Person.
GEORGE GROUP CONSULTING AGREEMENTS shall mean (a) that certain consulting
agreement dated on or about the Closing Date, by and between George Group,
Inc. and the Borrower, (b) any and all additional consulting agreements
entered into by and between George Group, Inc. and the Borrower or any of the
Borrower's Subsidiaries after the Closing Date in connection with any
acquisition, consolidation or merger permitted by SECTION 7.4(f)(3) below (so
long as only one such consulting agreement is entered into by and between
George Group, Inc. and the Borrower or the applicable Subsidiary for each
such acquisition, consolidation or merger), and (c) any and all extensions,
modifications and amendments of any of such consulting agreements; PROVIDED,
HOWEVER, that in no event shall (i) the term of such consulting agreement
dated on or about the Closing Date be extended beyond twenty-four (24) months
after the Closing Date, (ii) all of the payments (including reimbursements of
expenses) made and to be made by the Borrower under such consulting agreement
dated on or about the Closing Date exceed $2,000,000 in the aggregate in any
fiscal year of the Borrower, (iii) all of the payments (including
reimbursements of expenses) made and to be made by the Borrower or its
applicable Subsidiary under any such consulting agreement entered into after
the Closing Date exceed $500,000 in the aggregate in any
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fiscal year of the Borrower, or (iv) all of the payments (including
reimbursements of expenses) made and to be made by the Borrower and its
Subsidiaries under all of such consulting agreements exceed $4,500,000 in the
aggregate.
GOVERNMENTAL AUTHORITY shall mean any foreign governmental authority, the
United States of America, any state of the United States and any political
subdivision of any of the foregoing, and any agency, instrumentality,
department, commission, board, bureau, central bank, authority, court or
other tribunal, in each case whether executive, legislative, judicial,
regulatory or administrative, having jurisdiction over the Agent, any of the
Lenders, the Borrower, any Subsidiary of the Borrower, or their respective
Property.
GRANTOR shall mean any Grantor, Assignor, Pledgor or Debtor, as such
terms are defined in any of the Security Documents.
GUARANTORS shall mean each and every Person executing a Guaranty from
time to time, including without limitation, the Current Guarantors.
GUARANTY shall mean each and every guaranty of the Obligations from time
to time executed and delivered to the Agent by any Guarantor, as amended,
supplemented, modified, joined in pursuant to a Joinder Agreement and
restated from time to time.
HAZARDOUS SUBSTANCE shall mean any hazardous or toxic waste, substance or
product or material defined or regulated from time to time by any applicable
law, rule, regulation or order described in the definition of "Requirements
of Environmental Law," including solid waste (as defined under The Resource
Conservation and Recovery Act or its regulations, as amended from time to
time), petroleum and any fraction thereof and any radioactive materials and
waste.
HIGHEST LAWFUL RATE shall mean, with respect to the Agent or any Lender,
the maximum nonusurious rate of interest permitted to be charged by, as
applicable, the Agent or such Lender under applicable laws (if any) of the
United States or any state from time to time in effect.
INDEBTEDNESS shall mean, as to any Person, without duplication: (a) all
indebtedness (including principal, interest, fees and charges) of such Person
for borrowed money; (b) any other indebtedness which is evidenced by a bond,
debenture or similar instrument; (c) all Capital Lease Obligations of such
Person; (d) all obligations of such Person for the deferred purchase price of
Property or services (except current trade accounts payable arising in the
ordinary course of business and current accrued expenses, not the result of
borrowing, arising in the ordinary course of business); (e) all obligations
of such Person in respect of outstanding letters of credit, acceptances and
similar obligations created for the account of such Person; (f) all
indebtedness, liabilities, and obligations secured by any Lien on any
Property owned by such Person even though such Person has not assumed or has
not otherwise become liable for the payment of any such indebtedness,
liabilities or obligations secured by such Lien; (g) net liabilities of such
Person under interest rate cap agreements, interest rate swap agreements,
foreign currency exchange agreements and other hedging agreements or
arrangements (calculated on a basis satisfactory to the Agent and in
accordance with accepted practice); and (h) all other indebtedness,
liabilities and obligations of such Person which are required to be included
or listed in the liabilities section of
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such Person's balance sheet according to GAAP; PROVIDED, that (1) such term
shall not mean or include any Indebtedness in respect of which monies
sufficient to pay and discharge the same in full (either on the expressed
date of maturity thereof or on such earlier date as such Indebtedness may be
duly called for redemption and payment) shall be deposited with a depository,
agency or trustee acceptable to the Agent in trust for the payment thereof,
and (2) for purposes of computation of the Leverage Ratio, the Indebtedness
component of the Leverage Ratio shall exclude any Indebtedness of the type
described in clause (h) of this definition.
INDEPENDENT FINANCIAL ADVISOR shall mean a nationally recognized
accounting, appraisal, investment banking firm or consultant that is, in the
judgment of the Borrower's Board of Directors, qualified to perform the task
for which it has been engaged (a) which does not, and whose directors,
officers and employees or affiliates do not, have a direct or indirect
financial interest in the Borrower or any of its Subsidiaries and (b) which,
in the judgment of the Board of Directors of the Borrower, is otherwise
independent and qualified to perform the task for which it is to be engaged.
INTEREST COVERAGE RATIO shall mean as of any date that the Interest
Coverage Ratio is calculated, the ratio of (a) EBITDA less Capital
Expenditures for the Borrower and its Subsidiaries, on a Consolidated basis,
for the applicable calculation period to (b) Interest Expense of the Borrower
and its Subsidiaries, on a Consolidated basis, for such calculation period.
The components of the Interest Coverage Ratio shall be calculated for the
four (4) most recent consecutive fiscal quarters of the Borrower ending on or
immediately prior to the applicable date of determination of the Interest
Coverage Ratio.
INTEREST EXPENSE shall mean, with respect to any Person for any period,
the interest expense of such Person during such period determined in
accordance with GAAP, consistently applied, and shall in any event include,
without limitation, (a) the amortization of debt discounts, (b) the
amortization of all fees payable in connection with the incurrence of
Indebtedness to the extent included in interest expense (excluding the
amortization of fees incurred in connection with the Acquisition and the
Senior Subordinated Debt Transaction), (c) the portion of payments under
Capital Lease Obligation allocable to interest expense, and (d) all fixed and
calculable cash dividend payments on preferred stock.
INTEREST OPTION shall have the meaning given to such term in SECTION
2.8(a) hereof.
INTEREST PAYMENT DATES shall mean (a) for ALTERNATE BASE RATE BORROWINGS,
(1) the first Business Day of each calendar month prior to the Maturity Date,
and (2) the Maturity Date; and (b) FOR LIBOR BORROWINGS, (1) if the Interest
Period applicable to such LIBOR Borrowing is equal to or less than three (3)
months, the end of such Interest Period, and (2) in all other cases, on that
day which is three (3) calendar months following the first day of the
applicable Interest Period (or, if there be no corresponding day, on the next
succeeding day which is a Business Day) and at the end of such Interest
Period.
INTEREST PERIOD shall mean the period commencing on the date of the
applicable LIBOR Borrowing and ending on the numerically corresponding day
(or, if there is no numerically corresponding day, on the last day) in the
calendar month that is one (1), two (2), three (3) or
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six (6) months thereafter, as the Borrower may elect in accordance herewith;
PROVIDED, HOWEVER, that (a) if an Interest Period would end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on
the next preceding Business Day, (b) no Interest Period shall end later than
the Maturity Date, and (c) interest shall accrue from and including the first
day of an Interest Period to, but excluding, the last day of such Interest
Period.
INVESTMENT shall mean the purchase or other acquisition of any securities
or Indebtedness of, or the making of any loan, advance, transfer of Property
or capital contribution to, or the incurring of any liability, contingently
or otherwise, in respect of the Indebtedness of, any Person.
JOINDER AGREEMENT shall mean any agreement, in Proper Form, executed by a
Subsidiary of the Borrower from time to time in accordance with SECTION 6.10
hereof, pursuant to which such Subsidiary joins in the execution and delivery
of a Guaranty and the Contribution Agreement.
LEGAL REQUIREMENT shall mean any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or interpretation of any of
the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority.
LENDER or LENDERS shall have the meaning assigned to such terms in the
preamble of this Agreement.
LETTERS OF CREDIT shall mean all standby letters of credit and
documentary sight letters of credit issued by the Agent for the account of
the Borrower pursuant to the terms set forth in this Agreement.
LETTER OF CREDIT ADVANCES shall mean all sums which may from time to time
be paid by any and all of the Lenders pursuant to any and all of the Letters
of Credit, together with all other sums, fees, reimbursements or other
obligations which may be due to the Agent or any of the Lenders pursuant to
any of the Letters of Credit.
LETTER OF CREDIT EXPOSURE AMOUNT shall mean at any time the sum of (i)
the aggregate undrawn amount of all Letters of Credit outstanding at such
time PLUS (ii) the aggregate amount of all Letter of Credit Advances for
which the Lenders have not been reimbursed and which remain unpaid at such
time.
LEVERAGE RATIO shall mean as of any date that the Leverage Ratio is
calculated, the ratio of (a) the aggregate Indebtedness of the Borrower and
its Subsidiaries, on a Consolidated basis, as of such date TO (b) EBITDA of
the Borrower and its Subsidiaries, on a Consolidated basis, for the
applicable calculation period. The components of the Leverage Ratio shall be
determined for the four (4) most recent consecutive fiscal quarters of the
Borrower ending on or immediately prior to the applicable date of
determination of the Leverage Ratio.
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LIBOR BORROWING shall mean, as of any date, that portion of the principal
balance of the Loans bearing interest at the Adjusted LIBOR Rate as of such
date.
LIBOR LENDING OFFICE shall mean, with respect to any Lender, the office
of such Lender specified as its "LIBOR Lending Office" opposite or below its
name on the signature pages hereof, or (if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such Lender
may from time to time specify in writing to the Borrower and the Agent.
LIBOR RATE shall mean, with respect to any LIBOR Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the rate at which dollar deposits
approximately equal in principal amount to the Agent's portion of such LIBOR
Borrowing and for a maturity equal to the applicable Interest Period are
offered in immediately available funds to the London branch of the Agent by
leading lenders in the London interbank market for Eurodollars at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
first day of such Interest Period.
LIEN shall mean, with respect to any asset of any Person, (a) any
mortgage, pledge, charge, encumbrance, security interest, collateral
assignment or other lien or restriction of any kind on such asset, whether
based on common law, constitutional provision, statute or contract, (b) the
interest of any vendor or a lessor under any conditional sale agreement,
title retention agreement or capital lease relating to such asset, (c) in the
case of securities, any purchase option, call or similar right of a third
party with respect to such securities, or (d) any other right of or
arrangement with any creditor to have such creditor's claim satisfied out of
such assets, or the proceeds therefrom, prior to the general creditors of
such Person owning such assets.
LOAN DOCUMENTS shall mean this Agreement, the Notes, the Applications,
the Security Documents, the Guaranties, the Contribution Agreement, the
Joinder Agreements, the Letters of Credit, all instruments, certificates and
agreements now or hereafter executed or delivered to the Agent and/or the
Lenders in connection with or pursuant to any of the foregoing (including
without limitation, that certain Fee Letter of the Agent and Chase Securities
Inc. to Keystone, Inc. and Reliant Partners dated March 17, 1997 and accepted
by Keystone, Inc. and Reliant Partners as of March 17, 1997), and all
amendments, modifications, renewals, extensions, increases and rearrangements
of, and substitutions for, any of the foregoing.
LOANS shall mean the Loans made pursuant to SECTION 2.1 hereof. LOAN
shall mean any one of the Loans.
LOCKBOX AGREEMENT shall collectively mean one or more lockbox agreements,
in Proper Form, to be executed and delivered to the Agent or TCB by the
Borrower and each of its Subsidiaries required by the Agent, together with
all modifications and/or replacements thereof which are approved in writing
by the Agent. As of the Closing Date, the Borrower has executed and
delivered to TCB a Lockbox Agreement in substantially the form attached
hereto as EXHIBIT B.
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MATERIAL ADVERSE EFFECT shall mean a material adverse effect on (a) the
business, assets, prospects, operations, financial or other condition of the
Borrower and its Subsidiaries, taken as a whole, (b) the ability of the
Borrower and the Guarantors, taken as whole, to perform or pay the
Obligations in accordance with the terms hereof or of any other Loan
Document, (c) the validity or enforceability of this Agreement, any of the
Notes or any of the other Loan Documents or the rights or remedies of the
Agent or the Lenders hereunder or thereunder, or (d) the Agent's Lien on any
material portion of the Collateral or the priority of such Lien.
MATURITY DATE shall mean the earlier of (a) May 9, 2002, (b) any date
that the Total Commitment is terminated in full by the Borrower pursuant to
SECTION 2.4 hereof, and (c) any date the Maturity Date is accelerated by the
Agent pursuant to SECTION 8.1 hereof.
MONTHLY UNAUDITED FINANCIAL STATEMENTS shall mean the financial
statements of a Person, including all notes thereto, which statements shall
include (a) a balance sheet as of the end of the respective calendar month or
fiscal quarter, as applicable, (b) an income statement for such respective
calendar month or fiscal quarter, as applicable, and for the fiscal year to
date, subject to normal year-end adjustments, all setting forth in
comparative form the corresponding figures for the corresponding period of
the preceding fiscal year and (c) a statement of cash flows for the fiscal
year to date, subject to normal year-end adjustments, setting forth in
comparative form the corresponding figures in the corresponding period of the
preceding fiscal year, all prepared in accordance with GAAP and certified as
true and correct by a Responsible Officer of such Person. The Monthly
Unaudited Financial Statements for the Borrower and its Subsidiaries shall be
prepared on a Consolidated basis.
NET AMOUNT OF ELIGIBLE RECEIVABLES shall mean and include at any time,
without duplication, the gross amount of Eligible Receivables at such time
LESS each of the following items: (a) unpaid sales, excise or similar taxes
owed by the Borrower or any of its domestic Subsidiaries (to the extent the
same are included in Receivables); (b) returns, discounts, claims, credits
and allowances of any nature asserted or taken by account debtors of the
Borrower or any of its domestic Subsidiaries (to the extent the same are
included in Receivables); and (c) the amount, if any, by which the warranty
reserve of the Borrower and its Subsidiaries (determined in accordance with
GAAP), on a Consolidated basis, exceeds the sum of (i) $500,000 and (ii) the
amount of such warranty reserve of the Borrower and its Subsidiaries, on a
Consolidated basis, as of the Closing Date.
NET INCOME shall mean gross revenues and other proper income credits for
such Person, less all proper expenses and other income charges for such
Person, including taxes on income, all determined in accordance with GAAP;
PROVIDED, that there shall not be included in such revenues any extraordinary
or nonrecurring items, as determined in accordance with GAAP.
NOTES shall mean the promissory notes, each substantially in the form of
EXHIBIT A attached hereto, of the Borrower evidencing the Loans, payable to
the order of the respective Lender in the amount of said Lender's Commitment,
and all renewals, extensions, modifications, rearrangements and replacements
thereof and substitutions therefor. Note shall mean any one of such
promissory notes.
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OBLIGATIONS shall mean, without duplication, all obligations, liabilities
and Indebtedness of the Borrower and the Guarantors with respect to the
Security Documents and all other Loan Documents, including without
limitation, (a) the principal of and interest on the Loans and (b) the
payment or performance of all other obligations, liabilities and Indebtedness
of the Borrower or the Guarantors to the Agent and the Lenders hereunder,
under the Notes, under the Letters of Credit, under the Applications or under
any one or more of the other Loan Documents, including all fees, costs,
expenses and indemnity obligations hereunder and thereunder. The
Obligations include interest (including post-petition interest, whether or
not such interest would be an allowable claim under any applicable bankruptcy
or other similar proceeding) and other obligations accruing or arising after
(a) commencement of any case under any bankruptcy or similar laws by or
against the Borrower or any Guarantor or (b) the obligations of the Borrower
or any Guarantor shall cease to exist by operation of law or for any other
reason.
OFFICER'S CERTIFICATE shall mean a certificate substantially in the form
of EXHIBIT C attached hereto.
ORGANIZATIONAL DOCUMENTS shall mean, with respect to a corporation, the
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture, and with respect to a
trust, the instrument establishing such trust; in each case including any and
all modifications thereof as of the date of the Loan Document referring to
such Organizational Document and any and all future modifications thereof
which are consented to by the Agent.
PARTIES shall mean all Persons other than the Agent or any Lender
executing any Loan Documents.
PAST DUE RATE shall mean, on any day, as follows: (a) WITH RESPECT TO
PAST DUE PRINCIPAL WHICH IS OUTSTANDING UNDER ANY NOTE, the sum of the
Interest Option otherwise applicable thereto on such day plus two percent per
annum (it being understood by the Borrower that if any such applicable
Interest Option is based on the Adjusted LIBOR Rate, the Past Due Rate with
respect to the applicable principal amount shall only be calculated with
reference to the applicable Adjusted LIBOR Rate until the Interest Period
applicable thereto expires, and upon the expiration of such applicable
Interest Period, the Past Due Rate for such applicable principal amount shall
be computed on the basis of the Alternate Base Rate for such day plus two
percent per annum), and (b) WITH RESPECT TO PAST DUE ACCRUED INTEREST, FEES
AND OTHER OBLIGATIONS (other than past due principal outstanding under any
Note), the sum of the Alternate Base Rate for such day plus two percent per
annum.
PBGC shall mean the Pension Benefit Guaranty Corporation.
PERMITTED AFFILIATE SALES OF RECEIVABLES shall mean any sale, assignment,
transfer or other disposition by the Borrower or any of its Subsidiaries to
any of their respective Affiliates of any Receivables which do not constitute
Eligible Receivables, so long as the consideration received by the Borrower
or the applicable Subsidiary upon the disposition of the applicable
Receivables is approximately equivalent to the original invoice amount(s)
giving rise to such Receivables.
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PERMITTED AFFILIATE TRANSACTIONS shall mean any of the following: (a)
transactions with or among the Borrower and any Guarantor that is a wholly
owned Subsidiary of the Borrower; (b) customary directors' fees, customary
directors' indemnifications and similar arrangements for directors and
officers of the Borrower or any of its Subsidiaries entered into in the
ordinary course of business, together with any payments made under any such
indemnification arrangements; (c) the issuance and sale by the Borrower to
its shareholders of additional Stock; (d) any payment or distribution made
pursuant to any applicable Restricted Payment Exception; (e) loans and
advances to officers, directors and employees of the Borrower or any of its
Subsidiaries for travel, entertainment, moving and other relocation expenses,
in each case made in the ordinary course of business; (f) the incurrence of
intercompany Indebtedness permitted pursuant to SECTION 7.1(g) hereof; (g)
that certain tax sharing arrangement entered into as of the Closing Date by
and among the Borrower and each of its Subsidiaries; (h) any of the George
Group Consulting Agreements and any transactions pursuant to the terms
thereof; (i) any Permitted Affiliate Sale of Receivables; and (j)
transactions, contracts or agreements existing on the date of this Agreement
and which are set forth on SCHEDULE 7.6 attached hereto, together with any
renewals and extensions of such existing transactions, contracts or
agreements, so long as such renewals and extensions are upon terms and
conditions substantially identical to the terms and conditions set forth in
such existing transactions, contracts and agreements (or otherwise no less
favorable to the Borrower and the Guarantors, as applicable).
PERMITTED INVESTMENT SECURITIES shall mean: (a) at any time that the
daily collection and application procedures for Receivables have been
implemented and are continuing in accordance with the provisions of SECTION
6.15(b) hereof, (1) readily marketable, direct obligations of the United
States of America or any agency or wholly owned corporation thereof which are
backed by the fall faith and credit of the United States, maturing within six
(6) months after the date of acquisition thereof, (2) certificates of deposit
or other short-term direct obligations of (i) the Agent, (ii) TCB or (iii)
any other domestic financial institution having capital and surplus in excess
of $500,000,000, maturing within six months after the date of acquisition
thereof, and (3) other Investments mutually agreed to in writing by the
Borrower and the Agent; and (b) at any time that the daily collection and
application procedures for Receivables are not in effect in accordance with
the provisions of SECTION 6.15(b) hereof, (1) all Investments of the type
described in clause (a) of this definition, (2) eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with (i) the Agent, (ii) TCB or (iii) any other
domestic financial institution having capital and surplus in excess of
$500,000,000, (3) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (a)(1),
(a)(2) and (b)(2) above entered into with any financial institution meeting
the qualifications specified in clauses (a)(2) and (b)(2) above, and (4)
commercial paper issued by corporations organized under the laws of the
United States of America or any state thereof, each of which conducts a
substantial part of its business in the United States of America, maturing
within six months after the date of acquisition thereof and rated "P-1" or
better by Moody Investors Service, or "A-1" or better by Standard and Poor
Corporation.
PERMITTED TRANSFEREES shall mean, with respect to any Person: (a) in the
case of any Person who is a natural person, such individual's spouse or
children, any trust for such
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individual's benefit or the benefit of such individual's spouse or children,
or any corporation or partnership in which the direct and beneficial owner of
all of the equity interest is such natural Person or such individual's spouse
or children or any trust for the benefit of such Persons; (b) in the case of
any Person who is a natural person, the heirs, beneficiaries, executors,
administrators or personal representatives of such natural Person upon the
death of such Person or upon the incompetency or disability of such Person
for purposes of the protection and management of such individual's assets;
and (c) in the case of any Person who is not a natural Person, any Affiliate
of such Person on the Closing Date.
PERSON shall mean any individual, corporation, business trust,
unincorporated organization or association, partnership, joint venture,
Governmental Authority or any other form of entity.
PLAN shall mean any plan subject to Title IV of ERISA and maintained for
employees of the Borrower or of any member of a "controlled group of
corporations", as such term is defined in the Code, of which the Borrower,
any of its Subsidiaries or any ERISA Affiliate it may acquire from time to
time is a part, or any such plan to which the Borrower, any of its
Subsidiaries or any ERISA Affiliate is required to contribute on behalf of
its employees.
PRIME RATE shall mean the rate of interest per annum publicly announced
from time to time by Chase, or its successor financial institution, at its
principal office in New York City as it prime rate in effect at such time.
Without notice to the Borrower or any other Person, the Prime Rate shall
change automatically from time to time as and in the amount by which said
prime rate shall fluctuate, with each such change to be effective as of the
date of each change in such prime rate. THE PRIME RATE IS A REFERENCE RATE
AND DOES NOT NECESSARILY REPRESENT THE LOWEST OR BEST RATE ACTUALLY CHARGED
BY CHASE OR SUCH SUCCESSOR FINANCIAL INSTITUTION TO ANY OF ITS CUSTOMERS.
CHASE OR SUCH SUCCESSOR FINANCIAL INSTITUTION MAY MAKE COMMERCIAL LOANS OR
OTHER LOANS AT RATES OF INTEREST AT, ABOVE AND BELOW THE PRIME RATE.
PRINCIPAL OFFICE shall mean the principal office in New York City of the
Agent, or at such other place as the Agent may from time to time by notice to
the Borrower designate.
PROPER FORM shall mean in form and substance satisfactory to the Agent.
PROPERTY shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
RATE SELECTION DATE shall mean that Business Day which is (a) in the case
of the Alternate Base Rate Borrowings, the date of such borrowing, or (b) in
the case of LIBOR Borrowings, the date three (3) Business Days preceding the
first day of any proposed Interest Period.
RATE SELECTION NOTICE shall have the meaning ascribed to such term in
SECTION 2.8(b)(1) hereof.
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RECEIVABLES shall mean and include all of the accounts, instruments,
documents, chattel paper and general intangibles of the Borrower or any of
its Subsidiaries, whether secured or unsecured, whether now existing or
hereafter created or arising, and whether or not specifically assigned to the
Agent for the ratable benefit of the Lenders.
REFINANCING INDEBTEDNESS shall mean any Indebtedness of the Borrower or
any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund, other
Indebtedness of such Person, PROVIDED, that:
(a) the principal amount of such Refinancing Indebtedness does not
exceed the then outstanding principal amount of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded;
(b) the interest rate or rates to accrue under such Refinancing
Indebtedness do not exceed the prevailing market interest rate or rates
which are then applicable to, and generally available for, Indebtedness
which is similar in type, amount, maturity and other terms to the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded;
(c) the maturities, amortization schedules, covenants, defaults,
remedies, subordination provisions (with respect to any Subordinated
Indebtedness), collateral security provisions (or absence thereof) and
other terms of such Refinancing Indebtedness are in each case the same or
more favorable to the Borrower and/or its applicable Subsidiaries as those
in the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded; and
(d) no Default or Event of Default has occurred and is continuing or
would result from the issuance or origination of such Refinancing
Indebtedness.
REGULATION D shall mean Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation relating to reserve requirements applicable to
member Lenders of the Federal Reserve System.
REGULATORY CHANGE shall mean, with respect to any Lender, any change on or
after the date of this Agreement in any Legal Requirement (including Regulation
D) or the adoption or making on or after such date of any interpretation,
directive or request applying to a class of Lenders including such Lender under
any Legal Requirement (whether or not having the force of law) by any
Governmental Authority charged with the interpretation or administration
thereof.
RELIANT PARTNERS ENTITIES shall mean Reliant Partners, L.P., a Texas
limited partnership, and Reliant Partners II, L.P., a Texas limited partnership.
REPORTABLE EVENT shall mean a Reportable Event as defined in Section
4043(b) of ERISA.
REQUEST FOR EXTENSION OF CREDIT shall mean a written request for extension
of credit substantially in the form of EXHIBIT D attached hereto.
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REQUIRED LENDERS shall mean Lenders having greater than 50% of the Total
Commitment.
REQUIREMENTS OF ENVIRONMENTAL LAW shall mean all requirements imposed by
any law (including The Resource Conservation and Recovery Act, The
Comprehensive Environmental Response, Compensation, and Liability Act, the
Clean Water Act, the Clean Air Act, and any state analogues of any of the
foregoing), rule, regulation, or order of any Governmental Authority now or
hereafter in effect which relate to (i) pollution, protection or clean-up of
the air, surface water, ground water or land; (ii) solid, liquid or gaseous
waste or Hazard Substance generation, recycling, reclamation, release,
threatened release, treatment, storage, disposal or transportation; (iii)
exposure of Persons or property to Hazardous Substances; (iv) the
manufacture, presence, processing, distribution in commerce, use, discharge,
releases, threatened releases, or emissions of Hazardous Substances into the
environment; or (v) the storage of any Hazardous Substances. REQUIREMENT OF
ENVIRONMENTAL LAW shall mean any one of them.
RESPONSIBLE OFFICER shall mean, with respect to any Person, any president
or vice president, or the chief financial officer, treasurer or assistant
treasurer of such Person.
RESTRICTED PAYMENT EXCEPTIONS shall mean as follows:
(a) any dividends paid by the Borrower if, immediately after giving
effect to the payment of such dividends, all of the following shall apply:
(i) no Default or Event of Default shall have occurred; (ii) the declaration
and payment of such dividends would comply with the provisions of the Senior
Subordinated Debt Documents, including without limitation, the requirement
that the Consolidated Coverage Ratio (as defined in the applicable Senior
Subordinated Debt Documents) shall be greater than 2.00x; (iii) the Borrower
shall have not less than $7,500,000 in Availability; and (iv) the aggregate
amount of all such dividends declared or made on or after the Closing Date
does not exceed an amount equal to the sum of (1) 50% of the aggregate Net
Income of the Borrower and its Subsidiaries, on a Consolidated basis, for the
period (taken as one period) from the beginning of the first fiscal quarter
of the Borrower commencing after the Closing Date and ending on the last day
of the most recent fiscal quarter of the Borrower ending on or prior to the
date of the applicable dividend payment (or if such Net Income of the
Borrower and its Subsidiaries, on a Consolidated basis, shall be a loss for
the applicable period, minus 100% of such loss); (2) 50% of the aggregate net
cash proceeds received by the Borrower from either capital contributions to
the Borrower after the Closing Date or from the sale and issuance of Stock of
the Borrower after the Closing Date (with such Stock NOT to be redeemable or
convertible into Indebtedness), and (3) the aggregate principal amount of any
Indebtedness of the Borrower or any of its Subsidiaries incurred after the
Closing Date which has been converted into, redeemed or exchanged for Stock
of the Borrower (with such Stock NOT to be redeemable or convertible into
Indebtedness); or
(b) so long as no Default or Event of Default shall have occurred (after
giving effect to the applicable payment or transaction described below), any
of the following: (i) the purchase, redemption or other acquisition for value
by the Borrower or any of its Subsidiaries of any Stock of the Borrower or
any of its Subsidiaries held by officers, employees, former officers or
former employees of the Borrower or any of its Subsidiaries (or the estates
or beneficiaries of such officers, employees, former officers or former
employees) upon death, disability, retirement or
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termination of employment, or dividends by the Borrower to RBPI Holding
Corporation to effect the same in respect of any Stock of RBPI Holding
Corporation or any direct or indirect equity interest of Reliant Partners,
with all of such payments and dividends not to exceed $3,000,000 in the
aggregate since the Closing Date; (ii) dividends by the Borrower not to
exceed $2,000,000 in the aggregate since the Closing Date; (iii) payments by
the Borrower and any of its Subsidiaries to RBPI Holding Corporation to pay
general and administrative expenses not to exceed $500,000 in any fiscal year
of the Borrower; (iv) the purchase, redemption or other acquisition by the
Borrower of any of its Stock in exchange for, or out of the net cash proceeds
of the substantially concurrent issuance and sale of, other Stock of the
Borrower (provided that such net cash proceeds and the value of any Stock
issued in exchange for such retired Stock shall NOT be included for purposes
of determination the amount of dividends permitted by clause (a)(iv) above);
(v) the purchase, redemption, retirement or other acquisition by the Borrower
of Subordinated Indebtedness made in exchange for, or out of the net cash
proceeds of, the substantially concurrent issuance and sale of Stock of the
Borrower or other Subordinated Indebtedness (provided that any net cash
proceeds and the value of any Stock issued in exchange for such retired
Subordinated Indebtedness shall NOT be included for purposes of determining
the amount of dividends permitted by clause (a)(iv) above, and provided
further, that any Subordinated Indebtedness incurred in exchange for such
retired Subordinated Indebtedness also must be Refinancing Indebtedness); or
(vi) dividends by the Borrower to RBPI Holding Corporation in an amount not
to exceed $16,200,000 to effect the Stock Purchase Transaction.
In determining the amount of dividend payments permitted under clause (a)(iv)
above, amounts expended pursuant to clauses (b)(i), (ii) and (iii) shall be
included as dividends paid for purposes of such clause (a)(iv), and amounts
expended to causes (b)(iv), (v) and (vi) shall be excluded as dividends
declared or paid for purposes of such clause (a)(iv).
SECURITY AGREEMENTS shall mean (a) the Security Agreement (Personal
Property) of even effective date herewith, between the Borrower and the
Agent, for the ratable benefit of the Lenders, covering all Receivables,
inventory and all other related tangible and intangible personal Property of
the Borrower more particularly described therein, (b) the Security Agreement
(Personal Property) of even effective date herewith, between the Current
Guarantor and the Agent, for the ratable benefit of the Lenders, covering all
Receivables, inventory and other related tangible and intangible personal
Property of such Subsidiaries more particularly described therein, (c) any
and all other security agreements, pledge agreements, collateral assignments
or other similar documents now or hereafter executed in favor of the Agent,
for the ratable benefit of the Lenders, as security for the payment or
performance of any and/or all of the Obligations, and (d) any amendment,
modification, restatement or supplement of all or any of the above-described
agreements and assignments.
SECURITY DOCUMENTS shall mean the Security Agreements, all related
financing statements and any and all other agreements, mortgages, deeds of
trust, chattel mortgages, security agreements, pledges, guaranties, assignments
of income, assignments of contract rights, assignments or pledges of stock or
partnership interests, standby agreements, subordination agreements,
undertakings and other instruments and financing statements now or hereafter
executed and delivered in connection with, or as security for, the payment and
performance of
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the Obligations, as any of them may from time to time be amended, modified,
restated or supplemented.
SENIOR SUBORDINATED DEBT shall mean the Subordinated Indebtedness of the
Borrower to be evidenced by senior subordinated notes issued by the Borrower,
at a par value of at least $65,000,000 in aggregate principal amount, said
senior subordinated notes to be due not earlier than the seventh anniversary
of the Closing Date and to otherwise be in Proper Form.
SENIOR SUBORDINATED DEBT DOCUMENTS shall mean the senior subordinated
notes evidencing the Senior Subordinated Debt, the final prospectus and
indenture therefor and all other agreements, documents and instruments
executed and delivered pursuant hereto or in connection therewith, in each
case as in effect on the Closing Date.
SENIOR SUBORDINATED DEBT TRANSACTION shall mean the transactions
contemplated to occur under or in connection with the Senior Subordinated
Debt Documents.
STATUTORY RESERVES shall mean (a) WITH RESPECT TO THE ADJUSTED LIBOR
RATE, a fraction (expressed as a decimal), the numerator of which is the
number one and the denominator of which is the number one minus the aggregate
of the maximum reserve percentage (including without limitation, any
marginal, special, emergency or supplemental reserves) expressed as a
decimal, established by the Board of Governors of the Federal Reserve System
of the United States and any other banking authority to which any Lender is
subject with respect to the Adjusted LIBOR Rate for Eurocurrency Liabilities
(as defined in Regulation D), including without limitation, those reserve
percentages imposed under Regulation D, and (b) WITH RESPECT TO THE BASE CD
RATE, a fraction (expressed as a decimal), the numerator of which is the
number one and the denominator of which is the number one minus the aggregate
of the maximum reserve percentage (including without limitation, any
marginal, special, emergency or supplemental reserves) expressed as a
decimal, established by the Board of Governors of the Federal Reserve System
of the United States or any banking authority to which any Lender is subject
with respect to the Base CD Rate for new negotiable non-personal time
deposits in U.S. dollars of over $100,000 with maturities approximately equal
to three months. Statutory Reserves shall be adjusted automatically on and
as of the effective date of any change in any applicable reserve percentage.
For purposes hereof, LIBOR Borrowings shall be deemed to constitute
Eurocurrency Liabilities (as defined in Regulation D) and as such, shall be
deemed to be subject to such reserve requirements of Regulation D without
benefit of or credit for proration, exceptions or offsets which may be
available from time to time to any Lender under Regulation D.
STOCK shall mean as to a Business Entity, all capital stock or other
indicia of equity rights issued by such Business Entity from time to time.
STOCK PURCHASE TRANSACTION shall mean the transactions contemplated to
occur under or in connection with the Acquisition Documents.
SUBORDINATED INDEBTEDNESS shall mean, with respect to the Borrower or any
Guarantor, Indebtedness subordinated in right of payment to the Borrower's or
such Guarantor's monetary Obligations on terms satisfactory to and approved
in writing by the Agent in its discretion,
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together with any renewals, extensions or modifications thereof to the extent
the same constitute Refinancing Indebtedness. For purposes hereof, the
Senior Subordinated Debt shall be deemed to be Subordinated Indebtedness.
SUBSIDIARY shall mean, as to a particular parent Business Entity, any
Business Entity of which MORE THAN fifty percent (50%) of the Stock issued by
such Business Entity is at the time directly or indirectly owned by such
parent Business Entity or by one or more of its Affiliates.
TANGIBLE NET WORTH shall mean, as to any Person at any time, (a) the sum
of such Person's capital stock, capital in excess of par or stated value of
shares of its capital stock, retained earnings and any other amount which, in
accordance with GAAP, constitutes stockholders' equity, LESS (b) treasury
stock, LESS (c) the amount of any write-up subsequent to the effective date
of this Agreement in the value of any asset above the cost or depreciated
costs thereof to such Person, LESS (d) the book value of all assets which
would be treated as intangibles under GAAP, including without limitation,
good will, trademarks, trade names, patents, copyrights and licenses.
TCB shall mean Texas Commerce Bank National Association, a national
banking association.
THREE-MONTH SECONDARY CD RATE shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors of the Federal Reserve
System of the United States through the public information telephone line of
the Federal Reserve Bank of New York (which rate will, under the current
practices of such Board of Governors, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if
such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City received
at approximately 10:00 a.m. on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Agent from three New
York City negotiable certificate of deposit dealers of recognized standing
selected by the Agent.
TOTAL COMMITMENT shall mean, on any day, the aggregate of all of the
Commitments of the Lenders on such day (as the same may be reduced from time
to time pursuant to SECTION 2.4 hereof).
UNUSED COMMITMENT shall mean, as to a particular Lender, the daily
difference of such Lenders Commitment on such day less the Current Sum
applicable to such Lender on such day.
B. ACCOUNTING TERMS AND DETERMINATIONS. Except where specifically
otherwise provided:
1. The symbol "$" and the word "dollars" shall mean lawful money of
the United States of America.
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2. Any accounting term not otherwise defined shall have the
meaning ascribed to it under GAAP.
3. Unless otherwise expressly provided, any accounting concept and
all financial covenants shall be determined on a Consolidated basis, and
financial measurements shall be computed without duplication.
4. Wherever the term "including" or any of its correlatives
appears in the Loan Documents, it shall be read as if it were written
"including (by way of example and without limiting the generality of the
subject or concept referred to)".
5. Wherever the word "herein" or "hereof" is used in any Loan
Document, it is a reference to that entire Loan Document and not just to the
subdivision of it in which the word is used.
6. References in any Loan Document to Section numbers are
references to the Sections of such Loan Document.
7. References in any Loan Document to Exhibits, Schedules, Annexes
and Appendices are to the Exhibits, Schedules, Annexes and Appendices to such
Loan Document, and they shall be deemed incorporated into such Loan Document
by reference.
8. Any term defined in the Loan Documents which refers to a
particular agreement, instrument or document shall also mean, refer to and
include all modifications, amendments, supplements, restatements, renewals,
extensions and substitutions of the same; PROVIDED, that nothing in this
subsection shall be construed to authorize any such modification, amendment,
supplement, restatement, renewal, extension or substitution except as may be
permitted by other provisions of the Loan Documents.
9. All times of day used in the Loan Documents mean local time in
New York City.
10. Defined terms may be used in the singular or plural, as the
context requires.
II. LOANS; LETTERS OF CREDIT; NOTES; PAYMENTS; PREPAYMENTS; INTEREST RATES.
A. COMMITMENTS. Subject to the terms and conditions hereof, each
Lender, severally and not jointly, agrees to make Loans to the Borrower from
time to time on and after the Closing Date until, but not including, the
Maturity Date, in an aggregate principal amount at any one time outstanding
(including such Lender's Commitment Percentage of the Letter of Credit
Exposure Amount at such time) up to, but not exceeding such Lender's
Commitment. Notwithstanding the foregoing, the aggregate principal amount of
the Loans outstanding at any time shall not exceed (a) the lesser of (i) the
Total Commitment and (ii) the applicable Borrowing Base at such time LESS (b)
the Letter of Credit Exposure Amount at such time. Subject to the conditions
herein, any such Loan prepaid prior to the Maturity Date may be reborrowed as
an additional Loan by the Borrower pursuant to the terms of this Agreement.
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B. LOANS.
1. Subject to SECTIONS 4.1 and 4.2 hereof, all Loans shall be
advanced and made ratably by the Lenders in accordance with the Lenders'
respective Commitments.
2. When requesting a Loan hereunder, the Borrower shall give the
Agent notice of a request for a Loan in accordance with SECTION 4.1(a)
hereof; PROVIDED, HOWEVER, if the daily collection and application procedures
for Receivables are then in effect and continuing in accordance with the
provisions of SECTION 6.15(b) hereof, no notice of a request for Loan in
accordance with SECTION 4.1(a) hereof shall be required to be presented by
the Borrower to the Agent if a check issued by the Borrower shall be
presented for payment against any controlled disbursement account maintained
with the Agent or TCB in connection with the Lockbox Agreement, and the Agent
shall then cause the Lenders (subject to the provisions of SECTION 2.2(f)
hereof) to make a Loan for the purpose of crediting said controlled
disbursement account in an amount sufficient to permit such check to be
honored if (i) such Loan is to be made prior to the Maturity Date, (ii) the
Availability would be equal or greater than zero after giving effect to such
Loan, and (iii) no Default or Event of Default shall have occurred which is
then continuing. Except as otherwise provided in SECTION 2.2(f) hereof, the
Agent shall promptly advise the Lenders of any notice of a request for a Loan
given pursuant to SECTION 4.1(a) or of any such Loan advanced for purposes of
crediting any such controlled disbursement account and of each Lender's
portion of a requested borrowing (based on such Lender's Commitment
Percentage).
3. Except as otherwise provided or specified in SECTION 2.2(f)
below, each Lender shall make its Loans available on the proposed dates
thereof by causing its Applicable Lending Office to pay the amount required
to the Agent at the Principal Office in immediately available funds not later
than 11:00 a.m., and the Agent shall as soon as practicable, but in no event
later than 5:00 p.m. on such date, credit the amount so received to a general
deposit account designated and maintained by the Borrower with the Agent at
the Principal Office. If a requested Loan shall not occur on the Closing
Date or any date specified by the Borrower as set forth in the applicable
Request for Extension of Credit, as the case may be, because all of the
conditions for such Loan set forth herein or in any of the other Loan
Documents shall not have been met, the Agent shall return the amounts so
received from the Lenders in respect of such requested Loan to the applicable
Lenders as soon as practicable.
4. The obligations of the Lenders hereunder are several and not
joint; therefore, notwithstanding anything herein to the contrary: (i) no
Lender shall be required to make Loans at any one time outstanding in excess
of such Lender's Commitment; (ii) if a Lender fails to make a Loan as and
when required hereunder and the Borrower subsequently makes a repayment on
the Loans, such repayment shall be split among the non-defaulting Lenders in
accordance with the respective Commitment Percentages until each Lender has
its Commitment Percentage of all of the outstanding Loans, after which the
balance of such repayment shall be divided among all of the Lenders in
accordance with their respective Commitments; and (iii) the failure of any
Lander to make any Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (PROVIDED, that no Lender shall be responsible
for the failure of any other Lender to make a Loan such other Lender is
obligated to make hereunder).
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5. The Loans made by the Lenders on any date shall be in integral
multiples of $1.00; PROVIDED, HOWEVER, that the LIBOR Borrowings made on any
date shall be in a minimum aggregate principal amounts of $2,000,000, with
any increases over such minimal amount being in integral aggregate multiples
of $100,000.
6. When and if the daily collection and application procedures for
Receivables are implemented and are continuing in accordance with the
provisions of SECTION 6.15(b) hereof, the arrangements between the Agent and
the Lenders with respect to making and advancing the Loans and making
payments under Letters of Credit shall be handled on the following basis: no
less than once a week, the Agent will provide each Lender with a statement
showing, for the period of time since the date of the most recent of such
statements previously provided, the aggregate principal amount of new Loans
made to the Borrower, the aggregate amount of new Letter of Credit Advances
which have not been reimbursed, the aggregate face amount of new Letters of
Credit issued for the account of the Borrower, the amount of remittances and
payments actually collected and applied by the Agent to reduce the
outstanding principal balance of the Loans and to reimburse Letter of Credit
Advances during such period and the outstanding principal balances of the
Loans and the aggregate Letter of Credit Exposure Amount outstanding at the
end of such period. If a Lender's pro-rata share (based on such Lender's
Commitment Percentage) of the Loans and the unreimbursed Letter of Credit
Advances made during such period exceeds such Lender's pro-rata share of
remittances and payments applied to reduce the Loans and reimburse Letter of
Credit Advances during such period, the difference will be paid and made
available in same day funds by such Lender to the Agent, and if such Lender's
pro-rata share (based on such Lender's Commitment Percentage) of remittances
and payments applied to reduce the Loans and reimburse Letter of Credit
Advances during such period exceeds such Lender's pro-rata share (based on
such Lender's Commitment Percentage) of the Loans and the unreimbursed Letter
of Credit Advances made during such period, the difference will be paid and
made available in same day funds by the Agent to such Lender.
7. When and if the daily collection and application procedures for
Receivables are implemented and are continuing in accordance with the
provisions of SECTION 6.15(b) hereof, the Agent shall render to the Borrower
each month a statement of the Borrower's account of all transactions of the
type described in SECTION 2.2(f) hereof, which shall be deemed to be correct
and accepted by and be binding upon the Borrower unless the Agent receives a
written statement of the Borrower's exceptions to such account statement
within thirty (30) days after such statement was rendered to the Borrower.
C. COMMITMENT AND ADMINISTRATION FEES.
1. In consideration of each Lender's Commitment, the Borrower
agrees to pay to the Agent for the account of each Lender a commitment fee
(each a "COMMITMENT FEE") (computed on the basis of the actual number of days
elapsed in a year composed of 360 days, subject to the terms of SECTION 10.6
hereof) in an amount equal to the product of (A) the Applicable Commitment
Fee Percentage TIMES (B) such Lender's Unused Commitment. The Commitment Fee
shall be due and payable in arrears (i) on the first Business Day of each
July, October, January and April prior to the Maturity Date, commencing July 1,
1997, and (ii) on the Maturity Date, with each Commitment Fee to commence
to accrue as of the date hereof and to
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be effective as to any reduction in the Total Commitment pursuant to SECTION
2.4(a) below as of the date of any such decrease, and each Commitment Fee
shall cease to accrue (except with respect to interest at the Past Due Rate
on any unpaid portion thereof) on the Maturity Date. All past due Commitment
Fees shall bear interest at the Past Due Rate and shall be payable upon
demand by the Agent.
2. At all times when the daily collection and application
procedures for Receivables have not been implemented (or if previously
implemented, such daily collection and application procedures have ceased
pursuant to the other terms of this Agreement), the Borrower hereby agrees to
pay to the Agent for its sole benefit (and not for the benefit of each of the
Lenders) an administration fee in the amount of $35,000 per annum, payable in
advance annually, commencing on the Closing Date and continuing thereafter on
the same Business Day of each subsequent calendar year prior to the
implementation and continuation of such daily collection and application
procedures. When and if the daily collection and application procedures for
Receivables are implemented and are continuing in accordance with the
provisions of SECTION 6.15(b) hereof, the Borrower hereby agrees to pay to
the Agent, for its sole benefit (and not for the benefit of each of the
Lenders), an administration fee in the amount of $75,000 per annum, payable
in quarterly installments of $18,750 each, commencing thirty (30) days after
such daily collection procedures are implemented, and continuing thereafter
on the same Business Day of each subsequent calendar quarter in which such
daily collection procedures are continuing.
D. TERMINATION AND REDUCTIONS OF COMMITMENTS.
1. Upon at least five (5) Business Days' prior irrevocable written
notice to the Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Total Commitment
ratably among the Lenders in accordance with the amounts of their Commitments;
PROVIDED, HOWEVER, that the Total Commitment shall not be reduced at any time to
an amount not less than the aggregate of each Lender's Current Sum outstanding
at such time. Each partial reduction of the Total Commitment shall be in a
minimum of $1,000,000, or an integral multiple of $100,000 in excess thereof.
2. Simultaneously with any termination in whole of the Total
Commitment pursuant to SECTION 2.4(a) above, the Borrower hereby agrees to
pay to each Lender, through the Agent, (i) the Commitment Fee due and owing
through and including the date of such termination on the amount of the
Commitment of such Lender so terminated and (ii) a prepayment fee equal to
the product of (A) the Applicable Prepayment Fee Percentage TIMES (B) the
amount of the Commitment of such Lender so terminated. Simultaneously with
any reduction in part of the Total Commitment pursuant to SECTION 2.4(a)
above, the Borrower hereby agrees to pay to each Lender, through the Agent, a
prepayment fee equal to the product of (A) the Applicable Prepayment Fee
Percentage TIMES (B) the amount of the Commitment of such Lender so reduced.
3. To effect the payment of any and all Commitment Fees and all
other Obligations outstanding and owing hereunder or under any other Loan
Documents, subject to the provisions of SECTIONS 2.1 and 4.1 hereof, the Agent
may, but shall not be obligated to, cause the Lenders to make a Loan if (i) such
Loan is to be made prior to the Maturity Date, (ii) the Availability would be
equal to or greater than zero after giving effect to such Loan, and (iii) no
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Default or Event of Default shall have occurred which is then continuing;
PROVIDED, HOWEVER, that if the daily collection and application procedures
for Receivables are not then in effect in accordance with the provisions of
SECTION 6.15(b) hereof, the Agent shall give the Borrower five (5) Business
Days prior written notice and opportunity to directly pay the full amount of
such Commitment Fees or other Obligations then due prior to causing the
Lenders to make a Loan to affect the payment of such Commitment Fees or other
Obligations. The inability of the Agent to cause the payment of any such
Commitment Fees or other Obligations in accordance with the preceding
sentence shall not in any way whatsoever affect the Borrower's and
Guarantors' obligation to otherwise pay such amounts in accordance with the
applicable terms hereof or of any other Loan Documents.
E. MANDATORY AND VOLUNTARY PREPAYMENTS.
1. If the Current Sum applicable to a Lender at any time exceeds
such Lender's Commitment, the Agent shall notify the Borrower of such excess
amount (such notice being permitted to be given orally and need not be in
writing) and the Borrower shall immediately make a prepayment on such
Lender's Note or otherwise reimburse such Lender for Letter of Credit
Advances or cause one or more Letters of Credit to be canceled and
surrendered in an amount sufficient to reduce such Lender's Current Sum to an
amount no greater than such Lender's Commitment. Any prepayments required by
this subparagraph (a) shall be applied to outstanding Alternate Base Rate
Borrowings up to the full amount thereof before such prepayments are applied
to outstanding LIBOR Borrowings (together with any Consequential Loss
resulting from such prepayment).
2. The Borrower shall make prepayments of the Loans from time to
time so that the Availability equals or exceeds zero at all times.
Specifically, if the Availability at any time is less than zero, the Agent
shall notify the Borrower of the deficiency (such notice being permitted to
be given orally and need not be in writing) and the Borrower shall
immediately make a prepayment on the Notes or otherwise reimburse the Agent
for Letter of Credit Advances or cause one or more Letters of Credit to be
canceled and surrendered in an amount sufficient to cause the Availability to
be at least equal to zero. Any prepayments required by this subparagraph (b)
shall be applied to outstanding Alternate Base Rate Borrowings up to the full
amount thereof before such prepayments are applied to outstanding LIBOR
Borrowings (together with any Consequential Loss resulting from such
prepayment).
3. In addition to the mandatory prepayments required by SECTION
2.5(a) and (b) above, the Borrower shall have the right, at its option, to
prepay any of the Loans in whole at any time or in part from time to time,
without premium or penalty, except as otherwise provided in this SECTION 2.5
or subsections (a), (b) or (c) of SECTION 2.9 hereof. Each prepayment under
this subsection shall be applied to the prepayment of the aggregate unpaid
principal amount of the Notes. Prepayments under this subparagraph (c) shall
be subject to the following additional conditions:
a. In giving notice of prepayment as hereinafter provided, the
Borrower shall specify, for the purpose of paragraphs (2) and (3)
immediately following, the manner of application of such prepayment as
between Alternate Base Rate Borrowings
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and LIBOR Borrowings; PROVIDED, that in no event shall any LIBOR Borrowing
be partially prepaid.
b. Prepayments applied to any LIBOR Rate Borrowing may be made
on any Business Day, PROVIDED, that (i) if such prepayment is made on the
last day of the Interest Period corresponding to the LIBOR Borrowing to be
prepaid, the Borrower shall have given the Agent prior irrevocable written
notice or notice by telephone (which is to be promptly confirmed in
writing) of such prepayment on the Business Day of such prepayment,
specifying the principal amount of the LIBOR Borrowing to be prepaid and
the particular LIBOR Borrowing to which prepayment is to be applied; (ii)
if such prepayment is made on any day other than the last day of the
Interest Period corresponding to the LIBOR Borrowing to be prepaid, the
Borrower shall have given the Agent at least five (5) Business Days' prior
irrevocable written or telecopied notice of such prepayment, specifying the
principal amount of the LIBOR Borrowing to be prepaid, the particular LIBOR
Borrowing to which such prepayment is to be applied and the prepayment
date; and (iii) if such prepayment is made on any day other than the last
day of the Interest Period corresponding to the LIBOR Borrowing to be
prepaid, the Borrower shall pay directly to the Agent for the account of
the Lenders, on the last day of such Interest Period, the Consequential
Loss as a result of such prepayment.
c. Prepayments applied to any Alternate Base Rate Borrowing may
be made on any Business Day, PROVIDED, that the Borrower shall have given
the Agent prior irrevocable written notice or notice by telephone (which is
to be promptly confirmed in writing) of such prepayment on the Business Day
of such prepayment, specifying the principal amount of the Alternate Base
Rate Borrowing to be prepaid.
4. Notice of any prepayment having been given, the principal amount
specified in such notice, together with (in the case of any prepayment of a
LIBOR Borrowing) interest thereon to the date of prepayment, shall be due and
payable on such prepayment date.
F. NOTES; PAYMENTS.
1. Subject to the provisions of SECTION 10.12 hereof relating to
replacement and substitution of the Notes, all Loans made by a Lender to the
Borrower shall be evidenced by a single Note dated as of the Closing Date,
delivered and payable to such Lender in a principal amount equal to such
Lender's Commitment as of the Closing Date.
2. The outstanding principal balance of each and every Loan, as
evidenced by the Notes, shall mature and be fully due and payable on the
Maturity Date.
3. Subject to SECTION 10.6 hereof, the Borrower hereby agrees to pay
accrued interest on the unpaid principal balance of the Loans on the Interest
Payment Dates, commencing with the first of such dates to occur after the date
hereof. After the Maturity Date, accrued and unpaid interest on the Loans shall
be payable on demand.
4. To effect payment of accrued interest owing on the Loans as of
the Interest Payment Dates, subject to the provisions of SECTIONS 2.1 and 4.1
hereof, the Agent may, but shall
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not be obligated to, cause the Lenders to make a Loan to pay in full the
amount of accrued interest owing and payable on the Loans as of the
respective Interest Payment Date if (i) such Loan is to be made prior to the
Maturity Date, (ii) the Availability would be equal to or greater than zero
after giving effect to such Loan, and (iii) no Default or Event of Default
shall have occurred which is then continuing; PROVIDED, HOWEVER, that if the
daily collection and application procedures for Receivables are not then in
effect in accordance with the provisions of SECTION 6.15(b) hereof, the Agent
shall give the Borrower five (5) Business Days prior written notice and
opportunity to directly pay the full amount of such accrued interest then due
prior to causing the Lenders to make a Loan to affect the payment of such
accrued interest. The inability of the Agent to cause a payment of any
accrued interest owing on the Loans on any Interest Payment Date as of the
respective due date thereof in accordance with the preceding sentence shall
not in any way whatsoever effect the Borrower's obligation to otherwise pay
such amounts in accordance with the applicable terms hereof or any other Loan
Documents.
G. APPLICATION OF PAYMENTS AND PREPAYMENTS.
1. Except as otherwise provided in SECTIONS 2.5(a), (b) and (d)
hereof, prepayments on the Notes shall be applied to payment of the aggregate
unpaid principal amounts of the Notes, with the balance of any such
prepayments, if any, being applied to accrued interest. Payments of accrued
interest on each Note in accordance with SECTION 2.6(c) hereof shall be
applied to the aggregate accrued interest then outstanding under the Notes,
while payment by the Borrower of the aggregate principal amount outstanding
under the Notes on the Maturity Date shall be applied to principal.
2. Except as otherwise provided or specified in SECTION 2.2(f)
hereof, each payment or prepayment received by the Agent hereunder or under
any Note for the account of a Lender shall be paid promptly to such Lender,
in immediately available funds. If the Agent fails to send to any Lender the
product of such Lender's Commitment Percentage times the aggregate amount of
any such payment or prepayment received by the Agent for the account of all
the Lenders by the close of business on the date such payment was deemed
received by the Agent in accordance with SECTION 2.7(d) below, the Agent
shall pay to such Lender interest on such Lender's pro-rata portion of such
payment timely received by the Agent from such date of receipt by the Agent
to the date that such Lender receives its pro-rata portion of such payment,
such interest to accrue at the Federal Funds Effective Rate and to be payable
upon written request from such Lender.
3. All sums payable by the Borrower to the Agent hereunder or
pursuant to the Notes for its own account or the account of the Lenders shall be
payable in United States dollars in immediately available funds not later than
1:00 p.m. on the date such payment or prepayment is due and shall be made
without set-off, counterclaim or deduction of any kind. Any such payment or
prepayment received and accepted by the Agent after 1:00 p.m. shall be
considered for all purposes (including the payment of interest, to the extent
permitted by law) as having been made on the next succeeding Business Day. All
such payments or prepayments shall be made at the Principal Office. If any
payment or prepayment becomes due and payable on a day which is not a Business
Day, then the date for the payment thereof shall be extended to the
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next succeeding Business Day and interest shall be payable thereon at the
then applicable rate per annum during such extension.
H. INTEREST RATES FOR LOANS.
1. Subject to SECTION 10.6 hereof, the Notes shall bear interest
on their respective outstanding principal balances at the Alternate Base
Rate; PROVIDED, that (1) all past due principal and interest shall bear
interest at the Past Due Rate, which shall be payable on demand, and (2)
subject to the provisions hereof, the Borrower shall have the option of
having all or any portion of the principal balances from time to time
outstanding under the Notes bear interest until their respective maturities
at a rate per annum equal to the Adjusted LIBOR Rate (together with the
Alternate Base Rate, individually herein called an "INTEREST OPTION" and
collectively called "INTEREST OPTIONS"). The records of the Agent, with
respect to Interest Options, Interest Periods and the amounts of Loans to
which they are applicable shall be binding and conclusive, absent manifest
error. Interest on the Loans shall be calculated at the Alternate Base Rate,
except where it is expressly provided pursuant to this Agreement that the
Adjusted LIBOR Rate is to apply.
2. The Borrower shall have the right to designate or convert its
Interest Options in accordance with the provisions hereof. PROVIDED no
Default or Event of Default has occurred and is continuing and subject to the
provisions of the last sentence of SUBSECTION 2.8(a) hereinabove and of
SECTION 2.9 hereof, the Borrower may elect to have the Adjusted LIBOR Rate
apply or continue to apply to all or any portion of the principal balances of
the Notes. Each change in Interest Options shall be a conversion of the rate
of interest applicable to the specified portion of the Loans, but such
conversion alone shall not change the outstanding principal balance of the
Notes. The Interest Options shall be designated or converted in the manner
provided below:
a. The Borrower shall give the Agent notice by telephone,
promptly confirmed by written notice (the "RATE SELECTION NOTICE")
substantially in the form of EXHIBIT E hereto. Each such telephone and
written notice shall specify the amount and type of borrowings which are
the subject of the designation, if any; the amount and type of borrowings
into which such borrowings are to be converted or for which an Interest
Option is designated; the proposed date for the designation or conversion
(which, in the case of conversion of LIBOR Borrowings, shall be the last
day of the Interest Period applicable thereto) and the Interest Period or
Periods, if any, selected by the Borrower. Such notice by telephone shall
be irrevocable and shall be given to the Agent no later than the applicable
Rate Selection Date. If (a) a new Loan is to be a LIBOR Borrowing, (b) an
existing LIBOR Borrowing is maturing at the time that a new Loan is being
requested and the Borrower is electing to have such existing portion of the
outstanding principal balance of the Notes going forward bear interest at
the same Interest Option and for the same Interest Period as the new Loan,
or (c) a portion of an Alternate Rate Borrowing is to be converted so as to
bear interest at the same Interest Option and for the same Interest Period
as the new Loan, then the Rate Selection Notice shall be included in the
Request for Extension of Credit applicable to the new Loan, which shall be
given to the Agent no later than the applicable Rate Selection Date.
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b. No more than five (5) LIBOR Borrowings and corresponding
Interest Periods shall be outstanding at any one the. Each LIBOR Borrowing
shall be in a minimum aggregate principal amount of at least $2,000,000,
with any increases over such minimum amount being in integral aggregate
multiples of $100,000.
c. Principal included in any borrowing shall not be included in
any other borrowing which exists at the same time.
d. Each designation or conversion shall occur on a Business
Day.
e. Except as provided in SECTION 2.9 hereof, no LIBOR Borrowing
shall be converted on any day other than the last day of the applicable
Interest Period.
f. The Agent shall promptly advise the Lenders of any Rate
Selection Notice given pursuant to this SECTION 2.8 and of each Lender's
pro-rata portion of such designation or conversion hereunder.
3. Interest based on the Alternate Base Rate to the extent
determined by reference to the Prime Rate, will be computed on the basis of 365
(or 366) days and actual days elapsed (including the first day but excluding the
last day) occurring in the period for which payable. All other interest and
fees (including the Commitment Fee, but excluding any prepayment fee owing
pursuant to SECTION 2.4 hereof) will be computed on the basis of a year of 360
days and actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable, unless the effect of so
computing shall be to cause the rate of interest to exceed the Highest Lawful
Rate.
I. SPECIAL PROVISIONS APPLICABLE TO LIBOR BORROWINGS.
1. If, after the date of this Agreement, the adoption of any
applicable Legal Requirement or any change in any applicable Legal Requirement
or in the interpretation or administration thereof by any Governmental Authority
or compliance by the Agent or any Lender with any request or directive (whether
or not having the force of law) of any Governmental Authority shall at any time
make it unlawful or impracticable for any Lender to permit the establishment of
or to maintain any LIBOR Borrowing, the commitment of the Lenders to establish
or maintain the Adjusted LIBOR Rate affected by such adoption or change shall
forthwith be canceled and the Borrower shall forthwith, upon demand by the Agent
to the Borrower, (1) convert the Adjusted LIBOR Rate with respect to which such
demand was made to the Alternate Base Rate; (2) pay all accrued and unpaid
interest to date on the amount so converted; and (3) pay any amounts required to
compensate the Agent and the Lenders for any additional cost or expense which
the Agent or any Lender may incur as a result of such adoption of or change in
such Legal Requirement or in the interpretation or administration thereof and
any Consequential Loss which the Agent or any Lender may incur as a result of
such conversion to the Alternate Base Rate. If, when the Agent so notifies the
Borrower, the Borrower has given a Rate Selection Notice specifying one or more
borrowings of the type with respect to which such demand was made but the
selected Interest Period or Interest Periods has not yet begun, such Rate
Selection Notice shall be deemed to be of no force and effect, as if never made,
and the
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balance of the Loans specified in such Rate Selection Notice shall bear
interest at the Alternate Base Rate until a different available Interest
Option shall be designated in accordance herewith.
2. If the adoption of any applicable Legal Requirement or any change
in any applicable Legal Requirement or in the interpretation or administration
thereof by any Governmental Authority or compliance by the Agent or any Lender
with any request or directive (whether or not having the force of law) from any
Governmental Authority shall at any time as a result of any portion of the
principal balance of the Notes being maintained on the basis of the Adjusted
LIBOR Rate:
a. subject any Lender (or make it apparent that any Lender is
subject) to any tax (including any United States interest equalization
tax), levy, impost, duty, charge, fee, or any deduction or withholding for
any tax, levy, impost, duty, charge or fee on or from the payment due under
any LIBOR Borrowing or other amounts due hereunder, other than income taxes
and franchise taxes in lieu of income taxes of the United States and its
political subdivisions; or
b. change the basis of taxation of payments due from the
Borrower to the Agent or any Lender under any LIBOR Borrowing (otherwise
than by a change in the rate of taxation of the overall net income of the
Agent or any Lender); or
c. impose, modify, increase or deem applicable any reserve
requirement (excluding that portion of any reserve requirement included in
the calculation of the Statutory Reserves, special deposit requirement or
similar requirement (including state law requirements and Regulation D)
imposed, modified, increased or deemed applicable by any Governmental
Authority against assets held by the Agent or any Lender, or against
deposits or accounts in or for the account of the Agent or any Lender, or
against loans made by the Agent or any Lender, or against any other funds,
obligations or other Property owned or held by the Agent or any Lender; or
d. impose on the Agent or any Lender any other condition
regarding any LIBOR Borrowing;
and the result of any of the foregoing is to increase the cost to any Lender of
agreeing to make or of making, renewing or maintaining such borrowing on the
basis of the Adjusted LIBOR Rate, or reduce the amount of principal or interest
received by any Lender, then, upon demand by such Lender, the Borrower shall pay
to such Lender, from time to time as specified by such Lender, additional
amounts which shall compensate such Lender for such increased cost or reduced
amount. Such Lender will promptly notify the Borrower in writing of any event,
upon becoming actually aware of it, which will entitle any Lender to additional
amounts pursuant to this paragraph. Such Lender's determination of the amount
of any such increased cost, increased reserve requirement or reduced amount
shall be conclusive and binding, absent manifest error, provided that the
calculation thereof is set forth in reasonable detail in such notice.
The Borrower shall have the right, if it receives from any Lender any
notice referred to in the preceding paragraph, upon three (3) Business Days'
notice to the Agent, either (i) to repay
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in full (but not in part) any borrowing with respect to which such notice was
given, together with any accrued interest thereon, or (ii) to convert the
Adjusted LIBOR Rate in effect with respect to such borrowing from such Lender
to the Alternate Base Rate; PROVIDED, that any such repayment or conversion
shall be accompanied by payment of (x) the amount required to compensate the
appropriate Lender or Lenders for the increased cost or reduced amount
referred to in the preceding paragraph; (y) all accrued and unpaid interest
to date on the amount so repaid or converted; and (z) any Consequential Loss
which may be incurred as a result of such repayment or conversion.
Additionally, each Lender shall, upon request by the Borrower, take requested
measures to mitigate the additional amounts which the Borrower is required to
pay to any Lender pursuant to the preceding paragraph if such measures can,
in the sole and absolute opinion of such Lender, be taken without such Lender
suffering any economic, legal, regulatory or other disadvantage (provided,
however, that no such Lender shall be required to designate a funding office
that is not located in the United States of America).
3. If for any reason with respect to any Interest Period the Agent
shall have determined (which determination shall be conclusive and binding
upon the Borrower) that: (1) the Agent is unable through its customary
general practices to determine a rate at which the Agent is offered deposits
in United States dollars by prime banks in the London interbank market, in
the appropriate amount for the appropriate period, or by reason of
circumstances affecting the London interbank market, generally, the Agent is
not being offered deposits for the applicable Interest Period and in an
amount equal to the amount of the Agent's pro-rata portion of any LIBOR
Borrowing requested by the Borrower, or (2) the Adjusted LIBOR Rate will not
adequately and fairly reflect the cost to any Lender of making and
maintaining any LIBOR Borrowing hereunder for any proposed Interest Period,
then the Agent shall give the Borrower notice thereof and thereupon, (A) any
Rate Selection Notice previously given by the Borrower designating an
Adjusted LIBOR Rate which has not commenced as of the date of such notice
from the Agent shall be deemed for all purposes hereof to be of no force and
effect, as if never given, and (B) until the Agent shall notify the Borrower
that the circumstances giving rise to such notice from the Agent no longer
exist, each Rate Selection Notice requesting an Adjusted LIBOR Rate shall be
deemed a request for an Alternate Base Rate Borrowing, and each outstanding
LIBOR Borrowing then in effect shall be converted, without any notice to or
from the Borrower, upon the termination of the Interest Period then in effect
to an Alternate Base Rate Borrowing.
4. THE BORROWER HEREBY AGREES TO INDEMNIFY THE AGENT AND EACH OF
THE LENDERS AGAINST AND HOLD EACH OF THEM HARMLESS FROM ANY LOSS OR EXPENSE
WHICH IT MAY INCUR OR SUSTAIN AS A CONSEQUENCE OF ANY UNTIMELY PAYMENT
(MANDATORY OR OPTIONAL) OR DEFAULT BY THE BORROWER IN THE PAYMENT OF ANY
PRINCIPAL AMOUNT OF OR INTEREST ON EACH NOTE, OR ANY FAILURE BY THE BORROWER
TO CONVERT OR TO BORROW ANY LIBOR BORROWING ON THE DATE SPECIFIED BY THE
BORROWER, IN EACH CASE INCLUDING ANY INTEREST PAYABLE BY ANY LENDER TO THE
LENDERS OF THE FUNDS OBTAINED BY IT IN ORDER TO MAKE OR MAINTAIN ANY LIBOR
BORROWING (OR ANY PORTION THEREOF), AND, TO THE EXTENT NOT COVERED ABOVE, ANY
CONSEQUENTIAL LOSS. THIS AGREEMENT SHALL SURVIVE THE PAYMENT OF EACH NOTE.
A CERTIFICATE AS TO ANY ADDITIONAL AMOUNTS PAYABLE TO THE AGENT OR ANY LENDER
PURSUANT TO THIS PARAGRAPH SUBMITTED TO THE AGENT OR SUCH LENDER TO THE
BORROWER SHALL BE CONCLUSIVE AND BINDING UPON THE BORROWER, ABSENT MANIFEST
ERROR, PROVIDED THE CALCULATION HEREOF IS SET FORTH IN REASONABLE DETAIL IN
SUCH NOTICE.
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5. If the Borrower requests quotes of the Adjusted LIBOR Rate for
different Interest Periods being considered for election by the Borrower, the
Agent will use reasonable efforts to provide such quotes to the Borrower
promptly. However, all such quotes provided shall be representative only and
shall not be binding on the Agent or any Lender, nor shall they be
determinative, directly or indirectly, of any Adjusted LIBOR Rate or any
component of any such rate, nor will the Borrower's failure to receive or the
Agent's failure to provide any requested quote or quotes either (1) excuse or
extend the time for performance of any obligation of the Borrower or for the
exercise of any right, option or election of the Borrower or (2) impose any duty
or liability on the Agent or any Lender. If the Borrower requests a list of the
Business Days in any calendar month, the Agent will use reasonable efforts to
provide such list promptly. However, any such list provided shall be understood
to identify only those days which the Agent believes in good faith at the time
such list is prepared will be the Business Days for such month. The Agent shall
not have any liability for any failure to provide, delay in providing, error or
mistake in or omission from, any such quote or list.
6. With respect to any Lender having a LIBOR Lending Office which
differs from its Domestic Lending Office, all Loans advanced by such Lender's
LIBOR Lending Office shall be deemed to have been made by such Lender and the
obligation of the Borrower to repay such Loans shall nevertheless be to such
Lender and shall be deemed held by such Lender, to the extent of such portions
of the Loan, for the account of such Lender's LIBOR Lending Office.
7. Notwithstanding any provision of this Agreement to the contrary,
each Lender shall be entitled to fund and maintain its funding of all or any
part of the Loans hereunder in any manner it sees fit, it being understood,
however, that for the purposes of this Agreement, all determinations hereunder
shall be made as if such Lender had actually funded and maintained its portion
of each LIBOR Borrowing during each Interest Period for the Loans through the
purchase of deposits having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the LIBOR Rate for such Interest Period.
8. The Borrower's obligation to pay increased costs and
Consequential Loss with regard to each LIBOR Borrowing as specified in this
SECTION 2.9 hereof shall survive termination of this Agreement.
J. LETTERS OF CREDIT.
1. Subject to the terms and conditions contained herein, the
Borrower shall have the right to utilize a portion of the Total Commitment from
time to time prior to the Maturity Date to obtain from the Agent one or more
Letters of Credit for the account of the Borrower in such amounts and in favor
of such beneficiaries as the Borrower from time to time shall request; PROVIDED,
that in no event shall the Agent have any obligation to issue any Letter of
Credit if (i) the face amount of such Letter of Credit, PLUS the Letter of
Credit Exposure Amount at such time would exceed $5,000,000, (ii) the face
amount of such Letter of Credit, PLUS the aggregate of each Lender's Current Sum
at such time, would exceed the Availability, (iii) such Letter of Credit would
have an expiry date beyond the earlier to occur of (1) five Business Days prior
to the scheduled Maturity Date, (2) 120 days after the issuance date of such
Letter of Credit if such Letter of Credit is a documentary sight Letter of
Credit or (3) one year after the
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issuance date of such Letter of Credit if such Letter of Credit is a standby
Letter of Credit, PROVIDED that any such standby Letter of Credit may provide
for the renewal of the expiry date thereof for additional one-year periods
(which shall in no event extend the expiry date thereof beyond the date
provided for in clause (iii)(1) above), (iv) such Letter of Credit is not in
a form and does not contain terms satisfactory to the Agent at its sole and
absolute discretion, (v) the Borrower has not executed and delivered such
Applications and other instruments and agreements relating to such Letter of
Credit as the Agent shall have requested, (vi) an event has occurred and is
continuing which constitutes a Default or Event of Default or (vii) such
Letter of Credit is not being issued or has not been issued in connection
with transactions occurring in the ordinary course of business of the
Borrower.
2. If requesting the issuance of any Letter of Credit, the Borrower
shall give at least three (3) Business Days' prior written notice to the Agent,
at its Domestic Lending Office, which written notice shall be the requisite
Application for a Letter of Credit on the Agent's customary form. In accordance
with the provisions of SECTION 2.2(f) hereof, the Agent shall periodically
notify each "Lender that a Letter of Credit has been requested in the amount
reflected in such Application and inform such Lender of the amount of its
pro-rata portion of such proposed Letter of Credit (based upon such Lender's
Commitment Percentage).
3. Simultaneously with the Agent's issuance and delivery of any
Letter of Credit, the Agent shall be deemed, without further action, to have
sold to each other Lender, and such other Lender shall be deemed, without
further action by any party hereto, to have purchased from the Agent, a
participation interest (which participation shall be nonrecourse to the Agent)
equal to such other Lender's Commitment Percentage at such time in such Letter
of Credit and all of the Letter of Credit Exposure Amount related to such Letter
of Credit; PROVIDED, that no such Lender shall be obligated to participate in a
particular Letter of Credit if such Letter of Credit was issued or honored
solely as a result of the Agent's gross negligence or willful misconduct. Each
Lender acknowledges and agrees that its obligation to acquire participations in
each Letter of Credit, as well as its obligation to make the payments specified
in this SECTION 2.10 and the right of the Agent to receive the same in the
manner specified herein, are absolute and unconditional and shall not be
affected by any circumstance whatsoever, including without limitation, the
occurrence and continuance of a Default or Event of Default hereunder, and that
each such payment shall be made without any offset, abatement, withholding or
reduction whatsoever.
4. The Borrower promises to pay to the order of the Agent the amount
of all Letter of Credit Advances. Each Letter of Credit Advance shall be
considered for all purposes as a demand obligation owing by the Borrower to the
Agent, and each Letter of Credit Advance shall bear interest from the date
thereof at the Past Due Rate, without notice of presentment, demand, protest or
other formalities of any kind (said past due interest on such Letter of Credit
Advance being payable on demand). To effect repayment of any such Letter of
Credit Advance, the Borrower may request a Loan in accordance with the other
provisions of this Agreement, or the Agent may, at its option, automatically
satisfy such Letter of Credit Advance (subject to the terms and conditions of
SECTIONS 2.1 and 4.1 hereof) by causing the Lenders to make a Loan if (i) such
Letter of Credit Advance is (and such Loan is to be) made prior to the Maturity
Date, (ii) the Availability would be equal to or greater than zero after giving
effect to such Loan and
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(iii) no Default or Event of Default shall have occurred which is then
continuing. The failure of the Agent to elect to effect repayment of any
such Letter of Credit Advance in accordance with the preceding sentence shall
not in any way whatsoever affect the Borrower's obligation to pay each Letter
of Credit Advance on demand and to pay interest at the Past Due Rate on the
amount of unreimbursed Letter of Credit Advance. Except as otherwise
provided in SECTION 2.2(f), the Agent will pay to each Lender such Lender's
Commitment Percentage of all amounts received from the Borrower by the Agent,
if any, for application, in whole or in part, against the Letter of Credit
Advances in respect to any Letter of Credit, but only to the extent such
Lender has made its full pro-rata payment of each drawing under the Letter of
Credit to which such Letter of Credit Advance relates. All rights, powers,
benefits and privileges of this Agreement with respect to the Notes, all
security therefor (including the Collateral) and guaranties thereof
(including the Guaranties) and all restrictions, provisions for repayment or
acceleration and all other covenants, warranties, representations and
agreements of the Borrower contained in this Agreement with respect to the
Notes shall apply to such Letter of Credit Advances.
5. In consideration of the issuance of each Letter of Credit
pursuant to the provisions of this SECTION 2.10, the Borrower agrees to pay
(subject to SECTION 10.6 hereof) to the Agent for the ratable benefit of the
Lenders a letter of credit fee (computed on the basis of the actual number of
days elapsed in a year composed of 360 days) in an amount equal to the
product of (a) the Applicable Margin in effect for LIBOR Borrowings for the
applicable period times (b) the undrawn upon amount of the applicable Letter
of Credit, with each letter of credit fee to commence to accrue as of the
date of issuance of such Letter of Credit and to be effective as to any
reductions in the undrawn amount of such Letter of Credit as of the date of
any such reduction (whether resulting from payments thereunder by the Agent,
by agreement of the beneficiary thereunder or automatically by the terms of
Letter of Credit). Each letter of credit fee shall cease to accrue (except
with respect to interest at the Past Due Rate on any unpaid portion thereof)
on the date that such Letter of Credit expires, is returned to the Agent
undrawn upon by the beneficiary thereof or is fully paid by the Agent. Said
letter of credit fees shall be payable in arrears to the Agent at its
Principal Office in immediately available funds (i) on the first Business Day
of each calendar quarter that such Letter of Credit remains open, and (ii) on
the date that such Letter of Credit expires, is returned to the Agent undrawn
upon by the beneficiary thereof or is fully paid by the Agent. All past due
letter of credit fees shall bear interest at the Past Due Rate and shall be
payable upon demand by the Agent. The Agent will pay to each Lender, as soon
as practicable after receiving any payment of letter of credit fees described
in the preceding sentence, an amount equal to the product of (A) such
Lender's Commitment Percentage times (B) the amount of such fees received.
If the Agent fails to send to any Lender such Lender's pro-rata portion of
any payment of such letter of credit fees timely received by the Agent by the
close of business on the Business Day such payment was received by the Agent,
the Agent shall pay to such Lender interest on such Lender's pro-rata portion
of such letter of credit fees timely received by the Agent from such date of
receipt by the Agent to the date that such Lender receives its pro-rata
portion of such payment, such interest to accrue at the Federal Funds
Effective Rate and to be payable upon written request from such Lender.
6. The Borrower hereby agrees to pay to the Agent for the Agent's
sole benefit a fronting fee equal to .25% per annum on the undrawn upon amount
of each Letter of Credit issued hereunder, with each fronting fee to commence to
accrue as of the date of issuance
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of such Letter of Credit and to be effective as to any reductions in the
undrawn amount of such Letter of Credit as of the date of any such reduction
(whether resulting from payment thereunder by the Agent, by agreement of the
beneficiary thereunder or automatically by the terms of such Letter of
Credit). Each fronting fee shall cease to accrue (except with respect to
interest at the Past Due Rate on any unpaid portion thereof) on the date that
such Letter of Credit expires, is returned to the Agent undrawn upon by the
beneficiary thereof or is fully paid by the Agent. Fronting fees shall be
payable in arrears to the Agent at its Principal Office in immediately
available funds on the first Business Day of each calendar quarter that such
Letter of Credit remains open, and (b) on the date that such Letter of Credit
expires, is returned to the Agent undrawn upon by the beneficiary thereof or
is fully paid by the Agent. All past due fronting fees shall bear interest
at the Past Due Rate and shall be payable upon demand by the Agent. The
Borrower also hereby agrees to pay to the Agent for the Agent's sole benefit
any and all other issuance, administrative, amendment, negotiation, payment
and other normal and customary fees which are charged by the Agent in
connection with the issuance or negotiation of any of Letter of Credit and
the presentation or payment of any draw under any such Letter of Credit, with
all of such amounts being due and payable to the Agent upon demand.
7. The obligations of the Borrower under this Agreement in respect
of the Letters of Credit and all Letter of Credit Advances are absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever, including the
following circumstances:
a. any lack of validity or enforceability of this Agreement,
any Letter of Credit or any Loan Document;
b. any amendment or waiver of default under or any consent to
departure from the terms of this Agreement or any Letter of Credit without
the express prior written consent of the Agent;
c. the existence of any claim, set-off, defense or other right
which any beneficiary or any transferee of any Letter of Credit (or any
entities for whom any such beneficiary or any such transferee may be
acting), or any Person (other than the Agent or the Lenders) may have,
whether in connection with this Agreement, the Letters of Credit, the
transactions contemplated hereby or any unrelated transaction;
d. any statement, draft, certificate, or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever; PROVIDED, that the Agent
will examine each document presented under each Letter of Credit to
ascertain that such document appears on its face to comply with the terms
thereof; and
e. any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
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In the event that any restriction or limitation is imposed upon or determined or
held to be applicable to the Agent, any Lender or the Borrower by, under or
pursuant to any Legal Requirement now or hereafter in effect or by reason of any
interpretation thereof by any Governmental Authority, which in the respective
sole judgment of the Agent or any Lender would prevent any Lender from legally
incurring liability under a Letter of Credit issued or proposed to be issued
hereunder, then the Agent shall give prompt written notice thereof to the
Borrower, whereupon the Agent shall have no obligation to issue any additional
Letters of Credit then or at any time thereafter. In addition, if as a result
of any Regulatory Change which imposes, modifies or deems applicable (x) any
tax, reserve, special deposit or similar requirement against any Letters of
Credit issued or participated to by any Lender; (y) any fee, expense or
assessment against the Letters of Credit issued by the Agent or any Lender for
deposit insurance, or (z) any other charge, expense or condition which increases
the actual cost to the Agent or any Lender of issuing or maintaining such
Letters of Credit, or reduces any amount receivable by the Agent or any Lender
hereunder in respect of any Letter of Credit or any participation therein (which
increase in cost, or reduction in amount receivable, shall be the result of the
Agent's or such Lender's reasonable allocation of the aggregate of such
increases or reductions resulting from such event), then the Borrower (subject
to SECTION 10.6 hereof) shall pay to the Agent or such Lender, upon demand and
from time to time, amounts sufficient to compensate such Person for each such
increase from the effective date of such increase to the date of demand
therefor. Each such demand shall be accompanied by a certificate setting forth
in reasonable detail the calculation of the amount then being demanded in
accordance with the preceding sentence and each such certificate shall be
conclusive absent manifest error.
8. THE BORROWER HEREBY INDEMNIFIES AND HOLDS HARMLESS EACH LENDER
AND THE AGENT FROM AND AGAINST ANY AND ALL CLAIMS AND DAMAGES, LOSSES,
LIABILITIES, COSTS OR EXPENSES WHICH SUCH LENDER OR THE AGENT MAY INCUR (OR
WHICH MAY BE CLAIMED AGAINST SUCH LENDER OR THE AGENT BY ANY PERSON WHATSOEVER)
IN CONNECTION WITH THE EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR
FAILURE TO PAY UNDER ANY LETTER OF CREDIT, INCLUDING ANY CLAIMS, DAMAGES,
LOSSES, LIABILITIES, COSTS OR EXPENSES WHICH THE AGENT OR SUCH LENDER, AS THE
CASE MAY BE, MAY INCUR (WHETHER INCURRED AS A RESULT OF, ITS OWN NEGLIGENCE OR
OTHERWISE) BY REASON OF OR IN CONNECTION WITH THE FAILURE OF ANY OTHER LENDER
(WHETHER AS A RESULT OF ITS OWN NEGLIGENCE OR OTHERWISE) TO FULFILL OR COMPLY
WITH ITS OBLIGATIONS TO THE AGENT OR SUCH LENDER, AS THE CASE MAY BE, HEREUNDER
(BUT NOTHING HEREIN CONTINUED SHALL AFFECT ANY RIGHTS THE BORROWER MAY HAVE
AGAINST SUCH DEFAULTING LENDER); PROVIDED, THAT THE BORROWER SHALL NOT BE
REQUIRED TO INDEMNIFY ANY LENDER OR THE AGENT FOR ANY CLAIMS, DAMAGES, LOSSES,
LIABILITIES, COSTS OR EXPENSES TO THE EXTENT, BUT ONLY TO THE EXTENT, CAUSED BY
(I) THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PARTY SEEKING
INDEMNIFICATION OR (II) SUCH LENDER'S OR THE AGENT'S (AS THE CASE MAY BE)
FAILURE TO PAY UNDER ANY LETTER OF CREDIT AFTER THE PRESENTATION TO IT OF A
REQUEST REQUIRED TO BE PAID UNDER APPLICABLE LAW. NOTHING IN THIS SECTION
2.10(H) IS INTENDED
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TO LIMIT THE OBLIGATIONS OF THE BORROWER UNDER ANY OTHER PROVISION OF THIS
AGREEMENT.
9. The Agent shall review, on behalf of the Lenders, each draft and
any accompanying documents presented under a Letter of Credit. Promptly after
it shall have ascertained that any draft and any accompanying documents
presented under such Letter of Credit appear on their face to be in strict
conformity with the terms and conditions of such Letter of Credit, the Agent
shall make the appropriate payment to the beneficiary of such Letter of Credit.
Subject to the provisions of SECTION 2.2(f) hereof, the Agent shall give
telephonic or facsimile notice to the Lenders of the receipt and amount of any
draft presented under any Letter of Credit and the date on which payment thereon
will be made, and each of the Lender's shall, by 11:00 a.m. on the date such
payment is to be made under such Letter of Credit, pay in immediately available
funds, an amount equal to the product of (A) such Lender's Commitment Percentage
times (B) the amount of such payment to be made by the Agent to the beneficiary
under such Letter of Credit. Any Lender failing to timely deliver its requisite
portion of any such payment shall deliver the same to the Agent as soon as
possible thereafter, together with interest on such amount for each day from the
due date for such payment to the date of payment by such Lender to the Agent of
such amount at a rate of interest per annum equal to the Federal Funds Effective
Rate for such period. Each Lender hereby absolutely and unconditionally
assumes, as primary obligor and not as a surety, and agrees to pay and
discharge, and to indemnify and hold the Agent harmless from liability and
respect of, such Lender's pro-rata share (based on such Lender's Commitment
Percentage) of any amounts owing by such Lender to the Agent in accordance with
the immediately preceding sentence. Nothing herein shall be deemed to require
any Lender to pay to the Agent any amount as reimbursement for any payment made
by the Agent to acquire (discount) for its own account prior to maturity thereof
any acceptance created under a Letter of Credit.
K. PRO-RATA TREATMENT.
1. Except to the extent otherwise provided herein (including without
limitation, as specified in SECTIONS 2.2(f), 2.9(b) and 2.11(c) hereof): (a)
each borrowing from the Lenders under SECTION 2.1 hereof shall be made, each
payment of Commitment Fees shall be made and applied for the account of the
Lenders, and each termination or reduction of the Commitments of the Lenders
under SECTION 2.4 hereof shall be applied, PRO-RATA, according to each Lender's
Commitment Percentage; (b) each payment or prepayment by the Borrower of
principal of or interest on Loans shall be made to the Agent for the account of
the Lenders PRO-RATA in accordance with the respective unpaid principal amounts
of such Loans held by the Lenders; and (c) the Lenders (other than the Agent)
shall purchase from the Agent participations in the Letters of Credit, to the
extent of their respective Commitment Percentages upon issuance by the Agent of
each Letter of Credit as otherwise provided for herein.
2. Except as otherwise provided or specified in SECTION 2.2(f),
unless the Agent shall have been notified in writing by any Lender prior to the
date of a proposed Loan that such Lender will not make the amount that would
constitute such Lender's Commitment Percentage of such Loan on such date
available to the Agent at the Principal Office, the Agent may assume that such
Lender has made such amount available to the Agent on such date, and
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the Agent may, in reliance upon such assumption and subject to the terms and
conditions of this Agreement, make such amount available to the Borrower by
depositing the same, in immediately available funds, in a general deposit
account designated and maintained by the Borrower with the Agent at the
Principal Office. Any Lender failing to timely deliver its requisite portion
of such Loan shall deliver the same to the Agent as soon as possible
thereafter, together with interest on such amount for each day from the due
date for such payment to the date of payment by such Lender to the Agent of
such amount at a rate of interest per annum equal to the Federal Funds
Effective Rate for such period. In addition, the Borrower hereby agrees that
upon demand by the Agent, the Borrower shall reimburse the Agent for any such
amount which any Lender has failed to timely deliver to the Agent, but which
the Agent may have previously made available to the Borrower in accordance
with the other provisions of this SECTION 2.11(b). If a requested Loan shall
not occur on any date specified by the Borrower as set forth in the
applicable Request for Extension of Credit because all of the conditions for
such Loan set forth herein or in any of the other Loan Documents shall have
not been met, the Agent shall return the amounts so received from the Lenders
in respect of such requested Loan to the applicable Lenders as soon as
practicable.
3. Notwithstanding any provision to the contrary contained in this
SECTION 2.11 or in any other provision hereof, each Lender shall only receive
interest upon and a portion of the Commitment Fee paid hereunder based upon the
amount of funds actually advanced by such Lender to Borrower from time to time.
L. SHARING OF PAYMENTS, ETC. The Borrower agrees that, in addition to
(and without limitation of) any right of set-off, bankers' lien or counterclaim
a Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances held by it for the account of any of the Borrower at any of any
of its offices against any principal of or interest on any of such Lender's
Loans to the Borrower hereunder, such Lender's Commitment Percentage of the
Letter of Credit Exposure Amount or any other obligation of the Borrower
hereunder which is not paid when due (regardless of whether such balances are
then due to the Borrower), in which case it shall promptly notify the Borrower
and the Agent thereof, PROVIDED, that such Lender's failure to give such notice
shall not affect the validity thereof. If a Lender shall obtain payment of any
principal of or interest on any Loan made by it under this Agreement, any Letter
of Credit Exposure Amount or other obligation then due to such Lender hereunder,
through the exercise of any right of set-off (including, without limitation, any
right of set-off or lien granted under SECTION 10.19 hereof), banker's lien,
counterclaim or similar right, or otherwise, it shall promptly purchase from the
other Lenders participations in the Loans made by, the Letter of Credit Exposure
Amount of, or the other obligations of the Borrower hereunder of, the other
Lenders in such amounts, and make such other adjustments from time to time as
shall be equitable to the end that all the Lenders shall share the benefit of
such payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such benefit) PRO-RATA in accordance with their
respective Commitment Percentages. To such end all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees, to the fullest extent it may effectively do so under applicable
law, that any Lender so purchasing a participation in the Loans made by, Letter
of Credit Exposure Amount of, or other obligations hereunder of, the other
Lenders may exercise all rights of set-off, bankers' lien, counterclaim or
similar rights with
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respect to such participation as fully as if such Lender were a direct holder
of said Loans, Letter of Credit Exposure Amount or other obligations in the
amount of such participation. Nothing contained herein shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect
to any other indebtedness or obligation of the Borrower.
M. RECAPTURE. If on any Interest Payment Date the Agent does not receive
for the account of one or more Lenders payment in full of interest computed at
the Alternate Base Rate and/or the Adjusted LIBOR Rate, as applicable (computed
without regard to any limitation by the Highest Lawful Rate), because the sum of
the Alternate Base Rate and/or the Adjusted LIBOR Rate, as applicable (so
computed), exceeds or has exceeded the Highest Lawful Rate applicable to such
Lenders, the Borrower shall pay to the Agent for the account of such Lenders, in
addition to interest otherwise required, on each Interest Payment Date
thereafter, the Excess Interest Amount (calculated as of each such subsequent
Interest Payment Date); PROVIDED, that in no event shall the Borrower be
required to pay, for any computation period, interest at a rate exceeding the
Highest Lawful Rate applicable to such Lenders during such period. As used
herein, the term "EXCESS INTEREST AMOUNT" shall mean, on any day, the amount by
which (a) the amount of all interest which would have accrued prior to such day
on the outstanding principal of the Notes of the applicable Lender (had the
Alternate Base Rate and/or the Adjusted LIBOR Rate, as applicable, at all times
been in effect without limitation by the Highest Lawful Rate applicable to such
Lender) exceeds (b) the aggregate amount of interest actually paid to the Agent
for the account of such Lender on its Notes on or prior to such day.
III. COLLATERAL.
A. SECURITY DOCUMENTS. The Loans and all other Obligations shall be
secured by the Collateral described in the Security Documents and are entitled
to the benefits thereof. The Borrower and the Guarantors shall duly execute and
deliver the Security Documents, all consents of third parties necessary to
permit the effective granting of the Liens created thereby, financing statements
pursuant to the Uniform Commercial Code and other documents, all in Proper Form,
as may be reasonably required by the Agent to grant to the Agent, for the
ratable benefit of the Lenders, a valid, perfected and enforceable first
priority Lien on and security interest in the Collateral (subject only to the
Liens permitted under SECTION 7.2 hereof).
B. FILING AND RECORDING. The Borrower shall, at its sole cost and
expense, cause all financing statements and other Security Documents pursuant to
this Agreement to be duly recorded and/or filed or otherwise perfected in all
places necessary, in the opinion of the Agent, and take such other actions as
the Agent may reasonably request, in order to perfect and protect the Liens of
the Agent, for the ratable benefit of the Lenders, in the Collateral. The
Borrower, to the extent permitted by law, hereby authorizes the Agent to file
any financing statement in respect of any Lien created pursuant to the Security
Documents which may at any time be required or which, in the opinion of the
Agent, may at any time be desirable, although the same may have been executed
only by the Agent or, at the option of the Agent, to sign such financing
statement on behalf of the Borrower and the Guarantors and file the same, and
the Borrower hereby irrevocably designates the Agent, its agents,
representatives and designees as its agent and attorney-in-fact for this
purpose. In the event that any re-recording or refiling thereof (or the
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filing of any statements of continuation or assignment of any financing
statement) is required to protect and preserve such Lien, the Borrower shall,
at the Borrower's cost and expense, cause the same to be recorded and/or
refiled at the time and in the manner requested by the Agent.
IV. CONDITIONS.
A. ALL LOANS. The obligation of each Lender to make any Loan and the
obligation of the Agent to issue any Letter of Credit is subject to the accuracy
of all representations and warranties of the Borrower (and each Guarantor, if
applicable) on the date of such Loan or issuance of such Letter of Credit, to
the performance by the Borrower (and each Guarantor, if applicable) of its
obligations under the Loan Documents and to the satisfaction of the following
further conditions:
1. the Agent shall have received the following, all of which shall
be duly executed and in Proper Form: (1) IN THE CASE OF A LOAN, other than a
Loan for the purposes described in SECTIONS 2.6(d) and 2.10(d),
(1) WITH RESPECT TO EACH ALTERNATE BASE RATE BORROWING, Agent
shall have received by no later than 1:00 p.m. on the applicable Rate
Selection Date, telephonic notice from the Borrower of the proposed date
and amount of such Loan, and by no later than 2:00 p.m. on the applicable
Rate Selection Date, a Request for Extension of Credit, signed by a
Responsible Officer of the Borrower, and
(2) WITH RESPECT TO EACH LIBOR BORROWING, Agent shall have
received by no later than 12:00 noon on the applicable Rate Selection
Date, telephonic notice from the Borrower of the proposed date and amount
of such Loan, and no later than 1:00 p.m. on the applicable Rate Selection
Date, a Request for Extension of Credit, signed by a Responsible Officer of
the Borrower,
or, IN THE CASE OF ISSUANCE OF A LETTER OF CREDIT, a completed Application (as
may be required by the Agent) signed by a Responsible Officer of the Borrower by
12:00 noon three (3) Business Days prior to the proposed date of issuance of
such Letter of Credit and payment of the first letter of credit fee as and by
the time required in SECTION 2.10 of this Agreement, along with, IN EACH CASE,
such financial information as the Agent may reasonably require to substantiate
compliance with all financial covenants contained herein by the Borrower if the
Agent reasonably believes at such time that the Borrower is not then in
compliance with any of the financial covenants contained herein; and (2) such
other Applications, certificates and other documents as the Agent may reasonably
require;
2. Availability must be in excess of or equal to zero, after giving
effect to the requested Loan(s) or Letter(s) of Credit;
3. all representations and warranties of the Borrower and any other
Person set forth in this Agreement and in any other Loan Document shall be true
and correct in all material respects with the same effect as though made on and
as of such date, except for (i) those
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representations and warranties which relate only to the Closing Date and (ii)
those changes in such representations and warranties otherwise permitted by
the terms of this Agreement;
4. the Borrower (and each Guarantor, if applicable) shall be in
compliance with all the terms and provisions contained in this Agreement or in
any other Loan Document which are to be observed or performed by the Borrower
(or such Guarantor, if applicable), including without limitation, the provisions
of SECTION 6.15(a) below;
5. there shall have occurred no Material Adverse Effect, after
giving effect to the requested Loan(s) or Letter(s) of Credit;
6. no Default or Event of Default shall have occurred and be
continuing;
7. if requested by the Agent, it shall have received a certificate
executed by the Financial Officer or other Responsible Officer of the Borrower
as to the compliance with subparagraphs (b) through (f) above;
8. the making of such Loan or the issuance of such Letter of Credit,
shall not be prohibited by, or subject the Agent or any Lender to, any penalty
or onerous condition under any Legal Requirement; and
9. the Borrower shall have paid all legal fees and expenses of the
type described in SECTION 10.9 hereof for which invoices have been presented
through the date of such Loan or the issuance of such Letter of Credit.
B. FIRST LOAN. In addition to the matters described in SECTION 4.1
hereof, the obligation of any Lender to make the initial Loan or the obligation
of the Agent to issue the first Letter of Credit is subject to the receipt by
the Agent of each of the following, in Proper Form:
1. the Notes executed by the Borrower;
2. the Security Documents, including without limitation, the
Guaranty, executed by the Borrower and the Current Guarantors, as applicable;
3. a certificate executed by the Secretary or an Assistant Secretary
of the Borrower dated as of the date hereof, substantially in the form attached
hereto as EXHIBIT F ;
4. a certificate executed by the Secretary or an Assistant Secretary
of each of the Current Guarantors dated as of the date hereof substantially in
the form attached hereto as EXHIBIT G;
5. certified copies of the Organizational Documents of the Borrower
and each Current Guarantor, including without limitation, the appropriate
amendment of the articles of incorporation of the Borrower changing the name of
the Borrower to "Reliant Building Products, Inc.";
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6. a certificate from the Secretary of State or other appropriate
public official of the State of Delaware as to the continued existence of the
Borrower in the State of Delaware;
7. a certificate from the Office of the Comptroller or other
appropriate public official of the State of Delaware as to the good standing of
the Borrower in the State of Delaware;
8. certificates from the appropriate public officials of those
jurisdictions, including without limitation, the State of Texas, where the
nature of the Borrower's business makes it necessary or desirable to be
qualified to do business as a foreign corporation, as to the good standing and
qualification as a foreign corporation (as may be appropriate) of the Borrower
in such jurisdictions;
9. with respect to each Current Guarantor, certificates from the
appropriate public officials of the state of incorporation of such Current
Guarantor and of those jurisdictions where the nature of such Current
Guarantor's business makes it necessary or desirable to be qualified to do
business as a foreign corporation, as to the existence, good standing and
qualification as a foreign corporation (as may be appropriate) of such Current
Guarantor in such jurisdictions;
10. the most recent schedule and aging of Receivables of the Borrower
and the Current Guarantors (dated within thirty (30) days of the Closing Date);
11. a copy of the Agent's field examination, including a takeover
field examination, of the Borrower's and the Current Guarantors' books and
records and the results of such field examination;
12. evidence that the Borrower has $20,000,000 or more of
Availability;
13. the financial statements described in SECTION 5.2 hereof,
together with any management letters, if any, received for such financial
statements;
14. one copy of each of the Acquisition Documents, including all
amendments and schedules thereto, certified as a true and correct copy by a
Responsible Officer of the Borrower;
15. one copy of each of the Senior Subordinated Debt Documents,
including all amendments and schedules thereto, certified as a true and correct
copy by a Responsible Officer of the Borrower;
16. evidence that the Acquisition Agreement and all other Acquisition
Documents are in full force and effect, and all material consents, approvals and
filings required by any Governmental Authority in connection with any and all
Acquisition Documents have been obtained and made;
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17. evidence that the Senior Subordinated Debt Documents are in full
force and effect, and all material consents, approvals and filings required by
any Governmental Authority in connection with any and all Senior Subordinated
Debt Documents have been obtained and made;
18. evidence that the Stock Purchase Transaction has been duly and
validly consummated without modification, amendment or waiver of any material
provisions of any of the Acquisition Documents (except for such modifications,
amendments or waivers as shall have been approved in writing by the Required
Lenders), all in accordance with the terms, conditions and provisions of the
Acquisition Documents;
19. evidence that the Senior Subordinated Debt Transaction has been
duly and validly consummated and the Borrower received all of the net proceeds
of the Senior Subordinated Debt, without modification, amendment or waiver of
any material provisions of any of the Senior Subordinated Debt Documents (except
for such modifications, amendments or waivers as shall have been approved in
writing by the Required Lenders), all in accordance with the terms, conditions
and provisions of the Senior Subordinated Debt Documents;
20. evidence that the actual purchase price paid by Reliant Partners
and any of its Affiliates in connection with the Acquisition is less than or
equal to (1) $36,200,000 in aggregate cash consideration and (2) additional
consideration in the form of promissory notes of RBPI Holding Corporation in the
aggregate principal amount of $9,800,000;
21. evidence that the sources and uses for the Stock Purchase
Transaction and the financing thereof are consistent with the terms therefor set
forth in the Commitment Letter, including without limitation, evidence that the
disbursements by the Borrower and RBPI Holding Corporation do not exceed
$92,500,000;
22. a schedule of all transaction fees paid or payable by the
Borrower and its Affiliates in connection with the Senior Subordinated Debt
Transaction and the Stock Purchase Transaction demonstrating that all such fees
do not exceed $5,400,000 in the aggregate;
23. evidence that the partners of Reliant Partners have contributed
$20,000,000 or more of cash equity to Reliant Partners in connection with the
Stock Purchase Transaction;
24. evidence that the Stock Purchase Transaction and the Senior
Subordinated Debt Transaction are in compliance with all material Legal
Requirements;
25. evidence that all legal matters in connection with the Stock
Purchase Transaction and the Senior Subordinated Debt Transaction are
satisfactory to the Agent, the Lenders and their respective counsel in their
sole reasonable discretion;
26. the results of one or more environmental audits with respect to
each of the Borrower's and any Current Guarantor's real property locations
(whether leased or owned by the Borrower or the applicable Current Guarantor, as
appropriate) conducted by one or more environmental engineering firms
satisfactory to the Agent;
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27. a legal opinion from Kelly, Hart & Hallman, the independent
counsel for the Borrower and the Current Guarantors, dated as of the Closing
Date, addressed to the Agent and acceptable in all respects to the Agent in its
sole and absolute discretion;
28. certificates of insurance satisfactory to the Agent in all
respects evidencing the existence of all insurance required to be maintained by
the Borrower and the Current Guarantors pursuant to the terms of this Agreement
and the Security Documents;
29. the Borrower, the Current Guarantors and the Agent (or TCB) shall
have entered into the Lockbox Agreement;
30. copies of all major customer and supplier contracts with respect
to the Borrower or any Current Guarantors which the Agent shall have requested;
31. copies of all employment agreements, management fee agreements
and tax sharing agreements which the Agent shall have requested;
32. copies of all lease agreements entered into by Borrower or any
Current Guarantor which the Agent shall have requested;
33. waivers or subordinations of any and all landlord liens (whether
statutory or contractual) held by any owner of each real Property leased by the
Borrower or any Current Guarantor;
34. copies of all loan agreements, notes and other documentation
evidencing any Indebtedness of the Borrower or any Current Guarantor which the
Agent shall have requested and which will remain in effect after the Closing
Date;
35. evidence satisfactory to the Agent that there has been no
material adverse change in the prospects, business, assets, operations or
financial condition of the Borrower or any Current Guarantor since February 28,
1997;
36. all other Loan Documents and any other instruments or documents
consistent with the terms of this Agreement and relating to the transactions
contemplated hereby as the Agent may reasonably request, executed by the
Borrower or any other Person required by the Agent, including without
limitation, the Lockbox Agreement;
and subject to the further conditions that, at the time of the initial Loan, (1)
the ownership, corporate structure, solvency and capitalization of the Borrower
and each Current Guarantor shall be reasonably satisfactory to the Lenders in
all respects; (2) the Agent and the Lender shall have had the opportunity, if
they elect, to examine the books of account and other records and files of the
Borrower and each Current Guarantor and to make copies thereof, and to conduct a
preclosing audit which shall include, without limitation, verification of
Eligible Receivables, verification of satisfactory status of customer and
supplier accounts, payment of payroll taxes and accounts payable and formulation
of an opening Borrowing Base as of the Closing Date (with the results of such
examination and audits to have been satisfactory to the Agent and the Lenders
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in all respects); (3) all such actions as the Agent shall reasonably require
to perfect the Liens created pursuant to the Security Documents shall have
been taken, including without limitation, the delivery to the Agent of all
Property with respect to which possession is necessary for the purpose of
perfecting such Liens, and with respect to Collateral covered by the Security
Agreements, the filing of appropriately completed and duly executed Uniform
Commercial Code financing statements; (4) the Agent shall also have received
evidence reasonably satisfactory to it that the Liens created by the Security
Documents constitute first priority Liens (except for any Liens expressly
provided for in SECTIONS 7.2(c), (d) and (e) below), including without
limitation, satisfactory title commitments, Uniform Commercial Code search
reports and executed releases of liens or termination statements with respect
to any existing prior Liens to be released; (5) the Borrower shall have paid
all fees owed to the Agent and the Lenders by the Borrower under the
Commitment Letter or this Agreement, including without limitation, legal fees
and expenses described in SECTION 10.9 or otherwise for which invoices have
been presented; and (6) all other legal matters incident to the transactions
herein contemplated shall be reasonably satisfactory to counsel for the Agent
and respective counsel for each of the Lenders.
V. REPRESENTATIONS AND WARRANTIES.
To induce the Agent and the Lenders to enter into this Agreement, the
Borrower represents and warrants to the Agent and the Lenders, as of the date
hereof and as of the date any Loan is made hereunder or any Letter of Credit is
issued hereunder, as follows:
A. ORGANIZATION. The Borrower and each of the Current Guarantors are
duly organized, validly existing and in good standing under the laws of the
state of its incorporation; have all power and authority to own their respective
Property and assets and to conduct their respective businesses as presently
conducted; and are duly qualified to do business and in good standing in each
and every state in the United States of America where their respective business
requires such qualification, except for those states in which the failure to
qualify and/or be in good standing does not cause a Material Adverse Effect to
occur.
B. FINANCIAL STATEMENTS.
1. The financial statements of the Borrower delivered to the Agent
and the Lenders in connection with this Agreement, including without limitation,
(i) the Annual Audited Financial Statements of the Borrower dated as of March
31, 1995 and March 29, 1996, and (ii) the Monthly Unaudited Financial Statements
of the Borrower dated as of February 28, 1997, fairly present, in accordance
with GAAP, the financial condition and the results of operations of the Borrower
and the Current Guarantors, on a Consolidated basis, as of the dates and for the
periods indicated. No Material Adverse Effect has occurred since the dates of
such financial statements which is not otherwise disclosed in such financial
statements themselves.
2. The Borrower has heretofore furnished to the Agent, for each
month from the projected Closing Date through the end of the Borrower's 1998
fiscal year and for each fiscal year of the Borrower thereafter through the
Maturity Date, projected income statements, balance sheets and cash flows of the
Borrower and the Current Guarantors, on a Consolidated basis, together with one
or more schedules demonstrating prospective compliance with all financial
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covenants contained in this Agreement, such projections disclosing all
material assumptions made by the Borrower in formulating such projections.
The projections are based upon estimates and assumptions which the Borrower
believes are reasonable in light of the conditions which existed as of the
time the projections were made, have been prepared on the basis of the
material assumptions stated therein and reflect as of the Closing Date an
estimate believed reasonable by the Borrower as to the results of operations
and other information projected therein.
C. ENFORCEABLE OBLIGATIONS; AUTHORIZATION. The Loan Documents are legal,
valid and binding obligations of the Borrower (and the Guarantors, as
applicable), enforceable in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors rights generally and by general equitable principles. The execution,
delivery and performance of the Loan Documents have all been duly authorized by
all necessary corporate, and if necessary shareholder, action; are within the
power and authority of the Borrower (and the Guarantors, as applicable); do not
and will not contravene or violate any Legal Requirement or the Organizational
Documents of the Borrower (and the Guarantors, as applicable); do not and will
not result in the breach of, or constitute a default under, any agreement or
instrument by which the Borrower (and the Guarantors, as applicable) or any of
its Property may be bound or affected; and do not and will not result in the
creation of any Lien upon any Property of the Borrower (and the Guarantors, as
applicable) except as expressly contemplated therein. All necessary approvals
of any Governmental Authority and all other requisite permits, registrations and
consents for the performance have been obtained for the delivery and performance
of the Loan Documents.
D. OTHER DEBT. Neither the Borrower, nor any of is Subsidiaries, is in
default in the payment of any other Indebtedness or under any agreement,
mortgage, deed of trust, security agreement or lease to which it is a party, the
result of which has, would or could have a Material Adverse Effect. As of the
Closing Date, the outstanding principal balance of the Indebtedness described in
SECTION 6.17 hereof does not exceed $240,000.
E. LITIGATION. There is no litigation or administrative proceeding
pending or, to the knowledge of the Borrower, threatened against, nor any
outstanding judgment, order or decree affecting, the Borrower or any Subsidiary
of the Borrower before or by any Governmental Authority or arbitral body which
individually or in the aggregate have, or if adversely determined could have, a
Material Adverse Effect. Except as set forth on SCHEDULE 5.5 attached hereto,
as of the Closing Date there is no litigation or administrative proceeding
pending against, nor any outstanding judgment, order or decree affecting, the
Borrower or any Subsidiary of the Borrower before or by any Governmental
Authority or arbitral body. Neither the Borrower, nor any Subsidiary thereof,
is in default with respect to any judgment, writ, rule, regulation, order or
decree of any Governmental Authority.
F. TAXES. The Borrower and each of its Subsidiaries, other than any
Dormant Subsidiary, have filed all federal, state, local or foreign tax returns
required to have been filed and paid all taxes shown thereon to be due, except
those for which extensions have been obtained and except for those which are
being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained in accordance with GAAP. No
federal income tax returns of the Borrower have been audited by the Internal
Revenue Service, and the
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Borrower has not, as of the Closing Date, requested or been granted any
extension of time to file any Federal tax return. The Borrower has not, as
of the Closing Date, requested or been granted any extension of time to file
any state, local or foreign tax return, other than extensions with respect to
tax liabilities where the Borrower's failure to pay such tax liabilities
would not have a Material Adverse Effect. Except for the tax sharing
arrangement entered into as of the Closing Date by and among the Borrower and
each of its Subsidiaries, the Borrower is not a party to, and does not have
any obligation under, any tax sharing arrangement.
G. NO MATERIAL MISSTATEMENTS. No information, report, financial
statement, exhibit or schedule prepared or furnished by or on behalf of the
Borrower to the Agent or any Lender in connection with this Agreement or any
other Loan Documents knowingly contains any material misstatement of fact or
knowingly omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
H. SUBSIDIARIES. As of the date hereof, the Borrower has no Subsidiaries
or any other material minority ownership interests in any other Person other
than as listed on SCHEDULE 5.8 attached hereto. Except as expressly indicated
on SCHEDULE 5.8 attached hereto, each of the Subsidiaries listed on SCHEDULE 5.8
is wholly owned by the Borrower. Each of the Dormant Subsidiaries listed on
SCHEDULE 5.8 does not currently conduct or maintain any business operation and
does not own assets having an aggregate value in excess of the amount shown for
such Dormant Subsidiary in SCHEDULE 5.8.
I. REPRESENTATIONS BY OTHERS. All representations and warranties made by
or on behalf of the Borrower in any Loan Document shall constitute
representations and warranties of the Borrower hereunder.
J. PERMITS, LICENSES, ETC. The Borrower and each of its Subsidiaries
possess all material permits, licenses, patents, patent rights, trademarks,
trademark rights, trade names, trade name rights and copyrights which are
required to conduct their respective businesses.
K. ERISA. No Reportable Event has occurred with respect to any Plan.
Each Plan complies in all material respects with all applicable provisions of
ERISA, and the Borrower or each ERISA Affiliate have filed all reports required
by ERISA and the Code to be filed with respect to each Plan. The Borrower does
not have any knowledge of any event which could reasonably be expected to result
in a liability of the Borrower or any ERISA Affiliate to the PBGC other than for
applicable premiums. No accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any Plan. No event has occurred and no condition exists that could
reasonably be expected to constitute grounds for a Plan to be terminated under
circumstances which would cause the Lien provided under Section 4068 of ERISA to
attach to any Property of the Borrower or any ERISA Affiliate. No event has
occurred and no condition exists that could reasonably be expected to cause the
Lien provided under Section 302 of ERISA or Section 412 of the Code to attach to
any Property of the Borrower or any ERISA Affiliate.
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L. TITLE TO PROPERTIES; POSSESSION UNDER LEASES.
1. The Borrower and each of their respective Subsidiaries have good
and marketable title to, or a valid leasehold interest in, all of their
respective Property and assets shown on the most recent Consolidated balance
sheets of the Borrower and its Subsidiaries referred to in SECTION 5.2 hereof
and all assets and Property acquired since the date of such balance sheets,
except for such Property as is no longer used or useful in the conduct of their
respective businesses or as have been disposed of in the ordinary course of
business, and except for minor defects in title that do not interfere with the
ability of the Borrower or any of As Subsidiaries to conduct their respective
businesses as now conducted. All such assets and Property are free and clear of
all Liens other than those permitted by SECTION 7.2 hereof.
2. The Borrower and each of its Subsidiaries have complied in all
material respects with all obligations under all leases to which any of them is
a party and under which any of them is in occupancy, except where non-compliance
does not effect the Borrower's or such Subsidiary's use or occupancy thereof, as
applicable, and all such leases are in full force and effect, and the Borrower
and each of its applicable Subsidiaries enjoy peaceful and undisturbed
possession under all such leases. SCHEDULE 5.12 attached hereto sets forth each
of such leases of real Property in existence as of the Closing Date, and the
Borrower has provided the Agent with complete and correct copies of all of such
leases of real Property in effect as of the Closing Date.
M. ASSUMED NAMES. Neither the Borrower, nor any of its Subsidiaries, is
currently conducting its business under any assumed name or names, except as set
forth on SCHEDULE 5.13 attached hereto.
N. INVESTMENT COMPANY ACT. Neither the Borrower, nor any of its
Subsidiaries, is an investment company within the meaning of the Investment
Company Act of 1940, as amended, or, directly or indirectly, controlled by or
acting on behalf of any Person which is an investment company, within the
meaning of said Act.
O. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower, nor any of
its Subsidiaries, is a "public utility company," or an "affiliate" or a
"subsidiary company" of a "public utility company," or a "holding company," or a
"subsidiary company" of a "registered holding company," or an "affiliate" of a
"registered holding company" or of a "subsidiary company" of a "registered
holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended ("PUHCA"). To the best of the Borrower's
knowledge, neither the Borrower, nor any of its Subsidiaries, is an "affiliate"
or a "subsidiary company" of an unregistered, non-exempt "holding company" as
such terms are defined in PUHCA.
P. AGREEMENTS. SCHEDULE 5.16 attached hereto is a complete and correct
list, as of the Closing Date (after giving effect to the Acquisition and the
Senior Subordinated Debt Transaction), of (i) all credit agreements for borrowed
money, indentures and capitalized leases to which the Borrower or any of its
Subsidiaries is a party and all Property of the Borrower or any of its
Subsidiaries subject to any Lien securing such Indebtedness or lease obligation,
(ii) each letter of credit and guaranty to which the Borrower or any of its
Subsidiaries is a party, (iii)
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all other material instruments in effect as of the date hereof providing for,
evidencing, securing or otherwise relating to any Indebtedness for borrowed
money of the Borrower or any of its Subsidiaries (other than the Indebtedness
hereunder), and (iv) all obligations of the Borrower or any of its
Subsidiaries to issuers of appeal bonds issued for account of the Borrower or
any of its Subsidiaries. The Borrower shall, upon, request by the Agent,
deliver to the Agent and the Lenders a complete and correct copy of all such
credit agreements, indentures, capitalized leases, letters of credit,
guarantees and other instruments or leases described in SCHEDULE 5.16 or
arising after the date hereof, including any modifications or supplements
thereto, as in effect on the date hereof.
Q. ENVIRONMENTAL MATTERS. Except as is described on SCHEDULE 5.17
attached hereto, no activity of the Borrower or any of its Subsidiaries requires
any Environmental Permit which has not been obtained and which is not now in
full force and effect. The Borrower and each of its Subsidiaries are in
compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Requirement of Environmental Law or Environmental Permit. The
Borrower and each of its Subsidiaries (i) have obtained and maintained in effect
all Environmental Permits, (ii) along with their respective Properties have been
and are in material compliance with all applicable Requirements of Environmental
Law and Environmental Permits, (iii) along with their respective Properties are
not subject to any (A) Environmental Claims or (B) Environmental Liabilities, in
either case direct or contingent, and whether known or unknown, arising from or
based upon any act, omission, event, condition or circumstance occurring or
existing on or prior to the date hereof, except as set forth on SCHEDULE 5.17
attached hereto, and (iv) have not received individually or collectively any
notice of any violation or alleged violation of any Requirements of
Environmental Law or Environmental Permit or any Environmental Claim in
connection with their respective Properties. Neither the Borrower, nor any of
its Subsidiaries, has actual knowledge of any violation of any applicable
Requirements of Environmental Law and Environmental Permits by, or Environmental
Claims or Environmental Liabilities arising against, any of the prior owners or
operators and predecessors in interest with respect to any of the Borrower's or
any of its Subsidiaries' respective Property.
R. NO CHANGE IN CREDIT CRITERIA OR COLLECTION POLICIES. There has been
no material adverse change in credit criteria or collection policies concerning
Receivables of the Borrower or any of it Subsidiaries since March 21, 1997.
S. SOLVENCY.
1. The value of the assets of the Borrower, based on a fair
valuation thereof, is not less than the amount that will be required to be paid
on or in respect of the probable liability on the existing debts and other
liabilities (including contingent liabilities) of the Borrower, as they are
expected to become absolute and mature. The value of the assets of each of the
Subsidiaries of the Borrower, based on a fair valuation thereof, is not less
than the amount that will be required to be paid on or in respect of the
probable liability on the existing debts and other liabilities (including
contingent liabilities) of each such Subsidiary, as they are expected to become
absolute and mature.
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2. The assets of the Borrower do not constitute unreasonably small
capital for the Borrower to carry out its business as now conducted and as
proposed to be conducted including the capital needs of the Borrower, taking
into account (1) the nature of the business conducted by the Borrower, (2) the
particular capital requirements of the business conducted by the Borrower, (3)
the anticipated nature of the business to be conducted by the Borrower in the
future, and (4) the projected capital requirements and capital availability of
such current and anticipated business. The assets of each of the Subsidiaries
of the Borrower do not constitute unreasonably small capital for such Subsidiary
to carry out its business as now conducted and as proposed to be conducted,
including the capital needs of each such Subsidiary, taking into account (1) the
nature of the business conducted by such Subsidiary, (2) the particular capital
requirements of the business conducted by such Subsidiary, (3) the anticipated
nature of the business to be conducted by such Subsidiary in the future, and (4)
the projected capital requirements and capital availability of such current and
anticipated business.
3. Neither the Borrower, nor any of its Subsidiaries, intends to
incur debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be received by the Borrower or any
such Subsidiary, as applicable, and the timing and amounts to be payable on or
in respect of debt of the Borrower or any such Subsidiary, as applicable). The
cash flow of the Borrower, after taking into account all anticipated uses of the
cash of the Borrower, should at all times be sufficient to pay all such amounts
on or in respect of debt of the Borrower when such amounts are anticipated to be
required to be paid.
4. The Borrower does not believe that final judgments against it or
any of its Subsidiaries in actions for money damages presently pending, if any,
will be rendered at a time when, or in an amount such that, the Borrower or any
such Subsidiary, as applicable, will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
reasonable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered). The cash flow of
the Borrower or any such Subsidiary, as applicable, after taking into account
all other anticipated uses of the cash of the Borrower or any such Subsidiary,
as applicable (including the payments on or in respect of debt referred to in
subparagraph (c) of this SECTION 5.19), should at all times be sufficient to pay
all such judgments promptly in accordance with their terms (taking into account
the maximum reasonable amount of such judgments in any such actions and the
earliest reasonable time at which such judgments might be rendered).
T. STATUS OF RECEIVABLES AND OTHER COLLATERAL. The Borrower represents
and warrants that (a) the Borrower or any Guarantor, as applicable, is and shall
be the sole owner, free and clear of all Liens except in favor of the Agent or
otherwise permitted under SECTION 7.2 hereunder, of and fully authorized to
sell, transfer, pledge and/or grant a security interest in each and every item
of said Collateral owned by the Borrower or any such Guarantor; (b) each
Eligible Receivable is and shall be a good and valid account representing an
undisputed bona fide indebtedness incurred or an amount indisputably owed by the
account debtor therein named, for a fixed sum as set forth in the invoice
relating thereto with respect to an absolute sale and delivery upon the
specified terms of goods sold by the Borrower or one or more of its
Subsidiaries, or work, labor and/or services theretofore rendered by the
Borrower or the applicable Subsidiary; (c) no Eligible Receivable is or shall be
subject to any defense, offset,
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counterclaim, discount or allowance (as of the time of its creation) except
as may be stated in the invoice relating thereto or discounts and allowances
as may be customary in the Borrower's or its applicable Subsidiary's
business; (d) none of the transactions underlying or giving rise to any
Eligible Receivable shall violate any applicable state or federal laws or
regulations, and all documents relating to any Receivable shall be legally
sufficient under such laws or regulations and shall be legally enforceable in
accordance with their terms, subject, as to enforceability, to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creators' rights generally; (e) to the best of the Borrower's
knowledge, each account debtor, guarantor or endorser with respect to any
Eligible Receivable is solvent and able to pay all Receivables on which it is
obligated in full when due; (f) all documents and agreements relating to
Eligible Receivables shall be true and correct and in all respects what they
purport to be; (g) to the best of the Borrower's knowledge, all signatures
and endorsements that appear on all documents and agreements relating to
Eligible Receivables shall be genuine and all signatories and endorsers with
respect thereto shall have full capacity to contract; (h) the Borrower and
each its Subsidiaries shall maintain books and records pertaining to the
respective Collateral owned by each of them in detail, form and scope as the
Agent shall reasonably require; (i) concurrently with the delivery by the
Borrower to the Agent of any accounts receivable aging or any sales report
summary hereunder, the Borrower will disclose to the Agent which Receivables,
if any, arise out of contracts with the United States or any department,
agency or instrumentality thereof, and will, upon request from the Agent,
execute or cause to be executed any instruments and take any steps required
by the Agent in order that all monies due or to become due under any such
contract shall be assigned to the Agent and notice thereof given under the
Federal Assignment of Claims Act; (j) the Borrower will, promptly after any
Responsible Officer learns thereof, report to the Agent any material loss or
destruction of, or substantial damage to, any of the Collateral, and any
other matters materially affecting the value, enforceability or
collectability of any of the Collateral; (k) if any amount payable under or
in connection with any Receivable is evidenced by a promissory note or other
instrument, as such terms are defined in the Uniform Commercial Code, such
promissory note or instrument shall be promptly pledged, endorsed, assigned
and delivered to the Agent as additional Collateral; (l) the Borrower shall
not redate, or allow any of its Subsidiaries to redate, any invoice or sale
or make or allow to be made sales on extended dating beyond that customary in
the industry; (m) if no Default or Event of Default shall have occurred
(other than Events of Default or Defaults which have been cured to the
satisfaction of the Agent or waived in writing by the Agent and the Required
Lenders), the Borrower shall promptly provide the Agent with copies of any
regularly scheduled physical counts of the Borrower's and each of its
Subsidiaries' inventory which are conducted by the Borrower and such
Subsidiaries after the Closing Date; (n) after the occurrence of any Default
or Event of Default which has not been cured to the satisfaction of the Agent
or waived in writing by the Agent and the Required Lenders, the Borrower
shall conduct a physical count of its and each of its Subsidiaries' inventory
at such intervals as the Agent may request and promptly supply the Agent with
a copy of such counts accompanied by a report of the value (based on the
lower of cost, on a weighted average basis, or market value) of such
inventory; and (o) neither the Borrower, nor any of its Subsidiaries, shall
be entitled to pledge the Lenders' credit on any purchases or for any purpose
whatsoever.
U. ACQUISITION AND SENIOR SUBORDINATED DEBT DOCUMENTS. Each of the
Acquisition Documents and the Senior Subordinated Debt Documents constitutes the
valid and binding
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obligation of each of the parties thereto in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy laws
and other laws affecting creditors' rights generally and by general
principles of equity. The Borrower has no knowledge that any of the
representations and warranties contained in any of the Acquisition Documents
or any of the Senior Subordinated Debt Documents were not true and correct in
all material respects on and as of the date given or, except as disclosed in
writing to the Agent prior to the Closing Date, that any of the material
terms thereof have been modified, amended or waived.
VI. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees with the Agent and the Lenders that prior
to the termination of this Agreement, it will do, cause each of its
Subsidiaries, if any, to do, and if necessary cause to be done, each and all of
the following:
A. BUSINESSES AND PROPERTIES. At all times: (a) do or cause to be done
all things necessary to obtain, preserve, renew and keep in full force and
effect the rights, licenses, permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses; (b)
maintain and operate such businesses in the same general manner in which they
are presently conducted and operated; (c) comply with all material Legal
Requirements applicable to the operation of such businesses whatever now in
effect or hereafter enacted (including without limitation, all Legal
Requirements relating to public and employee health and safety and all
Environmental Laws) and with any and all other Legal Requirements; and (d)
maintain, preserve and protect all Property material to the conduct of such
businesses and keep such Property in good repair, working order and condition,
and from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
B. TAXES. Pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its Property before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise, which, if unpaid, and in excess of $250,000 with respect to claims
for labor, material and supplies or in excess of $200,000 with respect to claims
for taxes, assessments and governmental charges or levies, might give rise to
Liens upon such properties or any part thereof (except as otherwise permitted by
SECTION 7.2 hereof), unless being diligently contested in good faith by
appropriate proceedings and as to which adequate reserves in an amount not less
than the aggregate amount secured by such Liens have been established in
accordance with GAAP; PROVIDED, HOWEVER, that such contested amounts giving rise
to such Liens shall be immediately paid upon commencement of any procedure or
proceeding to foreclose any of such Liens unless the same shall be validly
stayed by a court of competent jurisdiction or a surety bond, which is
satisfactory in all respects to the Agent, is delivered to the Agent for the
ratable benefit of the Lenders in an amount no less than such contested amounts.
C. FINANCIAL STATEMENTS AND INFORMATION. Furnish to the Agent three (3)
copies and to each Lender one (1) copy of each of the following: (a) as soon as
available and in any event within one hundred and five (105) days after the end
of each fiscal year of the Borrower, Annual
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Audited Financial Statements of the Borrower and its Subsidiaries; (b) as
soon as available and in any event within thirty (30) days after the end of
each calendar month, Monthly Unaudited Financial Statements of the Borrower
and its Subsidiaries; (c) concurrently with the financial statements provided
for in SUBSECTIONS 6.3(a) and 6.3(b) hereof, (1) an Officer's Certificate,
signed by a Responsible Officer of the Borrower, and (2) a written
certificate in Proper Form, identifying each Subsidiary which is otherwise
required by the provisions of SECTION 6.10 hereof to become a Guarantor at
the request of the Agent but which has not yet done so as of the date of such
certificate, and providing an explanation of the reasons why each such
Subsidiary is not a Guarantor, signed by a Responsible Officer of the
Borrower; (d) as soon as available and in any event within five (5) days
after the date of issuance thereof (if any such management letter is ever
issued), a management letter prepared by the independent public accountants
who reported on the financial statements provided for in SUBSECTION 6.3(a)
above, with respect to the internal audit and financial controls of the
Borrower and its Subsidiaries; (e) as soon as available and in any event
within twenty (20) days after the end of each month, accounts receivable
agings and reconciliations, inventory designations, accounts payable agings
and reconciliations, monthly sales report summaries, open order reports and
all other schedules, computations and other information, all in reasonable
detail, as may be reasonably required or requested by the Agent, all
certified by a Responsible Officer of the Borrower; (f) as soon as available
and in any event within twenty (20) days after the end of each month, a
Borrowing Base Compliance Certificate, signed by a Responsible Officer of the
Borrower in the form attached hereto as EXHIBIT H; (g) as soon as available
and in any event within fifteen (15) days prior to the commencement of each
fiscal year of the Borrower, management-prepared Consolidated financial
projections of the Borrower and its Subsidiaries for the immediately
following two (2) fiscal years (setting forth such projections on both an
annual basis and on a monthly basis for the upcoming fiscal year and on an
annual basis only for the fiscal year thereafter), such projections to be in
such format and detail as reasonably requested by the Agent; and (h) such
other information relating to the financial condition, operations and
business affairs of the Borrower or any of its Subsidiaries as from time to
time may be reasonably requested by the Agent.
D. INSPECTION. Upon reasonable notice (which may be telephonic notice),
at all reasonable times and as often as the Agent may request, permit any
authorized representative designated by the Agent, together with any authorized
representatives of any Lender desiring to accompany the Agent, to visit and
inspect the Properties and financial records of the Borrower and its
Subsidiaries and to make extracts from such financial records at the Agent's
expense, and permit any authorized representative designated by the Agent
(together with any accompanying representatives of any Lender) to discuss the
affairs, finances and condition of the Borrower and its Subsidiaries with the
appropriate Financial Officer and such other officers as the Borrower shall deem
appropriate and the Borrower's independent public accountants, as applicable.
The Agent agrees that it shall schedule any meeting with any such independent
public accountant through the Borrower, and a Responsible Officer of the
Borrower shall have the right to be present at any such meeting. At the
Borrower's expense, the Agent shall have the right to examine, up to three (3)
times in each fiscal year of the Borrower prior to the occurrence of a Default
or Event of Default (but as frequently as may be requested by the Agent at any
time after a Default or Event of Default shall have occurred which has not been
cured to the satisfaction of the Agent or waived in writing by the Agent and the
Required Lenders) the existence and condition of the Receivables, books and
records of the Borrower and its Subsidiaries and to
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review their compliance with the terms and conditions of this Agreement and
the other Loan Documents, subject to governmental confidentiality
requirements. The Agent shall also have the right to verify with any and all
customers of the Borrower and any of its Subsidiaries the existence and
condition of the Receivables, as often as the Agent may require, without
prior notice to or consent of the Borrower or any of its Subsidiaries;
PROVIDED, HOWEVER, that so long as no Default or Event of Default shall have
occurred which has not been cured to the reasonable satisfaction of the Agent
or waived in writing by the Agent and the Required Lenders, the Agent agrees
to limit the frequency of such verification as to any specific customer of
the Borrower and any of its Subsidiaries to once per fiscal year of the
Borrower, but only so long as the total Receivables owing to the Borrower and
its Subsidiaries by such customer constitute less than five percent (5%) of
the aggregate Receivables owing to the Borrower and its Subsidiaries by all
customers (it being understood that the Agent's right to verify with any
customers exceeding such 5% concentration limit shall be unlimited, whether
any Default or Event of Default exists).
E. FURTHER ASSURANCES. Upon request by the Agent, promptly execute and
deliver any and all other and further instruments which may be reasonably
requested by the Agent to (a) cure any defect in the execution and delivery of
any Loan Document or more fully to describe particular aspects of the Borrower's
or any of its Subsidiaries' agreements set forth in the Loan Documents or so
intended to be and (b) grant, preserve, protect and perfect the first priority
Liens created by the Security Documents in the Collateral.
F. BOOKS AND RECORDS. Maintain financial records and books in accordance
with accepted financial practice and GAAP.
G. INSURANCE.
1. Keep its insurable Properties adequately insured at all times by
financially sound and reputable insurers.
2. Maintain such other insurance, to such extent and against such
risks, including fire and other risks insured against by extended coverage,
employee liability and business interruption, as is customary with companies
similarly situated and in the same or similar businesses, PROVIDED, HOWEVER,
that such insurance shall insure the Property of the Borrower and each of its
Subsidiaries against all risk of physical damage, including without limitation,
loss by fire, explosion, theft, fraud and such other casualties as may be
reasonably satisfactory to the Agent, but in no event at any the in an amount
less than the replacement value of the Collateral.
3. Maintain in full force and effect worker's compensation coverage
and public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with its operations
and with the use of any Properties owned, occupied or controlled by the Borrower
or any of its Subsidiaries, in such amounts as the Agent shall reasonably deem
necessary.
4. Maintain such other insurance as may be required by law or as may
be reasonably requested by the Agent for purposes of assuring compliance with
this SECTION 6.7. All insurance covering tangible personal Property subject to a
Lien in favor of the Agent for the
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benefit of the Lenders granted pursuant to the Security Documents shall
provide that, in the case of each separate loss, the full amount of insurance
proceeds shall be payable to the Agent and shall further provide for at least
30 days' prior written notice to the Agent of the cancellation or substantial
modification thereof.
H. ERISA. At all times: (a) make contributions to each Plan in a timely
manner and in an amount sufficient to comply with the minimum funding standards
requirements of ERISA; (b) immediately upon acquiring knowledge of (i) any
Reportable Event in connection with any Plan for which no administrative or
statutory exemption exists or (ii) any "prohibited transaction", as such term is
defined in Section 4975 of the Code, in connection with any Plan, that could
result in the imposition of material damages or a material excise tax on the
Borrower or any Subsidiary thereof, furnish the Agent a statement executed by a
Responsible Officer of the Borrower or such Subsidiary setting forth the details
thereof and the action which the Borrower or any such Subsidiary proposes to
take with respect thereto and, when known, any action taken by the Internal
Revenue Service with respect thereto; (e) notify the Agent promptly upon receipt
by the Borrower or any Subsidiary thereof of any notice of the institution of
any proceedings or other actions which may result in the termination of any Plan
by the PBGC and furnish the Agent with copies of such notice; (d) pay when due,
or within any applicable grace period allowed by the PBGC, all required premium
payments to the PBGC; (e) furnish the Agent with copies of the annual report for
each Plan filed with the Internal Revenue Service not later than ten (10) days
after the Agent requests such report; (f) furnish the Agent with copies of any
request for waiver of the funding standards or extension of the amortization
periods required by Sections 303 and 304 of ERISA or Section 412 of the Code
promptly after the request is submitted to the Secretary of the Treasury, the
Department of Labor or the Internal Revenue Service, as the case may be; and (g)
pay when due all installment contributions required under Section 302 of ERISA
or Section 412 of the Code or within 10 days of a failure to make any such
required contributions when due furnish the Agent with written notice of such
failure.
I. USE OF PROCEEDS. Subject to the terms and conditions contained
herein, use the proceeds of the Loans for (a) financing ongoing working capital
needs of the Borrower and its Subsidiaries not otherwise prohibited herein, (b)
financing acquisitions by the Borrower or any Subsidiary of the Borrower as
permitted by SECTION 7.4(f)(3) below, (c) for general corporate purposes of the
Borrower or any of its Subsidiaries in the ordinary course of business not
otherwise prohibited herein, and/or (d) payment of the Obligations, as provided
in this Agreement; PROVIDED, that no proceeds of any Loan shall be used (w) for
the purpose of purchasing or carrying directly or indirectly any margin stock as
defined in Regulation U ("REG U") of the Board of Governors of the Federal
Reserve System, (x) for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any such margin stock, (y)
for any other purpose which would cause such Loan to be a "purpose credit"
within the meaning of Reg U and (z) for any purpose which would constitute a
violation of Reg U or of Regulations G, T or X of the Board of Governors of the
Federal Reserve System or any successor regulation of any thereof or of any
other rule, statute or regulation governing margin stock from time to time.
J. GUARANTORS, JOINDER AGREEMENTS. Promptly inform the Agent of the
creation or acquisition of any Subsidiary of the Borrower after the Closing Date
(including any Subsidiary
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acquired pursuant to SECTION 7.4(f)(3) below) and, within thirty (30) days
after the written request of the Agent delivered in accordance with SECTION
10.2 below, cause any such Subsidiary created after the Closing Date (except
as provided for below) to become a Guarantor by execution and delivery to the
Agent, for the ratable benefit of the Lenders, of a Guaranty or a Joinder
Agreement (if a Joinder Agreement is requested by the Agent in lieu of a
Guaranty) and execute and deliver to the Agent, for the ratable benefit of
the Lenders, any applicable Security Documents required by the Agent,
together with such related certificates, legal opinions and documents
(including Organizational Documents) as the Agent may reasonably require;
PROVIDED, HOWEVER, that any foreign Subsidiary shall not be required to
become a Guarantor hereunder if the Agent receives, for the ratable benefit
of the Lender, a first priority pledge of no less than sixty-five percent
(65%) of all issued and outstanding indicia of equity rights (including
capital stock) in such foreign Subsidiary contemporaneously with the
acquisition or creation by the Borrower or other Subsidiary of such foreign
Subsidiary.
K. NOTICE OF EVENTS.
1. Notify the Agent within one (1) Business Day after any
Responsible Officer of the Borrower or any of its Subsidiaries acquires
knowledge of the occurrence of, or if the Borrower or any of its Subsidiaries
causes or intends to cause, as the case may be, any of the following: (i) the
institution of any lawsuit, administrative proceeding or investigation affecting
the Borrower or any of its Subsidiaries, including without limitation, any audit
by the Internal Revenue Service, the adverse determination under which could
reasonably be expected to have a Material Adverse Effect; (ii) any development
or change in the business or affairs of the Borrower or any of its Subsidiaries'
which has had or which is likely to have, in the reasonable judgment of any
Responsible Officer of the Borrower, a Material Adverse Effect; (iii) any Event
of Default or Default, together with a detailed statement by a Responsible
Officer on behalf of the Borrower of the steps being taken to cure the effect of
such Event of Default or Default; (iv) the occurrence of a default or event of
default by the Borrower or any of its Subsidiaries under any agreement or series
of related agreements to which it is a party, which default or event of default
could have a Material Adverse Effect; (v) any violation by, or investigation of
any Borrower or any of its Subsidiaries in connection with any actual or alleged
violation of any Legal Requirement imposed by the Environmental Protection
Agency, the Occupational Safety Hazard Administration or any other Governmental
Authority which has or is likely to have, in the reasonable judgment of any
Responsible Officer of the Borrower, a Material Adverse Effect; and (vi) any
significant change in the accuracy of any material representations and
warranties of the Borrower or any of its Subsidiaries in this Agreement or any
other Loan Document.
2. Promptly notify the Agent of either (i) the commencement of any
material business operations or activities by any Dormant Subsidiary or (ii) the
acquisition by any Dormant Subsidiary of any asset or assets other than those
assets held by such Dormant Subsidiary as of the closing date.
L. ENVIRONMENTAL MATTERS. Without limiting the generality of SECTION
6.1(c) hereof, (a) comply in all material respects with all material
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Requirement of
Environmental Law, or Environmental Permit; (b) obtain and maintain in effect
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all Environmental Permits; and (c) keep its Property free of any
Environmental Claims or Environmental Liabilities.
M. END OF FISCAL YEAR. Cause each of its fiscal years to end on either
the Friday or Sunday closest to March 31 of the applicable year.
N. PAY OBLIGATIONS AND PERFORM OTHER COVENANTS. Make full and timely
payment of the Obligations, whether now existing or hereafter arising, duly
comply with all of the terms and covenants contained in this Agreement and in
each of the other Loan Documents at all times and places and in the manner set
forth therein, and except for the filing of continuation statements and the
making of other filings by the Agent as secured party or assignee, at all times
take all actions necessary to maintain the Liens and security interests provided
for under or pursuant to this Agreement and the Security Documents as valid
perfected first priority Liens on the Collateral intended to be covered thereby
(subject only to other Liens expressly permitted by SECTION 7.2 hereof) and
supply all information to the Agent necessary for such maintenance.
O. COLLECTION OF RECEIVABLES; APPLICATION OF LOCKBOX AGREEMENT PROCEEDS.
1. At the Borrower's own cost and expense, arrange for remittances
on all Receivables to be made directly to one or more lockboxes designated by
the Agent under the terms of the Lockbox Agreement or in such other manner as
the Agent may direct. Prior to the implementation of the procedures discussed
in SECTION 6.15(b) below, the proceeds of all Receivables collected through such
lockbox(es) shall not be required to be remitted to the Agent for application to
the Loans and for other disbursements approved by the Agent as set forth in
SECTION 6.15(b) below, but instead shall be available for unrestricted use by
the Borrower by deposit of such proceeds into one or more operating accounts
maintained by the Borrower with the Agent or TCB (with the availability and
timing of such deposits to be governed by the terms of the Lockbox Agreement).
2. If at any time, either (i) a Default or Event of Default shall
occur or (ii) Availability shall be less than $7,500,000 for any reason, the
Agent shall have the option to cause all remittances on all Receivables
processed through the lockbox(es) in accordance with SECTION 6.15(a) above to at
all times thereafter be promptly deposited in one or more accounts designated by
the Agent, subject to withdrawal by the Agent only, as hereinafter provided (the
Agent to exercise such option by providing written notice to the Borrower of the
Agent's election to implement such daily collection and application procedures
for Receivables any time prior to the end of the fiscal quarter of the Borrower
during which (i) all existing Defaults and Events of Default, if applicable,
shall have been cured to the satisfaction of the Agent and (ii) Availability
shall have increased to, and remained at, an amount equal to or greater than
$7,500,000, if applicable). In connection therewith, the Agent and TCB are
irrevocably authorized, in accordance with the terms of the implementation and
processing instructions for the Lockbox Agreement, to cause all such remittances
on all Receivables to be promptly deposited in such account or accounts
designated by the Agent. All remittances and payments that are deposited in
accordance with the foregoing will be immediately applied by the Agent to reduce
the outstanding balance of the Loans, subject to the continued accrual of
interest on the Loan balances to which such remittances and payments are applied
for one (1) Business Day (or two
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Business Days in the case of remittances and payments received after 12:00
noon) and in any event subject to final collection in cash of the item
deposited.
3. As long as the procedures implemented under SECTION 6.15(b) above
are in effect and are continuing, the Borrower shall cause all payments, if any,
received by the Borrower or any of its Subsidiaries on account of Receivables
which are not forwarded directly to the above-described lockbox(es) (whether in
the form of cash, checks, notes, drafts, bills of exchanges, money orders or
otherwise) to be promptly deposited in precisely the form received (but with any
endorsements of the Borrower or the applicable Subsidiary necessary for deposit
or collection) in the account or accounts designated by the Agent in accordance
with the provisions of SECTION 6.15(b) above.
4. In addition to the financial reporting requirements set forth in
SECTION 6.3 hereof, as long as the daily collection procedures implemented by
the provisions of SECTION 6.15(b) above are in effect, the Borrower shall
furnish to the Agent on a timely basis the following: (i) so long as
Availability is greater than or equal to $5,000,000 and no Default or Event of
Default has occurred which has not been cured to the satisfaction of the Agent
or waived in writing by the Required Lenders, the Borrower shall furnish to the
Agent, not less frequently than weekly, a Receivables report which includes a
sales summary, collections report and customer credits for the Borrower and its
Subsidiaries for the period beginning with the date of the preceding Receivables
report previously furnished to the Agent by the Borrower and ending with the
preceding Business Day prior to the date of such new Receivables report; and
(ii) so long as Availability is less than $5,000,000 or any Default or Event of
Default has occurred which has not been either cured to the satisfaction of the
Agent or waived in writing by the Agent and the Required Lenders, the Borrower
shall furnish to the Agent on each Business Day, a Receivables report which
includes a sales summary, collections report and customer credits for the
Borrower and its Subsidiaries for the preceding Business Day prior to the date
of such Receivables report. For purposes of preparing the various Receivables
reports to be periodically delivered pursuant to this subparagraph (d), it shall
be assumed that each Business Day ends at 2:00 p.m., with any other activity
occurring on such Business Day after such 2:00 p.m. deadline to be deemed to
have occurred on the next succeeding Business Day.
5. If and when the daily collection procedures discussed in SECTION
6.15(B) above are implemented in accordance with the provisions thereof, such
daily collection procedures shall thereafter continue to be in effect until the
end of the fiscal quarter of the Borrower during which (i) all existing Defaults
and Events of Default, if applicable, shall have been cured to the satisfaction
of the Agent and (ii) Availability shall have increased to, and remained at, an
amount equal to or greater than $7,500,000, if applicable.
P. ADDITIONAL RECEIVABLES DOCUMENTATION. In addition to the Receivables
information delivered pursuant to the other provisions of this Agreement,
furnish such further schedules and/or information as the Agent may require
relating to the Receivables (including without limitation, sales invoices). The
items to be provided under this SECTION 6.16 are to be in form satisfactory to
the Agent and are to be executed and delivered to the Agent from time to time
solely for its convenience in maintaining records of the Collateral. The
Borrower's failure to give
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any of such items to the Agent shall not affect, terminate, modify or
otherwise limit the Agent's Lien or security interest in the Collateral.
Q. HORAN INDEBTEDNESS. Within 180 days after the Closing Date, cause the
Indebtedness evidenced by that certain promissory note in the original principal
amount of $400,000 dated April 28, 1995, executed by RBP of Texas, Inc., payable
to Timothy Horan, Jr., and guaranteed by the Borrower, to either (1) be paid in
full or otherwise satisfied, with all Liens securing such Indebtedness being
properly released pursuant to properly executed and delivered releases of liens
and/or termination statements, or (2) become Subordinated Indebtedness for
purposes hereof pursuant to a subordination agreement entered into after the
Closing Date, in Proper Form, by and among the Agent, Timothy Horan, Jr., RBP of
Texas, Inc. and the Borrower.
VII. NEGATIVE COVENANTS.
The Borrower covenants and agrees with the Agent and the Lenders that prior
to the termination of this Agreement, the Borrower will not, and will not suffer
or permit any of its Subsidiaries, if any, to, do any of the following:
A. INDEBTEDNESS. Create, incur, suffer or permit to exist, or assume or
guarantee, directly or indirectly, or become or remain liable with respect to
any Indebtedness, whether direct, indirect, absolute, contingent, or otherwise,
EXCEPT the following:
1. Indebtedness to the Lenders and the Agent pursuant hereto;
2. Indebtedness secured by Liens permitted by SECTION 7.2 hereof;
3. Purchase money Indebtedness (including the amount of any Capital
Lease Obligations required to be capitalized and included as a liability on the
consolidated balance sheet of the Borrower and its Subsidiaries) incurred to
finance Capital Expenditures (to the extent permitted by SECTION 7.12 hereof) in
an amount not to exceed (i) $4,000,000 in the aggregate per fiscal year and (ii)
$10,000,000 in the aggregate at any time outstanding;
4. Subordinated Indebtedness, with no renewals, extensions,
modifications or increases thereof being permitted, unless the same constitutes
Refinancing Indebtedness;
5. other liabilities existing on the date of this Agreement and set
forth on SCHEDULE 5.16 attached hereto, with no renewals, extensions,
modifications or increases thereof being permitted, unless the same constitutes
Refinancing Indebtedness;
6. current accounts payable and unsecured current liabilities
(including current accrued expenses), not the result of borrowings, to vendors,
suppliers and persons providing services, for expenditures on ordinary trade
terms for goods and services normally required by the Borrower or any of its
Subsidiaries in the ordinary course of its business;
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7. Indebtedness of any Guarantor to the Borrower or to any other
Guarantor, or the Indebtedness of the Borrower to any Guarantor;
8. current and deferred taxes and other assessments and governmental
charges (to the extent permitted by SECTION 7.2(e) hereof);
9. other long-term liabilities of the Borrower or any of its
Subsidiaries, not the result of borrowings and arising in the ordinary course of
business, so long as such other long-term liabilities do not exceed $500,000 in
the aggregate at any time outstanding;
10. liabilities and obligations under agreements or arrangements
designed to protect the Borrower and the Guarantors against fluctuations in
interest rates accruing under the credit facility governed by this Agreement,
including without limitation, interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements;
11. Indebtedness of any Person (or any of such Person's Subsidiaries)
existing at the time such Person becomes a Subsidiary of the Borrower or any of
the Borrower's Subsidiaries (or is merged into or consolidated with the Borrower
or any of its Subsidiaries), but only to the extent that such Indebtedness was
not incurred in connection with, as a result of or in contemplation of such
Person becoming a Subsidiary of the Borrower or any of the Borrower's
Subsidiaries (or being merged into or consolidated with the Borrower or any of
its Subsidiaries); PROVIDED, HOWEVER, that (1) in no event shall the aggregate
amount of such Indebtedness outstanding at any time exceed $5,000,000, and (2)
immediately after such acquired Person becomes a Subsidiary (or is merged into
or consolidated with the Borrower or any of its Subsidiaries), no Default or
Event of Default has occurred; and
12. Refinancing Indebtedness, to the extent the same relates to any
Indebtedness permitted by SECTIONS 7.1(c) through (e) or SECTION 7.1(k) hereof.
THE BORROWER, THE AGENT, THE LENDERS AND EACH GUARANTOR (BY ITS EXECUTION
OF A GUARANTY OR A JOINDER AGREEMENT) AGREE THAT, NOTWITHSTANDING ANYTHING
CONTAINED IN SECTIONS 7.1(g) OR IN ANY OTHER PROVISION CONTAINED IN THIS
AGREEMENT WHICH MAY APPEAR TO BE TO THE CONTRARY, ANY AND ALL INDEBTEDNESS
PERMITTED BY SECTIONS 7.1(g) HEREOF (TOGETHER WITH ANY AND ALL LIENS FROM TIME
TO TIME SECURING THE SAME AS PERMITTED BY SECTION 7.2(i) HEREOF) IS HEREBY MADE
AND AT ALL TIMES HEREAFTER SHALL BE INFERIOR AND SUBORDINATE IN ALL RESPECTS TO
THE OBLIGATIONS FROM TIME TO TIME OWING TO THE AGENT OR ANY LENDER PURSUANT
HERETO AND TO ANY LIEN AGAINST ANY COLLATERAL FROM TIME TO TIME NOW OR HEREAFTER
SECURING ANY OF SUCH OBLIGATIONS PURSUANT TO THE TERMS HEREOF AND THE SECURITY
DOCUMENTS. ADDITIONALLY, THE BORROWER, THE AGENT AND THE LENDERS AGREE THAT,
NOTWITHSTANDING ANYTHING CONTAINED IN ANY PROVISION OF THIS AGREEMENT, ANY AND
ALL CONTRACTUAL, STATUTORY OR CONSTITUTIONAL LIENS WHICH MAY NOW OR HEREAFTER
HELD BY THE BORROWER AGAINST ANY PROPERTY OF ANY OF THE BORROWER'S SUBSIDIARIES
AS A RESULT OF ANY INTERCOMPANY LEASE OR SUBLEASE BY THE BORROWER TO ANY OF ITS
SUBSIDIARIES OF ANY REAL PROPERTY OWNED OR LEASED BY THE BORROWER ARE, AND AT
ALL TIMES HEREAFTER SHALL BE, INFERIOR AND SUBORDINATE IN ALL RESPECTS TO ANY
LIEN NOW OR HEREAFTER HELD BY THE AGENT, FOR THE RATABLE BENEFIT OF THE LENDERS,
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AGAINST ANY COLLATERAL AS SECURITY FOR ANY OF THE OBLIGATIONS PURSUANT TO THE
TERMS HEREOF AND THE SECURITY DOCUMENTS. THE BORROWER AGREES TO EXECUTE AND
DELIVER ON ITS OWN BEHALF, AND TO CAUSE TO BE EXECUTED AND DELIVERED BY AND ON
BEHALF OF THE GUARANTORS, ANY AND ALL SUBORDINATION AGREEMENTS, IN FORM AND
CONTENT REASONABLY ACCEPTABLE TO THE AGENT, WHICH THE AGENT MAY HEREAFTER
REQUIRE TO FURTHER EVIDENCE THE SUBORDINATION OF THE INDEBTEDNESS PERMITTED BY
SECTION 7.1(g) ABOVE, THE LIENS PERMITTED BY SECTION 7.2(i) AND ANY SUCH
CONTRACTUAL, STATUTORY OR CONSTITUTIONAL LANDLORD'S LIENS HELD BY THE BORROWER.
B. LIENS. Create or suffer to exist any Lien upon any of its Property
(including without limitation, real property assets) now owned or hereafter
acquired, or acquire any Property upon any conditional sale or other title
retention device or arrangement or any purchase money security agreement;
PROVIDED, HOWEVER, that the Borrower and its Subsidiaries (or any of them) may
create or suffer to exist:
1. Liens in effect on the date hereof and which are described on
SCHEDULE 7.2 attached hereto, PROVIDED, that the Property covered thereby does
not increase in quantity and such Liens may not be renewed and extended, unless
the same relate to Refinancing Indebtedness permitted by SECTION 7.1(e) above;
2. Liens in favor of the Agent for the ratable benefit of the
Lenders;
3. Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, old-age pensions and other social security benefits (not including
any lien described in Section 412(m) of the Code);
4. Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens and other similar liens, incurred
in good faith in the ordinary course of business and securing obligations which
are not overdue for a period of more than 15 days or which are being contested
in good faith by appropriate proceedings as to which the Borrower or any of its
Subsidiaries, as the case may be, shall, to the extent required by GAAP,
consistently applied, have set aside on its books adequate reserves;
5. Liens securing the payment of taxes, assessments and governmental
charges or levies, that are not delinquent, are permitted by SECTION 6.2 hereof
or are being diligently contested in good faith by appropriate proceedings and
as to which adequate reserves have been established in accordance with GAAP;
PROVIDED, HOWEVER, that in no event shall the aggregate amount of taxes,
assessments and governmental charges or levies which are either permitted by
SECTION 6.2 hereof or are being contested at any time exceed $400,000 and that
in no event shall the aggregate amount of such reserves be less than the
aggregate amount secured by such Liens;
6. Zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of property
or minor irregularities of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created, assumed
or permitted to exist and arising by, through or under a landlord or owner of
the leased property, with or without consent of the lessee) which do not in the
aggregate
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materially detract from the value of its property or assets or materially
impair the use thereof in the operation of its business;
7. Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety, customs and appeal bonds and other obligations of like
nature, incurred as an incident to and in the ordinary course of business;
8. Purchase money Liens securing the Indebtedness permitted by
SECTION 7.1(c) above, PROVIDED, as a result of the creation of any such Lien,
(i) no Default or Event of Default shall have occurred, (ii) the principal
amount of such Lien does not exceed 100% of the purchase price; of the asset
acquired with such permitted Indebtedness plus accrued interest on such
Indebtedness plus protective advances made by the holder of such permitted
Indebtedness, and (iii) such Lien shall not apply to any other Property other
than the asset acquired with such purchase money Indebtedness;
9. Liens in favor of the Borrower or any Guarantor securing any
Indebtedness permitted pursuant to SECTIONS 7.1(g) hereof; and
10. Liens on fixed assets of a Person existing at the time such
Person becomes a Subsidiary of the Borrower or any of the Borrower's
Subsidiaries (or such Person is merged into or consolidated with the Borrower
or any of its Subsidiaries) in accordance with the provisions of SECTION
7.4(f)(3) hereof; PROVIDED, HOWEVER, that such Liens (1) only secure the
Indebtedness permitted by SECTION 7.1(k) above, (2) were in existence prior
to such acquired Person becoming a Subsidiary of the Borrower or any of the
Borrower's Subsidiaries (or prior to the contemplation of such merger or
consolidation), and (3) do not cover any Property other than the Property of
such acquired Person which is subject to such Liens prior to such acquired
Person becoming a Subsidiary of the Borrower or any of the Borrower's
Subsidiaries (or prior to the contemplation of such merger or consolidation).
PROVIDED, HOWEVER, notwithstanding anything contained above in this SECTION 7.2
to the contrary, if any of the permitted Liens are of the type that are being
contested in good faith by appropriate proceedings as to the Borrower or any of
its Subsidiaries, the Indebtedness giving, rise to such contested Lien(s) must
be immediately paid upon commencement of any foreclosure process or proceeding
with respect to such Lien(s) unless the same shall be effectively stayed or a
surety bond with respect thereto (which is satisfactory in all respects to the
Agent), is posted.
C. CONTINGENT LIABILITIES. Create, incur, suffer or permit to exist,
directly or indirectly, any Contingent Obligations, other than (a) the
Obligations of each Guarantor to the Agent and the Lenders under the terms of
any Guaranty and (b) the guarantees by any Subsidiary of the Borrower of the
Senior Subordinated Debt.
D. MERGERS, CONSOLIDATIONS AND DISPOSITIONS AND ACQUISITIONS OF ASSETS.
In any single transaction or series of related transactions, directly or
indirectly:
1. Wind up its affairs, liquidate or dissolve;
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2. Be a party to any merger or consolidation;
3. Sell, convey, lease, transfer or otherwise dispose of all or any
portion of the assets (except for the sale of inventory and other assets in the
ordinary course of business for fair and adequate consideration) of the
Borrower and/or its Subsidiaries, or agree to take any such action;
4. Sell, assign, pledge, transfer or otherwise dispose of, or in any
way part with control of, any Stock of any of its Subsidiaries or any
Indebtedness or obligations of any character of any of its Subsidiaries, or
permit any such Subsidiary to do so with respect to any Stock of any other
Subsidiary or any Indebtedness or obligations of any character of the Borrower
or any of its Subsidiaries, or permit any of its Subsidiaries to issue any
additional Stock other than to the Borrower;
5. Take any board of director or shareholder action with a view
toward dissolution, liquidation or termination; or
6. Purchase or otherwise acquire, directly or indirectly, in a
single transaction or a series of related transactions, all or a substantial
portion of the assets of any Person or any shares of Stock of, or similar
interest in, any Person;
PROVIDED, HOWEVER that:
a. any Subsidiary of the Borrower may merge or consolidate with
the Borrower or any other domestic Subsidiary of the Borrower, PROVIDED,
that if one or more of the entities so merging or consolidating was a
Guarantor, if the surviving entity is not the Borrower or is not yet a
Guarantor, such surviving entity shall simultaneously with such merger,
execute and deliver to the Agent a Joinder Agreement, together with all
requested Security Documents, as required at such time by the Agent,
appropriately completed in Proper Form;
b. any of the Borrower's Subsidiaries may sell, lease, transfer
or otherwise dispose of any of its assets to the Borrower or any other
domestic Subsidiary of the Borrower, PROVIDED, that if the entity selling,
leasing, transferring or otherwise disposing of its assets is a Guarantor,
if the entity to whom the sale, lease, transfer or disposition was made is
not the Borrower or is not yet a Guarantor, such entity shall
simultaneously with such lease, transfer or disposition, execute and
deliver to the Agent a Joinder Agreement, together with all requested
Security Documents, as required at such time by the Agent, appropriately
completed in Proper Form;
c. the Borrower or any of its Subsidiaries may merge into or
consolidate with, or acquire all or a substantial portion of the assets of,
or the shares of Stock in, any Person, PROVIDED, that (u) with respect to
any such consolidation or merger, the surviving entity shall be the
Borrower or a Guarantor, (v) if the pro-forma testing of the Leverage Ratio
discussed below in this subparagraph for the applicable acquisition,
consolidation or merger results in a Leverage Ratio exceeding 5.00 to 1.00
(but not
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exceeding of 5.50 to 1.00) at any time during the applicable four
(4) consecutive fiscal quarters of the Borrower, the aggregate amount of
all Loans outstanding hereunder for the purpose of funding any such
acquisitions, mergers or consolidations shall not exceed $10,000,000 (after
giving effect to the applicable acquisition, consolidation or merger), (w)
if the pro-forma testing of the Leverage Ratio discussed below in this
subparagraph for the applicable acquisition, consolidation or merger does
not result in a Leverage Ratio exceeding 5.00 to 1.00 at any time during
the applicable four (4) consecutive fiscal quarters of the Borrower, the
aggregate amount of all Loans outstanding hereunder for the purpose of
funding any such acquisitions, mergers or consolidations shall not exceed
$20,000,000 (after giving effect to the applicable acquisition,
consolidation or merger), (x) after giving effect to the applicable
acquisition, consolidation or merger and any Indebtedness incurred to
finance such acquisition, consolidation or merger, no Default or Event of
Default shall have occurred hereunder, (y) assuming that the applicable
acquisition, consolidation or merger, and any additional Indebtedness
incurred to finance the same had been consummated and incurred at the
beginning of the four (4) most recent consecutive fiscal quarters of the
Borrower ending on or immediately prior to the applicable date of such
acquisition, consolidation or merger, the Borrower shall be in pro-forma
compliance with the financial covenant provisions of SECTIONS 7.13 and 7.14
hereof for such four (4) consecutive fiscal quarters, (z) the aggregate
amount of each Lender's Current Sum outstanding after giving effect to the
applicable acquisition, merger or consolidation shall not exceed
$20,000,000, and (aa) the Borrowing Base immediately after the consummation
of the applicable acquisition, merger or consolidation LESS the aggregate
amount of each Lender's Current Sum outstanding after giving effect to such
acquisition, merger or consolidation shall not be less than $7,500,000;
d. the Borrower and its Subsidiaries may sell, convey, lease,
transfer or otherwise dispose of (x) up to $500,000 in the aggregate (based
upon the higher of cost or market value) of non-Collateral assets outside
of the ordinary course of business in any fiscal year of the Borrower
(including any casualty loss of assets, whether or not such assets are
Collateral, for which insurance proceeds attributable to such casualty loss
are NOT utilized for restoration or replacement of such assets) without
being obligated to apply any of the net proceeds realized from any such
sale or other disposition (including any insurance proceeds attributable to
the applicable casualty loss) against the Obligations or for purposes of
reducing the Total Commitment, and (y) any non-Collateral fixed assets in
excess of such $500,000 threshold amount outside of the ordinary course of
business, so long as the net proceeds realized from any such sale or other
disposition of such fixed assets are applied as follows: (i) first, to
prepay the Loans, to the extent that Loans are then outstanding hereunder;
(ii) second, to the payment of any other accrued and unpaid Obligations,
(iii) third, to cash collateralize the aggregate Letter of Credit Exposure
Amounts then outstanding, on terms and pursuant to documents and agreements
satisfactory in all respects to the Agent; and (iv) finally, to reduce the
Total Commitment by the amount of any remaining net proceeds not utilized
for the purposes set forth in clauses (i), (ii) and (iii) above. If any
non-cash proceeds are received by the Borrower or any of its Subsidiaries
as a result of any such sale, conveyance, lease, transfer or other
disposition of any fixed assets, such non-cash proceeds shall be promptly
pledged as additional Collateral for the Obligations upon terms and
conditions reasonably acceptable
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in all respects to the Agent, so as to create in the Agent's favor, for
the ratable benefit of the Lenders, a first priority Lien on such
additional Collateral; and
e. any Dormant Subsidiary may wind up its affairs, liquidate or
dissolve at any time prior to either (x) the commencement of any material
business operations or activities by such Dormant Subsidiary or (y) the
acquisition of any asset or assets other than those assets held by such
Dormant Subsidiary as of the Closing Date.
E. NATURE OF BUSINESS. Materially change the nature of its business from
manufacturing building products or enter into any business which is
substantially different from the business in which it is engaged as of the
Closing Date.
F. TRANSACTIONS WITH RELATED PARTIES.
1. Except for any Permitted Affiliate Transactions, enter into any
other transaction, contract or agreement of any kind with any Affiliate, officer
or director of the Borrower or any of its Subsidiaries, unless (i) such
transaction, contract or agreement is made upon terms and conditions not less
favorable to such Person than those which could have been obtained from wholly
independent and unrelated sources, (ii) if such transaction, contract or
agreement (or series of related transactions, contracts or agreements) involves
aggregate payments or other consideration having a fair market value in excess
of $1,000,000, such transaction, contract or agreement (or series of related
transactions, contracts or agreements) is in writing and a majority of the
disinterested members of the Board of Directors of the Borrower shall have
approved such transaction, contract or agreement (or series of related
transactions, contracts or agreements) and determined that the same comply with
the provisions of clause (i) above, and (iii) if such transaction, contract or
agreement (or series of related transactions, contracts or agreements) involves
aggregate payments or other consideration having a fair market value in excess
of $5,000,000, in addition to the requirements of clauses (i) or (ii) above, the
Agent is furnished with a written opinion from an Independent Financial Advisor
stating that the terms of such transaction, contract or agreement (or series of
related transactions, contracts or agreements) are fair, from a financial point
of view to the Borrower or the applicable Subsidiary of the Borrower involved in
such transaction, contract or agreement (or series of related transactions,
contracts or agreements), as the case may be.
2. Except as otherwise permitted pursuant to any Permitted Affiliate
Transactions, the Borrower will not permit the compensation paid by the Borrower
or any of its Subsidiaries to any officer, stockholder, director, partner or
proprietor of the Borrower or any of its Subsidiaries to be excessive, based on
the reasonable discretion of the Agent, taking into consideration the financial
circumstances of the Borrower or the applicable Subsidiary and the position and
qualifications of such Person.
3. The Borrower shall not permit any officer or director of the
Borrower or any of its Subsidiaries to acquire or otherwise usurp any corporate
opportunity rightfully belonging to the Borrower or such Subsidiary in any
manner which would constitute a breach of such officer's or director's duty of
loyalty to the Borrower or such Subsidiary; PROVIDED, HOWEVER, that if any
director independently learns of any corporate opportunity from a source
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separate from any employee or officer of the Borrower or any of its
Subsidiaries, such director shall be entitled to independently pursue such
opportunity without involvement of the Borrower or any of its Subsidiaries,
so long as such independent actions by such director and its Affiliates in
connection with such independent opportunity do not result in direct
competition to the Borrower or any of its Subsidiaries.
G. INVESTMENTS, LOANS. Make, directly or indirectly, any loan or advance
to or have any Investment in any Person, or make any commitment to make such
loan, advance or Investment, except:
1. Stock of any Subsidiary created or acquired after the Closing
Date in accordance with the other provisions of this Agreement, including
without limitation, the provisions of SECTIONS 6.10 and 7.4(f)(3) above, or with
the prior written consent of the Agent;
2. Permitted Investment Securities;
3. loans otherwise permitted by the provisions of SECTION 7.1(g)
above;
4. loans to account debtors of the Borrower or any of its
Subsidiaries (other than normal and customary extensions of trade credit), so
long as (1) the aggregate amount of such loans by the Borrower and its
Subsidiaries does not exceed $750,000 in the aggregate at any time, and (2) the
Borrower promptly causes the promissory notes or other instruments evidencing
such loans to be properly endorsed and delivered to the Agent in accordance with
the provisions of the applicable Security Agreements; and
5. the existing investment by the Borrower in ATEMCO as of the
Closing Date, together with any additional investment by the Borrower in ATEMCO
required pursuant to the ATEMCO Joint Venture Agreement not to exceed the
Borrower's pro-rata share of capital contributions based on its ownership
interest in ATEMCO as of the Closing Date and in any event not to exceed
$100,000 in any fiscal year of the Borrower (provided that all other holders of
ownership interests in ATEMCO are also simultaneously making investments in
ATEMCO pursuant to the ATEMCO Joint Venture Agreement in accordance with their
pro-rata share of required capital contributions based on their respective
ownership interests in ATEMCO).
H. ERISA COMPLIANCE.
1. At any the engage in any "prohibited transaction" as defined in
ERISA; or permit any Plan to be terminated in a manner which could result in the
imposition of a Lien on any Property of the Borrower or any of its Subsidiaries
pursuant to ERISA.
2. Engage in any transaction in connection with which the Borrower
or any Subsidiary thereof could be subject to either a material civil penalty
assessed pursuant to the provisions of Section 502 of ERISA or a material tax
imposed under the provisions of Section 4975 of the Code.
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3. Terminate any Plan in a "distress termination" under Section 4041
of ERISA, or take any other action which could result in a material liability of
the Borrower or any Subsidiary thereof to the PBGC.
4. Fail to make payment when due of all amounts which, under the
provisions of any Plan, the Borrower or any Subsidiary thereof is required to
pay as contributions thereto, or, with respect to any Plan, permit to exist any
material "accumulated funding deficiency" (within the meaning of Section 302 of
ERISA and Section 412 of the Code), whether or not waived, with respect thereto.
5. Adopt an amendment to any Plan requiring the provision of
security under Section 307 of ERISA or Section 401(a)(29) of the Code.
I. CREDIT EXTENSIONS. Extend credit other than (a) normal and prudent
extensions of credit to customers for goods and services in the ordinary course
of business and (b) loans otherwise permitted by the provisions of SECTIONS
7.1(g) or SECTION 7.7 above.
J. CHANGE IN ACCOUNTING METHOD. Make or permit any change in accounting
method or financial reporting practices except as may be required by GAAP, as in
effect from time to time.
K. REDEMPTION, DIVIDENDS, DISTRIBUTIONS AND PAYMENTS. Except as
otherwise permitted pursuant to any applicable Restricted Payment Exceptions, at
any time:
1. Redeem, purchase, retire or otherwise acquire, directly or
indirectly, any shares of its Stock or set aside any amount for such purpose;
2. Declare or pay, directly or indirectly, (i) any dividend, except
dividends paid to the Borrower or any Guarantor which is a direct parent of the
Subsidiary paying a dividend, or (ii) any management or consulting fees, except
(1) management or consulting fees paid to the Borrower or any Guarantor or (2)
consulting fees paid pursuant to the George Group Consulting Agreement;
3. Make any other distribution of any Property, cash, securities or
a combination thereof, with respect to (whether by reduction of capital or
otherwise) any shares of its Stock; or
4. Redeem, purchase, defease or retire for value, or make any
principal payment on, any Subordinated Indebtedness (including without
limitation, any Senior Subordinated Debt), prior to the date of any scheduled
maturity, scheduled repayment or scheduled sinking fund payment thereon.
L. CAPITAL EXPENDITURES. Permit the amount of payments made by the
Borrower and its Subsidiaries, on a Consolidated basis, for Capital
Expenditures, including those in respect of Capital Lease Obligations and
Indebtedness permitted under SECTION 7.1(c) above, to exceed
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$6,000,000 in the aggregate in any fiscal year or $24,000,000 in the
aggregate after the Closing Date.
M. INTEREST COVERAGE RATING. Permit the Interest Coverage Ratio of the
Borrower and its Subsidiaries, on a Consolidated basis, to be less than the
respective amounts set forth below as of the end of any fiscal quarter included
in each of the following fiscal years:
Fiscal Year Ratio
----------- -----
1998 1.25x
1999 1.25x
2000 1.75x
2001 1.75x
2002 1.75x
N. LEVERAGE RATIO. Permit the Leverage Ratio of the Borrower and its
Subsidiaries, on a Consolidated basis, to be greater than the respective amount
set forth below as of the end of any fiscal quarter included in each of the
following fiscal years:
Fiscal Year Ratio
----------- -----
1998 (initial two fiscal quarters) 5.50x
1998 (last two fiscal quarters) 5.00x
1999 5.00x
2000 4.75x
2001 4.50x
2002 4.25x
O. SALE OF RECEIVABLES. Sell, assign, discount, transfer or otherwise
dispose of any Receivables, promissory notes, drafts or trade acceptances or
other rights to receive payment held by it, with or without recourse; PROVIDED,
HOWEVER, that the Borrower or any of its Subsidiaries may sell, assign,
discount, transfer or otherwise dispose of any Receivables which do not
constitute Eligible Receivables, so long as (a) such sale or other disposition
is upon reasonably prudent business terms or otherwise constitutes a Permitted
Affiliate Sale of Receivables, (b) no Default or Event of Default shall have
occurred which has not been cured to the reasonable satisfaction of the Agent or
which has not been waived in writing by the Agent and the Required Lenders, and
(c) all net proceeds received from any such disposition shall be applied against
the Obligations and Total Commitment in the same manner as set forth in SECTION
7.4(f)(4) above.
P. SALE AND LEASE-BACK TRANSACTIONS. Enter into any arrangement,
directly or indirectly, with any Person whereby the Borrower or any of its
Subsidiaries shall sell or transfer any Property, real or personal, which is
used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such Property or other Property which the Borrower or
such Subsidiary intends to use for substantially the same purpose or purposes as
the Property being sold or transferred, unless the cash consideration received
by the Borrower or such Subsidiary from such sale or transfer is promptly
utilized to prepay the Loans and the Total
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Commitment is permanently reduced by the Borrower at such the by an amount
equal to such cash consideration received by the Borrower or such Subsidiary.
Q. CHANGE OF NAME OR PLACE OF BUSINESS. Permit the Borrower or any of
its Subsidiaries to change its address, name, location of its chief executive
office or principal place of business or the place it keeps its books and
records, unless the Borrower has (a) notified the Agent of such change in
writing at least thirty (30) days before the effective date of such change, (b)
taken such action, reasonably satisfactory to the Agent and the Lenders, to have
caused the Liens against all Collateral in favor of the Agent for the ratable
benefit of the Lenders to be at all times fully perfected and in full force and
effect and (c) delivered such certificates of Governmental Authorities as the
Agent may require substantiating such name change.
R. AVAILABILITY. Allow Availability to be less than zero at any time.
S. STATUS OF RBPI HOLDING CORPORATION. Permit the status of RBPI Holding
Corporation to change from that of a passive holding company created for the
sole purpose of holding and owing all of all the issued and outstanding Stock of
the Borrower.
T. MODIFICATION OR WAIVER OF SUBORDINATED INDEBTEDNESS. Request, join in
or otherwise consent to any modification or waiver of any material term of any
document evidencing or governing any Subordinated Indebtedness, except as
otherwise permitted in connection with any Refinancing Indebtedness.
VIII. EVENTS OF DEFAULT AND REMEDIES.
A. EVENTS OF DEFAULT. If any of the following events shall occur and be
continuing, then the Agent may (and, if directed by the Required Lenders,
shall), by written notice (or facsimile notice promptly confirmed in writing) to
the Borrower, take any or all of the following actions at the same or different
times: (1) accelerate the Maturity Date and declare the Notes, all Letter of
Credit Advances, the Commitment Fees and all other Obligations then outstanding
to be, and thereupon the Notes, said Letter of Credit Advances, the Commitment
Fees and all other Obligations then outstanding to be, and thereupon the Notes,
said Letter of Credit Advances, the Commitment Fees and all other Obligations
shall forthwith become, immediately due and payable, without further notice of
any kind, notice of intention to accelerate, presentment and demand or protest,
or other notice of any kind all of which are hereby expressly WAIVED by the
Borrower; (2) terminate all or any portion of the Commitments and any obligation
to issue any additional Letters of Credit; (3) demand that the Borrower and the
Guarantors provide the Agent, for the ratable benefit of the Lenders, and the
Borrower and the Guarantors jointly and severally agree upon such demand to,
provide cash collateral in an amount equal to the aggregate Letter of Credit
Exposure Amount then outstanding, on terms and pursuant to documents in
agreement and satisfactory in all respects to the Agent; and (4) exercise any
and all other rights pursuant to the Loan Documents:
1. The Borrower shall fail to pay or prepay any principal of or
interest on any Note, any Application, the Commitment Fees or any other
Obligation hereunder as and when due and payable, whether at the due date
thereof (by acceleration, lapse of time or otherwise) or at
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any date fixed for prepayment thereof in accordance with the other provisions
of this Agreement; or
2. The Borrower or any of its Subsidiaries (i) shall fail to pay at
maturity, or within any applicable period of grace, any of the Senior
Subordinated Debt or any other Indebtedness (excluding Indebtedness outstanding
hereunder) in excess of $500,000 in principal amount unless such payment is
being contested in good faith (by appropriate proceedings) and adequate reserves
have been provided therefor, or (ii) shall default in any other manner with
respect to any of the Senior Subordinated Debt or any other Indebtedness
(excluding Indebtedness outstanding hereunder) in excess of $500,000 in
principal amount if the effect of any such default or event of default shall be
to accelerate or to permit the holder of any such Indebtedness, at its option,
to accelerate the maturity of such Indebtedness prior to the stated maturity
thereof; or
3. Any representation or warranty made or deemed made in connection
with any Loan Document shall prove to have been incorrect, false or misleading
in any material respect when made or deemed to have been made; or
4. Except as provided in SECTION 8.1(e) below, Default shall occur
in the punctual and complete performance or observance of any covenant,
condition or agreement to be observed or performed on the part of the Borrower
or any of its Subsidiaries pursuant to the terms of any provision of this
Agreement or any other Loan Document, and such Default remains uncured five (5)
Business Days after the earlier to occur of (1) the Agent giving written notice
of such Default to the Borrower or (2) any Responsible Officer of the Borrower
or any of its Subsidiaries required actual knowledge of the existence of such
Default; or
5. Default shall occur in the punctual and complete performance or
observance of any covenant, condition or agreement to be observed or performed
on the part of the Borrower or any of its Subsidiaries pursuant to the terms of
SECTION 6.2, SECTION 6.3, SECTION 6.8, SECTION 6.9, SECTION 6.11, SECTION 6.12,
SECTIONS 7.1 through 7.9, SECTIONS 7.11 through 7.17 and SECTION 7.20 hereof; or
6. Final judgment or judgments (or any decree or decrees for the
payment of any fine or any penalty) for the payment of an uninsured money award
in excess of $200,000 in the aggregate shall be rendered against the Borrower or
any of its Subsidiaries and the same shall remain undischarged for a period of
thirty (30) days during which execution shall not be effectively stayed or
bonded; or
7. Any order shall be entered in any proceeding against the Borrower
or any of its Subsidiaries decreeing the dissolution, liquidation or split-up
thereof, and such order shall remain in effect for thirty (30) days; or
8. The Borrower or any of its Subsidiaries shall have concealed,
removed, or permitted to be concealed or removed, any part of its Property, with
intent to hinder, delay or defraud its creditors or any of them, or made or
suffered a transfer of any of its Property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or shall have
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made any transfer of its Property to or for the benefit of a creditor at a
time when other creditors similarly situated have not been paid; or
9. A change shall occur in the financial condition, business affairs
or otherwise of the Borrower or any of its Subsidiaries, or in the value of the
Collateral given as security for the Obligations hereunder, which does, or would
or could reasonably be expected to, have a Material Adverse Effect; or
10. Any of the following shall occur: (1) a Reportable Event shall
have occurred with respect to a Plan; (2) the filing by the Borrower, any ERISA
Affiliate, or an administrator of any Plan of a notice of intent to terminate
such Plan in a "distressed termination" under the provisions of Section 4041 of
ERISA; (3) the receipt of notice by the Borrower, any ERISA Affiliate or an
administrator of a Plan that the PBGC has instituted proceedings to terminate
(or appoint a trustee to administer) such a Plan; (4) any other event or
condition exists which might, in the opinion of the Agent, constitute grounds
under the provisions of Section 4042 of ERISA for the termination of or the
appointment of a trustee to administer any Plan by the PBGC; (5) a Plan shall
fail to maintain a minimum funding standard required by Section 412 of the Code
for any plan year or a waiver of standard is sought or granted under the
provisions of Section 412(d) of the Code; (6) the Borrower or any ERISA
Affiliate has incurred, or is likely to incur, a liability under the provisions
of Section 4062, 4063, 4064 or 4201 of ERISA; (7) the Borrower or any ERISA
Affiliate fails to pay the full amount of an installment required under Section
412(m) of the Code; or (8) the occurrence of any other event or condition with
respect to any Plan which would constitute an event of default or default under
any other agreement entered into by the Borrower or any ERISA Affiliate; or
11. One or more notices of Liens arising from unpaid federal, state
or local taxes exceeding $400,000 in the aggregate shall be filed against any of
the Properties or assets of the Borrower or any of its Subsidiaries, PROVIDED,
HOWEVER, that a reserve against the Borrowing Base will be established in an
amount equal to the amount of any and all federal, state or local taxes less
than such $400,000 aggregate threshold which are claimed to be owing under any
such notices of Liens; or
12. This Agreement, any Note, any of the Security Documents or any
other Loan Documents shall for any reason cease to be, or shall be asserted by
the Borrower or any Guarantor, not to be, a legal, valid and binding obligation
of the Borrower or such Guarantors, as applicable, enforceable in accordance
with its terms, or the Lien purported to be created by any of the Security
Documents shall for any reason cease to be, or be asserted by the Borrower or
any Guarantor, as applicable not to be, a valid, first priority perfected Lien
against any Collateral (except to the extent otherwise permitted under this
Agreement or any of the Security Documents); or
13. The Borrower or any of its Subsidiaries which is a party to the
Lockbox Agreement fails to perform and observe, and/or cause to be performed and
observed, all covenants, provisions and conditions to be performed, discharged
and observed by the Borrower or any such Subsidiary under the terms of the
Lockbox Agreements; or
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14. A Change of Control shall occur.
In addition, if any of the following events shall occur, then the Notes, the
Letter of Credit Advances, the Commitment Fees and all other Obligations then
outstanding and payable hereunder shall automatically, without demand,
presentment, protest, notice of intent to accelerate, notice of acceleration or
other notice to any Person of any kind, all of which are hereby expressly WAIVED
by the Borrower, become immediately due and payable and all Commitments and
further obligation to issue any additional Letters of Credit shall be
immediately and automatically terminated.
15. The Borrower or any of its Subsidiaries shall make a general
assignment for the benefit of creditors or shall petition or apply to any
tribunal for the appointment of a trustee, custodian, receiver or liquidator of
all or any substantial part of its business, estate or assets or shall commence
any proceeding under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect; or
16. Any such petition or application shall be filed or any such
proceeding shall be commenced against the Borrower or any of its Subsidiaries
and the Borrower or such Subsidiary by any act or omission shall indicate
approval thereof, consent thereto or acquiescence therein, or an order shall be
entered appointing a trustee, custodian, receiver or liquidator of all or any
substantial part of the assets of the Borrower or any of its Subsidiaries or
granting relief to the Borrower or any of its Subsidiaries or approving the
petition in any such proceeding, and such order shall remain in effect for more
than sixty (60) days; or
17. The Borrower or any of its Subsidiaries shall admit in writing
its inability to pay its debts as they become due or fail generally to pay its
debts as they become due; or
18. The Borrower or any of its Subsidiaries shall suffer any writ of
attachment or execution or any similar process to be issued or levied against it
or any substantial part of its Property which is not released, stayed, bonded or
vacated within sixty (60) days after its issue or levy.
B. REMEDIES CUMULATIVE. No remedy, right or power conferred upon the
Agent or any Lender is intended to be exclusive of any other remedy, right or
power given hereunder or now or hereafter existing at law, in equity, or
otherwise, and all such remedies, rights and powers shall be cumulative.
IX. THE AGENT.
A. APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby irrevocably
appoints and authorizes the Agent to act as its agent hereunder and under the
Letters of Credit and the other Loan Documents with such powers as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental thereto. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under the
Letters of Credit which the Agent has issued with such powers as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental
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thereto. The Agent (which such term as used in this SECTION 9, shall, in
each case, include reference to its Affiliates and its own and its
Affiliates' officers, directors, employees' and agents) (a) shall not have
duties or responsibilities except those expressly set forth in this
Agreement, the Letters of Credit and the other Loan Documents, and shall not
by reason of this Agreement or any other Loan Document be a trustee for any
Lender; (b) shall not be responsible to any Lender for any recitals,
statements, representations or warranties contained in this Agreement, the
Letters of Credit or any other Loan Document, or in any certificate or other
document referred to or provided for in, or received by any of them under,
this Agreement, the Letters of Credit or any other Loan Document, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, the Letters of Credit or any other Loan Document or any other
certificate or document referred to or provided for herein or therein or any
property covered thereby or for any failure by any Party or any other Person
(other than the Agent) to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation
or collection proceedings hereunder or under the Letters of Credit or any
other Loan Document except to the extent requested by the Required Lenders,
and (d) shall not be responsible for any action taken or omitted to be taken
by it hereunder or under the Letters of Credit or any other Loan Document or
any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, INCLUDING PURSUANT TO ITS OWN
NEGLIGENCE, except for its own gross negligence or willful misconduct. The
Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by them with reasonable care. Without in any way limiting any of
the foregoing, each Lender acknowledges that the Agent shall not have any
greater responsibility in the operation of the Letters of Credit than is
specified in the Uniform Customs and Practice for Documentary Credits (1993
Revision, International Chamber of Commerce Publication No. 500 or any
successor publication). In any foreclosure proceeding concerning any
collateral for the Notes, each holder of a Note if bidding for its own
account or for its own account and the accounts of other Lenders is
prohibited from including in the amount of its bid an amount to be applied as
a credit against its Note or the Notes of the other Lenders, instead such
holder must bid in cash only. However, in any such foreclosure proceeding,
the Agent may (but shall not be obligated to) submit a bid for all Lenders
(including itself) in the form of a credit against the Notes of all of the
Lenders, and the Agent or its designee may (but shall not be obligated to),
with the consent of the Required Lenders, accept title to such collateral for
and on behalf of all Lenders.
B. RELIANCE. The Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel (which may be counsel for the Borrower),
independent accountants and other experts selected by the Agent. As to any
matters not expressly provided for by this Agreement, the Letters of Credit or
any other Loan Document, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder and thereunder in accordance
with instructions of the Required Lenders, and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders.
C. DEFAULTS. The Agent shall not be deemed to have knowledge of the
occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on Loans,
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non-payment of reimbursements of Letters of Credit Advances, or nonpayment of
Commitment Fees or Letter of Credit fees payable hereunder or under any other
Loan Documents) unless it has received notice from a Lender or the Borrower
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default. " In the event that the Agent receives such a notice of
the occurrence of a Default or Event of Default, the Agent shall give prompt
notice thereof to the Lenders (and shall give each Lender prompt notice of
each such non-payment). The Agent shall (subject to SECTION 9.7 hereof) take
such action with respect to such Default or Event of Default as shall be
directed by the Required Lenders and within its rights under the Loan
Documents and at law or in equity, PROVIDED that, unless and until the Agent
shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, permitted
hereby with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders and within its rights under
the Loan Documents, at law or in equity.
D. RIGHTS AS A LENDER. With respect to its Commitment, the Loans and any
Letter of Credit Exposure Amount, the Agent in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
includes the Agent in its individual capacity. The Agent may (without having to
account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust, letter of credit, agency or
other business with the Borrower (and any of its Affiliates) as if it were not
acting as the Agent, and the Agent may accept fees and other consideration from
the Borrower (in addition to the fees heretofore agreed to between the Borrower
and the Agent) for services in connection with this Agreement or otherwise
without having to account for the same to the Lenders.
E. INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY THE AGENT (TO THE
EXTENT NOT REIMBURSED UNDER SECTION 2.10(h), SECTION 10.9 OR SECTION 10.10
HEREOF, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWER UNDER SAID SECTIONS
2.10(h),10.9 AND 10.10), RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE
COMMITMENTS, FOR ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY
KIND AND NATURE WHATSOEVER (INCLUDING THE CONSEQUENCES OF THE NEGLIGENCE OF SUCH
INDEMNIFIED PERSON, BUT EXCLUDING THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH INDEMNIFIED PERSON) WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE
LETTERS OF CREDIT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENTS CONTEMPLATED
BY OR REFERRED TO HEREIN OR THEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (INCLUDING THE COSTS AND EXPENSES WHICH THE BORROWER IS OBLIGATED TO PAY
UNDER SECTIONS 2.10(h), 10.9 AND 10.10 HEREOF BUT EXCLUDING, UNLESS A DEFAULT OR
EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, NORMAL ADMINISTRATIVE COSTS AND
EXPENSES INCIDENT TO THE PERFORMANCE OF ITS AGENCY DUTIES HEREUNDER) OR THE
ENFORCEMENT OF ANY OF THE TERMS HEREOF OR THEREOF OR OF ANY SUCH OTHER
DOCUMENTS, INCLUDING THE NEGLIGENCE OF SUCH INDEMNIFIED PERSON, BUT EXCLUDING
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON. THE
OBLIGATIONS OF THE LENDERS UNDER THIS SECTION 9.5 SHALL SURVIVE THE TERMINATION
OF THIS AGREEMENT AND THE REPAYMENT OF THE INDEBTEDNESS ARISING IN CONNECTION
WITH THIS AGREEMENT.
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F. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that it
has received current financial information with respect to the Borrower and the
other Parties and that it has independently and without reliance on the Agent
or any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and the other Parties
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or any of the other Loan Documents. The Agent shall not be required to keep
itself informed as to the performance or observance by any Party of this
Agreement, the Letters of Credit or any of the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Borrower or any Party. Except for notices, reports
and other documents and information expressly required to be furnished to the
Lenders by the Agent, under the Letters of Credit or the other Loan Documents,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the affairs, financial condition or
business of the Borrower or any other Party (or any of their Affiliates) which
may come into the possession of the Agent.
G. FAILURE TO ACT. Except for action expressly required of the Agent
hereunder, under the Letters of Credit and under the other Loan Documents, the
Agent shall in all cases be fully justified in failing or refusing to act
hereunder and thereunder unless it shall receive further assurances to its
satisfaction by the Lenders of their indemnification obligations under SECTION
9.5 hereof against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action.
H. RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Lenders and the Borrower, and the Agent may
be removed at any the with or without cause by the Required Lenders. Upon any
such resignation or removal, the Required Lenders shall have the right to
appoint a successor Agent reasonably acceptable to the Borrower. If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent's giving
of notice of resignation or the Required Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent
reasonably acceptable to the Borrower. Any successor Agent shall be a Lender
which has an office in the United States with a combined capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. Such successor Agent shall promptly specify by notice to
the Borrower and the Lenders its office for the purpose of any notices and
payments hereunder. After any retiring Agent's resignation or removal hereunder
as Agent, the provisions of this SECTION 9 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent.
X. MISCELLANEOUS.
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A. NO WAIVER. No waiver of any Default or Event of Default shall be
deemed to be a waiver of any other Default or Event of Default. No failure to
exercise and no delay on the part of the Agent or any Lender in exercising any
right or power under any Loan Document or at law or in equity shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or the abandonment or discontinuance of steps to enforce any such right
or power, preclude any further or other exercise thereof or the exercise of any
other right or power. No course of dealing between the Borrower and the Agent
or any Lender shall operate as a waiver of any right or power of the Agent or
any Lender. No notice to or demand on the Borrower or any other Person shall
entitle the Borrower or any other Person to any other or further notice or
demand in similar or other circumstances.
B. NOTICES. All notices under the Loan Documents shall be in writing and
either (i) delivered against receipt therefor, (ii) mailed by registered or
certified mail, return receipt requested, or (iii) sent by telex, telecopy
(promptly confirmed by mail, except for any notice pursuant to SECTION 4.1(a)
hereof which need not be confirmed by mail) or telegram, in each case to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof; or, as to any Lender who is a signatory hereto, at such
other address as shall be designated by such Lender in a notice to the Borrower
and the Agent given in accordance with this SECTION 10.2 or to such other
address as a party may designate. The Borrower may change its address for
purposes hereof by providing written notice of such address change to the
Lenders and the Agent in accordance with the provisions of this SECTION 10.2,
with any such change in address only being effective ten (10) Business Days
after such change of address has been deemed given in accordance with the
provisions hereof. Notices shall be deemed to have been given (whether actually
received or not) when delivered (or, if mailed, on the third Business Day after
deposit of such notice into the mail); however, the notices required or
permitted by SECTIONS 2.2(b) and 4.1(a) hereof shall be effective only when
actually received by the Agent.
C. GOVERNING LAW. UNLESS OTHERWISE SPECIFIED THEREIN, EACH LOAN DOCUMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF) AND THE UNITED
STATES OF AMERICA.
D. SURVIVAL: PARTIES BOUND. All representations, warranties, covenants
and agreements made by or on behalf of the Borrower in connection herewith shall
survive the execution and delivery of the Loan Documents, shall not be affected
by any investigation made by any Person, and shall bind the Borrower and in
successors, trustees, receivers and assigns and inure to the benefit of the
successors and assigns of the Agent and the Lenders, provided that the
undertaking of the Lenders hereunder to make Loans to the Borrower and to issue
Letters of Credit for the account of the Borrower shall not inure to the benefit
of any successor or assign of the Borrower. The term of this Agreement shall be
until the final maturity of each Note and the payment of all amounts due under
the Loan Documents.
E. COUNTERPARTS. This Agreement may be executed in several identical
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.
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F. LIMITATION OF INTEREST. The Borrower and the Lenders intend to
strictly comply with all applicable laws, including applicable usury laws, if
any. Accordingly, the provisions of this SECTION 10.6 shall govern and control
over every other provision of this Agreement or any other Loan Document which
conflicts or is inconsistent with this Section, even if such provision declares
that it controls. As used in this Section, the term "interest" includes the
aggregate of all charges, fees, benefits or other compensation which constitute
interest under applicable law, PROVIDED, that, to the maximum extent permitted
by applicable law, (a) any non-principal payment shall be characterized as an
expense or as compensation for something other than the use, forbearance or
detention of money and not as interest, and (b) all interest at any time
contracted for, reserved, charged or received shall be amortized, prorated,
allocated and spread, in equal parts during the full term of the Loans and the
Commitments. In no event shall the Borrower or any other Person be obligated to
pay, or the Agent or any Lender have any right or privilege to reserve, receive
or retain, (Y) any interest in excess of the maximum amount of nonusurious
interest permitted under the laws of the United Stales or of any state, if any,
which are applicable to the Agent or such Lender, respectively, or (Z) total
interest in excess of the amount which the Agent or such Lender could lawfully
have contracted for, reserved, received, retained or charged had the interest
been calculated for the full term of the Loans at the Highest Lawful Rate, if
any, applicable to the Agent or such Lender. None of the terms and provisions
contained in this Agreement or in any other Loan Document which directly or
indirectly relate to interest shall ever be construed without reference to this
SECTION 10.6, or be construed to create a contract to pay any Lender for the
use, forbearance or detention of money at an interest rate in excess of the
Highest Lawful Rate applicable to such Lender. If the term of any Loans or the
Notes is shortened by reason of acceleration of maturity as a result of any
Default or Event of Default or by any other cause, or by reason of any required
or permitted prepayment, and if for that (or any other) reason the Agent or any
Lender at any time is owed or receives (and/or has received) interest in excess
of interest calculated at the Highest Lawful Rate applicable to the Agent or
such Lender, then and in any such event all of any such excess interest owed to
or received by the Agent or such Lender shall be canceled automatically as of
the date of such acceleration, prepayment or other event which produces the
excess, and, if such excess interest has been paid to the Agent or such Lender,
it shall be credited PRO TANTO against the then-outstanding principal balance
of the Borrower's obligations to the Agent or such Lender, effective as of the
date or dates when the event occurs which causes it to be excess interest, until
such excess is exhausted or all of such principal has been fully paid and
satisfied, whichever occurs first, and any remaining balance of such excess
shall be promptly refunded to its payor.
G. SURVIVAL. The obligations of the Borrower under SECTIONS 2.3, 2.4(b),
2.9, 2.10(h). 10.9, 10.10 and 10.17 hereof shall survive the repayment of the
Loans, the termination of the Commitments and the cancellation or expiration
of the Letters of Credit.
H. CAPTIONS. The headings and captions appearing in the Loan Documents
have been included solely for convenience and shall not be considered in
construing the Loan Documents.
I. EXPENSES, ETC. Whether or not any Loan is ever made or any Letter of
Credit ever issued, the Borrower agrees to pay or reimburse on demand each of
the Lenders and the Agent for paying: (a) the reasonable and documented fees and
expenses of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., counsel to the Agent,
or any other legal counsel engaged by the Agent
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(excluding in-house counsel), in connection with (i) the preparation,
execution and delivery of this Agreement (including the exhibits and
schedules hereto) and the Loan Documents and the making of the Loans and the
issuance of Letters of Credit hereunder and (ii) any modification, supplement
or waiver of any of the terms of this Agreement, the Letters of Credit or any
other Loan Document; (b) all reasonable and documented out-of-pocket costs
and expenses (including reasonable attorneys' fees) of the Lenders and the
Agent in connection with the enforcement of this Agreement, the Letters of
Credit or any other Loan Documents; (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement, any Letter of Credit or any
other Loan Document or any other document referred to herein or therein; (d)
all reasonable and documented out-of-pocket costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated
by this Agreement, any other Loan Document or any document referred to herein
or therein, and the cost of title insurance; and (e) expenses of the Agent's
field examination described in SECTION 4.2(k) above incurred prior to or as
of the Closing Date.
J. INDEMNIFICATION. THE BORROWER AGREES TO INDEMNIFY THE AGENT, THE
LENDERS AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, COUNSEL AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY
AND ALL LOSSES, LIABILITIES (INCLUDING ENVIRONMENTAL LIABILITIES), CLAIMS
(INCLUDING ENVIRONMENTAL CLAIMS) OR DAMAGES TO WHICH ANY OF THEM MAY BECOME
SUBJECT, INSOFAR AS SUCH LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISE OUT OF OR
RESULT FROM ANY (A) ACTUAL OR PROPOSED USE BY THE BORROWER OF THE PROCEEDS OF
ANY EXTENSION OF CREDIT (WHETHER A LOAN OR A LETTER OF CREDIT) BY ANY LENDER
HEREUNDER, (B) BREACH BY THE BORROWER OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, (C) VIOLATION BY THE BORROWER OR ANY OF ITS SUBSIDIARIES OF ANY LAW,
RULE, REGULATION OR ORDER INCLUDING ANY REQUIREMENTS OF ENVIRONMENTAL LAW, (D)
LIENS OR SECURITY INTERESTS GRANTED ON ANY PROPERTY PURSUANT TO OR UNDER THE
LOAN DOCUMENTS, TO THE EXTENT RESULTING FROM ANY HAZARDOUS SUBSTANCE LOCATED IN,
ON OR UNDER ANY SUCH PROPERTY, (E) OWNERSHIP BY THE LENDERS OR THE AGENT OF ANY
PROPERTY FOLLOWING FORECLOSURE UNDER THE LOAN DOCUMENTS, TO THE EXTENT SUCH
LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISE OUT OF OR RESULT FROM ANY HAZARDOUS
SUBSTANCE, LOCATED IN, ON OR UNDER SUCH PROPERTY PRIOR TO OR AT THE TIME OF SUCH
FORECLOSURE, INCLUDING LOSSES, LIABILITIES, CLAIMS OR DAMAGES WHICH ARE IMPOSED
UPON PERSONS UNDER LAWS RELATING TO OR REGULATING HAZARDOUS SUBSTANCES, SOLELY
BY VIRTUE OF OWNERSHIP, (F) ANY LENDER OR THE AGENT BEING DEEMED AN OPERATOR OF
ANY SUCH PROPERTY BY A COURT OR OTHER REGULATORY OR ADMINISTRATIVE AGENCY OR
TRIBUNAL OR OTHER THIRD PARTY, TO THE EXTENT SUCH LOSSES, LIABILITIES, CLAIMS OR
DAMAGES ARISE OUT OF OR RESULT FROM ANY HAZARDOUS SUBSTANCE, PETROLEUM,
PETROLEUM PRODUCT OR PETROLEUM WASTE LOCATED IN ON OR UNDER SUCH PROPERTY AT OR
PRIOR TO THE OF ANY FORECLOSURE THEREON UNDER THE LOAN DOCUMENT, OR (G)
INVESTIGATION, LITIGATION OR OTHER PROCEEDING (INCLUDING ANY THREATENED
INVESTIGATION OR PROCEEDING) RELATING TO ANY OF THE FOREGOING, AND THE BORROWER
AGREES TO REIMBURSE THE AGENT AND EACH LENDER, AND EACH AFFILIATE THEREOF AND
THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL AND AGENTS, UPON DEMAND
FOR ANY REASONABLE AND DOCUMENTED OUT-OF-POCKET EXPENSES (INCLUDING LEGAL FEES)
INCURRED IN CONNECTION WITH ANY SUCH INVESTIGATION OR PROCEEDING, AND WHETHER
ANY SUCH LOSS, LIABILITY, CLAIM OR DAMAGE RESULTS FROM THE NEGLIGENCE OF ANY
SUCH INDEMNIFIED PERSON; BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS,
DAMAGES OR EXPENSES INCURRED BY A PERSON OR
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ANY AFFILIATE THEREOF OR THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
COUNSEL OR AGENTS BY REASON OF (I) THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF SUCH PERSON, AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE OR AGENT OR (II)
OWNERSHIP OR OPERATION OF ANY PROPERTY BY THE LENDERS OR THE AGENT FOLLOWING
FORECLOSURE UNDER THE LOAN DOCUMENTS IF SUCH LOSSES, LIABILITIES, ETC. ARE
ATTRIBUTABLE SOLELY TO THE POST-FORECLOSURE ACTIONS OF THE LENDER OR THE
AGENT. PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PERSON OF NOTICE OF ANY
CLAIM OR THE COMMENCEMENT OF ANY ACTION, SUCH INDEMNIFIED PERSON SHALL, IF
ANY CLAIM IN RESPECT THEREOF IS TO BE MADE AGAINST THE BORROWER UNDER THIS
SECTION 10.10, NOTIFY THE BORROWER IN WRITING OF THE CLAIM OR THE
COMMENCEMENT OF THAT ACTION. THE BORROWER SHALL NOT BE LIABLE FOR ANY
SETTLEMENT OF ANY SUCH CLAIM OR ACTION INVOLVING THE PAYMENT OF MONETARY
DAMAGES EFFECTED WITHOUT ITS WRITTEN CONSENT NOT TO BE UNREASONABLY WITHHELD.
IF ANY SUCH CLAIM OR ACTION SHALL BE BROUGHT AGAINST AN INDEMNIFIED PERSON,
IT SHALL NOTIFY THE BORROWER THEREOF, AND THE BORROWER SHALL BE ENTITLED TO
PARTICIPATE IN THE JOINT DEFENSE THEREOF.
K. AMENDMENTS, WAIVERS, ETC. No amendment, modification or waiver of any
provision of this Agreement, the Notes or any other Loan Document, nor any
consent to any departure by the Borrower or any of its Subsidiaries therefrom,
shall in any event be effective unless the same shall be agreed or consented to
in writing by the Required Lenders, the Borrower and the affected Subsidiaries
of the Borrower, if any, and each such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; PROVIDED,
that no amendment, waiver or consent shall, unless consented to in writing by
each affected Lender, do any of the following: (a) increase any Commitment of
any of the Lenders or subject the Agent or any of the Lenders to any additional
obligations; (b) reduce the principal of, or interest on, any Loan, any Letter
of Credit Exposure Amount or any fee hereunder; (c) waive or postpone any
scheduled date fixed for any payment of principal of, or interest on, any Loan,
any Letter of Credit Exposure Amount or any fee or other sum to be paid
hereunder; (d) change the percentage of any of the Commitments or of the
aggregate unpaid principal amount of any of the Loans, any Letter of Credit
Exposure Amount, or the number of Lenders which shall be required for the
Lenders or any of them to take any action under this Agreement; (e) increase the
Borrowing Base advance rate for Net Amount of Eligible Receivables above
eighty-five percent (85%); (f) change any provision contained in SECTIONS
2.2(d), 2.11, 10.9 or 10. 10 hereof or this SECTION 10.11 or SECTION 10.16
hereof; (g) waive any violation or change any provision of SECTION 7.1, SECTION
7.2, SECTION 7.4 or SECTIONS 7.11 through 7.14 hereof; (h) release the Borrower
from liability for any of the Obligations; (i) release any Guarantor from any
Guaranty; (j) other than as expressly permitted by this Agreement, release any
Collateral for any of the Obligations having a value in excess of $500,000, as
reasonably determined by the Agent; or (k) change the definition of "Required
Lenders" contained herein. Anything in this Section 10.11 to the contrary, no
amendment, waiver or consent shall be made with respect to SECTION 9 without the
written consent of the Agent.
L. SUCCESSORS AND ASSIGNS.
1. This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Agent and the Lenders and their respective successors and
permitted assigns. The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of all of the Lenders.
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2. Each Lender may sell participations to any Person in all or part
of any Loan, or all or part of its Notes, the Letter of Credit Exposure Amount
or Commitments, to another bank or other entity, in which event, without
limiting the foregoing, the provisions of SECTIONS 10.10 and 10.16 shall inure
to the benefit of each purchaser of a participation and the pro-rata treatment
of payments, as described in SECTION 2.11, shall be determined as if such Lender
had not sold such participation. In the event any Lender shall sell any
participation, (i) the Borrower, the Agent and the other Lenders shall continue
to deal solely and directly with such selling Lender in connection with such
selling Lender's rights and obligations under the Loan Documents (including the
Note(s) held by such selling Lender), (ii) such Lender shall retain the sole
right and responsibility to enforce the obligations of the Borrower relating to
the Loans and Letter of Credit Exposure Amount, including the right to approve
any amendment, modification or waiver of any provision of this Agreement other
than (and then only if expressly permitted by the applicable participation
agreement) amendments, modifications or waivers with respect to (A) any fees
payable hereunder to the Lender and (B) the amount of principal or the rate of
interest payable on, or the dates fixed for the scheduled repayment of principal
of, the Loans and other sums to be paid to the Lenders hereunder, and (iii) the
Borrower agrees, to the fullest extent it may effectively do so under applicable
law, that any participant of a Lender may exercise all rights of set-off,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such participant were a direct holder of Loans if such Lender has
previously given notice of such participation to the Borrower.
3. Each Lender may assign to one or more Lenders or Eligible
Assignees all or a portion of its interests, rights and obligations under this
Agreement (including all or a portion of its Commitment and the same portion of
the related Loans at the time owing to it, the related Note or Notes held by it
and its Letter of Credit Exposure Amount) (a "RATABLE ASSIGNMENT"); PROVIDED,
HOWEVER, that, (i) the Agent and the Borrower must give their respective prior
written consent, which consent will not be unreasonably withheld, conditioned or
delayed, (ii) the aggregate amount of the applicable Commitment, Loans and
Letter of Credit Exposure Amount (without duplication) of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance (as defined below) with respect to such assignment is delivered to
the Agent) shall in no event be less than $5,000,000 (except for certain
exceptions approved by the Borrower and the Agent) and shall be in an amount
that is an integral multiple of $1,000,000 (unless all of the assigning Lender's
applicable Commitment, Loans and Letter of Credit Exposure Amount is being
assigned); (iii) the aggregate amount of the applicable Commitment and/or Loans
of the assigning Lender immediately after each partial assignment must be at
least $5,000,000 (except for certain exceptions approved by the Borrower and the
Agent) and shall be in an amount which is an integral multiple of $1,000,000;
and (iv) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in its records, an Assignment and
Acceptance in a form required by the Agent (each an "ASSIGNMENT AND ACCEPTANCE")
with blanks appropriately completed, together with any Note or Notes subject to
such assignment and a processing and recordation fee of $2,500 (for which the
Borrower shall have no liability). Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five (5) Business Days
after the execution thereof, unless a shorter period of time may be agreed to by
the Agent as its sole and absolute discretion, (A) the assignee thereunder shall
be a party hereto and, to the extent provided in such Assignment and Acceptance,
have the
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rights and obligations of a Lender hereunder and (B) the Lender thereunder
shall, to the extent provided in such assignment, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).
4. By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with any Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
other instrument or document furnished pursuant thereto; (ii) such assignor
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any of its Subsidiaries or
the performance or observance by the Borrower of any of its obligations
hereunder; (iii) such assignee confirms that it has received a copy of this
Agreement and the other Loan Documents, together with copies of the financial
statements of the Borrower previously delivered in accordance herewith and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee confirms that it will keep confidential all information with
respect to the Borrower furnished to it by the Borrower, such assignor Lender or
the Agent (other than information generally available to the public or otherwise
available to the Agent on a non-confidential basis or otherwise permitted
pursuant to the terms of this Agreement); (v) such assignee will, independently
and without reliance upon the Agent, such assignor Lender or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents; (vi) such assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all obligations that by the
terms of the Loan Documents are required to be performed by it as a Lender.
5. The Agent shall maintain at its office a copy of each Assignment
and Acceptance delivered to it and a record of the names and addresses of the
Lenders and the Commitments of, and principal amount of the Loans owing to, and
the Letter of Credit Exposure Amount of, each Lender from time to time. The
entries in the register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Lenders may treat each person the name of
which is recorded therein as a Lender hereunder for all purposes of the Loan
Documents. Such records shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to the upon reasonable prior
notice.
6. Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and the assignee thereunder together with the Note(s) subject
to such assignment, the written consent to such assignment and the fee payable
in respect thereto, the Agent shall, if such
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Assignment and Acceptance has been completed with blanks appropriately
filled, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower and the Lenders. Contemporaneously with the receipt
by the Borrower of such assignment and Acceptance, the Borrower, at its own
expense, shall execute and deliver to the Agent in exchange for the
surrendered Note(s), a new Note or Notes payable to the order of such
assignee in an amount equal to the applicable Commitment, Loans and Letter of
Credit Exposure Amount (without duplication) assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained
Commitments, Loans and/or Letters of Credit hereunder, a new Note or Notes to
the order of the assigning Lender in an amount equal to the applicable
Commitment, Loans and/or Letters of Credit retained by it hereunder. Such
new Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note(s), shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the surrendered Note(s). Thereafter, such
surrendered Note shall be marked canceled and returned to the Borrower.
7. Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this SECTION
10.12, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; PROVIDED, HOWEVER, that as a condition to any
such disclosure of information relating to the Borrower, such Lender shall
require such proposed assignee or participant to agree in writing to keep
confidential all information with respect to the Borrower furnished to it by
such Lender in connection with any proposed assignment or participation (other
than information generally available to the public or otherwise available to the
Agent or such Lender on a non-confidential basis).
8. Each Lender agrees that, in connection with any assignment or
participation or proposed assignment or participation pursuant to this SECTION
10.12, the Borrower will not be responsible for the accuracy and completeness of
any written materials furnished by such Lender to any actual or prospective
assignee or participant, other than copies of (i) documents furnished to such
Lender pursuant to SECTIONS 5.2(a) and (b) hereof, and (ii) any other documents
which are prepared by the Borrower for use in such connection and which contain
a statement to such effect.
9. Notwithstanding anything herein to the contrary, each Lender may
pledge and assign all or any portion of its rights and interests under the Loan
Documents to any Federal Reserve Bank.
M. ENTIRE AGREEMENT. This Agreement and the other Loan Documents embody
the entire agreement and understanding among the Borrower, the Agent and the
Lenders relating to the subject matter hereof and supersedes all prior
proposals, agreements and understandings relating to the subject matter hereof.
Any conflict between the provisions of this Agreement and the provisions of any
other Loan Documents shall be governed by the provisions of this Agreement. The
Borrower certifies that it is relying on no representation, warranty, covenant
or agreement except for those set forth in this Agreement and the other Loan
Documents of even date herewith.
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N. SEVERABILITY. If any provision of any Loan Documents shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.
O. DISCLOSURES. Every reference in the Loan Documents to disclosures of
the Borrower to the Agent and the Lenders in writing, to the extent that such
references refer to disclosures at or prior to the execution of this Agreement,
shall be deemed strictly to refer only to written disclosures delivered to the
Agent and the Lenders in an orderly manner prior to or concurrently with the
execution hereof.
P. CAPITAL ADEQUACY.
1. If after the date of this Agreement, any Lender shall have
determined that the adoption or effectiveness (regardless of whether previously
announced) of any applicable Legal Requirement or treaty regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, has or would have
the effect of increasing the cost of, or reducing the rate of return on the
capital of such Lender (or any holding company of which such Lender is a part)
as a consequence of its obligations hereunder or under any Letter of Credit or
its Note to a level below that which such Lender or holding company could have
achieved but for such adoption, change or compliance by an amount deemed by such
Lender to be material, then from the to time, upon demand by such Lender (with a
copy to the Agent), the Borrower (subject to SECTION 10.6 hereof) agrees to pay
to such Lender such additional amount or amounts as will compensate such Lender
or holding company for such reduction.
2. The certificate of any Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender or its holding company
as specified in SUBSECTION 10.16(a) above (and setting forth the calculation
thereof in reasonable detail) shall be delivered as soon as practicable to the
Borrower and shall be conclusive and binding, absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within five days after such Lender delivers such certificate. In preparing such
certificate, such Lender may employ such assumptions and allocations of costs
and expenses as it shall in good faith deem reasonable and may use any
reasonable averaging and attribution method.
Q. TAXES.
1. As used in this SECTION 10.17, the following terms shall have the
following meanings:
(1) "INDEMNIFIABLE TAX" means any Tax, but excluding, in any
case, any Tax that (a) would not be imposed in respect of a payment to a
holder of any of the Notes under this Agreement, under the Notes held by
such holder or under any of the other Loan Documents except for a present
or former connection between the jurisdiction of the
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Governmental Authority imposing such Tax and such holder (or a
shareholder or other Person with an interest in such holder), including
a connection arising from such holder's (or shareholder of such holder
or such other Person) being or having been a citizen or resident of such
jurisdiction, or being or having been organized, present or engaged in a
trade or business in such jurisdiction, or having or having had a
permanent establishment or fixed place of business in such jurisdiction,
but excluding a connection arising solely from such holder having
executed, delivered, performed its obligations or received a payment
under, or enforced, this Agreement, the Notes held by such holder or any
other Loan Documents, or (b) is imposed under United States federal
income tax law or any state income tax law.
(2) "TAX" means any present or future tax, levy, impost, duty,
charge, assessment or fee of any nature (including interest thereon and
penalties and additions thereto) that is imposed by any Governmental
Authority in respect of a payment to a holder of any of the Notes under
this Agreement, under the Notes or under any of the other Loan Documents.
2. If the Borrower is required by any applicable Legal Requirement
to make any deduction or withholding for or on account of any Tax from any
payment to be made by it under this Agreement, under the Notes or under any
other Loan Documents, then the Borrower shall (i) promptly notify the holder of
Notes hereunder that is entitled to such payment of such requirement to so
deduct or withhold such Tax, (ii) pay to the relevant authorities the full
amount required to be so deducted or withheld, (iii) promptly forward to such
holder an official receipt (or certified copies thereof), or other documentation
reasonably acceptable to such holder, evidencing such payment to such
Governmental Authorities and (iv) if such Tax is an Indemnifiable Tax, pay, to
the extent permitted by law to such holder, in addition to whatever net amount
of such payment is paid to such holder, such additional amount as is necessary
to ensure that the total amount actually received by such holder (free and clear
of Indemnifiable Tax) will equal the full amount of the payment such holder
would have received had no such deduction or withholding been required. If the
Borrower pays any additional amount to a holder pursuant to the preceding
sentence and such holder shall receive a refund of an Indemnifiable Tax with
respect to which, in the good faith opinion of such holder, such payment was
made, such holder shall pay to the Borrower the amount of such refund promptly
upon receipt thereof.
3. In the event that any Governmental Authority notifies the
Borrower that it has improperly failed to withhold or deduct any Tax from a
payment received by any holder of Notes under this Agreement, under the Notes
held by such holder or under any other Loan Documents, the Borrower agrees to
timely and fully pay such Tax to such Governmental Authority and such holder
shall, upon receipt of written notice of such payment, immediately pay to the
Borrower, an amount necessary in order that the amount of such payment to the
Borrower after payment of all Taxes with respect to such payment, shall equal
the amount that the Borrower paid to such Governmental Authority pursuant to
this clause (c).
4. Each holder of a Note shall, upon request by the Borrower, take
requested measures to mitigate the amount of Indemnifiable Tax required to be
deducted or withheld from any payment made by the Borrower under this Agreement,
under the Notes or under any other
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Loan Documents if such measures can, in the sole and absolute opinion of
such holder, be taken without such holder suffering any economic, legal,
regulatory or other disadvantage (provided, however, that no such holder
shall be required to designate a funding office that is not located in
the United States of America).
5. Notwithstanding the foregoing, in no event shall the amount
payable under this SECTION 10.17 (to the extent, if any, constituting interest
under applicable laws) together with all amounts constituting interest under
applicable laws and payable in connection with this Agreement or the Notes,
exceed the Highest Lawful Rate or the maximum amount of interest permitted to be
charged by applicable laws.
R. WAIVER OF CLAIM. THE BORROWER HEREBY WAIVES AND RELEASES THE AGENT
AND ALL LENDERS FROM ANY AND ALL CLAIMS OR CAUSES OF ACTION WHICH THE BORROWER
MAY OWN, HOLD OR CLAIM IN RESPECT OF ANY OF THEM AS OF THE DATE HEREOF.
S. RIGHT OF SETOFF. Upon the occurrence and during the continuation of
any Event of Default, the Lenders each are hereby authorized at any the and from
time to time, without notice to the Borrower or any of the Guarantors (any such
notice being expressly waived by the Borrower and by the Guarantors by their
execution of a Guaranty or a Joinder Agreement), to setoff and apply any and all
deposits (general or special, time or demand, provisional or final, whether or
not such setoff results in any loss of interest or other penalty, and including
without limitation all certificates of deposit) at any time held, and any other
funds or property at any time held, and other Indebtedness at any time owing by
such Lender to or for the credit or the account of the Borrower or any such
Guarantor against any and all of the Indebtedness arising in connection with
this Agreement irrespective of whether or not such Lender shall have made any
demand under this Agreement, the Notes or any other Loan Document. The Borrower
and each of the Guarantors (by their execution of a Guaranty or a Joinder
Agreement) also hereby grants to each of the Lenders a security interest in and
hereby transfers, assigns, sets over, and conveys to each of the Lenders, as
security for payment of all Loans and Letter of Credit Exposure Amount, all such
deposits, funds or property of the Borrower or any such Guarantor or
Indebtedness of any Lender to the Borrower or any such Guarantor. Should the
right of any Lender to realize funds in any manner set forth hereinabove be
challenged and any application of such funds be reversed, whether by court order
or otherwise, the Lenders shall make restitution or refund to the Borrower or
such Guarantor, as applicable, pro rata in accordance with their respective
Commitment Percentages. Each Lender agrees to promptly notify the Borrower and
the Agent after any such setoff and application, provided that the failure to
give such notice will not affect the validity of such setoff and application.
The rights of the Agent and the Lenders under this Section are in addition to
other rights and remedies (including without limitation other rights of setoff)
which the Agent or the Lenders may have. This Section is subject to the terms
and provisions of SECTION 2.11 hereof.
T. WAIVER OF RIGHT TO JURY TRIAL. EXCEPT AS PROHIBITED BY APPLICABLE
LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE NOTES,
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ANY OF THE OTHER LOAN DOCUMENTS OR ANY TRANSACTIONS EVIDENCED THEREBY.
U. ADDITIONAL PROVISIONS REGARDING COLLECTION OF RECEIVABLES: CONTROL
INVENTORY AND OTHER COLLATERAL.
1. So long as the procedures discussed in SECTION 6.15(b) hereof
have been implemented and are continuing, the Borrower hereby designates and
constitutes the Agent or the Agent's designee as the Borrower's attorney-in-fact
with power to endorse the Borrower's name upon any notes, acceptances, checks,
drafts, money orders or other evidence of payment of any Receivables or any
other Collateral that may come into its possession; to sign or endorse the
Borrowers on any invoice, bill of lading or other title or ownership documents
relating to any Receivables or inventory, drafts against any customers of the
Borrower, assignments and verifications of Receivables and notices to customers
of the Borrower; to send verifications of Receivables; to notify the U.S. Postal
Service authorities to change the address for delivery of mail addressed to the
Borrower to such address as the Agent may designate at any time after the
occurrence of any Event of Default which is continuing; and to do all other acts
and things necessary to carry out this Agreement. All acts of said attorney or
designee are hereby ratified and approved by the Borrower, and said attorneys or
designee shall not be liable for any acts of omission or commission, for any
error of judgment or for any mistake of fact or law, provided that the Agent or
its designee shall not be relieved of liability to the extent it is determined
by a final judicial decision that its act, error or mistake constituted gross
negligence or willful misconduct. The power of attorney granted under this
subparagraph is coupled with an interest and is irrevocable until all of the
Obligations are paid in full and this Agreement and the Total Commitment is
terminated.
2. The Agent, without notice to or consent of the Borrower, at any
time after the occurrence and during the continuation of an Event of Default,
(i) may sue upon or otherwise collect, extend the time. of payment of, or
compromise or settle for cash, credit or otherwise upon any terms, any of the
Receivables or any instruments or insurance applicable thereto and/or release
any account debtor thereon; (ii) is authorized and empowered to accept or direct
shipments of inventory and accept the return of the goods represented by any of
the Receivables; and (iii) shall have the right to receive, endorse, assign
and/or deliver in its name or the name of the Borrower any and all checks,
drafts and other instruments for the payment of money relating to the
Receivables, and the Borrower hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed.
3. Nothing herein contained shall be construed to constitute the
Borrower as agent of the Agent for any purpose whatsoever, and the Agent
shall not be responsible or liable for any shortage, discrepancy, damage,
loss or destruction of any part of the Collateral wherever the same may be
located and regardless of the cause thereof (except to the extent it is
determined by a final judicial decision that the Agent's or a Lender's act or
omission constituted gross negligence of willful conduct). The Agent and the
Lenders shall not, under any circumstances or in any event whatsoever, have
any liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Receivables or any instrument
received in payment thereof or for any damage resulting therefrom (except to
the extent it is
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determined by a final judicial decision that the Agent's or such Lender's
error, omission or delay constituted gross negligence or willful misconduct).
The Agent and the Lenders do not, by anything herein or in any assignment or
otherwise, assume any of the Borrower's obligations under any contract or
agreement assigned to the Agent or the Lender, and the Agent and the Lenders
shall not be responsible in any way for the performance by the Borrower of
any of the terms and conditions thereof.
4. Upon the occurrence and during the continuation of any Event of
Default: (i) if any of the Receivables includes a charge for any tax payable to
any governmental tax authority, the Agent is hereby authorized (but in no event
obligated) in its discretion to pay the amount thereof to the proper taxing
authority for, the account of the Borrower and to charge the Borrower's account
therefor; and (ii) the Borrower shall notify the Agent if any Receivables
include any tax due to any such taxing authority and, in the absence of such
notice, the Agent shall have the right to retain the full proceeds of such
Receivables and shall not be liable for any taxes that may be due from the
Borrower by reason of the sale and delivery creating such Receivables.
5. Upon the occurrence and continuation of any Event of Default, the
Agent may at any time and from time to time employ and maintain in the premises
of the Borrower a custodian selected by the Agent who shall have full authority
to do all acts necessary to protect the Agent's and Lenders' interests and to
report to the Agent thereon. The Borrower hereby agrees to cooperate with any
such custodian and to do so whatever the Agent may reasonably request to
preserve the Collateral. All costs and expenses incurred by the Agent by reason
of the employment of the custodian shall be charged to the Borrower's account
and added to the Obligations.
V. JOINT AND SEVERAL OBLIGATIONS. Notwithstanding anything to the
contrary contained herein or in any other Loan Documents, the Borrower and the
Guarantors are jointly and severally responsible for their respective
agreements, covenants, representations, warranties and obligations contained and
set forth in this Agreement or in any other Loan Document to which they are a
party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
RELIANT BUILDING PRODUCTS, INC.,
a Delaware corporation
By: /s/ Virgil D. Lowe
-----------------------------------
Name: Virgil D. Lowe
-----------------------------------
Title: Secretary and Treasurer
-----------------------------------
ADDRESS FOR NOTICES:
3030 LBJ Freeway, Suite 300
Dallas, Texas 75234
Attention: Chief Financial Officer
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THE CHASE MANHATTAN BANK,
a New York banking corporation, as a Lender and as
Agent
By: /s/ Jeffrey S. Ackerman
-----------------------------------
Name: Jeffrey S. Ackerman
-----------------------------------
Title: Vice President
-----------------------------------
ADDRESSES FOR NOTICES:
633 Third Avenue, 7th Floor
New York, New York 10017-6764
Attention: Credit Deputy
DOMESTIC LENDING OFFICE:
633 Third Avenue
New York, New York 10017-6764
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TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a
national banking association, as a Lender
By: /s/ Jeffrey A. Stern
-----------------------------------
Name: Jeffrey A. Stern
-----------------------------------
Title: Vice President
-----------------------------------
ADDRESS FOR NOTICES:
201 Main Street, 3rd Floor
Fort Worth, Texas 76102
Attention: Mr. Lee Beckelman
DOMESTIC LENDING OFFICE:
201 Main Street, 3rd Floor
Fort Worth, Texas 76102
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<PAGE>
CIBC INC., a Delaware corporation, as a
Lender
By: /s/ William J. Koslo, Jr.
-----------------------------------
Name: William J. Koslo, Jr.
-----------------------------------
Title: Director
-----------------------------------
ADDRESS FOR NOTICES:
c/o CIBC Wood Gundy Securities Corp.
425 Lexington Avenue, 8th Floor
New York, New York 10017
Attention: Mr. William Coslet
DOMESTIC LENDING OFFICE:
c/o CIBC Wood Gundy Securities Corp.
425 Lexington Avenue, 8th Floor
New York, New York 10017
97
<PAGE>
New York, New York
$________________ May ___, 1997
FOR VALUE RECEIVED, RELIANT BUILDING PRODUCTS, INC., a Delaware
corporation (herein called "BORROWER"), promises to pay to the order of
___________________________________________________________________________
(herein called "PAYEE"), a ____________________ banking ____________________,
at the banking office of THE CHASE MANHATTAN BANK, a New York banking
corporation acting in its capacity as Agent under the Credit Agreement
(together with its successors in such capacity being herein called "AGENT"),
located at 633 Third Avenue, New York, New York, or at such other place as
Agent may hereafter designate in writing, in immediately available funds and
in lawful money of the United States of America, the principal sum of
________________________ Dollars ($ ), (or the unpaid
balance of all principal advanced against this note, if that amount is less),
together with interest on the unpaid principal balance of this note from time
to time outstanding until maturity at the rate or rates provided for in the
Credit Agreement and interest on all past due amounts, both principal and
accrued interest, at the Past Due Rate; PROVIDED, that for the full term of
this note, the interest rate produced by the aggregate of all sums paid or
agreed to be paid to the holder of this note for the use, forbearance or
detention of the debt evidenced hereby shall not exceed the Highest Lawful
Rate, if any, applicable to Payee.
If, for any reason whatever, the interest paid or received on this note
during its full term produces a rate which exceeds the Highest Lawful Rate,
if any, applicable to Payee, the holder of this note shall refund to the
payor or, at the holder's option, credit against the principal of this note
such portion of said interest as shall be necessary to cause the interest
paid on this note to produce a rate equal to the Highest Lawful Rate, if any,
applicable to payee. All sums paid or agreed to be paid to the holder of this
note for the use, forbearance or detention of the indebtedness evidenced
hereby shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread in equal parts through out the full term of
this note, so that the interest rate is uniform throughout the full term of
this note.
This note has been issued pursuant to the terms of a Credit Agreement
(which, as it may have been or may be amended, restated, modified or
supplemented from time to time, is herein called the "CREDIT AGREEMENT") of even
date herewith, by and among Borrower, Agent, Payee and certain other signatory
financial institutions named therein or which may be a party thereto from time
to time, to which reference is made for all purposes. This note is a Note under
the terms of the Credit Agreement, and advances against this note by Payee or
other holder hereof, payments and prepayments hereunder and acceleration hereof
shall be governed by the Credit Agreement. Capitalized words and phrases used
herein and not defined herein and which are defined in the Credit Agreement
shall have the same meanings herein as are ascribed to them in the Credit
Agreement.
The unpaid principal balance of this note at any time shall be the total of
all principal lent or advanced against this note less the sum of all principal
payments and permitted prepayments made on this note by or for the account of
Borrower. All loans and advances and all payments
EXHIBIT A
Page 1 of 2 Pages
<PAGE>
and permitted prepayments made hereon may be endorsed by the holder of this
note on the schedule which is attached hereto (and hereby made a part hereof
for all purposes) or otherwise recorded in the holder's records; PROVIDED,
that any failure to make notation of (a) any advance shall not cancel, limit
or otherwise affect Borrower's obligations or any holder's rights with
respect to that advance, or (b) any payment or permitted prepayment of
principal shall not cancel, limit or otherwise affect Borrower's entitlement
to credit for that payment as of the date received by the holder.
Except for notices expressly required by the terms and provisions of the
Credit Agreement, Borrower and any and all co-makers, endorsers, guarantors and
sureties severally waive notice (including, but not limited to, notice of intent
to accelerate and notice of acceleration, notice of protest and notice of
dishonor), demand, presentment for payment, protest, diligence in collecting and
the filing of suit for the purpose of fixing liability and consent that the time
of payment hereof may be extended and reextended from time to time without
notice to any of them. Each such person agrees that his, her or its liability
on or with respect to this note shall not be affected by any release of or
change in any guaranty or security at any time existing or by any failure to
perfect or maintain perfection of any lien against or security interest in any
such security or the partial or complete unenforceability of any guaranty or
other surety obligation, in each case in whole or in part, with or without
notice and before or after maturity.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF) AND
THE UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT.
RELIANT BUILDING PRODUCTS, INC.,
a Delaware corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
EXHIBIT A
Page 2 of 2 Pages
<PAGE>
TREASURY MANAGEMENT SERVICE AGREEMENT
I. INTRODUCTION
Texas Commerce Treasury Management offers a wide variety of treasury
management services under the terms of this document. When you sign
implementation forms or instructions (as modified from time to time, the
"Service Forms") or use any of the described services after you receive this
document, you agree to these terms and conditions, recognizing that we are
relying on them in providing the services to you. If the provisions of any
Service Form for a particular service are inconsistent with the terms set out
in this document for that service, the Service Form will control.
Throughout this document, the terms "you," "your" and "yours" refer to the
party other than us executing a Service Form or using the services described.
The terms "we," "our," "ours" and "Bank" refer to Texas Commerce Bank
National Association. This document, the Service Forms and any
administrative rules or user manuals that we provide to you in connection
with a particular service (the "Administrative Rules") are all together
referred to as "this Agreement."
Section II applies to all of the services. Section III contains provisions
applicable to specific services. The various parts of Section III apply to
you only if you actually use the service described in that part or you sign a
Service Form for that service. If a provision in Section II relates to the
same subject matter as a provision in Section III with regard to particular
services and there is a conflict between the two provisions, Section III will
control to resolve the conflict.
II. GENERALLY APPLICABLE TERMS AND CONDITIONS
A. AUTHORIZED PERSONS. We may accept oral or written instructions (including
written instructions sent via facsimile or other electronic transmission)
from any persons designated as "Authorized Persons" in the applicable Service
Form, and may also accept instructions from any person authorized to sign on
the affected account ("Authorized Signers"). You agree to hold us harmless
from any and all costs, suits, expenses, liabilities, damages and attorney's
fees arising from or related to our acting in good faith in accordance with
instructions or information that was purportedly faxed or sent electronically
by you or your Authorized Persons. We may require further written
confirmation of instructions given orally or via facsimile. Unless the
applicable Service Form specifically limits the authority of particular
persons, each Authorized Person or Authorized Signer may act alone. If at
any time any two or more Authorized Persons, Authorized Signers, or other
persons purporting to be authorized to act on your behalf give us conflicting
instructions, without liability to you or anyone else; we may (1) honor one
or more of the instructions, (2) refuse to honor any of the instructions
until we receive jointly agreed instructions from all persons who had issued
conflicting instructions, or (3) turn over to a court for disposition any
funds subject to conflicting instructions.
EXHIBIT "B"
-1-
<PAGE>
B. SERVICE CHARGES AND TAXES. You agree to pay our fees and charges for the
services you use, as reflected on a written fee schedule provided to you by
us. We may change our fees and charges by giving you 30 days advance written
notice of the changes; if you object to the changes you may terminate the
services prior to the effective date of the changes. You also agree to pay
all taxes or assessments that result from the services provided under this
Agreement (except for taxes on our income) and to pay any access or
transmission charges, transfer commissions or other direct charges we incur
in providing a product or service to you. We may choose to collect these
amounts by debiting any of your accounts with us, taking the fees into
account in account analysis, and/or billing you.
C. REPRESENTATIONS. You represent and warrant to us that (1) if you are
not a natural person, you are duly organized and validly existing and in good
standing under the laws of your state of organization, and you have the full
power and authority to carry on your business as now conducted and are duly
qualified to do business and in good standing in each jurisdiction where
qualification is necessary for your business, and you have not commenced any
dissolution proceedings; (2) if you conduct business under an assumed
business or professional name, you have properly filed assumed name
certificates as required by applicable law; and (3) you have obtained all
necessary consents to enter into this Agreement and to make it legally
binding on you.
D. COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS. You must comply with
all applicable laws and regulations at all times that you use our services.
E. EXTENSIONS OF CREDIT. Certain provisions of this Agreement may require
you to have specified amounts of collected or available funds in your
accounts at the Bank or an affiliate bank at certain times. Neither we nor
the affiliate bank is ever obligated to extend credit to you unless we have
specifically agreed to do so in a separate writing and any conditions to that
obligation have been satisfied. However, we have the option to extend credit
to you from time to time by permitting overdrafts in your accounts, delaying
collection of amounts due, or otherwise. If we extend credit to you, the
outstanding principal amount is immediately due and payable and will bear
interest from the date the credit is extended until it is repaid at a per
annum interest rate determined by us, but not exceeding the lesser of 18% per
annum or the maximum nonusurious rate of interest permitted under applicable
Texas or federal law (whichever permits the higher rate). If we do not elect
to extend credit to you, you must provide immediately available funds
sufficient to satisfy your obligations under this Agreement.
F. CONFIDENTIALITY. If you use our software products to transmit
instructions to us or for other purposes, you recognize that we have a
proprietary interest in that software, and you agree to keep confidential all
software, systems, customer records, supporting manuals, procedures, and
instructions published or made available to you by us ("Confidential
Information"). You agree to disclose the Confidential Information to your
employees and agents only on a need-to-know basis, and you agree not to
disclose the Confidential Information to anyone else without our
EXHIBIT "B"
-2-
<PAGE>
prior written consent, except as required by law or as permitted by this
Agreement. When your right to use the software products terminates, you must
return all Confidential Information to us, together with any reproductions or
extracts of the Confidential Information.
G. SECURITY. Some of the services we offer to you require you and any third
parties whom you have designated as Authorized Persons to implement
appropriate security measures, as set forth in the Administrative Rules for
those services. We may rely on the security procedures identified in the
Service Forms to determine whether any instructions are authorized, and you
will be bound by those instructions issued in your name (or in the name of
your Authorized Persons) and accepted by us in compliance with your chosen
security procedures, whether or not you actually authorized them. You
acknowledge that we have offered you and your Authorized Persons a number of
different commercially reasonable security procedures, and that the security
procedures indicated in the Service Forms are based on your belief that those
procedures are commercially reasonable. If your chosen security procedures
include a PIN, user ID number, password or other code (collectively, a
"code"), you agree that you and your Authorized Persons will keep the code
confidential.
H. DATA TRANSMISSION SYSTEMS. If you use one or more of our proprietary
computerized data transmission systems and supporting software, you are bound
by the terms and conditions relating to Information Services in addition to
the terms that relate to the specific services you access by that
transmission facility.
I. CONSENT TO RECORDING. We may mechanically record telephone conversations
between you, your employees and agents and us, our employees and agents
relating to your accounts and treasury management services. You understand,
however, that we are not obligated to record any conversation, or to retain
any recordings made for any period of time.
J. NOTICES. If this Agreement requires that notices be written, the notices
will be effective when received. Notices must be sent to one of the
following: (a) the addresses listed in the Service Form for the service
affected, (b) the address to which account statements are mailed, or (c) any
other address designated in writing by either you or us to the other.
K. DISCREPANCIES/ERRORS. You must promptly report in writing any error in
connection with any treasury management service and any discrepancy between
your records of your orders and requests (including wire and ACH payment
orders) and the notice you receive from us regarding our execution of your
orders and requests. You agree that 60 days is a reasonable time for you to
notify us of discrepancies, including unauthorized and erroneous payment
orders, unless any other applicable Administrative Rules, agreements or laws
provide for a shorter notification time. You agree to provide us with all
information we reasonably request in connection with any discrepancy. This
paragraph does not modify the Deposit Rules modification requirements
regarding checks paid without a properly authorized signature or errors or
discrepancies other than those specifically related to a treasury management
service.
EXHIBIT "B"
-3-
<PAGE>
L. ASSIGNMENT/AFFILIATES. This Agreement binds and benefits you, us, and
your and our respective successors and assigns, except that you may not
assign or delegate any of your rights or obligations under this Agreement
without our prior written consent. Certain of the treasury management
services may be performed by one of our affiliates. You specifically
authorize us to share with our affiliates information and documents relating
to your deposit accounts, treasury management services, credit facilities and
financial condition. This Agreement is not intended to benefit anyone other
than you, us, and our affiliates.
M. UNCONTROLLABLE EVENTS. No party will be deemed to have breached this
Agreement if it fails to perform because of a cause beyond the reasonable
direct control of that party, and without fault or negligence of that party.
Examples of causes beyond the reasonable direct control of a party include,
without limitation: any failure or interruption of any electronic
communication system between you and us, equipment or software failure or
malfunction, electrical, computer, or mechanical failure or malfunction,
action or inaction of governmental, civil or military authority, fire,
strike, lockout or other labor disputes, flood, hurricane, war, riot, theft,
earthquake, natural disaster, default of common carriers or third party
vendors, and suspension in payments by another financial institution. We are
not responsible for any act or failure to act by any correspondent bank,
Federal Reserve Bank, SWIFT, NACHA, SWACHA, any regional or local automated
clearinghouse, or any other third party.
N. OTHER RULES OF THE BANK. Our Terms and Conditions of Deposit Accounts,
schedules of services and fees, and Funds Availability Policy (collectively,
the "Deposit Rules") apply to each of your accounts and should be considered
a part of this Agreement as fully as if the Deposit Rules were set out in
this document. To the extent this Agreement conflicts with the Deposit
Rules, this Agreement will control. In addition, we may publish
Administrative Rules from time to time regarding particular products or
services, and these are also a part of this Agreement; to the extent they
conflict with this Agreement, the Administrative Rules will control.
However, to the extent the Administrative Rules conflict with the Service
Forms, the Service Forms will control.
O. INDEMNIFICATION/LIMITATION OF LIABILITY. You agree to indemnify and hold
us, our affiliates, and our and their respective officers, directors, agents
and employees (collectively, the "Bank Parties") harmless from and against
any and all loss, liability and expense (including reasonable attorney's
fees) arising from the services performed by any of the Bank Parties in
connection with this Agreement, except for those losses caused directly by
our failure to exercise ordinary care or to act in good faith. To the
maximum extent permitted by law, you agree that the Bank Parties will not be
liable for events or circumstances beyond their reasonable control, and the
liability of the Bank Parties will be limited to correcting errors caused by
the Bank Parties. You and we agree that clerical errors and mistakes in
judgment do not constitute a failure to exercise ordinary care or to act in
good faith. THE BANK PARTIES WILL NEVER BE LIABLE OR RESPONSIBLE FOR
CONSEQUENTIAL, EXEMPLARY, PUNITIVE, SPECIAL OR INCIDENTAL DAMAGES OR LOSSES,
INCLUDING LOST PROFITS (WHETHER OR NOT
EXHIBIT "B"
-4-
<PAGE>
ANY OF THE BANK PARTIES WERE ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR
DAMAGES). We make no representations or warranties to you, and disclaim any
implied warranties, as to the fitness, merchantability or suitability of any
of the services or software products for you, or as to the suitability or
compatibility of our software, equipment or communication interfaces with
those that you use.
P. AMENDMENT. We may amend or supplement this Agreement by giving you 30
days written notice of the amendment or supplement, and we may amend or
supplement the Administrative Rules by giving you 10 days written notice of
the amendment or supplement. If the change is required by law, regulations
or applicable clearinghouse rules, or if we determine in our sole discretion
that the change is necessary for the security of your accounts or the
security or integrity of the systems used by us in performing treasury
management services, we may amend or supplement this Agreement by giving you
notice promptly after the change. If the change is unacceptable to you in
any case, you may terminate this Agreement by written notice to us prior to
the effective date of the change (or within 10 days after receiving notice of
any change for which prior notice is not required). You may change this
Agreement only by a written agreement signed by us setting forth the changes.
Q. TERMINATION. Either you or we may terminate this Agreement or the
portion relating to any particular product or service by giving 30 days
written notice to the other party. All provisions relating to
indemnification, limitations of liability, and Confidential Information will
survive termination. We may also terminate all or part of this Agreement
immediately and without prior notice if (1) you fail to maintain adequate
available balances in your accounts or fail to pay any overdraft of any kind,
no matter how the overdraft was created (unless the overdraft was created
solely by our error); (2) you violate this Agreement or any loan, credit,
letter of credit or other financing agreement under which you are a debtor or
account party (whether with us or any other creditor); (3) you fail to
provide financial information that we reasonably request; (4) a material
adverse change occurs in your financial or business condition; (5) you make a
general assignment for the benefit of creditors or become a debtor in any
bankruptcy or other insolvency or liquidation proceeding of any kind; or (6)
we determine that it has become impracticable for us to perform under this
Agreement because of changes in applicable laws, regulations, or
clearinghouse rules. If all or part of this Agreement terminates, you must
return any Administrative Rules for the services no longer being used.
R. GOVERNING LAW/VENUE. THIS AGREEMENT IS GOVERNED BY - AND SHOULD BE
INTERPRETED UNDER - TEXAS LAW. THE COUNTY IN WHICH OUR PRINCIPAL OFFICE IS
LOCATED IS THE PLACE OF PERFORMANCE OF THIS AGREEMENT AND IS PROPER VENUE FOR
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, WHETHER SUCH ACTION IS
IN CONTRACT, TORT, OR OTHERWISE. WE MAY BRING ANY ACTION OR PROCEEDING
AGAINST YOU IN ANY STATE OR FEDERAL COURT IN THAT COUNTY OR IN ANY OTHER
JURISDICTION OR VENUE, AND YOU IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE
JURISDICTION OF
EXHIBIT "B"
-5-
<PAGE>
THOSE COURTS AND WAIVE ANY OBJECTION YOU MAY NOW OR HEREAFTER HAVE AS TO
VENUE IN THAT COURT OR AS TO THAT COURT BEING AN INCONVENIENT FORUM. YOU MAY
BE SERVED WITH PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, AT YOUR NOTICE ADDRESS THIS AGREEMENT, OR IN ANY OTHER MANNER
PERMITTED BY LAW. THE PREVAILING PARTY IN ANY SUIT RELATED TO A CLAIM UNDER
THIS AGREEMENT WILL BE ENTITLED TO LEGAL COSTS, INCLUDING REASONABLE
ATTORNEY'S FEES.
S. ARBITRATION. Unless prohibited by applicable law, either you or we may
request (before or after judicial proceedings have commenced), that any
controversy or claim relating to treasury management services be settled by
mandatory and binding arbitration using the Commercial Arbitration Rules of
the American Arbitration Association (the "AAA"). In that case, all statutes
of limitation that would otherwise apply will continue to apply, and the
arbitration will be conducted in the city where the Bank's principal office
is located, by a single arbitrator (or by 3 arbitrators if the amount in
controversy exceeds $1 million). The arbitrator(s) may (1) order discovery
to be conducted in accordance with the Federal Rules of Civil Procedure, and
(2) make summary rulings such as summary judgments and orders of dismissal
after a party submits a motion to dismiss. Any arbitration award will be
final and binding. This agreement to arbitration does not prevent us from
exercising self-help remedies such as setoff, or from foreclosing any lien or
security interest we may have, or from obtaining emergency court relief where
it would otherwise be available. Controversies or claims involving ACH
services will be settled by arbitration in accordance with the NACHA
arbitration procedures.
T. MISCELLANEOUS. If any provision of this Agreement is illegal or
unenforceable under applicable law, that provision should be deemed reformed
so as to be enforceable to the extent permitted by applicable law, or if that
is not possible, then this Agreement should be read as if that provision was
never a part of it, and the balance of the Agreement will be enforceable. If
we waive your failure to comply with this Agreement in certain circumstances,
that waiver will not be deemed a waiver of any other breaches of the same or
different provisions of the agreements between you and us. All waivers must
be written. All headings in this Agreement and the Administrative Rules are
for convenience only and should not be considered in interpreting the
agreements. All pronouns should be construed to include the masculine,
feminine and neuter forms. You agree to execute any additional documents and
provide any information that we reasonably request.
U. ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING THE ADMINISTRATIVE RULES AND
SERVICE FORMS, CONSTITUTES THE ENTIRE AGREEMENT BETWEEN YOU AND US REGARDING
THE DESCRIBED TREASURY MANAGEMENT SERVICES; IT SUPERSEDES ALL PROPOSALS AND
PRIOR AGREEMENTS AND ALL ORAL DISCUSSIONS RELATING TO THE SUBJECTS COVERED BY
THIS AGREEMENT; AND IT MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS
EXHIBIT "B"
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<PAGE>
OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN YOU AND US.
III. SERVICES.
A. FUNDS TRANSFER/ACH SERVICES. We provide automated clearing house ("ACH")
and wire transfer services to meet the funds transfer needs of our customers.
The following terms, as well as the Service Forms and any other referenced
agreements, apply to these services. In this section, we refer to requests
to transfer funds to or from your accounts via wire transfer, ACH, or the
other methods described in this section as "payment orders".
1. INCORPORATION OF CERTAIN OTHER AGREEMENTS AND DOCUMENTS. Funds
transfer services are subject to the Operating Bulletins and Circulars of the
Federal Reserve Bank of Dallas. You also must comply with the procedures and
requirements outlined in the Administrative Rules for these services, as
modified from time to time.
A. WIRE TRANSFER. Unless the Bank or one of our affiliates is the
beneficiary's bank, we will transmit all domestic wire transfer payment
orders through the Fedwire service of the Federal Reserve Bank, and those
payments orders will be governed by subpart B of Regulation J (12 CFR
210.25, et seq.). We will transmit all payment orders designating a
beneficiary's bank that is not located within the United States via telex
or through the SWIFT communications system. Payment orders sent through
SWIFT will be governed by the rules of SWIFT.
B. ACH. We will transmit all domestic ACH credit and debit entries
through the National Automated Clearinghouse Association ("NACHA"), the
SouthWestern Automated Clearinghouse Association ("SWACHA"), correspondent
banks, Federal Reserve banks and ACHs, and all ACH entries will be governed
by the NACHA/SWACHA rules and any amendments to those rules (the
"NACHA/SWACHA Rules"). You agree to comply with the NACHA/SWACHA Rules.
We will provide you with a copy of the NACHA/SWACHA Rules and notice of all
amendments within a reasonable time after they become known to us.
C. INTERNATIONAL ACH. We will transmit all international ACH debit or
credit entries to the United Kingdom through the Bankers' Automated
Clearing Services Limited ("BACS"), and those entries will be governed by
the BACS procedures. If you indicate on your ACH Service Form that you
will use United Kingdom ACH services, we will provide you with a copy of
the BACS procedures. If we offer you ACH transmissions to other countries,
we will provide you with any additional procedures prior to implementation
of that service.
EXHIBIT "B"
-7-
<PAGE>
2. ISSUANCE OF PAYMENT ORDERS. You may issue payment orders for wire
transfers from your accounts with us orally, electronically or in writing, as
set forth in the Service Forms. ACH payment orders and orders for the issuance
of checks must be issued electronically. You authorize us to comply with those
payment orders. We will only receive and process payment orders on our funds
transfer business days, and within our established cutoff hours. We have the
right to accept or reject payment orders, and we may hold or reject payment
orders for many reasons, including your failure to have an available balance in
your Settlement Account (hereinafter defined) that is sufficient for the
requested transaction. We will not be liable for failure to detect errors in
the beneficiary or amount of payment orders, or the existence of duplicate
payment orders.
a. ACH. By initiating each ACH debit or credit entry, you represent to us
that you have obtained the authorization of your customer/employee/third
party ("Receiver") as required in the NACHA/SWACHA Rules, and that you have
complied with the NACHA/SWACHA Rules and the Administrative Rules with
respect to the entry. Additionally, you make each of the representations
and warranties of a Receiver and an Originator under the NACHA/SWACHA
Rules, as applicable, and you give us each warranty that the NACHA/SWACHA
Rules require us to make to any other party involved in a transaction.
Further, if you initiate any ACH debit governed by the Electronic Funds
Transfer Act of 1978, Federal Reserve Regulation E, or other laws or
regulations governing the initiation of preauthorized electronic debits,
you warrant that you have fully complied with all applicable requirements,
and you agree that you are solely responsible for compliance.
(i) PAYMENT ORDERS ON DISKETTE. If you elect to deliver your
instructions for ACH debit or credit entries to us using a diskette,
you do so with the understanding that we have no effective and
commercially reasonable method to determine whether the information on
the diskette was properly authorized by you, or whether the diskette
was altered or tampered with after the time the diskette left your
premises, and you understand that transmitting instructions using a
diskette is a less secure means of providing instructions to us than
other commercially reasonable options for transmission of instructions
that we make available to you. You agree that we may act on the
instructions contained on the diskette when the diskette arrives at
Bank, and that we have no obligation to verify that the information on
the diskette is correct or was authorized by you. We will not be
liable to you for acting in accordance with any instructions on the
diskette, regardless of whether the instructions were in fact
authorized by you, and you agree to indemnify us for and hold us
harmless against any and all claims, demands, proceedings, losses,
liabilities, expenses, including attorneys' fees, and damages,
including consequential, special and punitive damages, directly or
indirectly arising out of our processing of diskettes.
EXHIBIT "B"
-8-
<PAGE>
b. PAPER DEBITS. If the ACH Service Form authorizes debit transactions
that are to be initiated by sending to another financial institution a
paper preauthorized check or similar document ("Paper Items"), you
authorize us to take all action necessary to effect transfers of funds in
other banks ("Local Depository Banks") to an account at Bank or one of our
affiliates. If the account to be debited is owned by you, you agree to
provide a letter of instruction to each Local Depository Bank, authorizing
the Local Depository Bank to accept and pay all Paper Items drawn by us
against your account, and to take all other actions necessary to ensure
that the Paper Items will be honored by the Local Depository Bank. If the
account to be debited is not owned by you, you represent and warrant to us
that the amounts to be transferred via Paper Items are due and owing to
you, that the debits have been authorized by the party being debited, and
that you have complied with the NACHA/SWACHA Rules with respect to each
debit.
c. AUTOMATIC STANDING TRANSFERS. If you select the automatic standing
transfer service in the Wire Transfer Service Form, you authorize us to
automatically transfer funds from the disbursement accounts to the
receiving accounts specified in the Service Form, all in accordance with
the instructions in the Service Form.
d. AUTHORIZATION TO ISSUE CHECKS. If you use our consolidated payables
services, you authorize us to issue or arrange for the issuance of paper
items drawn on your account(s) with us ("checks") upon our receipt of a
transmission from you containing instructions to issue checks. By
transmitting to us a request for issuance of a check in accordance with the
security procedures, you agree that we may honor the check upon
presentation to us. You must provide us with all information necessary for
us to arrange for issuance and delivery of checks (including, without
limitation, information you want printed on the check or enclosed with the
check, and the mailing or delivery address to which the check is to be
mailed) by transmitting that information to us by the method specified in
the Consolidated Payables Service Form. You understand that all accounts
on which checks are to be issued through the consolidated payables service
must utilize our account reconciliation and positive pay services, and that
Item Issue Information for positive pay services on the applicable accounts
will be provided by us or our vendor who prints the checks.
3. EXECUTION OF PAYMENT ORDERS. We may determine the order in which we
handle payment orders that we receive from customers. ACH credit or debit
entries may be transmitted by any means we deem appropriate.
a. NAME/IDENTIFYING NUMBER INCONSISTENCIES. In executing a payment order
(including incoming payments), we and other banks involved in the transfer
may rely on the identifying number (e.g., transit routing number and/or
account number) of any beneficiary, intermediary bank, receiver,
beneficiary's bank, or receiving depository financial institution ("RDFI")
as instructed in the payment order, even if that number
EXHIBIT "B"
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<PAGE>
identifies a person different from the named beneficiary, intermediary
bank, receiver, beneficiary's bank or RDFI. You assume full responsibility
for any inconsistency between the name and the identifying number of any
credit party.
b. PAPER DEBITS. If you select Paper Debits in the ACH Service Form, you
authorize us to endorse each Paper Item substantially as follows (with any
appropriate changes in the name of the bank) if required by the Local
Depository Bank:
CREDIT TO THE ACCOUNT OF THE
WITHIN NAMED PAYEE
ABSENCE OF ENDORSEMENT GUARANTEED
ALL RIGHTS RESERVED WITHOUT PREJUDICE
TEXAS COMMERCE BANK N.A.
4. ACH DISCREPANCIES/ERRORS. In addition to the general notification
requirements regarding discrepancies and errors, you must notify us within 5
business days after the designated settlement date if you discover that any ACH
entry you initiated was in error. After you notify us of the error, we may
indicate a reversal entry on your behalf in accordance with the NACHA/SWACHA
Rules, but we cannot guarantee that the funds transferred by the erroneous entry
will be returned to you.
5. SETTLEMENT. The Service Forms designate a demand deposit account (the
"Settlement Account") at Bank or an affiliate bank approved by us, which will be
used for your ACH and wire transfer transactions. You authorize us to debit and
credit your Settlement Account in connection with those transactions (including
but not limited to rejected, returned or erroneous payment orders), and you
authorize any affiliate bank holding a Settlement Account to honor our
instructions with respect to the Settlement Account. You agree to have
sufficient available balances in your Settlement Account to cover the amount of
each day's payment orders, and you agree not to submit payment orders that
exceed the available balances in the Settlement Account.
a. ACH ONLY. If you use our ACH services, we may at any time in our
sole discretion require you to maintain available balances in your
Settlement Account in a minimum amount determined by us. We may at
any time offset or debit the Settlement Account for any amounts you
owe to us, whether related to ACH services or otherwise. You must
maintain the Settlement Account for at least 60 days after ACH
services terminate.
6. TRANSFERS TO FOREIGN COUNTRIES. If a transfer is to be made to a bank
in a foreign country, the paying bank may make payment in the currency of the
country to which the transfer is made, at the paying bank's exchange rate for
U.S. dollars, even if you request the transfer in U.S. dollars. If you issue a
payment order in a currency other than the U.S. dollar, we may
EXHIBIT "B"
-10-
<PAGE>
debit your account for the U.S. dollar equivalent of the amount of the
foreign currency, at our then prevailing selling rate. If we do not have a
selling rate, then we may use any exchange rate that we determine to be
reasonable under the circumstances. You agree to comply with all local
currency restrictions and all U.S. and other laws governing the transaction.
7. PROBLEMS WITH ACH INPUT. If we notify you that your ACH input is
unreadable or unprocessable, you must provide us with a replacement input file
at least two days before the scheduled settlement. If you are unable to provide
a timely processable replacement file, we will advise you of other available
recovery options. If we are generally unable to process your ACH input in a
manner satisfactory to us because of a high error or rejection rate or for other
reasons, we have the option either to terminate ACH service immediately or to
work with you to correct the problems. We may deduct any returned or rejected
entries from either the Settlement Account or of your other accounts at the
Bank. Our only duties in connection with entries that are returned or rejected
by any ACH association or any receiving depository financial institution are
those set out in the NACHA/SWACHA Rules and applicable law.
8. ACH ENTRIES PROCESSED THROUGH VENDORS. You may elect to transmit your
ACH entries to us using the services of a vendor acceptable to us, in which case
you authorize us to follow the instructions of the vendor indicated on the
Service Form to the same extent and under the same conditions as would apply if
the instructions came directly from you. You remain responsible for complying
with all NACHA/SWACHA Rules and maintaining sufficient records of your entries
to permit resolution of questions about errors and discrepancies. You also
authorize us to notify the vendor, as your agent, of any problems with your ACH
input, and to provide the vendor with information necessary to permit the vendor
to perform the services indicated on the Service Form. You agree to provide the
vendor with copies of the NACHA/SWACHA Rules and all relevant Administrative
Rules.
a. VENDOR ERRORS/FAILURES. We are not liable to you for errors in
execution made by the vendor, or for our inability to process your ACH
entries because of vendor computer or software failures.
b. VENDOR FEES AND CHARGES. You agree to pay or reimburse us, upon
our demand, for any vendor fees or charges assessed against us by the
vendor in connection with the services that you use.
c. SUBSTITUTION OF VENDOR. If you wish to change vendors, you must
notify us at least 30 days prior to the effective date of the change,
and we must approve of the new vendor. We may require the new vendor
to sign certain agreements with us as a condition of our approval.
9. MISCELLANEOUS. When you initiate an ACH credit entry, and when you
receive a credit to your account via ACH, that credit is provisional until the
RDFI has received final
EXHIBIT "B"
-11-
<PAGE>
settlement through a Federal Reserve Bank or otherwise has received payment
as provided for in Article 4A of the Texas Business and Commerce Code. If
the RDFI does not receive payment for the entry, the RDFI is entitled to a
refund from the receiver in the amount of the credit to the receiver's
account, and you will not be considered to have paid the amount of the credit
entry to the receiver. The NACHA/SWACHA Rules do not require the RDFI to
provide the receiver with notice that the RDFI has received the entry unless
the RDFI has agreed to do so.
B. LOCKBOX SERVICES. If you execute a Lockbox Service Form, we will perform
lockbox processing services for you in accordance with the options you have
selected in the Lockbox Service Form. Lockbox processing includes opening
envelops and handling checks and other evidences of payment ("Checks") and
accompanying documents delivered to your lockbox(es), endorsing Checks as we
determine is necessary, submitting Checks for payment by paying banks and
drawees, crediting your designated account with proceeds of Checks, returning or
forwarding Checks that your Service Form indicates are not acceptable to you,
and adjusting account balances if errors occur or Checks are returned unpaid.
1. RESTRICTIVE ENDORSEMENTS. We will process and deposit all checks
bearing restrictive notations or endorsements, including but not limited to
"payment in full," or "balance on account," or "final settlement," unless
your Service Form indicates that you want us to forward such checks to you.
In that case, we will use reasonable efforts to identify Checks with
restrictive endorsements or notations (but we will not examine the reverse
side of any Checks for restrictive notations). However, we won't be liable
to you if we process and deposit those Checks.
2. RETURNED CHECKS. If any Check is returned to us unpaid for any reason,
we will charge back that Check against your account, and we will charge
your account our fee for returned checks (unless the Service Form instructs
us to take these charges into account in account analysis or to do
otherwise). We will forward the returned Checks, if available, along with
the debit advice, to you.
3. FOREIGN CHECKS. We will handle Checks drawn in foreign currency or on
foreign bank offices on an individual collection basis only. You bear all
the risk of any fluctuation in exchange rates. We will charge your account
our standard fees for foreign collections (or take these charges into
account in account analysis if the Service Form specifies).
4. CHECKS PAYABLE TO THIRD PARTIES. If your Service Form indicates that
you want us to process Checks payable singularly or jointly to a person or
entity other than you ("Third Party"), you represent and warrant to us that
you have the authority and right to receive and control all Checks received
in the lockbox, including Third Party Checks, and their proceeds. This
representation and warranty extends to all acceptable payees
EXHIBIT "B"
-12-
<PAGE>
under the Service Form. You authorize us to endorse each Check in the
name of the Third Party as necessary for negotiation. You must promptly
provide us with evidence of your authority to receive and control Third
Party Checks at any time that we request that evidence.
C. CONTROLLED DISBURSEMENT SERVICES. Controlled disbursement allows you to
write checks and drafts on your demand deposit account (the "Disbursement
Account") at an affiliate bank designated in the Service Form (the "Disbursement
Bank"), and to fund payment of those checks and drafts by transfers from a
demand deposit account at Bank as designated in the Service Form (the "Funding
Account").
1. AUTHORITY OF BANK. We may open the Disbursement Account in your name,
and may act as your agent in authorizing withdrawals from and deposits to
the Disbursement Account, except as that authority is limited in the
Service Form. We may also act as agent for Disbursement Bank in connection
with controlled disbursement services. If you want to revoke our authority
with respect to the Disbursement Account, you must give us written notice.
Even though we open the Disbursement Account and act as your agent in
connection with it, the Disbursement Account is a deposit arrangement
exclusively between you and Disbursement Bank.
2. AUTHORITY OF DISBURSEMENT BANK. Disbursement Bank will act as your
agent to perform or to assist us in performing actions appropriate to carry
out the purposes of controlled disbursement services, including requesting
that we transfer amounts from the Funding Account to the Disbursement
Account by any means acceptable to us and Disbursement Bank. Disbursement
Bank may rely on our instructions regarding a Disbursement Account and may
pay items drawn against the Disbursement Account pursuant to our
instructions.
3. STANDARD TRANSFERS/MAINTENANCE OF AVAILABLE BALANCES. Upon Disbursement
Bank's request, we will transfer funds in the Funding Account to the
Disbursement Account on each business day. We never have the obligation to
transfer more than the amount of available funds in the Funding Account.
You must insure that there are available funds in the Funding Account
sufficient to cover each day's funding requirements in the Disbursement
Account. If you fail to have adequate available funds in the Funding
Account to cover the Disbursement Account requirements, we may return
checks drawn on the Disbursement Account.
4. ADJUSTMENTS. Both we and Disbursement Bank rely on information from
third parties to report to you and to initiate transfers from the Funding
Account to the Disbursement Account. Difference in the reported clearing
totals and the actual totals are identified the morning of the next
business day. If the reported clearing totals that we receive from third
parties are inaccurate on the funding day, the Disbursement Account will
not show
EXHIBIT "B"
-13-
<PAGE>
a zero balance on the next day unless we indicate a funds transfer
to the Disbursement Account from our own funds or the Disbursement Bank
returns unpaid a sufficient number of checks to avoid an overdraft in the
Disbursement Account. You authorize us to debit the Funding Account (or
any of your other accounts at Bank or Disbursement Bank) in an amount
sufficient to reimburse us for any advances we make to cover items paid or
withdrawals made against insufficient available funds in the Disbursement
Account. If the actual clearing totals are such that the Disbursement
Account has a positive balance, you authorize us to debit the Disbursement
Account and credit the Funding Account in a like amount so as to result in
a zero balance in the Disbursement Account.
5. USE OF OTHER SERVICES FOR CONTROLLED DISBURSEMENT ACCOUNTS. If you use
any of the other described treasury management services in connection with
your Disbursement Account, you understand that we will act as the
Disbursement Bank's agent in performing the services, and all of your
communication will be with us. You authorize us to act on your behalf in
instructing the Disbursement Bank, and you authorize Disbursement Bank to
act on our instructions with respect to your Disbursement Account. In each
case where you have agreed to hold us harmless or to indemnify us in
connection with particular services, you also agree to hold Disbursement
Bank harmless and to indemnify Disbursement Bank. You agree that if we
would not be liable to you in a given situation, Disbursement Bank will not
be liable to you either.
D. POSITIVE PAY SERVICE. We offer a service that allows you to provide us with
information regarding all checks and other debit items ("Items") issued by you
against your accounts with us or an affiliate bank, including Item number and
amount ("Item Issue Information"), which we can then compare against Items that
we receive for payment against your accounts.
1. ITEM ISSUE INFORMATION REQUIREMENTS. You must provide Item Issue
Information to us via electronic transmission by the deadline specified in
the Administrative Rules (the "Information Deadline") each business day.
We may also, at our sole option, elect to accept Item Issue Information in
written form via facsimile from time to time. If we accept Item Issue
Information after the Information Deadline, that does not obligate us to
accept late Item Issue Information in the future.
2. BANK RENEW OF ITEM ISSUE INFORMATION. We will review all Items
presented to us for payment against all Item Issue Information that is in
our files as of the Information Deadline on the previous business day. You
agree that if the Item number and amount on an Item conform to the Item
Issue Information, then we may consider that Item validly issued and
authorized, and we may pay the Item without contacting you. You agree that
if we act in accordance with this Agreement in paying Items, we will be
deemed to have exercised ordinary care.
EXHIBIT "B"
-14-
<PAGE>
3. SUSPECT ITEMS. If we find that an Item is inconsistent with the Item
Issue Information you provide to us (a "Suspect Item"), we will advise you
by the notification time specified in the Administrative Rules (the
"Notification Time") via telephone and facsimile. You must instruct us by
the decision deadline specified in the Administrative Rules (the "Decision
Deadline") via facsimile signed by an Authorized Person or an Authorized
Signer as to whether to pay or stop payment on each Suspect Item (the
"Instructions"). If you fail to provide Instructions by the Decision
Deadline, we will either pay or return the Suspect Items, as you designate
in the Service Form.
a. LATE INSTRUCTIONS. If you miss the Decision Deadline but
belatedly provide Instructions to stop payment on certain Suspect
Items, we may elect to attempt to return the Items unpaid; however,
the presenting bank may not be obligated to honor the return. If the
presenting bank fails to honor the return, you must immediately
reimburse us for the amount of the Item, and you agree to indemnify us
and hold us harmless from any costs, suits, expenses, liabilities,
damages and attorney's fees related to return of the Item.
b. EXCESSIVE SUSPECT ITEMS. If we determine that there appear to be
an excessive number of Suspect Items on a particular business day,
possibly indicating inaccurate or missing Item Issue Information, we
will contact you so that we can jointly determine how you can provide
us with instructions to pay or return the Suspect Items, and we will
be entitled to rely on your instructions without further review of the
Items. If any reason you instruct us to suspend positive pay services
and pay all Items presented at our teller lines, you agree that we
will have exercised ordinary care in following your instructions and
paying Items without review of Item Issue Information, and we will not
be liable to you for paying any fraudulent item during the suspension
of teller line positive pay services.
E. MAXIMUM DOLLAR AMOUNT SERVICE. If you use our Maximum Dollar Amount
Service you authorize us to automatically return all Items in excess of a
designated dollar limit or to notify you of such Items, as designated in the
Service Form.
F. STALE DATE SERVICE. If you use our Stale Date Service you authorize us to
automatically return all Items that are processed for payment more than a
specified number of days after the issue date ("Stale Items"), or to notify you
of Stale Items, as designated in the Service Form. You agree to advise your
payees of the stale date restrictions on the negotiability of Items that you
issue. You agree to hold us harmless and indemnify us against any damages
caused by your instructions to us to deem Items stale on the basis of a shorter
time period than that provided by the Texas Uniform Commercial Code or other
applicable laws.
G. DOMESTIC DRAFTS. If you sign a Draft Service Form, you may issue drafts
payable through an account at Bank or Disbursement Bank. The bank through which
the draft is payable
EXHIBIT "B"
-15-
<PAGE>
is a collecting bank only, meaning that the bank will make presentment to
you, but will not automatically pay the draft except as set forth in this
Agreement
1. DRAFT REQUIREMENTS. All drafts must contain on the face of the
instrument (a) the words "DRAFT" in prominent type, (b) a legend that the
draft is "payable through" either Bank or Disbursement Bank, and (c) a
unique serial number. In addition, each draft must:
(i) contain a statement that the draft is payable on sight ("Sight
Drafts");
(ii) contain a statement that the draft is payable a certain number of
days after presentment to you, specifying the number of days ("Time
Drafts"); or
(iii) be printed with magnetic ink character recognition ("MICR")
characters conforming to specimens furnished by us and reflecting our
transit routing number and an account number (the "Draft Account
Number") indicated in the Service Form ("Payable Through Drafts").
The Draft Account Number is not the number of your deposit account
with Bank, but is a special number for the purpose of electronic
retrieval of information regarding drafts. You agree to provide us
with specimen Payable Through Drafts after printing for MICR testing
and our approval before issuing any Payable Through Drafts to payees.
Sight Drafts and Time Drafts must not be printed with any MICR characters.
We may treat any draft that does not meet these requirements precisely
either as a draft or as a check.
2. PRESENTMENT OF DRAFTS. We will notify you of the total amount of all
drafts on a daily basis, and will deliver the drafts to you by electronic
transmission, commercial courier, or delivery to your agent at our offices,
as designated in the Service Form. We will notify you of any Payable
Through Drafts received by our published notice time for Payable Through
Drafts on the business day following the business day we receive them. The
day of this notice is called the "Appropriate Banking Day."
a. PHYSICAL DELIVERY. If we physically deliver drafts to you, you or
your agent must acknowledge receipt of the drafts.
b. ELECTRONIC DELIVERY. If you choose electronic delivery, we will
electronically transmit to you a listing of the serial number and
dollar amount of the drafts received. Entry of information into our
chosen electronic system constitutes delivery of drafts to you,
regardless or whether or not you retrieve the information. If
electronic delivery is unavailable to us for any reason, we may
deliver drafts to you by commercial courier. We will subsequently
return to you the original of electronically presented drafts or
provide you with microfilm or microfiche copies of the original
drafts, as designated in the Service Form.
EXHIBIT "B"
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<PAGE>
3. DISHONORED DRAFTS. If you wish to dishonor any Sight Draft, you must
do so by our published dishonor deadline for Sight Drafts on the business
day following the day we present the drafts to you. If you wish to
dishonor any Time Draft, you must do so by our published dishonor deadline
for Time Drafts on the due date calculated by us. If you wish to dishonor
any Payable Through Draft, you must do so by our published dishonor
deadline on the Appropriate Banking Day. If you dishonor a draft, we will
return it to the payee marked as we deem appropriate. If you fail to
dishonor a draft by the dishonor deadline by the appropriate method
described below, we may treat the draft as accepted for payment.
a. DRAFTS PRESENTED BY PHYSICAL DELIVERY. If we physically deliver
the draft to you, to dishonor it you must physically return the draft
to us.
b. DRAFTS PRESENTED ELECTRONICALLY. If we present the draft to you
electronically, to dishonor it you must notify us by telephone,
electronically, or by facsimile.
c. LATE DISHONOR. If you physically return a draft or notify us of
your dishonor of a draft after the dishonor deadline, we may elect to
attempt to process the return for you, but you understand that the
originating financial institution is not obligated to accept the
return. You agree that we will not be liable to you, and you will
indemnify us for any losses or costs, including reasonable attorney's
fees, that we incur as a result of returning the draft.
4. PAYMENT FOR DRAFTS. You must tender sufficient immediately available
funds to pay all drafts that you have not dishonored by the applicable
dishonor deadline. If you don't have sufficient available funds in the
account through which a draft is payable, we may deem that draft dishonored
and may return it, regardless of your instructions to us, without liability
for wrongful dishonor, or we may charge any of your accounts for the amount
the draft.
5. RESPONSIBILITIES OF BANK. We assume no responsibility for the
genuineness of any draft or endorsements on any draft. If the payee of a
draft demands return of the draft and any accompanying documents before the
applicable dishonor deadline, we may notify you of this request, but we are
not obligated to do so; we assume no responsibility for your failure to
respond to such a request.
H. ELECTRONIC STOP PAYMENTS. We offer you the ability to electronically place
stop payment orders against Items drawn on your accounts at the Bank and certain
affiliate banks. If we provide you with access to software that will permit you
to place electronic stop payment orders, you agree as follows.
EXHIBIT "B"
-17-
<PAGE>
1. INSTRUCTIONS. All stop payment instructions must comply with the
Administrative Rules and must describe the Item by MICR encoded serial
number (i.e., check number) and the face amount of the Item, and we must
receive the instructions in sufficient time to allow us to act on the
instructions prior to payment of the Item in the normal course of business.
Generally, stop payment instructions will not be effective until at least
30 minutes following the time you electronically input the instructions.
2. BANK LIABILITY FOR PAYMENT OF ITEMS. If we pay an Item after you have
validly provided us with stop payment instructions as a result of our
failure to exercise ordinary care or to act in good faith, our liability to
you will not exceed the face amount of the Item. You agree that we will
not be deemed to have failed to exercise ordinary care if (1) you fail to
comply with this Agreement or the Administrative Rules; (2) your
description of the Item is inaccurate or incomplete; or (3) we do not
receive the stop payment instructions in sufficient time to allow us to act
on your instructions prior to payment of the Item in the ordinary course of
business.
3. DURATION OF STOP PAYMENT INSTRUCTIONS. Electronic stop payment
instructions are effective for a period of 1 year from the date we receive
the instructions. You may renew the instructions for an additional 1-year
period by issuing additional electronic stop payment instructions at the
end of the initial 1-year period. The 1-year effective period applies only
to instructions issued through our electronic stop payment service, and not
to instructions issued via telephone, fax, or other systems. All other
stop payment instructions are governed by the provisions concerning stop
payments in the Deposit Rules.
I. ELECTRONIC ADJUSTMENT AND RESEARCH REQUESTS. We offer you the ability to
electronically request adjustments to and/or research on items drawn against or
deposited to your accounts at the Bank and certain affiliate banks. If we
provide you with access to software that will permit you to place these
electronic requests, you agree that requests made using this service are
requests only, and we are not obligated to take any particular action with
respect to your request. If we are unable to satisfy your request or we
determine that any requested adjustment is not warranted or appropriate, we will
not have any liability to you for our failure to complete the requested research
or adjustment.
J. CHECK SAFEKEEPING SERVICE. If you use our check safekeeping service, we
will provide microfilm, microfiche or CD ROM copies of the Items drawn on the
accounts you specify in a Service Form. If you indicate on your Service Form
that you want us to provide CD ROM copies of the Items drawn on your accounts at
other financial institutions, we will provide CD ROM copies of the Items you
deliver to us. We will deal with your original Items as you specify in the
Service Form.
EXHIBIT "B"
-18-
<PAGE>
1. OBTAINING ORIGINALS OR COPIES OF ITEMS. If you want a photocopy or the
original of any Item we are holding in safekeeping, you must make a written
request, providing us with all information concerning the Item that is
shown on your Account Reconciliation Report or your bank statement (or if
the Item is drawn on an account at another financial institution, you must
provide all information that is necessary for us to retrieve the original
Item). We will make a good faith effort to provide you with (1) a
photocopy of the Item within 2 business days after we receive your request,
or (2) the original Item within 5 business days after we receive your
request. We may delay providing you with a photocopy of the Item if we
cannot locate it on the film or if you request a large number of Items.
2. AVAILABILITY OF ITEMS. For purposes of Section 4.406 of the Texas
Business and Commerce Code, any Item reflected on a statement of account
will be deemed available to you on the ending date of the statement period.
3. BANK'S LIABILITY. We will not be liable to you or anyone else because
an original Item is destroyed or unavailable if we have acted in accordance
with this subsection of this Agreement and your instructions in the Service
Form. It is your responsibility to review the microfilm, microfiche, or CD
ROM copies of the Items drawn on your accounts and to promptly notify us of
any items that are not clear on the microfilm, microfiche, or CD ROM image.
We have no liability or responsibility for the accuracy or completeness of
any information provided to us in connection with accounts at or Items
drawn on other financial institutions, or for the condition of the original
Items provided to us by you or other financial institutions.
K. CASH VAULT AND COMMERCIAL DEPOSIT SERVICES. If you use the services
described below, the following provisions apply.
1. COURIER SERVICE. You may deliver and pick up shipments of cash or
checks to or from us by using the services of a courier that has been
preapproved by us, who will act as your agent. The courier must comply
with our Administrative Rules and must maintain adequate insurance to cover
its liabilities under this Agreement. We may refuse to permit any courier
to enter our premises with or without cause, in which case we will use
reasonable efforts to promptly notify you.
2. DEPOSIT PRESENTMENT AND PROCESSING. You must deliver deposits to your
account to be processed through the vault in sealed bags that meet the
standards described in the Administrative Rules for the deposit presentment
method you are using, have been approved by us, and contain only cash and
checks. The bags may also contain food stamps if you have provided proof
satisfactory to us of your authority to redeem food stamps. We are
authorized to open the bags and count the cash, checks and food stamps
EXHIBIT "B"
-19-
<PAGE>
found in the bag, and then to credit our count of items to your account
designated in the Service Form.
a. DELIVERY TO VAULT. If we agree to accept your deposits at one of
our vault locations, we will provide a receipt indicating the number
of bags received, but this receipt is not an acknowledgment of the
contents of any bag, nor is any telephonic or other acknowledgment of
a deposit of which you notify us by telephone an acknowledgment of our
receipt of that deposit or of the contents of any bag.
b. DELIVERY TO BRANCH FOR DELAYED PROCESSING. If we agree to accept
your deposits at one of our branch locations, we will not verify the
amount of deposits at the time of receipt, but we will provide you
with a receipt showing the amount indicated on your deposit slip.
This receipt is not an acknowledgment of the contents of any bag.
c. DELIVERY TO UNATTENDED FACILITY. If we agree to allow you to use
one of our unattended facilities (including but not limited to a night
depository or commercial ATM), we will provide you with an access
device (such as a key or card that may require a PIN). You must
return all access devices to us upon our request. We will process any
deposits delivered to an unattended facility as specified in the
Service Form and our Administrative Rules. If you receive a receipt
from an unattended facility, the receipt is not an acknowledgment of
the contents of any bag or of the receipt of any bags. While you or
your agents are physically present at one of our unattended
facilities, you are a licensee only and we owe you only the duty of
care that we owe a licensee.
d. DISCREPANCIES. If there are differences between the amount
credited by us and the amount shown on the deposit slips prepared by
you or the receipt provided to you upon initial presentment, a
supervisor or similar bank employee will verify the official bank
count. Our determination and records as to our receipt of any bag and
as to the contents of any bag is conclusive and binding on you, and we
may correct any provisional credit made to your account so as to be
consistent with the official bank count. We will notify the customer
representative designated in the Service Form if the difference is
more than the amount specified in the Administrative Rules.
e. RELATIONSHIP UPON DELIVERY OF BAGS. Until we verify the contents
of the bags and enter a final credit to your account on our books, our
only relationship with respect to the deposit is that of bailee and
bailor. We are not responsible for any property included in a bag
other than cash, checks and food stamps.
EXHIBIT "B"
-20-
<PAGE>
3. CURRENCY DELIVERIES. If you wish to order currency, you must place the
order within the time frame set out in the Administrative Rules using the
system designated in the Service Form and Administrative Rules, and you
must comply with all of the procedures and Administrative Rules applicable
to that system. We will notify you from time to time of the denominations
and maximum amounts of currency that you may order.
a. PAYMENT FOR CURRENCY. We will debit the account designated in the
Service Form for the amount of currency ordered by you according to
our records. You agree to have sufficient available funds in the
designated account to cover each day's currency orders. If the
account does not contain sufficient available funds, we may either
supply a partial order or refuse to supply any of the order.
b. DISCREPANCIES. You must verify each currency shipment under dual
control procedures immediately upon receipt of the shipment. If you
discover a discrepancy in a shipment received in a plastic bag prior
to opening the bag, you must return the bag to us immediately without
opening the bag. If you discover a discrepancy within a strap, you
must report it to us within 5 days of the shipment date and promptly
return the strap to us. We will have a reasonable time to investigate
any reported discrepancy and we will promptly communicate our findings
to you.
4. INVESTIGATIONS. You agree to cooperate fully and to cause your
employees, agents, officers, contractors and subcontractors to cooperate
fully with us in any investigation of any loss or discrepancy. If you fail
to comply with these duties of cooperation, that will constitute your
release of us from any liabilities, claims or expenses incurred by anyone
in connection with a discrepancy.
5. CURRENCY TRANSACTION REPORTS. We may be required by law to report any
currency deposits or withdrawals in a single day exceeding $10,000 or lower
limits established by the Internal Revenue Service.
6. BANK'S LIABILITY. You may not assert any claim you have against us in
connection with the services described in this Section K. more than 90
days after the date the event occurred that gives rise to the claim. You
assume all risks of using our unattended facilities, including risks of
theft, robbery and personal injury; we are not responsible if a facility
fails to operate properly in any way, including failing to open, close,
lock, or unlock. It is your responsibility to verify that your bags have
dropped down completely into the facility, and you agree that you will not
leave your bags in any facility that does not appear to be operating
properly. We will not be liable to you if any of our unattended facilities
or tele-entry systems is closed or otherwise unavailable for use at any
time.
EXHIBIT "B"
-21-
<PAGE>
L. INFORMATION SERVICES. We offer electronic cash management and information
services, available by direct transmission to you or by using a personal
computer and certain software. If we provide you with access to our cash
management and information reporting software (the "Software"), or if we provide
you with another means of electronic access to information about your accounts,
the following provisions apply.
1. SOFTWARE. The Software will be distributed to you on a non-exclusive
basis in object code form on a diskette or other medium. You must
determine whether the Software is compatible with one or more of the
personal computers and operating software described in the Administrative
Rules, and must advise us of the personal computer and operating software
you intend to use. When the Software is distributed to you, you will be
granted a non-exclusive, non-transferable license to use the Software (the
"Software License"), and by using the Software you agree to comply with
all of the terms and conditions of the Software License.
2. CUSTOMER ACCOUNTS. You will designate the accounts to which you want
to secure access in the Service Form. If you request access to accounts of
other companies in which you or your parent have majority ownership
("Affiliates"), you must provide evidence satisfactory to us of your
authority to access the Affiliate accounts, and must represent and warrant
that you are authorized to access those accounts and give instructions on
behalf of the Affiliates.
3. BANK'S OBLIGATIONS. We will transmit all appropriate financial data
within our control that is necessary for you to use the Software for the
purposes for which it is designed, and will act on appropriate instructions
received from you in connection with the Software. We make no
representations or warranties regarding the accuracy of any information you
receive while using the Software or otherwise accessing information about
accounts, and we will not be liable if you receive inaccurate information,
unless we have been grossly negligent or engaged in willful misconduct in
making available the information.
4. USE OF THE SOFTWARE PRODUCTS. You may use the Software and otherwise
access the account information only (a) for so long as this section of this
Agreement is in effect, (b) for your own business use, and (c) in
accordance with the terms of this Agreement, the Software License, and the
Administrative Rules. All trademarks, tradenames, service marks,
copyrights, programs, software, specifications, systems designs,
applications, routines, sub-routines, techniques, enhancements,
documentation, manuals, ideas and formulas used, developed or provided by
us or otherwise in connection with this Agreement are proprietary property,
will remain the sole property of the rightful owner (whether Bank or a
third party), and you have no ownership interest in them. You agree not to
disclose any proprietary or other confidential information to any third
party.
EXHIBIT "B"
-22-
<PAGE>
5. TERMINATION. If the Software License terminates, your rights and our
obligations with respect to the Software will terminate immediately without
prior notice to you, but your obligations not to disclose Confidential
Information will remain in effect.
M. CHECK CASHING SERVICE. If you have signed a Check Cashing Service Form, we
may cash certain checks or drafts drawn on your accounts at other banks for the
payees of those checks or drafts. The Service Form will specify the
requirements for checks or drafts that will be cashed.
1. PRESENTMENT OF CHECKS/DRAFTS. All named payees on the check or draft
must be present at the time the check or draft is presented to us, and must
provide identification bearing the name of the payee in the form of a state
driver's license or state identification card, or in another form
acceptable to us. We may require additional identification if we determine
that such a request is warranted, and we may refuse to cash any particular
check or draft without giving you notice of our refusal.
2. DISHONORED OR RETURNED CHECKS. You agree to pay us the amount of any
check or draft cashed by us that is dishonored or returned for any reason,
together with all applicable fees in connection with the dishonor or
return. As long as you use this service, you will maintain an account with
us, and you authorize us to debit that or any other account for the amount
of any dishonored or returned check and applicable fees.
EXHIBIT "B"
-23-
<PAGE>
Austin
(4 Locations)
700 Lavaca
(512) 479-2695
Beaumont
(4 Locations)
510 Park
(409) 880-1445
El Paso
(10 Locations)
Main at Mesa
(915) 546-6506
Houston Area
(53 Locations)
712 Main Street
(713) 216-5714
Dallas/Fort Worth Metroplex
(33 Locations)
Dallas
2200 Ross
(214) 965-2173
Fort Worth
201 Main
(817) 878-7567
Permian Basin
(3 Locations)
400 West Illinois
Midland
(915) 335-4421
Rio Grande Valley
(6 Locations)
1034 East Levee Street
Brownsville
(210) 548-6968
EXHIBIT "B"
-24-
<PAGE>
San Angelo
(2 Locations)
301 West Beauregard
(915) 653-5911
San Antonio Area
(5 Locations)
1020 N.E. Loop 410
San Antonio
(210) 829-6122
EXHIBIT "B"
-25-
<PAGE>
SUPPLEMENT TO TREASURY MANAGEMENT SERVICE AGREEMENT
This Supplement to Treasury Management Service Agreement (this
"Agreement") is dated as of May 9, 1997 and is between TEXAS COMMERCE
BANK NATIONAL ASSOCIATION ("Bank"), Reliant Building Products, Inc.*,
("Customer"), and The Chase Manhattan Bank, as Agent ("Lender").
RECITALS:
Bank has agreed to provide certain services to Customer in accordance with
the terms of Bank's Treasury Management Service Agreement, as amended form time
to time (the "Treasury Management Agreement") and as supplemented by this
Agreement. Pursuant to a separate agreement between Customer and Lender,
Customer has agreed to grant Lender a security interest in its deposit account
with Bank (the "Account"). Bank is willing to permit the security interest on
the terms and conditions set forth in this Agreement.
AGREEMENT:
In consideration of the recitals and $10.00 and other good and valuable
consideration, the receipt and sufficiency of which the parties acknowledge,
Bank, Customer and Lender agree as follows:
1. CONSENT AND SUBORDINATION. Bank consents to the Lender's security interest
in the Account, and hereby subordinates its right of setoff against the Account
to the security interest of the Lender for the term of this Agreement.
Notwithstanding the foregoing, Bank retains the right to debit the Account at
any time for (a) the amount of any overdraft in the Account, (b) the amount of
any item deposited to the Account and subsequently returned to Bank for any
reason, and (c) the amount of all service fees and other charges associated with
the Account and owing to Bank (collectively, the "Permitted Debits").
2. INSUFFICIENT FUNDS IN ACCOUNT. If Bank is unable to debit the Account for
the Permitted Debits, or if the Account contains insufficient available balances
at the time of any attempted Permitted Debit, Lender agrees to reimburse Bank
for the outstanding amount of any overdraft, return item, or service fee or
other charge related to the Account within 10 days after Bank's written demand
for payment.
3. TREASURY MANAGEMENT AGREEMENT. For purposes of the Generally Applicable
Terms and Conditions in Section II, the provisions of Section III.B., and the
provisions of any other section
- -------------
*RBP of Arizona, Inc., RBP Custom Glass, Inc., RBP Fenesco, Inc., RBP of
Texas, Inc. and RBP Trans, Inc.
EXHIBIT "B"
-26-
<PAGE>
of the Treasury Management Agreement covering services provided by Bank
in connection with the Account, the terms "you," "your," and "yours," as
used in the Treasury Management Agreement, mean Customer and Lender,
jointly and severally, for all purposes. Customer and Lender agree to
the provisions of the Treasury Management Agreement as supplemented by
this Agreement. This Agreement supplements, amends, and becomes a part
of the Treasury Management Agreement for all purposes.
4. INSTRUCTIONS. Bank may act in accordance with any instructions
regarding the Account provided by (mark applicable box) / / any authorized
signer on the Account; /X/ Lender personnel only. If the "Lender personnel
only" box is checked above, Bank will be fully protected in acting on any
instructions given by Lender regarding the Account without making any inquiry
as to Lender's right to give the instructions or as to the application of any
payment made pursuant thereto, and any payment of all or part of the Account
made to Lender or pursuant to Lender's instructions will satisfy any
liability Bank has to Lender and relieve Bank of all liability to Customer
for such amounts. Bank may rely on the instructions of any person providing
instructions on Lender's Letterhead, without further inquiry into the
authority of that person to act on behalf of Lender.
5. CERTAIN ACTIONS. Nothing contained herein will require Bank to take any
action in contravention of applicable laws, any court order, or the instructions
of any bankruptcy trustee.
6. INTERPLEADER. If at any time Bank is uncertain as to its rights or duties
under this Agreement, Bank may consult an attorney and/or may interplead any
funds in the Account into a court of competent jurisdiction, and Customer and
Lender jointly and severally agree to reimburse Bank for any costs incurred.
7. ENTIRE AGREEMENT. The Treasury Management Agreement, as supplemented by
this Agreement, represents the final agreement between the parties and may not
be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreement of the parties. Bank is not bound by any provisions contained in any
other document executed between Customer and Lender and to which Bank is not a
party, even if Bank has been provided with a copy of that document.
CUSTOMER: RELIANT BUILDING PRODUCTS, INC.
By: /s/ VIRGIL D. LOWE
------------------------------
Name: VIRGIL D. LOWE
------------------------------
Title: SECRETARY AND TREASURER
------------------------------
EXHIBIT "B"
-27-
<PAGE>
LENDER: THE CHASE MANHATTAN BANK, AS AGENT
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
BANK: TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ JEFFREY A. STERN
------------------------------
Name: JEFFREY A. STERN
------------------------------
Title: VICE PRESIDENT
------------------------------
CUSTOMER: RBP OF ARIZONA, INC.
By: /s/ VIRGIL D. LOWE
------------------------------
Name: VIRGIL D. LOWE
------------------------------
Title: SECRETARY AND TREASURER
------------------------------
CUSTOMER: RBP CUSTOM GLASS, INC.
By: /s/ VIRGIL D. LOWE
------------------------------
Name: VIRGIL D. LOWE
------------------------------
Title: SECRETARY AND TREASURER
------------------------------
CUSTOMER: RBP FENESCO, INC.
By: /s/ VIRGIL D. LOWE
------------------------------
Name: VIRGIL D. LOWE
------------------------------
Title: SECRETARY AND TREASURER
------------------------------
CUSTOMER: RBP OF TEXAS, INC.
By: /s/ VIRGIL D. LOWE
------------------------------
Name: VIRGIL D. LOWE
------------------------------
Title: SECRETARY AND TREASURER
------------------------------
CUSTOMER: RBP TRANS, INC.
By: /s/ VIRGIL D. LOWE
------------------------------
Name: VIRGIL D. LOWE
------------------------------
Title: SECRETARY AND TREASURER
------------------------------
EXHIBIT "B"
-28-
<PAGE>
OFFICER'S CERTIFICATE
Date:
--------------
[Name and address of Lender
or Agent, as the case may be]
- ------------------------------
- ------------------------------
Attention:
--------------------
Re: Financial Statements Required under Credit Agreement (as the same may
have been amended, modified and restated from time to time, the
"CREDIT AGREEMENT") dated as of May __, 1997, by and among Reliant
Building Products, Inc., the financial institutions or party thereto
from time to time and The Chase Manhattan Bank, as Agent
Gentlemen:
Capitalized words and phrases used herein and not defined herein and
defined in the Credit Agreement are used herein with the same meanings as are
assigned to them in the Credit Agreement.
The undersigned hereby certifies, warrants and represents to the addressee
named above that to the best knowledge of the undersigned:
(1) He or she is the duly appointed and acting Financial Officer of
Borrower;
(2) The attached financial statements dated as of ______________ were
prepared in conformity with GAAP consistently applied, subject only to
normal and customary adjustments, and present fairly the financial
position of Borrower and its Subsidiaries, on a Consolidated [and
consolidating basis], as of the date thereof and the results of its
operations for the period covered thereby.
(3) The following constitute true, correct and complete financial
calculations for the Borrower and its Subsidiaries on a Consolidated
basis, as of the end of the period covered by the attached financial
statements:
(a) LEVERAGE RATIO:
(i) Total Indebtedness: $
-----------
(ii) EBITDA: $
-----------
EXHIBIT "C"
Page 1
<PAGE>
(iii) Actual Leverage Ratio
[ratio of Line (i) TO Line (ii)]: ___ to 1.00
(iv) Required Leverage Ratio: ___ to 1.00
(b) INTEREST COVERAGE RATIO:
(i) EBITDA: $
----------
(ii) Capital Expenditures: $
----------
(iii) Adjusted EBITDA
[Line (i) less Line (ii)] $
----------
(iv) Interest Expense: $
----------
(v) Actual Interest Coverage Ratio
[ratio of Line (iii) to Line (iv)]: ___ to 1.00
(vi) Required Interest Coverage Ratio: ___ to 1.00
(4) The undersigned hereby certifies to his or her best knowledge as
follows:
(a) each representation or warranty of Borrower contained in the
Credit Agreement is true and correct in all material respects on
and as of the date hereof with the same effect as though such
representations and warranties had been made on and of this date,
except for (i) those representations and warranties which relate
only to the Closing Date or (ii) such changes in the
representations and warranties otherwise permitted by the terms
of the Credit Agreement;
(b) no Event of Default or Default under the Credit Agreement has
occurred and is still continuing; and
(c) neither Borrower, nor any of its Subsidiaries, is in default in
the due performance of any covenant on its part in the Credit
Agreement or any other Loan Documents.
---------------------------------------
Name:
----------------------------------
EXHIBIT "C"
Page 2
<PAGE>
[Borrower Letterhead]
REQUEST FOR EXTENSION OF CREDIT
Date:
---------------
The Chase Manhattan Bank
633 Third Avenue
New York, New York 10017-6764
Attention: Mr. Jeffrey Ackerman
Re: Loan under Credit Agreement dated as of May ___, 1997, by and among
Reliant Building Products, Inc., the financial institutions a party
thereto from time to time, and The Chase Manhattan Bank, as Agent (as
the same may have been amended, modified and/or restated from time to
time, the "CREDIT AGREEMENT")
Gentlemen:
Capitalized words and phrases used herein, but not defined herein, shall
have the same meanings as are ascribed to them in the Credit Agreement.
Borrower requests that a Loan be made under the Credit Agreement in the
amount of $_____________ and that such Loan be made on __________, 19__,
which is a Business Day (unless this request for a Loan is received by Agent
after 1:00 p.m., New York City time, with respect to LIBOR Borrowings, or 2:00
p.m., New York City time, with respect to Alternate Base Rate Borrowings, in
which case, then on the next to occur Business Day hereafter).
The Loan is to be an (CHECK ONE) [ ] Alternate Base Rate Borrowing
[ ] LIBOR Borrowing. If the Loan is to be a LIBOR Borrowing, the Interest
Period is to be (CHECK ONE) [ ] one [ ] two [ ] three [ ] six months.
[Borrower further requests that simultaneously with the making of the Loan
described above, the current [Alternate Base Rate Borrowing] [LIBOR Borrowing]
which matures on the same day that said Loan is to be made (i) be converted to a
LIBOR Borrowing with the same Interest Period selected for such Loan and (ii)
have its unpaid principal balance be combined with the new Loan so that the
aggregate thereof is treated as a single LIBOR Borrowing for the Interest Period
designated for the new Loan above and for all other purposes in the Credit
Agreement.]
Borrower hereby represents and warrants as follows:
EXHIBIT D
Page 1
<PAGE>
(i) each representation or warranty of Borrower contained in the Credit
Agreement is true in all material respects on and as of the date
hereof with the same effect as though such representations and
warranties had been made on and of this date, except for (1) those
representations and warranties which relate only to the Closing Date
or (2) such changes in the representations and warranties otherwise
permitted by the terms of the Credit Agreement;
(ii) no Event of Default or Default under the Credit Agreement has occurred
and is still continuing;
(iii) neither Borrower, nor any of its Subsidiaries, is in default in
the due performance of any covenant on its part in the Credit
Agreement or any other Loan Documents;
(iv) so far as is known to or is ascertainable by the officers of Borrower,
the business and operations of Borrower and all of its Subsidiaries,
as conducted at all times relevant to the transactions contemplated by
the Credit Agreement to and including the close of business on the
date hereof, have been and are in compliance with all applicable Legal
Requirements materially affecting the business and operations of
Borrower or any of its Subsidiaries.
The undersigned Responsible Officer executing this Request for Extension
of Credit on behalf of Borrower is the duly elected, qualified and acting
_____________.
RELIANT BUILDING PRODUCTS, INC.,
a Delaware corporation
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
EXHIBIT D
Page 2
<PAGE>
RATE SELECTION NOTICE
Reliant Building Products, Inc., the financial institutions which are
signatories thereto from time to time (collectively, the "LENDERS") and The
Chase Manhattan Bank, a New York banking corporation, as Agent for and on behalf
of Lenders, executed and delivered that certain Credit Agreement (as amended,
supplemented and restated, the "CREDIT AGREEMENT") dated as of May __, 1997.
Any term used herein and not otherwise defined herein shall have the meaning
herein ascribed to it in the Credit Agreement.
In accordance with the Credit Agreement, Borrower hereby notifies Agent of
the exercise of an Interest Option.
E. CURRENT BORROWING(S)
1. Interest Option now in effect:
-----------
2. Amount: $
-----------
3. Expiration of current Interest Period,
if applicable: , 199
------- --
F. PROPOSED BORROWING
1. Amount: $
-----------
2. Date Interest Option is to be effective , 199
------- --
3. Interest Option to be applicable
(check one):
[ ] Alternate Base Rate
[ ] LIBOR Rate
4. Interest Period (check one if applicable):
[ ] 1 month [ ] 3 months
[ ] 2 months [ ] 6 months
EXHIBIT E
Page 1
<PAGE>
Borrower represents and warrants that the Interest Option and the Interest
Period (if applicable) selected above comply with all provisions of the Credit
Agreement and that there exists no Event of Default or Default under the Credit
Agreement.
RELIANT BUILDING PRODUCTS, INC.,
a Delaware corporation
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
EXHIBIT E
Page 2
<PAGE>
SECRETARY'S CERTIFICATE
I, the undersigned, do hereby certify that I am the duly elected and
acting Secretary of RELIANT BUILDING PRODUCTS, INC. (the "CORPORATION"), a
Delaware corporation; that, by unanimous written consent by all members of the
Board of Directors of the Corporation, the following resolutions have been duly
adopted; that said resolutions have been recorded in the minute books of the
Corporation kept by me, are in accord with and pursuant to the Certificate of
Incorporation and Bylaws of the Corporation, have not been amended, modified,
superseded or revoked, and are now in full force and effect, to-wit:
RESOLVED: That this Corporation enter into a Credit
Agreement with such financial institutions (together with
all other financial institutions which may become a party
thereto pursuant to the terms of the Credit Agreement, the
"LENDERS" and each of Lenders being a "LENDER herein) as the
officer of this Corporation executing the same may in his or
her discretion approve, and with THE CHASE MANHATTAN BANK,
in its capacity as Agent for and on behalf of Lenders (in
such capacity, the "AGENT"), substantially in the form of
the draft of April __, 1997, presented to the directors,
together with such changes as the officer of this
Corporation executing the same may in his or her discretion
approve, such Credit Agreement, together with such changes,
being herein called the "CREDIT AGREEMENT";
RESOLVED, FURTHER: That pursuant to the Credit Agreement,
this Corporation execute and deliver to each Lender a
promissory note (each a "NOTE") in an original principal
amount equal to such Lender's Commitment (as that term is
defined in the Credit Agreement), payable to the order of
such Lender, such Notes to bear interest on the unpaid
principal balances thereof at the rates provided in the
Credit Agreement, this Corporation to have the right
pursuant to the terms of the Credit Agreement to borrow,
repay and reborrow prior to the Maturity Date (as that term
is defined in the Credit Agreement), with accrued interest
on each Note being due and payable on the dates set forth in
the Credit Agreement, and with the outstanding principal
balance of each Note being finally due and payable on the
Maturity Date;
RESOLVED, FURTHER: That pursuant to the Credit Agreement,
this Corporation, together with the Current Guarantors (as
that term is defined in the Credit Agreement) enter into a
Contribution Agreement (the "CONTRIBUTION AGREEMENT") of
even date with the Credit Agreement, pursuant to which this
Corporation agrees, among other things, to indemnify each
Guarantor (as that term is defined in the Credit Agreement)
from time to time a party thereto against any losses
incurred thereby under the Credit
EXHIBIT F
Page 1
<PAGE>
Agreement or any Guaranty (as that term is defined in the Credit
Agreement) now or hereafter executed by any Guarantor in
connection therewith;
RESOLVED, FURTHER: That pursuant to the Credit Agreement,
this Corporation execute and deliver to Agent, for the
ratable benefit of Lenders, all of the Security Documents
(as that term is defined in the Credit Agreement) required
by Agent from this Corporation to evidence and perfect the
liens against, security interests in, and assignments and
pledges of all Collateral (as that term is defined in the
Credit Agreement) now or hereafter owned and held by this
Corporation;
RESOLVED, FURTHER: That the Credit Agreement, each Note,
the Contribution Agreement, the Security Documents and other
instruments as Agent and Lenders may reasonably require in
connection with the same shall be in form and substance
satisfactory to Agent and Lenders and in form and substance
approved by the officer of this Corporation executing the
same, his or her approval of each such instrument to be
conclusively evidenced by the execution thereof;
RESOLVED, FURTHER: That the obligations incurred upon the
execution and delivery by this Corporation of the Credit
Agreement, each Note, the Contribution Agreement, the
Security Documents and any other document executed in
connection with the transactions contemplated in any of the
foregoing shall become binding and enforceable obligations
of this Corporation;
RESOLVED, FURTHER: That the Chairman of the Board, the
President, any Vice President, the Treasurer, the Secretary
or any Assistant Secretary of this Corporation be, and each
acting alone hereby is, severally authorized and directed
for and on behalf, and as the act and deed, of this
Corporation, to execute and deliver to Agent and Lenders,
the Credit Agreement, each Note (including without
limitation, each new Note executed from time to time
hereafter, as contemplated in the Credit Agreement), the
Contribution Agreement, the Security Documents and such
other instruments as Agent or any Lender may require in its
sole and absolute discretion and to take such other action
in the consummation of the transaction herein contemplated
as the officer acting shall deem to be necessary or
desirable, and any and all acts heretofore taken by each of
the officers above delineated of this Corporation to such
end are hereby expressly ratified and confirmed as the acts
and deeds of this Corporation;
RESOLVED, FURTHER: That any and all documents, agreements,
certificates, opinions, letters, financing statements,
consents, schedules and other instruments and writings
executed and delivered on behalf of this Corporation in
connection with the foregoing resolutions by any one of
above-named officers of this Corporation shall be deemed to
be the act of this Corporation and shall be in all respects
binding against this Corporation;
EXHIBIT F
Page 2
<PAGE>
RESOLVED, FURTHER: That the directors have found that good,
fair and valuable consideration and reasonably equivalent
value have been and will be received by this Corporation for
entry into and performance of all the foregoing agreements
referred to in the preceding paragraphs, and that the
incurrence of the obligations evidenced by such agreements
is in the best interest of this Corporation and may be
expected to benefit this Corporation, directly or
indirectly; and
FURTHER RESOLVED: That the Secretary or any Assistant
Secretary of this Corporation be, and is hereby authorized,
empowered and directed to certify and attest any documents
which he or she may deem necessary or appropriate to
consummate the transactions contemplated by the Credit
Agreement, any Note, the Contribution Agreement, any of the
Security Documents or any other document executed in
connection with the transactions contemplated in any of the
foregoing, but such certification or attestation shall not
be required for the validity of the particular document.
I further certify that _________________ and ________________ are the
duly elected and incumbent _____________________ and __________________,
respectively, of the Corporation, that their true and correct signatures are
set forth below:
________________________________.
(Signature of __________________)
________________________________.
(Signature of __________________)
I further certify that attached hereto as ANNEX I is a true, correct
and complete copy of the Articles of Incorporation of the Corporation, together
with all amendments thereto; and that attached hereto as ANNEX II is a true,
correct and complete copy of the Bylaws of the Corporation, together with all
amendments thereto.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name by order of
the Board of Directors thereof on this ___ day of ____________________, 1997.
___________________________________
Name:______________________________
EXHIBIT F
Page 3
<PAGE>
I do hereby certify that I am the duly elected and acting [__________]
[Vice President] of Reliant Building Products, Inc. and that __________________
is the duly elected and acting Secretary of Reliant Building Products, Inc.
___________________________________
Name:______________________________
EXHIBIT F
Page 4
<PAGE>
SECRETARY'S CERTIFICATE
I, the undersigned, do hereby certify that I am the duly elected
Secretary of ________________________, a ______________________ corporation
(the "CORPORATION"); that, by unanimous written consent by all members of the
Board of Directors of the Corporation, the following resolutions have been
duly adopted; that said resolutions have been recorded in the minute books of
the Corporation kept by me, are in accord with and pursuant to the corporate
charter and Bylaws of the Corporation, have not been amended, modified,
superseded or revoked, and are now in full force and effect, to-wit:
RESOLVED: That this Corporation execute and deliver to THE
CHASE MANHATTAN BANK, a New York banking corporation, in its
capacity as Agent (in such capacity, the "AGENT") on behalf
of the Lenders (as that term is hereafter defined), a
guaranty (the "GUARANTY") whereby this Corporation jointly
and severally guarantees payment of any and all indebtedness
of RELIANT BUILDING PRODUCTS, INC. (the "COMPANY"), a
Delaware corporation, to the Lenders and the Agent now or
hereafter existing, arising out of or in connection with
that certain Credit Agreement executed or to be executed by
and among the Company, the Agent and such financial
institutions which the Company and the Agent may approve or
which otherwise may be made a party thereto pursuant to the
terms thereof (collectively, the "LENDERS"), as the same may
be amended, supplemented or restated from time to time
(collectively, the "CREDIT AGREEMENT") and under the Notes
(as defined in the Credit Agreement); the Guaranty to cover
interest on the principal amount of said indebtedness and
all expenses of the Agent and the Lenders in collecting said
indebtedness or enforcing the Guaranty, or both, and certain
other costs and expenses more fully described in the
Guaranty;
RESOLVED, FURTHER: That this Corporation enter into a
Contribution Agreement (the "CONTRIBUTION AGREEMENT") with
the other guarantors (together with any other party which
becomes a guarantor under the Guaranty from time to time,
the "OTHER GUARANTORS") under the Guaranty, pursuant to
which, among other things, this Corporation agrees to pay to
any of the Other Guarantors on which demand for payment of
any of the indebtedness guaranteed by the Guaranty and
payment has been made, this Corporation's Proportionate
Share (as defined in the Contribution Agreement) of the
payment made under the Guaranty by such Other Guarantor;
EXHIBIT G
Page 1
<PAGE>
RESOLVED, FURTHER: That the form and content of the
Guaranty and the Contribution Agreement be substantially in
the forms of the drafts of such documents submitted to this
meeting, together with such changes as the officer of this
Corporation executing the same may in his or her discretion
approve;
RESOLVED, FURTHER: That the execution and delivery of the
Guaranty and the Contribution Agreement will benefit,
directly or indirectly, this Corporation and its
shareholders;
RESOLVED, FURTHER: That the Guaranty, the Contribution
Agreement and other instruments as the Agent and the Lenders
may reasonably require in connection with the Guaranty and
the Contribution Agreement shall be in form and substance
satisfactory to the Agent and the Lenders and in form and
substance approved by the officer of this Corporation
executing the same, his or her approval of each such
instrument to be conclusively evidenced by the execution
thereof; and
RESOLVED, FURTHER: That the Chief Executive Officer, the
President, any Vice President, the Treasurer, the Secretary
or any Assistant Secretary of this Corporation be and each
acting alone hereby is severally authorized and directed for
and on behalf, and as the act and deed, of this Corporation
to execute and deliver to the Agent and the Lenders said
Guaranty, Contribution Agreement and such other instruments
as the Agent and the Lenders may require, and to take such
other action in the consummation of the transaction herein
contemplated as the officer acting shall deem necessary or
desirable, and any and all acts heretofore taken by the
Chief Executive Officer, the President, any Vice President,
the Treasurer, the Secretary or any Assistant Secretary of
this Corporation to such end are hereby expressly ratified
and confirmed as the acts and deeds of this Corporation; and
RESOLVED, FURTHER: That the Chief Executive Officer, the
President, any Vice President, the Treasurer, the Secretary
or any Assistant Secretary of this Corporation be and each
acting alone hereby is severally authorized and directed for
and on behalf, and as the act and deed, of this Corporation,
in connection with any renewal, modification or extension of
the Credit Agreement or the Notes, to negotiate and agree to
on terms acceptable to such officer any and all renewals,
extensions, modifications and amendments to the Guaranty,
the Contribution Agreement or any other document executed in
connection with the transactions contemplated in any of the
foregoing, and to execute and deliver to the Agent and the
Lenders such documents as the Agent or any Lender shall
require to evidence any such renewal, extension,
modification or amendment and to take such other action in
the consummation of the transactions therein contemplated as
the officer acting shall deem to be necessary or desirable.
EXHIBIT G
Page 2
<PAGE>
I further certify that _______________________ is the duly elected
and incumbent ____________________________ of the Corporation, that the true
and correct signature of such officer is as set forth below:
________________________________.
I further certify that true, correct and complete copies of the
Certificate of Incorporation and Articles of Incorporation of the Corporation,
together with all amendments thereto have been delivered, or simultaneously
herewith are being delivered, to The Chase Manhattan Bank, as Agent; and true,
correct and complete copies of the Bylaws of the Corporation, together with all
amendments thereto have been delivered, or simultaneously herewith are being
delivered, to The Chase Manhattan Bank, as Agent.
IN WITNESS WHEREOF, I have hereunto subscribed my hand by order of the
Board of Directors of the Corporation thereof on this ______ day of
___________________________, 1997.
----------------------------------------
Name:
----------------------------------
I do hereby certify that I am the duly elected and acting
________________________ of _______________________, and that ______________
is a duly elected and acting _________________ Secretary of ________________.
----------------------------------------
Name:
----------------------------------
EXHIBIT G
Page 3
<PAGE>
BORROWING BASE CERTIFICATE
To: Chemical Bank, Asset Based Operation Date:
200 Jericho Quadrangle ---------
Jericho, NY 11753
SUBJECT: Reliant Building Products, Inc. ("Reliant")
Borrowing Base Certificate #
-------------
We hereby certify the following information:
I. ACCOUNTS RECEIVABLE:
Accounts Receivable as of the date of the last submitted
certificate $
-------------
Add: Sales $
----------
Less: Collections $
----------
Less: Adjustments to A/R $
----------
Accounts Receivable as of / / $
-------------- ----------
Accounts Receivable Aging as of / /
----------------
Total A/R Current 31-60 61-90 Over 90
--------- ------- ----- ----- -------
Gross Accounts Receivable $
----------
Less: Ineligibles:
------------
Receivables over 90 days from invoice date $( )
--------
Receivables from subsidiaries/affiliates $( )
--------
Cross-aged Receivables at 50% $( )
--------
Foreign Receivables not under L/C's or
insurance $( )
--------
Credits, Chargebacks & Disputes $( )
--------
Concentrations over 10% (uninsured) $( )
--------
Consignment, Progress Billing, Bill and Hold $( )
--------
Promotional $( )
--------
Government $( )
--------
Contras, offsets, etc. $( )
--------
Transportation/Backhauling Greater-than
$500M $( )
--------
C.O.D. and Cash in Advance $( )
--------
Warranty Reserve $( )
--------
Other: (Specify) $( )
--------
Total Ineligibles $( )
--------
Net Eligible Accounts Receivable $
----------
Availability at 85% (subject to revision)(1) $
----------
EXHIBIT "H"
-1-
<PAGE>
II. INVENTORY:
Gross Inventory $
----------
Less: Ineligibles $( )
----------- ---------
Work in Process $( )
--------
Slow Moving, Discontinued or Obsolete $( )
--------
In-Transit $( )
---------
Scrap or Remnants $( )
---------
Returned or Damaged $( )
---------
Inventory off premise (and not under
landlord waiver) $( )
---------
Packaging and Shipping Supplies $( )
---------
Other: (Specify) $( )
---------
Total Ineligibles $( )
---------
Net Eligible Inventory $
----------
Lesser of (i) Availability at 50% or (ii) $10,000M cap
amount)(2) $
----------
TOTAL A/R AND INVENTORY AVAILABILITY(1+2)=(A) $
----------
Total Loans Outstanding (3) $( )
----------
Total Letters of Credit (4) $( )
----------
Amount Requested for Borrowing or Repayment(5) $( )
----------
Total Revolving Credit Exposure(3+4+/-5)=(B) $( )
----------
HORAN INDEBTEDNESS RESERVE $400,000(C) $( )
----------
EXCESS AVAILABILITY(A-B-C) $
----------
The undersigned hereby represents and warrants that this is a correct
statement regarding the status of its accounts receivable, and inventory
assigned to The Chase Manhattan Bank, as Agent, and that the figures set
forth herein are accurate. The undersigned further warrants and represents
that the company is in complete compliance with all the terms and conditions
contained in the agreements between us. The undersigned further understands
that the loans to the Company will be based upon reliance on the information
contained herein.
ATTEST: RELIANT BUILDING PRODUCTS, INC.:
- ----------------------------------- -------------------------------------
Name: Name:
Title: Title:
EXHIBIT "H"
-2-
<PAGE>
SCHEDULE 1.1
(Lenders' Commitments)
Lender Commitment Amount
------ -----------------
1. The Chase Manhattan Bank $ 7,500,000
1. Texas Commerce Bank National Association $ 7,500,000
1. CIBC Inc. $10,000,000
<PAGE>
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT, dated effective as of May 9, 1997 (the
"Effective Date"), is by and between Reliant Building Products, Inc., a Delaware
corporation (the "Company"), and George Group, Inc., a Texas corporation (the
"Consultant").
For and in consideration of the mutual covenants and agreements set forth
herein and other good and valuable consideration, the adequacy and receipt of
which are hereby acknowledged and agreed, the parties hereby agree as follows:
1. ENGAGEMENT. The Company hereby agrees to engage the Consultant, and
the Consultant hereby agrees to serve the Company, in each case upon the terms
and subject to the conditions set forth herein.
2. TERM.
2.1 ORIGINAL TERM. The term of this Agreement (the "Term") shall be
the period commencing on the Effective Date and ending on the date eighteen
months after the Effective Date (the "Performance Term") or, if applicable, the
expiration of the Extended Performance Term (as defined herein), subject to the
earlier exercise of the termination rights of the Company or the Consultant set
forth in Section 9 below.
2.2 EXTENDED PERFORMANCE TERM. The Consultant may, in its sole
discretion, extend the Performance Term an additional six months (the "Extended
Performance Term") upon written notice to the Company at least 30 days prior to
the expiration of the Performance Term; PROVIDED, HOWEVER, that no additional
Monthly Fee (as defined herein) or other compensation, other than reimbursement
for reasonable, out-of-pocket expenses incurred by the Consultant, will be due
or payable to the Consultant in consideration of services performed during the
Extended Performance Term.
3. ADVISORY SERVICES. During the Term, the Consultant shall provide
personnel and resources as necessary to design and implement Company-wide
business processes consistent with those practices generally considered to be
"best practices" and designed to result in improvements in the Company's
revenue, cash flow, and return on invested capital (the "Services") in
accordance with the Consulting Plan and Budget attached hereto as EXHIBIT "A"
(the "Plan") with the intention of meeting the Final Performance Goals specified
in EXHIBIT "B" attached hereto. The Consultant shall perform its duties
hereunder in good faith.
4. COMPENSATION.
4.1 PAYMENT OF FEE. As compensation for the performance of the
Services during the Term, the Consultant shall receive a monthly fee as
specified in the Plan (each such fee, a "Monthly Fee"), together with
reimbursement of reasonable, out-of-pocket expenses incurred by the Consultant
during each such one-month period in connection with the performance of such
Services. In no event shall the sum of the aggregate of Monthly Fees paid to
the Consultant exceed $1,255,000. At the beginning of each month during the
Term of this
<PAGE>
Agreement, the Consultant shall provide the Company with a written statement
(the "Consultant Bill") including the applicable Monthly Fee for the month in
which the Consultant Bill is rendered and an estimate of all reasonable,
out-of-pocket expenses incurred by the Consultant for the immediately
preceding one-month period. The Company shall pay the Monthly Fee in advance
(for the month in which the Consultant Bill is dated), and the Company shall
reimburse the Consultant for its out-of-pocket expenses shown on the
Consultant Bill, in both cases on or before 30 days after receipt of the
Consultant Bill. The actual, out-of-pocket expenses of the Consultant will
be calculated every six months and the difference between actual expenses
incurred by the Consultant to date and expenses paid to the Consultant to
date will be billed or reimbursed, as appropriate. Notwithstanding the
foregoing provisions of this Section 4.1, however, if the Company achieves
its Final Performance Goals (as described on Exhibit "B" attached hereto)
prior to having been billed and paid a total of $1,255,000 in Monthly Fees,
then the Consultant shall not charge, and the Company shall not be obligated
to pay, any Monthly Fees relating to any month after the month in which the
Company achieves its Final Performance Goals.
4.2 RECORD OF EXPENSES. The Consultant shall maintain, during the
Term of this Agreement and continuing for a period the longer of (a) one year
after the termination of this Agreement or (b) until the final resolution of any
dispute between the Company and the Consultant which is outstanding on such
anniversary date, its internal books and records pertaining to its expenses, in
sufficient detail and condition so as to permit reasonable convenient periodic
audits of such books and records by the Company or the Company's authorized
representative, at times and places mutually agreed upon by the Company and the
Consultant, so that the Company may verify the amount of any and all expenses
included in the Consultant Bills.
5. INTELLECTUAL PROPERTY. (a) As used herein the following definitions
shall apply:
"DELIVERABLES" shall mean software (source code, object code,
associated documentation and related data files, tools and utilities),
plans, methods, prototypes, circuitry, diagrams, drawings, designs,
specifications, proposals, technical descriptions, schematics, and other
technical information relating to the subject matter of the Services that
the Consultant provides to the Company pursuant to this Agreement.
"INTELLECTUAL PROPERTY RIGHTS" or "IP RIGHTS" shall mean all patent,
copyright, trade secret and other proprietary rights in Deliverables.
(b) The Consultant shall assign to the Company all IP rights created
or acquired by the Consultant during the Term of this Agreement which (i) are
specifically adapted for window manufacturing, or (ii) incorporate Confidential
Information of the Company. The foregoing shall not preclude the Consultant
from using general information and techniques developed during the Agreement on
behalf of other clients of the Consultant. The Consultant retains sole
ownership of all IP Rights in existence at the beginning of the term of this
Agreement, and all IP Rights created or acquired by the Consultant during the
term of this Agreement other than those which are to be owned by the Company as
provided above. The owning party shall have the exclusive right to file and
prosecute patent and copyright applications relating to the applicable IP
Rights.
2
<PAGE>
(c) The Consultant hereby grants to the Company, and those of its
subsidiaries, parents and affiliates which are engaged in the business of
building products manufacturing, a perpetual, paid-up, non-exclusive license,
without right of sublicense, under the Consultant-owned IP Rights to use
Deliverables provided by the Consultant pursuant to this Agreement for the
Company's, any such subsidiaries', parents' and affiliates' internal business
purposes only. The license granted herein shall be non-transferable without the
Consultant's prior written consent, provided that no such consent shall be
required for transfers to a successor of the Company or to a purchaser of all or
substantially all the assets of the business in which the IP Rights will be
used, provided such transferee is not a competitor of the Consultant.
(d) The Consultant shall, at its expense, defend or settle any claim,
action, or allegation brought against the Company that the Deliverables infringe
any patent, copyright, trade secret, or other proprietary right of any third
party or that the Company's use of the Deliverables violates any non-competition
or similar agreement or otherwise violates the rights of any third party and pay
any judgments awarded or settlements entered into, provided that the Company
must give written notice of any such claim, action, or allegation of
infringement (collectively, "Infringement Claim") to the Consultant within 30
days after the Company first receives notice thereof. The Company will promptly
grant to the Consultant, and the Consultant will have, the exclusive right to
defend any Infringement Claim and make settlements thereof at its own
discretion, and the Company may not settle or compromise any Infringement Claim,
except with prior written consent of the Consultant. The Company shall give
such assistance and information as the Consultant may reasonably require to
settle or oppose any Infringement Claim. If any such infringement occurs or may
occur, the Consultant shall, at its sole option and expense (a) procure for the
Company the right to continue use of the Deliverables or infringing part
thereof, (b) modify or amend the Deliverables or infringing part thereof, or (c)
replace the Deliverables with other Deliverables having substantially the same
or better capabilities. This paragraph sets forth the entire liability of the
Consultant to the Company with respect to infringement of any patent, copyright,
trade secret or other proprietary rights.
6. CONFIDENTIALITY.
6.1 CONFIDENTIAL INFORMATION. The Consultant and the Company
acknowledge that they may acquire certain information and materials that are the
confidential and proprietary information of the other (the "Confidential
Information"). The Consultant and the Company agree not to disclose or use the
Confidential Information except in the performance of this Agreement or with the
prior, express, written consent of the other. The Consultant and the Company
agree to take all actions reasonably necessary and satisfactory to the other to
protect the confidentiality of the Confidential Information (including, without
limitation, as either receiving party may deem appropriate, entering into
written agreements with each of its employees, representatives, agents and
subcontractors who perform services hereunder sufficient to carry out each
party's obligations under this Agreement).
6.2 NON-CONFIDENTIAL INFORMATION. The following shall not be
considered Confidential Information:
(a) Information previously known to the disclosee that is, or
subsequently becomes, rightfully and without breach of any obligation
to or agreement with the
3
<PAGE>
other party hereto, in the disclosee's possession without any obligation
restricting use or disclosure.
(b) Information in the public domain, through no act or omission of
the party to this Agreement required to keep such information confidential.
(c) Information received from a third party with a legal or
contractual right to disclose such information.
(d) Information independently developed by the disclosee without
reference to the Confidential Information.
6.3 PUBLICITY. The Consultant shall not use and shall keep its
employees from using the name of the Company and its affiliates with any third
party, without the prior express written consent of the Company.
6.4 OTHER AGREEMENTS. The Consultant and the Company expressly agree
that this Agreement is intended to replace and supersede all, if any, prior
agreements between the Consultant and the Company concerning confidentiality and
non-disclosure.
6.5 RELEASE OF OBLIGATIONS. Each party will be relieved of its
respective confidentiality obligations hereunder if, and only to the extent,
that any Confidential Information is disclosed pursuant to the lawful
requirement or request of a governmental agency, or disclosure is required by
operation of law, solely with respect to such Confidential Information required
to be so disclosed; PROVIDED that such party has given notice to the other party
and with sufficient time to enable the other party to seek a protective order
limiting disclosure and use of the Confidential Information so disclosed.
7. [INTENTIONALLY OMITTED]
8. RESTRICTIVE COVENANTS OF CONSULTANT.
8.1 NON-COMPETITION. For a period commencing on the Effective Date
and ending on the fifth anniversary of the earlier of (i) a Change in Control or
(ii) the date of termination of this Agreement pursuant to Section 9.1 or
Section 9.2 (the "Restricted Period"), the Consultant covenants and agrees that,
without the prior written consent of the Company, neither the Consultant nor its
principals shall, in the Territory (as defined below), working alone or in
conjunction with one or more other persons or entities, for compensation or not,
directly or indirectly, either for itself or himself or as a member of a
partnership or other association or as a stockholder, investor, lender, agent,
associate, employee or consultant of any person, partnership, corporation or
other association (other than through ownership for investment purposes of not
more than 5% of the outstanding shares of a corporation's capital stock which is
listed on a national securities exchange or quoted on any automated quotation
system), engage in the business of manufacturing, distribution and/or selling
any of the products produced and/or distributed by the Company at any time
during the Restricted Period. As used herein, the term "Territory" means any
county in any state of the United States. The parties intend that the covenants
contained in this Section 8.1 shall be deemed to be a series of separate
covenants, one
4
<PAGE>
for each county in each state of the United States and, except for geographic
coverage, each such separate covenant shall be identical in terms to the
covenant contained in this Section 8.1.
8.2 NO SOLICITATION. During the Restricted Period, the Consultant
covenants and agrees that neither it nor its principals shall, directly or
indirectly through any affiliate, employee, agent or representative, interfere
with, or take any action that would have the effect of interfering with, the
contractual and other relationships between the Company or any of its affiliates
and any of its or their employees. During the Restricted Period, the Company
covenants and agrees that neither it nor its principals shall, directly or
indirectly through any affiliate, employee, agent or representative, interfere
with, or take any action that would have the effect of interfering with, the
contractual and other relationships between the Consultant or any of its
affiliates and any of its or their employees.
8.3 TOLLING. If the Consultant violates any covenant contained in
this Section, then the Restricted Period shall be tolled for the period
commencing on the commencement of such violation and ending upon the earlier of
(a) such time as such violation shall be cured by the Consultant to the
reasonable satisfaction of the Company or (b) final adjudication (including
appeals) of any action filed for injunctive relief or damages arising out of
such violation.
8.4 REFORMATION. If, in any judicial proceeding, the court shall
refuse to enforce any covenant contained in this Section hereof as written
because the duration thereof is too long, it is expressly understood and agreed
between the parties hereto that for purposes of such proceeding the duration of
such covenant shall be deemed reduced to the extent necessary to permit
enforcement of such covenant. If, in any judicial proceeding, the court shall
refuse to enforce any covenant contained in this Section hereof as written
because such covenant is more extensive (whether as to geographic area, scope of
business or otherwise) than necessary to protect the business and goodwill of
the Company or any of its affiliates, it is expressly understood and agreed
between the parties hereto that for purposes of such proceeding, the geographic
area, scope of business or other aspect shall be deemed reduced to the extent
necessary to permit enforcement of such covenant.
9. TERMINATION.
9.1 TERMINATION BY THE COMPANY. (a) The Company may terminate this
Agreement immediately following written notice to the Consultant of its decision
to terminate this Agreement:
(i) for Cause (as defined below),
(ii) upon the occurrence of a Change in Control (as defined below) of the
Company.
As used herein, "Cause" means (i) the failure by the Consultant as of the
expiration of the Interim Performance Term (as defined herein) to achieve on
behalf of the Company less than 75% of the Interim Performance Goals (as
described in EXHIBIT "C" attached hereto) for such Interim Performance Term
[such achievement to be calculated within fifteen days following the expiration
of the Interim Evaluation Period (as defined herein) based on the Aggregate
Weighted Percentage of Performance Achieved (as defined in EXHIBIT "D" attached
hereto) of the
5
<PAGE>
Company during the Interim Evaluation Period; or (ii) the engaging by the
Consultant or its employees or agents in willful, reckless or negligent
misconduct which is materially injurious to the Company, monetarily or
otherwise, and the failure of the Consultant to (x) cease, or cause to be
ceased, such misconduct within 10 days, and (y) remedy the adverse effect of
such misconduct within 90 days, after receipt of written notice from the
Company of such misconduct. As used herein, "Change in Control" means that
more than 50% of the voting interests in the Company, or more than 50% of the
assets thereof, are sold or transferred, directly or indirectly, to an entity
or person other than to Reliant Partners, L.P. and/or FW Strategic Partners,
L.P. and their direct and indirect general and limited partners as of the
date hereof or to a person that is not controlled by, controlling or under
common control with (being greater that 50% voting control) one or more of
the foregoing.
(b) As used herein, the following terms shall have the meaning
provided below:
"Interim Evaluation Period" shall mean the three-month period
immediately following the expiration of the Interim Performance Term.
"Interim Performance Term" shall mean the period commencing on
the Effective Date and ending on the date which is nine months from
the Effective Date.
9.2 TERMINATION BY THE CONSULTANT. The Consultant may terminate this
Agreement:
(i) in the event that the Company fails to remit payment to the Consultant
within 30 days following receipt of any Consultant Bill, provided that the
Consultant gives the Company written notice of such failure to pay and the
Company fails to cure such nonpayment within 30 days after receipt of such
notice, or
(ii) upon the occurrence of a Change in Control of the Company, provided
that such termination will not be effective until at least 90 days
following the date that the Change of Control of the Company occurs.
9.3 POST-TERMINATION OBLIGATIONS. (a) Upon the effective date of
termination of this Agreement (whether upon expiration of the Term or
otherwise), (i) the Company shall pay the Monthly Fee and shall reimburse the
Consultant for its out-of-pocket expenses, both in accordance with Section 4
hereof, through the effective date of termination; (ii) the Company shall
reimburse the Consultant for reasonable out-of-pocket costs and expenses
incurred by it in complying with the terms of this Section 9.3; and (iii) the
Consultant shall deliver to the Company all records in the possession of the
Consultant relating to the business and affairs of the Company, together with
all items of property owned by the Company and in the Consultant's possession.
(b) In addition, following the termination of this Agreement upon the
expiration of the Term pursuant to Section 1, the Consultant, for four years
after such termination, will make available to the Company at the Company's
request consultant services not to exceed eight days or $25,000 in Consultant
fees annually in order to assist the Company in its efforts to
6
<PAGE>
maintain the performance goals achieved under the Plan and to continue
improving the Company's manufacturing performance. If additional services
are needed or additional projects are identified, the Consultant shall
provide such additional services as are requested by the Company at a cost
per consultant month to be agreed to by the parties but in any event not to
exceed $23,000.
(c) Termination of this Agreement shall not release the Consultant or
the Company from liability for failure to perform any of the duties or
obligations of either of them under this Agreement that have already accrued,
and the payment of any amounts in connection with the termination shall not
constitute a release of the Consultant or the Company, as the case may be, from
any such accrued liabilities.
(d) After the effective date of termination and except as set forth
in this Section 9.3 and except for the obligations set forth in Sections 5, 6, 7
and 8, neither party shall have any further obligation to the other party hereto
under this Agreement.
10. REPRESENTATIONS AND WARRANTIES.
10.1 CONSULTANT REPRESENTATIONS. The Consultant is a corporation
existing and in good standing under the laws of the State of Texas. This
Agreement has been duly authorized, executed and delivered by the Consultant and
constitutes the legal, valid and binding obligation of the Consultant,
enforceable against the Consultant in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights generally and to
general equitable principles. The Consultant has all necessary corporate power
and authority to perform its obligations hereunder.
10.2 COMPANY REPRESENTATIONS. The Company is a corporation existing
and in good standing under the laws of the State of Delaware. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Consultant enforceable against
the Company in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights generally and to general equitable
principles. The Company has all necessary corporate power and authority to
perform its obligations hereunder.
10.3 LIMITATION OF LIABILITY. EXCEPT FOR THE EXPRESS WARRANTIES
SPECIFIED IN SECTIONS 10.1 AND 10.2, NEITHER THE CONSULTANT NOR THE COMPANY
MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
CONSULTANT WILL NOT BE RESPONSIBLE FOR ANY MODIFICATION OF THE DELIVERABLES MADE
BY COMPANY OR ITS CONSULTANTS. IN NO EVENT SHALL CONSULTANT BE LIABLE FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RESULTING FROM USE OF A DELIVERABLE.
7
<PAGE>
11. INDEMNIFICATION. Each party agrees to indemnify and hold the other
harmless against any losses, claims, damages or liabilities incurred by the
other party based upon acts performed or omitted to be performed by such party
as the result of its willful misconduct, negligence, intentional breach of this
Agreement or fraud, unless such act or omission also constitutes willful
misconduct, negligence, intentional breach or fraud on the part of the
indemnitee.
12. AMENDMENTS. This Agreement may be amended only by a written
instrument duly executed by both parties hereto.
13. ENTIRE AGREEMENT. This Agreement embodies the entire Agreement
between the parties hereto concerning the subject matters mentioned herein and
supersedes all previous discussions, correspondence, understandings and
agreements, whether written or oral, with respect to such matters.
14. NOTICES. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be deemed to
have been duly delivered three business days after mailing by certified mail,
when delivered by hand, or one day after sending by overnight delivery service,
to the respective addresses of the parties set forth on the signature page
hereto.
15. ASSIGNMENT. Neither party may assign this Agreement, or any interest
in it, by operation of law or otherwise, without the prior written consent of
the other party, which consent will not be unreasonably withheld; PROVIDED,
HOWEVER, that either party may assign its rights and obligations under this
Agreement to its successor without the consent of the other party in the event
that it shall effect a reorganization, consolidate with, or merge into, any
other entity or transfer all or substantially all of its properties or assets to
any other entity if the shareholders of the assigning party immediately prior to
such reorganization, consolidation, merger or transfer constitute a majority of
the shareholders of such new entity. This Agreement shall inure to the benefit
of and be binding upon the Company and the Consultant and their respective
successors and permitted assigns.
16. SEVERABILITY. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
17. WAIVER. No waiver of any provision of this Agreement shall be
effective unless made in writing and signed by a duly authorized representative
of each party. The failure of either party to require the performance of any
term or obligation of this Agreement, or the waiver by either party of any
breach of this Agreement, shall not prevent any subsequent enforcement of such
term or obligation or be deemed a waiver of any subsequent breach.
18. HEADINGS. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
8
<PAGE>
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together
constitute one and the same instrument.
20. GOVERNING LAW. This Agreement shall be construed and enforced under
and be governed in all respects by the substantive laws of the State of Texas,
without regard to the conflict of laws principles thereof.
21. DISPUTE RESOLUTION. In the event of any dispute between the Company
and the Consultant, the Consultant and the Company agree that prior to
submitting any such dispute to the Mediators (as defined herein) in accordance
with this Section they shall attempt to resolve disputes in an informal and
timely manner. In the event, however, that a dispute cannot be resolved
informally, the Consultant and the Company hereby designate the individuals in
the positions named below as "Mediators," who shall have the responsibility for
settling formal disputes. The Mediators agree to use reasonable best efforts to
confer with one another within one week after the formal dispute has been
submitted. If the Mediators are not able to resolve the dispute within two
weeks after its submission, then the dispute will be submitted to the Board of
Directors of the Company which shall resolve the dispute fully and finally.
Neither party may have recourse to the judicial system to resolve any such
dispute.
Consultant's Mediator: Rob Carringer, Senior Vice President of North
American Operations, George Group, Inc.
Company's Mediator: David G. Fiore, President
22. STATUS. The Consultant shall be deemed to be an independent
contractor. The Consultant shall not have the authority to act for or represent
the Company in any way and shall not otherwise be deemed to be an agent of the
Company. Similarly, the Company shall not have the authority to act for or
represent the Consultant in any way and neither shall be deemed to be an agent
of the Consultant. Nothing contained herein shall create or constitute the
Company and the Consultant as members of any partnership, joint venture,
association, syndicate, unincorporated business, or other separate entity, nor
shall be deemed to confer on any of them any express, implied, or apparent
authority to incur any obligation or liability on behalf of such other entity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly
executed by its duly authorized representative effective as of the Effective
Date.
ADDRESS: RELIANT BUILDING PRODUCTS, INC.
3030 LBJ Freeway, Suite 300
Dallas, Texas 75234
Attention: David G. Fiore By: /s/ David G. Fiore
--------------------------------
Title: President
----------------------------
ADDRESS: GEORGE GROUP, INC.
One Galleria Tower
13355 Noel Road, Suite 1100
Dallas, Texas 75240 By: /s/ Michael L. George
Attention: Don Jungerman --------------------------------
Title: Chief Executive Officer
----------------------------
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<PAGE>
EXHIBIT B
FINAL PERFORMANCE GOALS (1)
PERFORMANCE BASELINE FINAL WEIGHTING
CRITERIA PERFORMANCE FACTOR
GOALS
- ----------------------------------------------------------------------
Gross Profit $42 MM $56 MM 15%
- ----------------------------------------------------------------------
Order Fill Rate 86% 98% 10%
- ----------------------------------------------------------------------
On-time Delivery 79% 98% 10%
- ----------------------------------------------------------------------
Order Lead Time 10 days 5 days 15%
- ----------------------------------------------------------------------
Labor Productivity 0.1146 0.1357 25%
- ----------------------------------------------------------------------
Material Cost Reduction n/a $2.0 MM 15%
- ----------------------------------------------------------------------
Capital Turnover 1.86 2.17 10%
- ----------------------------------------------------------------------
DEFINITIONS:
As used in this Exhibit B and in Exhibit C, the following terms shall
have meanings ascribed to them below:
GROSS PROFIT DOLLARS means gross profit dollars realized over the
evaluation period.
ORDER FILL RATE means the number of orders that ship complete as a
percentage of total orders shipped.
ON-TIME DELIVERY means the frequency in which the Operating Company ships
orders on a date which is consistent with the delivery date that was promised to
the customer.
ORDER LEAD TIME means the average length of time from receipt of an order
to the shipment of such order.
- --------------------
(1) All measures, with the exception of capital turnover, refer to the
residential window business only. Baselines are estimates and will be
verified during the 3 months following the Effective Date. The parties agree
to amend this Exhibit B to reflect the actual baselines as so verified. In
addition, the parties agree to amend this Exhibit B to appropriately reflect
any acquisitions made by the Company.
<PAGE>
LABOR PRODUCTIVITY means the result obtained by dividing the number of
units shipped during a specified period by the indirect and direct labor costs
during such period.
MATERIAL COST REDUCTION means that number calculated in accordance with the
following: (i) the goal and actual improvements will be a function of both the
per unit material cost reduction on existing products and the per unit material
cost avoidance for new products, times the number of effected window units sold;
and (ii) values are calculated on a discrete project/initiative basis.
CAPITAL TURNOVER means (i) in the case of the baseline, the result obtained
by dividing (x) 1997E net sales by (y) invested capital, as of the Effective
Date; and (ii) in the case of the final goal, the result obtained by dividing
(xx) net sales during the final evaluation period by the average invested
capital during the final evaluation period (invested capital is derived from the
entire business of the Company (i.e., does not exclude non-residential window
operations)).
<PAGE>
EXHIBIT C
INTERIM PERFORMANCE GOALS(2)
<TABLE>
<CAPTION>
PERFORMANCE BASELINE(3) INTERIM WEIGHTING FINAL
CRITERIA PERFORMANCE FACTOR GOAL
GOAL
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Order Fill Rate 84% 50% of the variance 25%
between the baseline
and the final goal
- -------------------------------------------------------------------------------------------
On-time Delivery 86% 60% of the variance 25%
between the baseline
and the final goal
- -------------------------------------------------------------------------------------------
Order Lead Time 8 days 67% of the variance 25%
between the baseline
and the final goal
- -------------------------------------------------------------------------------------------
Successful N/A N/A 25%
Consolidation of Living
Windows (50% of
revenue retained)
</TABLE>
- -----------------
(2) Only the performance of the Bryan and Fresno facilities are incorporated
into the numerical interim performance goals and corresponding baselines and
are to be calculated in measuring interim performance. All measures refer to
the residential window business only.
(3) Baselines are estimates and will be verified and mutually agreed to by
the Consultant and the Company during the 60 days following the Effective
Date. The parties agree to amend this Exhibit C to reflect the actual
baselines as so verified and agreed upon.
(4) Interim Performance Goals are subject to changes actually agreed upon by
the Consultant and the Company in writing during the 60 days following the
Effective Date.
<PAGE>
EXHIBIT D
METHOD OF DETERMINING
AGGREGATE WEIGHTED PERCENTAGE OF PERFORMANCE ACHIEVED
"Aggregate Weighted Percentage of Performance Achieved" shall be determined
as follows:
1. divide (i) the actual level of performance achieved during the
applicable evaluation period for each performance criterion minus the baseline
for such performance criterion, by (ii) the applicable performance goal for such
performance criterion for the applicable evaluation period minus the baseline
for such performance criterion (such quotient being hereinafter referred to as
the "Percentage of Performance Achieved"); PROVIDED, HOWEVER, that any
Percentage of Performance Achieved in excess of 125% shall be deemed to be 125%;
2. multiply the Percentage of Performance Achieved for each performance
criterion by the applicable weighting factor (such product being hereinafter
referred to as the "Weighted Percentage of Performance Achieved"); and
3. add the Weighted Percentages of Performance Achieved for all
performance criteria (the "Aggregate Weighted Percentage of Performance
Achieved"); PROVIDED, HOWEVER, that if the Aggregate Weighted Percentage of
Performance Achieved is in excess of 100%, it shall be deemed to be 100%.
<PAGE>
GEORGE GROUP, INC.
ONE GALLERIA TOWER
13355 NOEL ROAD, SUITE 1100
DALLAS, TEXAS 75240
MARCH 27, 1997
Acquisition Advisory Services
Fee Letter
RBPI Holding Corporation
303 LBJ Freeway
Suite 300
Dallas, Texas
Attention: David Fiore
Ladies and Gentlemen:
This letter shall confirm our agreement that, in consideration of our
introducing you to Reliant Partners, L.P. and Reliant Partners II, L.P.
(collectively, the "Purchasers") as a potential acquisition candidate, our
assistance in connection with Purchasers' proposed acquisition of the stock (the
"Proposed Transaction") of RBPI Holding Corporation ("RBPI"), and advice and
counsel regarding the structuring of the proposed acquisition (collectively, the
"Advisory Services"), you shall pay, or cause Redman Building Products, Inc.
(the "Operating Company") to pay, to George Group, Inc. ("GGE"), for its own
account, a consulting fee in an amount equal to $990,000, payable on the closing
date of the Proposed Transaction. You hereby acknowledge and agree that, once
paid, the foregoing fee shall be nonrefundable.
This letter shall be governed by, and construed in accordance with, the
laws of the State of Texas. This letter may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature
page of this letter by facsimile transmission shall be effective as delivery of
a manually executed counterpart hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Please confirm that the foregoing is our mutual understanding by signing
and returning to us an executed counterpart of this letter.
Very truly yours,
GEORGE GROUP, INC.
By: /s/ Michael L. George
------------------------------------
Name: Michael L. George
----------------------------------
Title: Chief Executive Officer
---------------------------------
Accepted and agreed to as
of the date first above written:
RBPI HOLDING CORPORATION
By:/s/ David G. Fiore
-----------------------------
Name: David G. Fiore
---------------------------
Title: President
--------------------------
2
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of April 1, 1997 is
entered into by and between Redman Building Products, Inc. ("Building Products")
and David G. Fiore ("Executive").
WHEREAS, Building Products recognizes that Executive's contribution to the
growth and success of Building Products has been substantial;
WHEREAS, Executive possesses an intimate knowledge of the business and
affairs of Building Products, its policies, methods, personnel and problems;
WHEREAS, Building Products desires that Executive remain in the employ of
Building Products to assure itself of the continued services of Executive in
light of the major issues that have absorbed and will continue to absorb
Building Products' and Executive's attention; and
WHEREAS, Building Products and Executive wish to enter into this Agreement
effective as of the date hereof to reflect their mutual agreements regarding
Executive's employment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency all of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT. (a) During the Term (as hereinafter defined) hereof,
Building Products hereby agrees to continue to employ Executive, and Executive
agrees to continue to provide dedicated services to Building Products and its
subsidiaries, on the terms and conditions set forth herein.
(b) TERM. The term of this Agreement (the "Term") shall commence on
the date hereof and shall continue until the earlier to occur of (i) the
termination of Executive's employment with Building Products pursuant to the
provisions of paragraph 5(a) through 5(d) hereunder and (ii) March 31, 2000;
PROVIDED, HOWEVER, that unless Building Products or Executive gives the
<PAGE>
other written notice of its intention to terminate this Agreement not less than
30 days prior to the last day of each month, commencing April 30, 1998, the term
of this Agreement automatically shall be extended so that, as of the last day of
each month thereafter, the remaining term of this Agreement, subject to clause
(i) above, shall always be two years.
2. POSITION AND DUTIES. Executive shall serve as President and Chief
Executive Officer of Building Products and shall have such responsibilities,
powers and duties as are normally attendant such position, and as may from time
to time be prescribed by the Board of Directors of Building Products, provided
that such duties and responsibilities are substantially consistent with
Executive's present duties and those of a senior executive officer. Executive
agrees to devote his full and undivided business time and attention to his
duties and responsibilities as President and Chief Executive Officer of Building
Products and not to engage in any other business activity that would interfere
with his duties and responsibilities under this Agreement.
3. COMPENSATION. Executive shall receive a base salary at the annual
rate of $175,000 (the "Minimum Rate"), subject to increase from time to time in
the sole discretion of the Board of Directors of Building Products. Any
increase in base salary or other compensation shall in no way limit or reduce
any other obligation of Building Products hereunder.
4. BENEFITS; VACATION. During the Term hereof, Executive shall be
entitled (a) to continue to participate in or receive benefits under all
compensation plans, insurance plans, benefit plans and fringe benefit plans or
arrangements presently in effect (or plans and arrangements providing Executive
with substantially similar benefits), and shall be eligible to participate in
any such plans or arrangements which are made available by Building Products in
the future to its executives and key management employees, and (b) to not less
than three (3) weeks of paid vacation each year together with all paid holidays
given to senior executive officers. Nothing paid to Executive under any such
plan or arrangement shall be deemed to be in lieu of compensation to Executive
hereunder.
5. TERMINATION.
(a) TERMINATION FOR ANY REASON. Building Products may terminate
Executive's employment at any time subject to providing
2
<PAGE>
the severance benefits, if any, as hereinafter specified according to the terms
hereof. The "Date of Termination" shall mean the date on which Executive's
employment hereunder terminates, and shall be specified in a written notice.
(b) TERMINATION FOR CAUSE. Building Products may terminate
Executive's employment for Cause. For the purposes of this Agreement, "Cause"
shall mean (i) the deliberate and willful failure by Executive to substantially
perform Executive's duties with Building Products, other than any such failure
resulting from Executive's incapacity due to physical or mental illness, (ii)
the willful engaging by Executive in gross misconduct injurious to Building
Products in the sole determination of the Board of Directors of Building
Products acting in good faith, (iii) the conviction of Executive for fraud,
misappropriation, embezzlement or any felony or, (iv) the failure of Executive
to assist Wingate Partners, L.P. ("Wingate") and Building Products in connection
with the consummation of the Transaction (as defined in that certain Transaction
Incentive Agreement, dated of even date herewith, among Building Products, RBPI
Holding Corporation, Wingate and Executive) in such manner as Building Products
shall reasonably require; PROVIDED, HOWEVER, that Executive shall not be in
violation of clause (iv) of this sentence until he has received written notice
of such violation and 15 days' opportunity to cure. For purposes of this
subparagraph, no act, or failure to act, on Executive's part shall be considered
"willful" unless done, or omitted to be done, by Executive not in good faith and
without reasonable belief by Executive that Executive's action or omission was
in the best interest of Building Products.
(c) TERMINATION FOR GOOD REASON. Executive may terminate his
employment hereunder for Good Reason. "Good Reason" shall mean (i) any
reassignment of Executive to duties materially inconsistent with those attendant
his position, title and status with Building Products as set forth in paragraph
2 hereof, (ii) any reduction in Executive's base salary below the Minimum Rate
or the removal of Executive from participation in any employee benefit plan
generally provided to all executive officers unless Executive is provided with
substantially similar benefits pursuant to another plan or arrangement, (iii)
any material breach by Building Products of any provision of this Agreement or
the failure by Building Products to obtain the assumption of and the agreement
to perform this Agreement by any successor as contemplated in paragraph 11(f),
(iv) any requirement that Executive relocate out of the Dallas/Fort Worth
3
<PAGE>
metroplex area or (v) any requirement that Executive perform any illegal acts
(upon advice of counsel) or acts that a reasonable person in similar
circumstances would consider unethical.
(d) TERMINATION FOR DISABILITY; RETIREMENT.
(i) If, as a result of Executive's incapacity due to physical or
mental illness, Executive shall have been absent from his duties with Building
Products on a full time basis for six (6) consecutive months, and within thirty
(30) days after written notice of intention to terminate is given, Executive
shall not have returned to the full time performance of Executive's duties,
Building Products may terminate this Agreement for "Disability".
(ii) Termination by Building Products or Executive of Executive's
employment based on "Retirement" shall mean termination at normal retirement age
in accordance with Building Products' retirement policy, generally applicable to
its salaried employees or in accordance with any retirement arrangement
established with Executive's consent with respect to Executive.
6. COMPENSATION UPON TERMINATION.
(a) Upon termination of Executive's employment (i) by Building
Products for any reason other than for Cause, Disability, Retirement or Death,
or (ii) by Executive for Good Reason, in lieu of any severance payments that
would otherwise be due Executive upon termination of his employment, which
severance benefits are hereby waived and relinquished by Executive, Building
Products shall:
(i) pay Executive his full base salary through the Date of
Termination at the rate in effect at the time notice of termination is given
(but in no event less than the Minimum Rate), and such bonus (if any), with
respect to the immediately preceding fiscal year then ended (provided same has
not already been paid) which has been earned by Executive pursuant to Building
Products' bonus program then in effect.
(ii) pay Executive for all accrued and unused vacation through the
Date of Termination;
(iii) pay Executive his full base salary at the rate in effect at
the time notice of termination is given (but in no event less than the Minimum
Rate), during the remainder of the
4
<PAGE>
Term in accordance with Building Products' customary payment policies in effect
for senior executives, plus the pro rata portion of a bonus, if any, with
respect to the then current bonus period applicable to Executive (including any
hold back or deferred bonus) to which the Executive would otherwise be entitled
but for the termination of Executive's employment. Executive shall not forfeit
any bonus for the sole reason that he was not employed by Building Products or
its successors or assigns at the end of the applicable bonus period or any date
subsequent to the Date of Termination. The provisions hereof shall control over
the provisions contained in any bonus plan applicable to Executive.
(iv) maintain in full force and effect, for the continued benefit
of Executive for the remainder of the Term all employee benefit plans relating
to hospitalization, medical, life insurance and disability programs or
arrangements in which Executive was entitled to participate and in which he was
participating immediately before the Date of Termination provided that
Executive's continued participation is possible under the general terms and
provisions of such plans and programs. In the event that Executive's
participation in any such plan or program is barred or otherwise impractical,
Building Products shall arrange to provide Executive with benefits substantially
similar to those which Executive was entitled to receive under such plans and
programs immediately prior to the Date of Termination.
(b) Executive shall not be required to mitigate the amount of any
payment provided for in subparagraph 6(a)(iii) hereof by seeking other
employment or otherwise. Building Products shall no longer have an obligation
to provide benefits under subparagraph 6(a)(iv) relating to hospitalization,
medical, life insurance and disability programs or arrangements to the extent
Executive is covered by any hospitalization, medical, life insurance and
disability program or arrangement pursuant to any subsequent employment.
(c) Upon termination of Executive's employment for Cause, Building
Products shall pay Executive his full base salary through the Date of
Termination at the rate in effect at the time notice of termination is given
(but in no event less than the Minimum Rate), and Building Products shall have
no further obligations to Executive under this Agreement.
(d) If Executive is terminated due to Disability in accordance with
the provisions of subparagraph 5(d) hereof,
5
<PAGE>
Building Products' sole obligation to Executive shall be to pay Executive his
full base salary through the Date of Termination at the rate in effect at the
time notice of termination is given (but in no event less than the Minimum
Rate).
(e) If Executive terminates his employment hereunder for Good Reason,
EXCEPT in any instance wherein Good Reason involves or is related to any
violation of law or governmental rule or regulation on the part of Building
Products or its shareholder, officers, directors, managers, employees, agents,
successors or assigns, the payment of compensation pursuant to this Section 6
shall be the sole obligation of Building Products arising from such termination
or the circumstances constituting Good Reason and the receipt of such
compensation shall be the sole and exclusive remedy of Executive arising from
such termination or the circumstances constituting Good Reason.
7. EXCISE TAXES. Any provision of this Agreement to the contrary
notwithstanding, if any amount otherwise payable to Executive pursuant to this
Agreement would cause Executive to be subject to an excise tax with respect to
such amount on account of Internal Revenue Code section 280G (excess parachute
payments), Building Products will make a cash payment equal to the excise tax
imposed with respect to any such amount on account of Internal Revenue Code
section 280G.
8. UNAUTHORIZED DISCLOSURE. Executive acknowledges and agrees that all
of the documents and information relating to Building Products or its business
to which he has had access during his employment, including, but not limited to,
this Agreement, all information pertaining to any specific business transactions
in which Building Products is or was involved, all information pertaining in any
way to customers of Building Products, and in general, the business and
operations of Building Products (collectively the "Confidential Information")
are considered confidential and that, during the Term hereof and thereafter, he
shall secure the information with the same degree of security as he provides for
his own, personal confidential information and documents and not disclose to any
person, other than an executive of Building Products or a person to whom
disclosure is reasonably necessary or appropriate in connection with the
performance by Executive of his duties as an executive of Building Products or
its parent corporation or any subsidiary thereof (individually or collectively
as the context may require, the "Building Products Group"), Confidential
Information or use any Confidential Information for any purpose other than the
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performance of his duties and responsibilities hereunder; PROVIDED, HOWEVER,
that Confidential Information shall not include any information (i) known
generally to others unrelated to Business Products or readily available to said
others - from sources other than Executive (other than as a result of
unauthorized disclosure by Executive), or (ii) otherwise known or available to
Executive prior to his employment by Building Products. Notwithstanding the
foregoing, Executive may disclose the existence of and the terms of this
Agreement to Executive's spouse, attorney, accountant, tax return preparer,
financial planner and, to the extent necessary, to those persons who have a need
to know such information in connection with future employment, if each such
person has agreed to keep its existence and provisions confidential, and may
disclose confidential information (a) to the extent required by judicial process
and (b) with the written consent of the Building Products' Board of Directors or
a person authorized thereby.
9. NON-COMPETE.
(a) The term of this Section 9 shall be for a period commencing
simultaneously with the Term and ending on the 1st anniversary of the
termination of Executive's employment with Building Products for any reason
whatsoever (the "Restricted Period") and provided Executive receives
compensation pursuant to paragraph 6(a)(iii) hereunder, Executive shall not,
during the Restricted Period, (i) directly or indirectly, engage, participate,
or make any financial investment (other than a passive investment), in, or
become employed by or render advisory or other services to or for any Person
(within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended) or other business enterprise which is engaged, directly or
indirectly, in competition with any member of the Building Products Group, in
any geographic area or territory in which any member of the Building Products
Group is then engaged in such business, or (ii) solicit, induce or encourage any
employee of the Building Products Group to leave his or her employment.
(b) Executive expressly recognizes and agrees that the restraints imposed
by this Section 9 are (i) reasonable as to time; (ii) reasonably necessary to
protect the legitimate business interests of Building Products; and (iii) not
oppressive. Executive further expressly recognizes and agrees that the failure
by Executive to observe and comply with the covenants and agreements in this
Section 9 will cause irreparable
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harm to Building Products, that it is and will continue to be difficult to
ascertain the harm and damages to Building Products that such a failure by
Executive would cause, that the consideration received by Executive for entering
into these covenants and agreements is fair, that the covenants and agreements
and their enforcement will not deprive Executive of his ability to earn a
reasonable living in the field of manufactured windows and doors, and that
Executive has acquired knowledge and skills in this field that will allow him to
obtain employment without violating these covenants and agreements. Executive
further expressly acknowledges that he has been encouraged to and has consulted
independent counsel, and has reviewed and considered this Agreement with that
counsel before executing this Agreement.
10. ENFORCEMENT. The parties hereto recognize that the covenants of
Executive hereunder are special, unique and of extraordinary character.
Accordingly, it is the intention of the parties that, in addition to any other
rights and remedies which Building Products may have in the event of any breach
of Sections 8 and 9 hereof, Building Products shall be entitled to demand
specific performance, including without limitation, temporary and permanent
injunctive relief, and all other appropriate equitable relief against Executive
in order to enforce against Executive, or in order to prevent any breach or any
threatened breach by Executive of, the covenants and agreements contained in
Sections 8 and 9 hereof. In case of any such breach of this Agreement, nothing
herein contained shall be construed to prevent Building Products from seeking
such other remedy in the courts as it may elect or invoke.
11. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Executive: If to Building Products:
---------------- ------------------------
David G. Fiore Board of Directors
6883 Alcove Lane Redman Building Products, Inc.
Plano, TX 75024 3030 LBJ Freeway
Suite 300, LB 66
Dallas, TX 75234
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or to such other address as any party hereto may have furnished to the other in
writing.
12. MISCELLANEOUS.
(a) No provision of this Agreement may be amended, modified, waived
or discharged unless such amendment, modification, waiver or discharge is agreed
to in writing and signed by Executive and such officer as may be specifically
designated by the Board of Directors of Building Products.
(b) No waiver by either party hereto at any time of any breach by the
other party hereto of, or in compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(c) The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Texas.
(d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect; PROVIDED,
HOWEVER, that if any provision of this Agreement is deemed or held to be
illegal, invalid, or unenforceable there shall be added hereto automatically a
provision as similar as possible to such illegal, invalid, or unenforceable
provision as shall be legal, valid, and enforceable.
(e) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amount would still be payable to Executive hereunder if Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Executive's devisee,
legatee, or other designee or, if there be no such designee, to Executive's
estate.
(f) This Agreement shall be binding upon Building Products and
Building Products' successors and assigns. Building Products will require, in
connection with the sale of all or substantially all of the assets of Building
Products, that the
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successor to all or substantially all of the business and/or assets of Building
Products, expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Building Products would be required to
perform it if no such succession had taken place. The failure of Building
Products to obtain such agreement prior to the effectiveness of any such
succession shall constitute a breach of this Agreement and shall entitle
Executive to compensation from Building Products in accordance with paragraphs
6(a) and (b) hereof.
(g) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
13. Executive acknowledges that he has read this Agreement, that his
execution hereof is knowing and voluntary, that Executive had a reasonable time
to deliberate regarding this Agreement, and that Executive understands that he
had the right to consult with an attorney regarding this Agreement.
14. No right or interest of Executive hereunder may be sold, assigned,
transferred or pledged, in whole or in part, by operation of law or otherwise,
by Executive except pursuant to Executive's testamentary disposition or the laws
of descent and distribution.
15. The parties agree that this Agreement and the Transaction Incentive
Agreement of substantially concurrent date herewith: (a) contain and constitute
the entire understanding and agreement among them respecting the subject matter
hereof, (b) supersede and cancel any previous discussions, negotiations,
agreements, commitments and writings respecting such subject matter, and (c)
shall not be deemed or construed to create a trust fund or grant a security
interest of any kind for the benefit of Executive, and to the extent that
Executive acquires any rights to receive the severance payments hereunder, such
rights shall be no greater than the right of any unsecured general creditor of
Building Products.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first written above.
REDMAN BUILDING PRODUCTS, INC. EXECUTIVE
By: /s/James A. Johnson /s/David G. Fiore
------------------------- ---------------------------
James A. Johnson David G. Fiore
11
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AGREEMENT
AGREEMENT dated as of March 31, 1994, between Redman Building Products,
Inc. ("Building Products") and Virgil D. Lowe ("Executive").
Whereas, Building Products recognizes that the Executive's contribution to
the growth and success of Building Products has been substantial;
Whereas Executive possesses an intimate knowledge of the business and
affairs of Building Products, its policies, methods, personnel and problems;
Whereas, Building Products desires that Executive i) remain in the employ
of Building Products to assure itself of the continued services of Executive in
light of the major issues that have absorbed and will continue to absorb
Building Products' and Executive's attention;
Whereas, Building Products, in order to achieve its objectives as set forth
above, is willing to set forth the minimum severance benefits which Building
Products agrees will be provided to Executive in the event Executive's
employment with Building Products is terminated at any time;
Whereas, absent this Agreement, Building Products is under no legal
obligation to provide additional compensation to Executive in addition to the
compensation and benefits Executive is presently receiving; and
Whereas, Executive is willing to continue in the employ of Building
Products and to provide continued dedicated services to Building Products and
its subsidiaries, provided he receives adequate assurance that he will receive
certain compensation in the event of the termination of his employment.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency all of which are hereby acknowledged by the parties hereto agree as
follows:
1. EMPLOYMENT. Building Products hereby agrees to continue to employ
Executive, and Executive agrees to continue to provide dedicated services to
Building Products and its subsidiaries, on the terms and conditions set forth
herein.
2. POSITION AND DUTIES. Executive shall serve as Controller of Building
Products and shall have such responsibilities, powers and duties as are normally
attendant such position, and as may from time to time be prescribed by the Board
of Directors of Building Products or the President, provided that such duties
and responsibilities are substantially consistent with Executive's present
duties.
3. COMPENSATION. Executive shall receive a base salary at the annual
rate of at least $77,500.00 (the "Minimum Rate"), subject to increase from time
to time in the sole discretion of Building Products. Any increase in Base
Salary or other compensation shall in no way limit or reduce any other
obligation of Building Products hereunder.
<PAGE>
4. BENEFITS; VACATION. Executive shall be entitled (a) to continue to
participate in or receive benefits under all compensation plans, insurance
plans, benefit plans and fringe benefit plans or arrangements presently in
effect (or plans and arrangements providing Executive with substantially similar
benefits), and shall be eligible to participate in any such plans or
arrangements which are made available by Building Products in the future to its
executives and key management employees, and (b) to not less than three (3)
weeks of paid vacation each year together with all paid holidays given to senior
executive officers. Nothing paid to Executive under any such plan or
arrangement shall be deemed to be in lieu of compensation to Executive
hereunder.
5. TERMINATION.
(a) TERMINATION FOR ANY REASON. Building Products may terminate
Executive's employment at any time subject to providing the severance benefits,
if any, as hereinafter specified according to the terms hereof. The "Date of
Termination" shall mean the date on which Executive's employment hereunder
terminates, and shall be specified in a written notice.
(b) TERMINATION FOR CAUSE. Building Products may terminate
Executive's employment for Cause. For the purposes of this Agreement, Cause
shall mean i) the deliberate and willful failure by Executive to substantially
perform Executive's duties with Building Products, other than any such failure
resulting from Executive's incapacity due to physical or mental illness, or ii)
the willful engaging by Executive in gross misconduct injurious to Building
Products in the sole determination of the Board of Directors of Building
Products acting in good faith, or iii) the conviction of Executive of fraud,
misappropriation, embezzlement or any felony. For purposes of this
subparagraph, no act, or failure to act, on Executive's part shall be considered
"willful" unless done, or omitted to be done, by Executive not in good faith and
without reasonable belief by Executive that Executive's action or omission was
in the best interest of Building Products.
(c) TERMINATION FOR GOOD REASON. Executive may terminate his employment
for Good Reason. "Good Reason" shall mean i) any reassignment of the Executive
to duties materially inconsistent with those attendant his position, title and
status with Building Products as set forth in paragraph 2 hereof, ii) any
reduction in Executive's base salary below the Minimum Rate or the removal of
Executive from participation in any employee benefit plan generally provided to
all executive officers, or iii) any material breach by Building Products of any
provision of this Agreement or the failure by Building Products to obtain the
assumption of and the agreement to perform this Agreement by any successor as
contemplated in paragraph 11(vi).
(d) TERMINATION FOR DISABILITY; RETIREMENT.
(i) If, as a result of Executive's incapacity due to physical or
mental illness, Executive shall have been absent from his duties with Building
Products on a full time basis for six (6) consecutive months, and within thirty
(30) days after written notice of termination is
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given, Executive shall not have returned to the full time performance of
Executive's duties, Building Products may terminate this Agreement for
"Disability".
(ii) Termination by Building Products or Executive of Executive's
employment based on "Retirement" shall mean termination at normal retirement age
in accordance with the Company's retirement policy, generally applicable to its
salaried employees or in accordance with any retirement arrangement established
with Executive's consent with respect to Executive.
6. COMPENSATION UPON TERMINATION.
(a) Upon termination of Executive's employment i) by Building Products for
any reason other than for Cause, Disability, Retirement or Death, or ii) by the
Executive for Good Reason, in lieu of any severance payments that would
otherwise be due Executive upon termination of his employment, which severance
benefits are hereby waived and relinquished by Executive, Building Products
shall:
(i) pay Executive, Executive's full base salary through the Date of
Termination at the rate in effect at the time notice of termination is given
(but in no event less than the Minimum Rate), and a bonus, with respect to the
immediately preceding fiscal year then ended (provided same has not already been
paid) which accrued to Executive;
(ii) pay Executive, for all accrued and unused vacation through the
Date of Termination;
(iii) pay Executive, Executive's full base salary at the rate in
effect at the time notice of termination is given (but in no event less than the
Minimum Rate), for twelve (12) months after the Date of Termination plus the pro
rata share of a bonus, if any, with respect to then current fiscal year to which
the Executive would otherwise be entitled but for the termination of Executive's
employment, based upon the factors used in determining the bonus provided to
Executive for Building Products' previous fiscal year. Such bonus shall be
determined in the good faith determination of the Board of Directors of Building
Products; and
(iv) maintain in full force and effect, for the continued benefit of
Executive for twelve (12) months after the Date of Termination, all employee
benefit plans relating to hospitalization, medical, life insurance and
disability programs or arrangements in which Executive was entitled to
participate immediately before the Date of Termination provided that Executive's
continued participation is possible under the general terms and provisions of
such plans and programs. In the event that Executive's participation in any
such plan or program is barred, Building Products shall arrange to provide
Executive with benefits substantially similar to those which Executive is
entitled to receive under such plans and programs.
(b) Executive shall not be required to mitigate the amount of any payment
provided for in subparagraph 6 (iii) hereof by seeking other employment or
otherwise, provided however, that should Executive obtain other employment, the
amounts of any salary and bonus provided to Executive pursuant to such
subsequent employment shall offset amounts otherwise due under subparagraph 6
(iii) hereof. Building Products shall no longer have an obligation to provide
benefits relating to hospitalization, medical, life insurance and disability
programs or
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arrangements to the extent Executive is covered by any hospitalization, medical,
life insurance and disability program or arrangement pursuant to such subsequent
employment.
(c) Upon termination of Executive's employment for Cause, Building Products
shall pay Executive, Executive's full base salary through the Date of
Termination at the rate in effect at the time notice of termination is given
(but in no event less than the Minimum Rate), and Building Products shall have
no further obligations to Executive under this Agreement.
(d) During any period that the Executive fails to perform Executive's
duties hereunder as a result of incapacity due to physical or mental illness,
Building Products shall pay Executive, Executive's full base salary through the
Date of Termination at the rate in effect at the time notice of termination is
given (but in no event less than the Minimum Rate), and Building Products shall
have no further obligations to Executive under this Agreement.
7. Any provision of this Agreement to the contrary notwithstanding, if
any amount otherwise payable to Executive pursuant to this Agreement would cause
Executive to be subject to an excise tax with respect to such amount on account
of Internal Revenue Code section 4999, then the amount payable to Executive
pursuant to this Agreement shall be reduced to an amount which will not cause
Executive to be subject to the excise tax imposed with respect to any such
amount on account of Internal Revenue Code section 4999.
8. UNAUTHORIZED DISCLOSURE. During the period of Executive's employment
hereunder, Executive acknowledges and agrees that all of the documents and
information to which he has had access during his employment, including, but not
limited to, this Agreement, all information pertaining to any specific business
transactions in which Building Products was involved, all information pertaining
in any way to customers of Building Products, and in general, the business and
operations of Building Products, are considered confidential and, that during
the period of Executive's employment hereunder, and for the two (2) year period
following termination of Executive's employment with Building Products, he shall
not disclose to any person, other than an employee of Building Products or a
person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by Executive of his duties as an executive of Building
Products or any subsidiary thereof (individually or collectively as the context
may require, the "Building Products Group"), material confidential information
obtained by him while in the employ of Building Products including, but not
limited to confidential information with respect to any of the Building Products
Group's products, improvements, formulas, customers, distribution of products or
methods of manufacture; provided, however, that confidential information shall
not include any information a) known generally to the public (other than as a
result of unauthorized disclosure by the Executive), b) otherwise known or
available to Executive prior to his employment by Building Products, or c) not
treated as confidential by Building Products, except that Executive may disclose
(a) the existence of and the terms of this Agreement to Executive's spouse,
attorney, accountant or tax return preparer if such person has agreed to keep
its existence and provisions confidential, (b) to the extent required by
judicial process and (c) with the written consent of the Building Products'
Board of Directors or a person authorized thereby.
9. NON-COMPETE. Executive agrees that, following termination of his
employment with Building Products for any reason whatsoever, Executive shall
not, for a period of one (1)
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after the date of such termination of employment, directly or have others on his
behalf solicit, induce or encourage any employee of the Building Products Group
to leave his or her employment.
10. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:
IF TO EXECUTIVE: IF TO BUILDING PRODUCTS:
Virgil D. Lowe Board of Directors
1504 Pecos Redman Building Products, Inc.
Southlake, TX 76092 2550 Walnut Hill Lane
Dallas TX 75229
or to such other address as any party hereto may have furnished to the other in
writing.
11. MISCELLANEOUS.
(i) No provision of this Agreement may be amended, modified, waived or
discharged unless such amendment, modification, waiver or discharge is agreed to
in writing signed by Executive and such officer as may be specifically
designated by the Board of Directors of Building Products.
(ii) No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(iii) The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the state of Texas.
(iv) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect provided,
however, that if any provision of this Agreement is deemed or held to be
illegal, invalid, or unenforceable there shall be added hereto automatically a
provision as similar as possible to such illegal, invalid, or unenforceable
provision and be legal, valid, and enforceable.
(v) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amount would still be payable to Executive hereunder if Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Executive's devisee,
legatee, or other designee or, if there be no such designee, to Executive's
estate.
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(vi) This Agreement shall be binding upon Building Products and
Building Products' successors and assigns. Building Products will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of Building
Products, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Building Products would be required to
perform it if no such succession had taken place. Failure of Building Products
to obtain such agreement prior to the effectiveness of any such succession shall
constitute a breach of this Agreement and shall entitle Executive to
compensation from Building Products in accordance with paragraphs 6 (a) and (b)
hereof.
(vii) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
12. Executive acknowledges that he has read this Agreement, that his
execution hereof is knowing and voluntary, that Executive had a reasonable time
to deliberate regarding this Agreement, and that Executive understands that he
had the right to consult with an attorney regarding this Agreement.
13. No right or interest of Executive hereunder may be sold, assigned,
transferred or pledged, in whole or in part, by operation of law or otherwise by
Executive.
14. The Parties agree that this Agreement: (a) contains and constitutes
the entire understanding and agreement between them respecting the subject
matter hereof, (b) supersedes and cancels any previous discussions,
negotiations, agreements, commitments and writings respecting that subject
matter, and (c) shall not be deemed or construed to create a trust fund or grant
a security interest of any kind for the benefit of Executive, and to the extent
that Executive acquires any rights to receive the severance payments hereunder,
such rights shall be no greater than the right of any unsecured general creditor
of Building Products.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first written above.
REDMAN BUILDING PRODUCTS, INC EXECUTIVE
By: \s\ Thomas W. Sturgess \s\ Virgil D. Lowe
------------------------- -----------------------
Thomas W. Sturgess Virgil D. Lowe
Vice President
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TRANSACTION INCENTIVE AGREEMENT
THIS TRANSACTION INCENTIVE AGREEMENT (this "Agreement") dated as of
January 1, 1997 is entered into by and among RBPI Holding Corporation
("Holding"), Redman Building Products, Inc. ("Building Products"), and David G.
Fiore ("Executive").
WHEREAS, Wingate Partners, L.P. ("Wingate") is the principal stockholder of
Holding;
WHEREAS, Holding is the principal stockholder of Building Products;
WHEREAS, Executive is the President and Chief Executive Officer of Building
Products;
WHEREAS, Executive possesses an intimate knowledge of the business and
affairs of Building Products, its policies, methods, personnel and problems;
WHEREAS, Wingate and Building Products have entered into discussions
regarding a possible transaction involving (1) a merger or consolidation of
Building Products with or into another unrelated entity, (2) a sale, transfer or
disposition of outstanding Building Products Common Stock or the common equity
of Holding, or (3) a transfer of all or substantially all the assets of Building
Products (in a single transaction or series of related transactions) in exchange
for consideration to be distributed to the holders of Building Products' Common
Stock (not including, however, a transaction which is effected primarily for the
purpose of changing the jurisdiction of incorporation of Building Products or
the form of organization of Building Products; a reorganization within the
Building Products Group (as hereinafter defined); a transaction in which the
current owners of Building Products' Common Stock and Holding's common equity
and their proportionate equity ownership interest in the surviving entity
comprising the business of Building Products remain substantially the same as on
the date hereof, or which is otherwise technical in nature; or a transaction
that does not involve the sale of at least fifty-one percent (51%) of Building
Products assets or Common Stock or the common equity of Holding to an unrelated
entity) (the "Transaction");
<PAGE>
WHEREAS, Wingate, Holding and Building Products desire that Executive
continue in his position with Building Products until the consummation of the
Transaction or such later date as Building Products shall, in its sole and
absolute discretion, determine and to assist Building Products if, as and when
requested by Building Products, in the negotiation and consummation of the
Transaction;
WHEREAS, Holding and Building Products, in order to achieve their
objectives as set forth above and as an inducement for Executive to continue in
the employ of Building Products to assist Building Products if, as and when
requested by Building Products, in the negotiation and consummation of the
Transaction, are desirous of providing a bonus to Executive should the
Transaction be consummated during Executive's employment with Building Products;
WHEREAS, absent this Agreement, Holding and/or Building Products are under
no legal obligation to provide additional compensation to Executive in addition
to the compensation and benefits Executive is presently receiving; and
WHEREAS, Executive desires to remain in the employ of Building Products and
is willing to assist Building Products if, as and when requested by Building
Products, in the negotiation and consummation of the Transaction in accordance
with the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency all of which are hereby acknowledged by the parties
hereto, each of the parties hereto agrees as follows:
1. (a) Subject to the fulfillment of the specific conditions set forth
in paragraph 4 hereof and the general agreements contained herein, Executive
shall receive from Building Products, in the manner provided in paragraph 2, a
bonus (the "Transaction Bonus") as set forth below:
(i) Two hundred and fifty thousand dollars in cash ($250,000);
and
(ii) Two hundred thousand dollars ($200,000) in the form of
deferred compensation pursuant to a deferred compensation plan between Executive
and Building Products.
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(b) For purposes of this Agreement:
(i) "Common Equity Holders" shall mean Wingate, Holding (in the
event of a sale of the Common Stock of Building Products), or Building Products
(in the event of a sale of all or substantially all the assets of Building
Products), together with any other common equity holders of such entities at the
time the Transaction is consummated.
(ii) The term "Closing Date" shall mean the effective date of the
transfer of assets, Building Products Common Stock or Holding common equity to
the purchaser of all or substantially all the assets or Common Stock of Building
Products or the common equity of Holding in the Transaction (the "Purchaser")
and the receipt of the cash portion of the Gross Proceeds (other than
prepayments or deposits or post-Closing Date payments) by the Common Equity
Holders.
2. If a Transaction is consummated and the conditions to the obligation
to pay the Transaction Bonus to Executive as provided herein have been
satisfied, the cash portion of the Transaction Bonus shall be paid to Executive
in cash within 30 days after the Closing Date, net of the following items which
Executive hereby consents may be deducted: (i) all applicable payroll deductions
(e.g., taxes, F.I.C.A.), (ii) other amounts required by law and (iii) any
outstanding amounts owed by Executive to Wingate, Holding and/or Building
Products.
3. Any provision of this Agreement to the contrary notwithstanding, if
any amount otherwise payable to Executive pursuant to this Agreement would cause
Executive to be subject to an excise tax with respect to such amount on account
of Internal Revenue Code section 280G (excess parachute payments), Building
Products will make a cash payment to Executive equal to the excise tax imposed
with respect to any such amount on account of Internal Revenue Code section
280G.
4. The payment of the Transaction Bonus to Executive as provided in
paragraph 1 is subject to the satisfaction of all of the following conditions:
(a) The Transaction shall have been consummated and the Closing Date
shall have occurred on terms and conditions satisfactory to Wingate, Holding and
Building Products in their sole and absolute discretion, and all third parties
whose consent
3
<PAGE>
or approval is required to consummation of the Transaction shall have provided
such consent or approval, as applicable;
(b) Executive shall not have been terminated by Building Products for
failure to comply with the provisions of Section 4(c) prior to the Closing Date;
(c) From the date hereof to and including the Closing Date, (i)
Executive shall have assisted Wingate and Building Products in connection with
the consummation of the Transaction in such manner as Building Products shall
reasonably require, (ii) Executive shall fully discharged his responsibilities
to Building Products, including performance of all assigned job duties, in all
material respects and (iii) Executive shall not have breached any material
duties or obligations to Building Products. Compliance with each of the
foregoing conditions shall be determined to the sole satisfaction of Building
Products;
(d) From the date hereof to and including the Closing Date, and from
the Closing Date until the date of full payment of the Transaction Bonus,
Executive shall not have commenced or instigated any legal, equitable or
administrative complaint, proceeding, action or suit against Wingate, Holding,
Building Products, any of their directors, officers, employees, partners or
stockholders, the Purchaser or any investment banker or lender involved in the
Transaction nor have sought any stay, injunction, restraining order or the like,
with respect to the negotiation or consummation of the Transaction or the
funding or any other aspect of the Transaction, other than a complaint or
proceeding to enforce Executive's rights hereunder;
(e) By the close of business on any date specified by Building
Products, Executive shall have returned to Building Products any and all items
of Building Products' property (and any property of any company affiliated with
Building Products) which are in Executive's possession or under his control,
including, without limitation, keys, parking card, calculator, equipment, files,
manuals, correspondence and any and all other documents or property which
Executive has had possession of during the course of Executive's employment with
Building Products or which are then under Executive's control; and
(f) Executive shall have paid or satisfied all amounts owed by
Executive to Building Products and any company affiliated with Building Products
that have been incurred in the course of Executive's employment or otherwise,
including, without
4
<PAGE>
limitation, personal expenses, company loans or advances and unearned draws or
commissions.
5. In consideration of, and as a condition to, Building Products'
agreement to pay the Transaction Bonus to Executive, and subject to the terms
and conditions contained herein, Executive will on the Closing Date (a)
acknowledge and agree that he has and will make no claim of any kind against
Wingate or its partners, Holding or Building Products, or any of their parent
and affiliated companies, or any of the partners, officers, directors, agents,
executives, representatives, successors and assigns of such entities (all such
persons and entities herein collectively called the "Company"), including, but
not limited to, any claim based on any state or federal statutory or common law
that applies or is asserted to apply, directly or indirectly, to the employment
relationship, (b) except for claims for the enforcement hereof or enforcement of
his rights as expressly stated under any Employment Agreement in effect between
Executive and the Company and/or Building Products (an "Employment Agreement"),
release any and all claims, demands, actions or causes of action of any kind
which Executive may have on the Closing Date or may acquire subsequent to the
Closing Date against the Company resulting from, growing out of, connected with
or relating in any way to Executive's employment with Building Products, or the
termination of such employment, including, without limitation, any and all
claims for damages (actual, compensatory, liquidated, exemplary or punitive),
back pay, front pay, bonuses, severance pay, loss of past and future executive
benefits, injunctive relief, declaratory relief, attorneys' fees, costs of
court, disbursements, interest or any other form of legal or equitable relief to
which Executive claims or might claim entitlement as a result of any alleged act
of unlawful employment discrimination, failure to pay compensation, wrongful
discharge, breach of contract (express or implied) or the misappropriation of
any intellectual property, (c) except for claims arising out of the express
terms of any Employment Agreement, acknowledge and agree that by accepting the
Transaction Bonus, Executive has given up his right to file any charge,
complaint, suit or other legal action against the Company based on Executive's
employment with Building Products prior to the Closing Date or the termination
of his employment on the Closing Date, and (d) agree that after the payment of
the Transaction Bonus Executive will not commence or instigate any legal,
equitable or administrative complaint, proceeding, action or suit against the
Company, the Purchaser or any investment banker or lender involved in the
Transaction with respect to the
5
<PAGE>
negotiation or consummation of the Transaction or the funding or any other
aspect of the Transaction, except for any action, suit or proceeding which may
be necessary to enforce Executive's right to indemnification by the Company for
acts or actions taken by Executive in his capacity as an officer, director or
employee of Building Products.
6. THE TERMS OF THIS AGREEMENT DO NOT CONSTITUTE, AND SHOULD NOT BE
RELIED UPON AS, A GUARANTEE OR CONTRACTUAL COMMITMENT BY HOLDING OR BUILDING
PRODUCTS OF EMPLOYMENT FOR ANY DEFINITE PERIOD OF TIME. EXECUTIVE IS EMPLOYED
AT WILL, AND NOTHING CONTAINED IN THIS AGREEMENT LIMITS THE RIGHT OF BUILDING
PRODUCTS OR EXECUTIVE TO TERMINATE ITS AT-WILL RELATIONSHIP AT ANY TIME WITH OR
WITHOUT REASON OR ADVANCE NOTICE. The Purchaser shall be under no obligation to
offer employment to Executive, and neither Holding nor Building Products shall
be obligated to condition the Transaction on the offering of employment to any
individual, including Executive, or to continue the employment of Executive
after the Closing Date or the date hereof.
7. The term of this Agreement shall commence on the date hereof and shall
continue until the earlier to occur (the "Termination Date") of (i) the
termination of Executive's employment with Building Products pursuant any
Employment Agreement or otherwise and (ii) December 31, 1997; PROVIDED, HOWEVER,
that in the event a definitive and fully negotiated agreement of sale between
Wingate, Holding and/or Building Products, as the case may be, and the Purchaser
shall have been fully executed prior to the Termination Date, this Agreement
shall extend until the earlier of the Closing Date of such Transaction (if and
only if such Transaction is consummated) or termination of such Transaction. In
the event that this Agreement shall expire or terminate, Building Products shall
have no obligation to pay all or any portion of the Transaction Bonus, or any
other payment in respect thereof, to Executive. Should the Transaction Bonus be
paid to Executive, paragraphs 5, 6 and 9 hereof shall survive any completion,
termination or expiration of this Agreement.
8. None of Wingate, Holding or Building Products shall be under any duty
to Executive to (a) make any agreement to sell or otherwise dispose of any of
Building Products' Common Stock or assets, (b) close any Transaction or (c)
negotiate any particular selling price or to obtain any particular amount of
gross proceeds, it being understood that the decision whether to proceed with a
Transaction, and the terms and conditions of any
6
<PAGE>
Transaction, shall be in the sole and absolute discretion of Wingate, Holding or
Building Products, as appropriate.
9. Executive acknowledges and agrees that all of the documents and
information to which he has had access during his employment, including, but not
limited to, this Agreement, all information pertaining to any specific business
transactions in which Building Products is or was involved, all information
pertaining in any way to customers of Building Products, and in general, the
business and operations of Building Products, are considered confidential and
that, during the period of Executive's employment with Building Products and for
the one (1) year period thereafter following termination of Executive's
employment with Building Products, he shall not disclose to any person, other
than an executive of Building Products or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by
Executive of his duties as an executive of Building Products or its parent
corporation or any subsidiary thereof (individually or collectively as the
context may require, the "Building Products Group"), material confidential
information obtained by him while in the employ of Building Products including,
but not limited to, confidential information with respect to any of the Building
Products Group's products, improvements, formulas, customers, distribution of
products or methods of manufacture; provided, however, that confidential
information shall not include any information (i) known generally to the public
(other than as a result of unauthorized disclosure by Executive), (ii) otherwise
known or available to Executive prior to his employment by Building Products, or
(iii) not treated as confidential by Building Products (other than as a result
of unauthorized disclosure by Executive), except that Executive may disclose (a)
the existence of and the terms of this Agreement to Executive's spouse,
attorney, accountant, tax return preparer, financial planner and, to the extent
necessary, to those persons who have a need to know such information in
connection with future employment, if each such person has agreed to keep its
existence and provisions confidential, (b) to the extent required by judicial
process and (c) with the written consent of the Building Products' Board of
Directors or a person authorized thereby.
10. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
7
<PAGE>
If to Holding or
Building Products: If to Executive:
- ------------------ ----------------
Board of Directors David G. Fiore
Redman Building 6883 Alcove Lane
Products, Inc. Plano, TX 75024
3030 LBJ Freeway
Suite 300, LB 66
Dallas, TX 75234
With a copy to:
- ---------------
James A. Johnson
Wingate Partners, L.P.
750 North St. Paul
Dallas, TX 75201
or to such other address as any party hereto may have furnished to the other in
writing.
11. (a) No provision of this Agreement may be amended, modified, waived
or discharged unless such amendment, modification, waiver or discharge is agreed
to in writing and signed by Executive, Holding and such officer as may be
specifically designated by the Board of Directors of Building Products.
(b) No waiver by any party hereto at any time of any breach by the
other party hereto of, or in compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(c) The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Texas.
(d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect; provided,
however, that if any provision of this Agreement is deemed or held to be
illegal, invalid, or unenforceable there shall be added hereto automatically a
provision as similar as possible to such illegal,
8
<PAGE>
invalid, or unenforceable provision as shall be legal, valid and enforceable.
(e) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amount would still be payable to Executive hereunder if Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Executive's devisee,
legatee, or other designee or, if there be no such designee, to Executive's
estate.
(f) This Agreement shall be binding upon Holding, Building Products
and their related successors and assigns. Holding and Building Products will
require any entity that purchases all or substantially all of the assets of
Building Products to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that Holding and Building Products would be
required to perform it if no such succession had taken place. The failure of
Holding or Building Products to obtain such agreement prior to the effectiveness
of any such succession shall constitute a breach of this Agreement and shall
entitle Executive to compensation from Holding in accordance with paragraphs
1(a) and (b) hereof.
(g) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
12. Executive acknowledges that he has read this Agreement, that his
execution hereof is knowing and voluntary, that Executive had a reasonable time
to deliberate regarding this Agreement, and that Executive understands that he
had the right to consult with an attorney regarding this Agreement.
13. No right or interest of Executive hereunder may be sold, assigned,
transferred or pledged, in whole or in part, by operation of law or otherwise,
by Executive except pursuant to Executive's testamentary disposition or the laws
of descent and distribution.
14. The parties agree that this Agreement: (a) contains and constitutes
the entire understanding and agreement between them respecting the subject
matter hereof, (b) supersedes and
9
<PAGE>
cancels any previous discussions, negotiations, agreements, commitments and
writings respecting such subject matter, and (c) shall not be deemed or
construed to create a trust fund or grant a security interest of any kind for
the benefit of Executive, and to the extent that Executive acquires any rights
to receive the Transaction Bonus hereunder, such rights shall be no greater than
the right of any unsecured general creditor of Holding or Building Products.
15. The parties hereto agree that Executive's continued employment by the
Company or Building Products subsequent to the Closing Date shall have no effect
on the obligations of the parties hereto, including, without limitation, the
obligation to pay the Transaction Bonus.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first written above
/s/David G. Fiore
- -----------------------------------
DAVID G. FIORE
REDMAN BUILDING PRODUCTS, INC.
By: /s/James A. Johnsoon
-------------------------------
James A. Johnson
RBPI HOLDING CORPORATION
By:/s/James A. Johnson
--------------------------------
James A. Johnson
11
<PAGE>
RBPI HOLDING CORPORATION
NONQUALIFIED STOCK OPTION PLAN
1. PURPOSE. The purpose of this Nonqualified Stock Option Plan
(hereinafter called the "Plan") is to further the success of RBPI Holding
Corporation, a Delaware corporation (hereinafter called the "Company"), and
certain of its affiliates by making available Common Stock of the Company for
purchase by certain officers and employees of the Company and its affiliates,
and thus to provide an additional incentive to such individuals to continue in
the service of the Company or its affiliates and to give them a greater interest
as stockholders in the success of the Company. Subject to compliance with the
provisions of the Plan, nonqualified stock options (but not incentive stock
options under Section 422A of the Code) are authorized and may be granted under
the Plan.
2. DEFINITIONS. As used in this Plan the following terms shall have the
meanings indicated as follows:
(a) "Board" means the board of directors of the Company.
(b) "Change in Control" means that more than 50% of the voting interests in
the Company, or more than 50% of the assets thereof, are sold or transferred,
directly or indirectly, to an entity or person other than to Reliant Partners,
L.P. and/or Reliant Partners II, L.P. and their direct and indirect general and
limited partners as of the date hereof or to a person that is not controlled by,
controlling or under common control with (being greater that 50% voting control)
one or more of the foregoing.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" means the Company's Common Stock, par value $0.01 per
share.
(e) "Date of Grant" means the date on which an option is granted under a
written option agreement executed by the Company and a Participant pursuant to
the Plan.
(f) "Effective Date" means the effective date of this Plan specified in
Paragraph 14 hereof.
(g) "Parent" means a parent corporation of the Company as defined in
Section 425(e) of the Code.
(h) "Participants" means the employees, including officers, of the Company,
its Subsidiaries and its Parents.
(i) "Plan" means this RBPI Holding Corporation Nonqualified Stock Option
Plan, as it may be amended.
<PAGE>
(j) "Stockholders Agreement" means the Stockholders Agreement by and among
the Company and its stockholders.
(k) "Subsidiary" means a subsidiary corporation of the Company as defined
in Section 425(f) of the Code.
3. ADMINISTRATION OF PLAN. The Board shall have full and final authority
in its discretion, subject to the provisions of the Plan, to determine the
Participants to whom, and the time or times at which, options shall be granted,
the vesting of options and the number of shares of Common Stock covered by each
option. The Board shall also have full and final authority to construe and
interpret the Plan and any agreements made pursuant to the Plan; to determine
the terms and provisions (which need not be identical or consistent with respect
to each Participant) of the respective option agreements and any agreements
ancillary thereto including, but without limitation, terms covering the payment
of the option price; and to make all other determinations and take all other
actions deemed necessary or advisable for the proper administration of the Plan.
All such actions and determinations shall be conclusively binding for all
purposes and upon all persons.
4. OPTIONS AUTHORIZED. The options granted under this Plan shall be
nonqualified stock options which do not qualify as incentive stock options under
Section 422A of the Code. The Board shall have the full power and authority to,
in its sole discretion, grant to the holder of an outstanding option, in
exchange for the surrender and cancellation of such option, a new option having
a purchase price lower than that provided in the option so surrendered and
cancelled and containing such other terms and conditions as the Board may
prescribe in accordance with the provisions of the Plan. No options may be
granted under the Plan prior to the Effective Date.
5. COMMON STOCK SUBJECT TO OPTIONS. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of options
shall not exceed 7.50% of the outstanding shares of Common Stock of the
Company, subject to adjustment under the provisions of Paragraph 8. The shares
of Common Stock to be issued upon the exercise of options may be authorized but
unissued shares, or shares issued and reacquired by the Company. In the event
any option shall, for any reason, terminate or expire or be surrendered without
having been exercised in full, the shares subject to such option shall again be
available for options to be granted under the Plan, except that shares for which
options (or portions thereof) relinquished pursuant to Paragraph 9 hereof are
exercisable shall not again be available for grants of options under the Plan.
6. PARTICIPANTS. Except as may otherwise be provided herein, options may
be granted under the Plan to any Participant. A Participant who has been
granted an option under the Plan may be granted an additional option or options
under the Plan, in the Board's discretion.
7. TERMS AND CONDITIONS OF OPTIONS. The grant of an option under the
Plan shall be evidenced by a written agreement executed by the Company and the
applicable Participant and shall contain such terms and be in such form as the
Board may from time to time approve, subject to the following limitations and
conditions:
2
<PAGE>
(a) OPTION PRICE. The option price per share with respect to each option
shall be the fair market value per share on the Date of Grant. The Board may
permit the option purchase price to be payable (i) in Common Stock previously
owned by the optionee, valued at the fair market value of such Common Stock, as
determined by the Board, or (ii) by the relinquishment of all or any part of the
unexercised portion of the option for a number of shares of Common Stock as more
fully set forth at Paragraph 9 hereof.
(b) PERIOD OF OPTION. The expiration date of each option shall be fixed by
the Board, but, notwithstanding any provision of the Plan to the contrary, such
expiration date shall not be more than ten years from the Date of Grant.
(c) VESTING OF STOCKHOLDER RIGHTS. Except for rights pursuant to the
Stockholders Agreement, neither an optionee nor his successor in interest shall
have any rights of a stockholder of the Company until the shares relating to an
option hereunder are issued by the Company and properly delivered to such
optionee.
(d) EXECUTION OF STOCKHOLDERS AGREEMENT. As a condition to the issuance by
the Company of options hereunder, the respective optionee shall execute the
Stockholders Agreement.
(e) VESTING AND FORFEITURE OF OPTIONS. Each option shall be exercisable
from time to time over such period and upon such terms and conditions as the
Board shall determine, but not at any time as to less than 25 shares unless the
remaining shares which have become so purchasable are less than 25 shares. In
the event of a Change of Control of the Company, the unexercised portion of the
option that is not then exercisable shall be exercisable immediately. After the
death of the optionee, an option may be exercised as provided in Paragraph 15
hereof. An option may be forfeited at such time and upon such terms as the
Board may determine.
(f) NONTRANSFERABILITY OF OPTION. No option shall be transferable or
assignable by an optionee and each option shall be exercisable only by him or
her or, upon death or during a legal disability, by his or her legal
representative. No option shall be subject to execution, attachment, or similar
process.
(g) CALL OPTION. Each option granted under the Plan, to the extent
exercisable by the employee, shall be subject to a call option ("Call Option")
by the Company upon the terms and conditions as set forth at Paragraph 10
hereof.
(h) CODE SECTION 83(B) ELECTIONS. Any optionee hereunder who makes an
election pursuant to Code Section 83(b) shall promptly provide a copy of such
election to the Company, together with such other details concerning such
election as the Company may request.
8. ADJUSTMENTS. The Board, in its discretion, may make such equitable
adjustments in option price and the number of shares covered by outstanding
options which are required to prevent any dilution or enlargement of the rights
of the holders of such options, including, but not limited to, any such dilution
or enlargement of rights that would otherwise result from any reorganization,
recapitalization, stock split, stock dividend, combination of merger,
consolidation, issuance of rights or any other change in the capital structure
of the Company.
3
<PAGE>
9. RELINQUISHMENT OF OPTIONS. (a) The Board, in granting options
hereunder, shall have discretion to provide that an optionee, or his legal
representative (to the extent entitled to exercise the option under the terms
thereof), in lieu of purchasing the entire number of shares subject to purchase
thereunder, shall have the right to relinquish all or any part of the
unexercised portion of the option for a number of shares of Common Stock equal
to the quotient of (A) the excess of (1) the aggregate current fair market value
of the shares of Common Stock covered by the unexercised portion of the option
over (2) the aggregate purchase price for such shares specified in such option,
divided by (B) the then current fair market value per share of such Common
Stock.
(b) The Board, in granting options hereunder, shall have discretion to
determine the terms (including the fair market value of the Common Stock covered
by options) upon which such options shall be relinquishable, subject to the
applicable provisions of the Plan.
10. CALL OPTION. (a) At such time as an employee's employment with the
Company is terminated for any reason (including voluntary or involuntary or upon
the employee's disability or death) and for a period of one year thereafter,
each option granted under the Plan that is then exercisable shall be subject to
a Call Option by the Company.
(b) The Company may exercise the Call Option with respect to an option at
a purchase price equal to the difference between (i) the fair market value of
the number of shares for which such option is exercisable by the employee and
(ii) the option price that would have been payable by such employee upon
exercise of such options for the number of shares for which the Call Option is
exercised (the "Call Option Price"), which such Call Option Price shall be paid
in cash at the closing of such purchase.
(c) The Company may exercise the Call Option by delivering written notice
of exercise to the employee setting forth (1) the option(s) to be purchased by
the Company, (2) the Call Option Price, and (3) designating a closing date for
the purchase in accordance with Subparagraph (d) of this Paragraph 10.
(d) The closing of the purchase of option(s) by the Company pursuant to
the Call Option shall take place at the principal executive offices of the
Company within ninety (90) days after the applicable dates specified in
Subparagraph (c) above.
(e) If the Company does not exercise the Call Option within the applicable
time periods specified in Subparagraph (a) above, the option(s) shall no longer
be subject to the Call Option set forth in this Paragraph 10 but the shares of
Common Stock for which the option was exercisable by the employee shall remain
subject to the terms and conditions of the Stockholders Agreement, dated as of
even date herewith, by and among the Company and its stockholders.
11. RESTRICTIONS ON ISSUING SHARES. The exercise of each option shall be
subject to the condition that if at any time Company shall determine in its
discretion that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercises upon any securities exchange or, under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares pursuant thereto, then in any
such event, such exercise shall
4
<PAGE>
not be effective unless such listing, registration, qualification, consent, or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company.
12. AMENDMENT, SUSPENSION, AND TERMINATION OF PLAN. The Board may at any
time suspend or terminate the Plan or may amend it from time to time in such
respects as the Board may deem advisable in order that the options granted
thereunder may conform to any changes in the law or in any other respect which
the Board may deem to be in the best interests of the Company; provided,
however, that without approval by the stockholders of the Company voting the
legally required percentage of its voting power, no such amendment shall make
any change in the plan for which stockholder approval is required of the Company
by any applicable rule or law. Unless sooner terminated hereunder, the Plan
shall terminate ten years after the Effective Date. No option may be granted
during any suspension or after the termination of the Plan. Except as otherwise
required by law, no amendment, suspension, or termination of the Plan shall,
without an optionee's consent, impair or negate any of the rights or obligations
under any option theretofore granted to such optionee under the Plan.
13. TAX WITHHOLDING. The Board may, in its sole discretion, (a) require an
optionee to remit to the Company a cash amount sufficient to satisfy, in whole
or in part, any federal, state and local withholding tax requirements prior to
the delivery of any certificate for shares pursuant to the exercise of an option
hereunder; (b) grant, to an optionee the right to satisfy, in whole or in part,
any such withholding tax requirements by electing to require that the Company,
upon any exercise of the option, withhold from the shares of the Common Stock
issuable to the optionee upon the exercise of the option, that number of full
shares of Common Stock having a fair market value (determined in the sole
discretion of the Board) equal to the amount or portion of the amount required
to be withheld; or (c) satisfy such withholding requirements through another
lawful method.
14. EFFECTIVE DATE OF PLAN. This Plan shall become effective on the date
(the "Effective Date") of the adoption of the Plan by the Board.
15. TERMINATION OF EMPLOYMENT. Unless the terms of an option granted to an
employee under the Plan provide otherwise, in the event of (i) the retirement
(with the written consent of the Company) of such an employee, (ii) any other
termination of the employment of such an employee other than a termination that
is for Cause, (iii) termination by reason of death during, or within three
months after the termination of his employment by the Company or a Subsidiary or
Parent, or (iv) disability, within the meaning of Code Section 422A(c)(7), the
employee (or the executor or administrator of the employee's estate as the case
may be) may exercise his option at any time within three months of such
retirement or other termination of employment or within one year after
termination of employment due to death or disability, or within such other time
as the Board shall authorize, but in no event after 10 years from the date of
granting thereof (or such lesser period as may be specified in the stock option
agreement), but only to the extent of the number of shares for which his options
were exercisable by him at the date of the termination of his employment. In
the event of the termination of the employment of an employee to whom an option
has been granted under the Plan for Cause, options held by him under the Plan,
to the extent not previously exercised, shall forthwith terminate on the date of
such termination of employment. Options granted under the Plan shall not be
affected by any change of employment so long as the holder continues to be an
employee of the Company, a
5
<PAGE>
Subsidiary or a Parent. The option agreement may contain such provisions as the
Board shall approve with respect to the effect of approved leaves of absence.
Nothing in the Plan or in any option granted pursuant to the Plan shall confer
on any individual any right to continue in the employ of the Company or any of
its Subsidiaries or Parents or interfere in any way with the right of the
Company or any of its Subsidiaries or Parents to terminate his employment at any
time.
Unless otherwise defined in an option agreement, "Cause" shall mean (i) the
continued failure of the employee to substantially perform his duties to his
employer (other than any such failure resulting from disability), after a demand
for substantial performance is delivered in writing to the employee by the board
of directors of his employer which specifically identifies the manner in which
the employee has not substantially performed his duties; (ii) the engaging by
the employee in willful, reckless or negligent misconduct which is injurious to
the employer or any of its subsidiaries, monetarily or otherwise; or (iii) the
charging of employee with a felony.
16. LOANS TO ASSIST IN EXERCISE OF OPTIONS. If approved by the Board, the
Company or any Parent or Subsidiary may lend money or guarantee loans by third
parties to an individual to finance the exercise of any option granted under the
Plan. No such loan to finance the exercise of an option shall have an interest
rate or other terms that would cause any part of the principal amount to be
characterized as interest for purposes of the Code.
6
<PAGE>
<TABLE>
Fiscal Year Ended
---------------------------------------------------------------
Pro Forma
April 2, April 1, March 31, March 29, March 28, March 28,
1993 1994 1995 1996 1997 1997
-------- -------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income before taxes and extraordinary
items $ 426 $1,047 $1,602 $1,558 $ 4,245 $ 4,442
Interest expense 4,053 4,282 4,843 6,125 5,381 8,248
Interest expense related to rent 700 767 1,033 1,233 1,233 1,233
------ ------ ------ ------ ------- --------
Earnings before taxes, extraordinary
item and interest $5,179 $6,096 $7,478 $8,916 $10,859 $13,923
------ ------ ------ ------ ------- --------
------ ------ ------ ------ ------- --------
Interest expense $4,053 $4,282 $4,843 $6,125 $5,381 $8,248
Interest expense related to rent 700 767 1,033 1,233 1,376 1,233
------ ------ ------ ------ ------- --------
Total fixed charges 4,753 $5,049 $5,876 $7,358 $6,757 $9,481
------ ------ ------ ------ ------- --------
------ ------ ------ ------ ------- --------
Ratio of earnings of fixed charges 1.1 1.2 1.3 1.2 1.6 1.5
------ ------ ------ ------ ------- --------
------ ------ ------ ------ ------- --------
</TABLE>
Page 1
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Summary -
Conditions to the Merger, Termination of the Merger Agreement," "Summary -
Accounting Treatment," "The Merger - Accounting Treatment" and "Experts" in
the Registration Statement (Form S-4 No. 333-25715) and related Prospectus of
FIRSTPLUS Financial Group, Inc. for the registration of 1,243,134 shares of
its common stock and to the incorporation by reference therein of our report
dated October 25, 1996, with respect to the consolidated financial statements
of FIRSTPLUS Financial Group, Inc., formerly RAC Financial Group, Inc.,
included in its Annual Report (Form 10-K) for the year ended September 30,
1996, filed with the Securities and Exchange Commission.
----------------------------
ERNST & YOUNG LLP
Dallas, Texas
July 2, 1997
<PAGE>
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
BANK ONE, N.A. F/K/A BANK ONE, COLUMBUS, N.A.
Not Applicable 31-4148768
(State of Incorporation (I.R.S. Employer
if not a national bank) Identification No.)
100 East Broad Street, Columbus, Ohio 43271-0181
(Address of trustee's principal (Zip Code) executive offices)
Ted Kravits
c/o Bank One Trust Company, NA
100 East Broad Street
Columbus, Ohio 43271-0181
(614) 248-2566
(Name, address and telephone number of agent for service)
RELIANT BUILDING PRODUCTS, INC.
(Exact name of obligor as specified in its charter)
Delaware 75-1364873
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
3030 LBJ Freeway, Suite 300
Dallas, Texas 75234
(Address of principal executive (Zip Code)
offices)
$70,000,000 10 7/8% SENIOR SUBORDINATED NOTES DUE 2004
(Title of the Indenture securities)
<PAGE>
GENERAL
1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Cleveland, Cleveland, Ohio
Federal Deposit Insurance Corporation, Washington, D.C.
The Board of Governors of the Federal Reserve System, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee.
16. LIST OF EXHIBITS
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY AND QUALIFICATION. (EXHIBITS IDENTIFIED IN PARENTHESES,
ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS
EXHIBITS HERETO.)
Exhibit 1 - A copy of the Articles of Association of the trustee as now in
effect.
Exhibit 2 - A copy of the Certificate of Authority of the trustee to commence
business, see Exhibit 2 to Form T-1, filed in connection with Form S-3
relating to Wheeling-Pittsburgh Corporation 9 3/8% Senior Notes due 2003,
Securities and Exchange Commission File No. 33-50709.
Exhibit 3 - A copy of the Authorization of the trustee to exercise corporate
trust powers, see Exhibit 3 to Form T-1, filed in connection with Form S-3
relating to Wheeling-Pittsburgh Corporation 9 3/8% Senior Notes due 2003,
Securities and Exchange Commission File No. 33-50709.
Exhibit 4 - A copy of the Bylaws of the trustee as now in effect.
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Exhibit 7 - Report of Condition of the trustee as of the close of business on
March 31, 1997, published pursuant to the requirements of the Comptroller of the
Company.
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
Items 3 through 15 are not answered pursuant to General Instruction B which
requires responses to Item 1, 2 and 16 only, if the obligor is not in default.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, Bank One, NA, f/k/a/ Bank One, Columbus, NA, a national
banking association organized under the National Banking Act, has duly caused
this statement of eligibility and qualification to be signed on its behalf by
the undersigned, thereunto duly authorized, all in Columbus, Ohio on June 24,
1997.
Bank One, NA
f/k/a Bank One, Columbus, NA
By: /s/ Ted Kravits
-------------------------
Ted Kravits
Authorized Signer
<PAGE>
Exhibit 1
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
For the purpose of organizing an association to carry on the business of
banking under the laws of the United States, the following Articles of
Association are entered into:
FIRST. The title of this Association shall be BANK ONE, COLUMBUS,
NATIONAL ASSOCIATION.
SECOND. The main office of the Association shall be in Columbus, County
of Franklin, State of Ohio. The general business of the Association shall be
conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five Directors, the exact number of
Directors within such minimum and maximum limits to be fixed and determined
from time-to-time by resolution of the shareholders at any annual or special
meeting thereof, provided, however, that the Board of Directors, by
resolution of a majority thereof, shall be authorized to increase the number
of its members by not more than two between regular meetings of the
shareholders. Each Director, during the full term of his directorship, shall
own, as qualifying shares, the minimum number of shares of either this
Association or of its parent bank holding company in accordance with the
provisions of applicable law. Unless otherwise provided by the laws of the
United States, any vacancy in the Board of Directors for any reason,
including an increase in the number thereof, may be filled by action of the
Board of Directors.
-4-
<PAGE>
FOURTH. The annual meeting of the shareholders for the election of
Directors and the transaction of whatever other business may be brought
before said meeting shall be held at the main office of this Association or
such other place as the Board of Directors may designate, on the day of each
year specified therefor in the By-Laws, but if no election is held on that
day, it may be held on any subsequent business day according to the
provisions of law; and all elections shall be held according to such lawful
regulations as may be prescribed by the Board of Directors.
FIFTH. The authorized amount of capital stock of this Association shall
be 2,073,750 shares of common stock of the par value of Ten Dollars ($10)
each; but said capital stock may be increased or decreased from time-to-time,
in accordance with the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association
shall have the preemptive or preferential right of subscription to any share
of any class of stock of this Association, whether now or hereafter
authorized or to any obligations convertible into stock of this Association,
issued or sold, nor any right of subscription to any thereof other than such,
if any, as the Board of Directors, in its discretion, may from time-to-time
determine and at such price as the Board of Directors may from time-to-time
fix.
This Association, at any time and from time-to-time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of
the shareholders.
SIXTH. The Board of Directors shall appoint one of its members
President of the Association, who shall be Chairman of the Board, unless the
Board appoints another director to be the Chairman. The Board of Directors
shall have the power to appoint one or more Vice Presidents and to appoint a
Secretary and such other officers and employees as may be required to
transact the business of this Association.
-5-
<PAGE>
The Board of Directors shall have the power to define the duties of the
officers and employees of this Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of this
Association shall be made; to manage and administer the business and affairs
of this Association; to make all By-Laws that it may be lawful for them to
make; and generally to do and perform all acts that it may be legal for a
Board of Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of the City
of Columbus, Ohio, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of this
Association to any other location, without the approval of the shareholders
but subject to the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue
until terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than 10 percent of the stock
of this Association, may call a special meeting of shareholders at any time.
Unless otherwise provided by the laws of the United States, a notice of the
time, place and purpose of every annual and special meeting of the
shareholders shall be given by first-class mail, postage prepaid, mailed at
least ten days prior to the date of such meeting to each shareholder of
record at his address as shown upon the books of this Association.
-6-
<PAGE>
TENTH. Every person who is or was a Director, officer or employee of
the Association or of any other corporation which he served as a Director,
officer or employee at the request of the Association as part of his
regularly assigned duties may be indemnified by the Association in accordance
with the provisions of this paragraph against all liability (including,
without limitation, judgments, fines, penalties and settlements) and all
reasonable expenses (including, without limitation, attorneys' fees and
investigative expenses) that may be incurred or paid by him in connection
with any claim, action, suit or proceeding, whether civil, criminal or
administrative (all referred to hereafter in this paragraphs as "Claims") or
in connection with any appeal relating thereto in which he may become
involved as a party or otherwise or with which he may be threatened by reason
of his being or having been a Director, officer or employee of the
Association or such other corporation, or by reason of any action taken or
omitted by him in his capacity as such Director, officer or employee, whether
or not he continues to be such at the time such liability or expenses are
incurred, provided that nothing contained in this paragraph shall be
construed to permit indemnification of any such person who is adjudged guilty
of, or liable for, willful misconduct, gross neglect of duty or criminal
acts, unless, at the time such indemnification is sought, such
indemnification in such instance is permissible under applicable law and
regulations, including published rulings of the Comptroller of the Currency
or other appropriate supervisory or regulatory authority, and provided
further that there shall be no indemnification of directors, officers, or
employees against expenses, penalties, or other payments incurred in an
administrative proceeding or action instituted by an appropriate regulatory
agency which proceeding or action results in a final order assessing civil
money penalties or requiring affirmative action by an individual or
individuals in the form of payments to the Association. Every person who may
be indemnified under the provisions of this paragraph and who has been wholly
successful on the merits with respect to any Claim shall be entitled to
indemnification as of right. Except as provided in the preceding sentence,
any indemnification under this paragraph shall be at the sole discretion of
the Board of Directors and shall be made only if the Board of Directors or
the Executive Committee acting by a quorum consisting of
-7-
<PAGE>
Directors who are not parties to such Claim shall find or if independent
legal counsel (who may be the regular counsel of the Association) selected by
the Board of Directors or Executive Committee whether or not a disinterested
quorum exists shall render their opinion that in view of all of the
circumstances then surrounding the Claim, such indemnification is equitable
and in the best interests of the Association. Among the circumstances to be
taken into consideration in arriving at such a finding or opinion is the
existence or non-existence of a contract of insurance or indemnity under
which the Association would be wholly or partially reimbursed for such
indemnification, but the existence or non-existence of such insurance is not
the sole circumstance to be considered nor shall it be wholly determinative
of whether such indemnification shall be made. In addition to such finding
or opinion, no indemnification under this paragraph shall be made unless the
Board of Directors or the Executive Committee acting by a quorum consisting
of Directors who are not parties to such Claim shall find or if independent
legal counsel (who may be the regular counsel of the Association) selected by
the Board of Directors or Executive Committee whether or not a disinterested
quorum exists shall render their opinion that the Director, officer or
employee acted in good faith in what he reasonably believed to be the best
interests of the Association or such other corporation and further in the
case of any criminal action or proceeding, that the Director, officer or
employee reasonably believed his conduct to be lawful. Determination of any
Claim by judgment adverse to a Director, officer or employee by settlement
with or without Court approval or conviction upon a plea of guilty or of
NOLOCONTENDERE or its equivalent shall not create a presumption that a
Director, officer or employee failed to meet the standards of conduct set
forth in this paragraph. Expenses incurred with respect to any Claim may be
advanced by the Association prior to the final disposition thereof upon
receipt of an undertaking satisfactory to the Association by or on behalf of
the recipient to repay such amount unless it is ultimately determined that he
is entitled to indemnification under this paragraph. The rights of
indemnification provided in this paragraph shall be in addition to any rights
to which any Director, officer or employee may otherwise be entitled by
contract or as a matter of law.
-8-
<PAGE>
Every person who shall act as a Director, officer or employee of this
Association shall be conclusively presumed to be doing so in reliance upon
the right of indemnification provided for in this paragraph.
ELEVENTH. These Articles of Association may be amended at any regular
or special meeting of the shareholders by the affirmative vote of the holders
of a majority of the stock of this Association, unless the vote of the
holders of a greater amount of stock is required by law, and in that case by
the vote of the holders of such greater amount.
-9-
<PAGE>
Exhibit 4
BY-LAWS
OF
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION
ARTICLE I
MEETING OF SHAREHOLDERS
SECTION 1.01. ANNUAL MEETING. The regular annual meeting of the Shareholders
of the Bank for the election of Directors and for the transaction of such
business as may properly come before the meeting shall be held at its main
banking house, or other convenient place duly authorized by the Board of
Directors, on the third Monday of January of each year, or on the next
succeeding banking day, if the day fixed falls on a legal holiday. If from any
cause, an election of directors is not made on the day fixed for the regular
meeting of shareholders or, in the event of a legal holiday, on the next
succeeding banking day, the Board of Directors shall order the election to be
held on some subsequent day, as soon thereafter as practicable, according to the
provisions of law; and notice thereof shall be given in the manner herein
provided for the annual meeting. Notice of such annual meeting shall be given
by or under the direction of the Secretary or such other officer as may be
designated by the Chief Executive Officer by first-class mail, postage prepaid,
to all shareholders of record of the Bank at their respective addresses as shown
upon the books of the Bank mailed not less than ten days prior to the date fixed
for such meeting.
SECTION 1.02. SPECIAL MEETINGS. A special meeting of the shareholders of this
Bank may be called at any time by the Board of Directors or by any three or more
shareholders owning, in the aggregate, not less than ten percent of the stock of
this Bank. The notice of any special meeting of the shareholders called by the
Board of Directors, stating the time, place and purpose of the meeting, shall be
given by or under the direction of the Secretary, or such other officer as is
designated by the Chief Executive Officer, by first-class mail, postage prepaid,
to all shareholders of
-10-
<PAGE>
record of the Bank at their respective addresses as shown upon the books of the
Bank, mailed not less than ten days prior to the date fixed for such meeting.
Any special meeting of shareholders shall be conducted and its
proceedings recorded in the manner prescribed in these By-Laws for annual
meetings of shareholders.
SECTION 1.03. SECRETARY OF SHAREHOLDERS' MEETING. The Board of Directors may
designate a person to be the Secretary of the meetings of shareholders. In the
absence of a presiding officer, as designated in these By-Laws, the Board of
Directors may designate a person to act as the presiding officer. In the event
the Board of Directors fails to designate a person to preside at a meeting of
shareholders and a Secretary of such meeting, the shareholders present or
represented shall elect a person to preside and a person to serve as Secretary
of the meeting.
The Secretary of the meetings of shareholders shall cause the returns
made by the judges and election and other proceedings to be recorded in the
minute book of the Bank. The presiding officer shall notify the
directors-elect of their election and to meet forthwith for the organization
of the new board.
The minutes of the meeting shall be signed by the presiding officer and
the Secretary designated for the meeting.
SECTION 1.04. JUDGES OF ELECTION. The Board of Directors may appoint as many
as three shareholders to be judges of the election, who shall hold and conduct
the same, and who shall, after the election has been held, notify, in writing
over their signatures, the secretary of the shareholders' meeting of the result
thereof and the names of the Directors elected; provided, however, that upon
failure for any reason of any judge or judges of election, so appointed by the
directors, to serve, the presiding officer of the meeting shall appoint other
shareholders or their proxies to fill the vacancies. The judges of election at
the request of the chairman of the
-11-
<PAGE>
meeting, shall act as tellers of any other vote by ballot taken at such meeting,
and shall notify, in writing over their signatures, the secretary of the Board
of Directors of the result thereof.
SECTION 1.05. PROXIES. In all elections of Directors, each shareholder of
record, who is qualified to vote under the provisions of Federal Law, shall have
the right to vote the number of shares of record in his name for as many persons
as there are Directors to be elected, or to cumulate such shares as provided by
Federal Law. In deciding all other questions at meetings of shareholders, each
shareholder shall be entitled to one vote on each share of stock of record in
his name. Shareholders may vote by proxy duly authorized in writing. All
proxies used at the annual meeting shall be secured for that meeting only, or
any adjournment thereof, and shall be dated, and if not dated by the
shareholder, shall be dated as of the date of receipt thereof. No officer or
employee of this Bank may act as proxy.
SECTION 1.06. QUORUM. Holders of record of a majority of the shares of the
capital stock of the Bank, eligible to be voted, present either in person or by
proxy, shall constitute a quorum for the transaction of business at any meeting
of shareholders, but shareholders present at any meeting and constituting less
than a quorum may, without further notice, adjourn the meeting from time to time
until a quorum is obtained. A majority of the votes cast shall decide every
question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
-12-
<PAGE>
ARTICLE II
DIRECTORS
SECTION 2.01. MANAGEMENT OF THE BANK. The business of the Bank shall be
managed by the Board of Directors. Each director of the Bank shall be the
beneficial owner of a substantial number of shares of BANC ONE CORPORATION and
shall be employed either in the position of Chief Executive Officer or active
leadership within his or her business, professional or community interest which
shall be located within the geographic area in which the Bank operates, or as an
executive officer of the Bank. A director shall not be eligible for nomination
and re-election as a director of the Bank if such person's executive or
leadership position within his or her business, professional or community
interests which qualifies such person as a director of Bank terminates. The age
of 70 is the mandatory retirement age as a director of the Bank. When a
person's eligibility as director of the Bank terminates, whether because of
change in share ownership, position, residency or age, within 30 days after such
termination, such person shall submit his resignation as a director to be
effective at the pleasure of the Board provided, however, that in no event shall
such person be nominated or elected as a director. Provided, however, following
a person's retirement or resignation as a director because of the age
limitations herein set forth with respect to election or re-election as a
director, such person may, in special or unusual circumstances, and at the
discretion of the Board, be elected by the directors as a Director Emeritus of
the Bank for a limited period of time. A Director Emeritus shall have the right
to participate in board meetings but shall be without the power to vote and
shall be subject to re-election by the Board at its organizational meeting
following the Bank's annual meeting of shareholders.
SECTION 2.02. QUALIFICATIONS. Each director shall have the qualification
prescribed by law. No person elected a director may exercise any of the powers
of his office until he has taken the oath of such office.
-13-
<PAGE>
SECTION 2.03. TERM OF OFFICE/VACANCIES. A director shall hold office until the
annual meeting for the year in which his term expires and until his successor
shall be elected and shall qualify, subject, however, to his prior death,
resignation, or removal from office. Whenever any vacancy shall occur among the
directors, the remaining directors shall constitute the directors of the Bank
until such vacancy is filled by the remaining directors, and any director so
appointed shall hold office for the unexpired term of his or her successor.
Notwithstanding the foregoing, each director shall hold office and serve at the
pleasure of the Board.
SECTION 2.04. ORGANIZATION MEETING. The directors elected by the share-
holders shall meet for organization of the new board at the time fixed by the
presiding officer of the annual meeting. If at the time fixed for such meeting
there is no quorum present, the Directors in attendance may adjourn from time to
time until a quorum is obtained. A majority of the number of Directors elected
by the shareholders shall constitute a quorum for the transaction of business.
SECTION 2.05. REGULAR MEETINGS. The regular meetings of the Board of Directors
shall be held on the third Monday of each calendar month excluding March and
July, which meeting will be held at 4:00 p.m. When any regular meeting of the
Board falls on a holiday, the meeting shall be held on such other day as the
Board may previously designate or should the Board fail to so designate, on such
day as the Chairman of the Board of President may fix. Whenever a quorum is not
present, the directors in attendance shall adjourn the meeting to a time not
later than the date fixed by the Bylaws for the next succeeding regular meeting
of the Board.
SECTION 2.06. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held at the call of the Chairman of the Board or President, or at the
request of two or more Directors. Any special meeting may be held at such place
in Franklin County, Ohio, and at such time as may be fixed in the call. Written
or oral notice shall be given to each Director not later than the day next
preceding the day on which special meeting is to be held, which notice may be
waived in writing.
-14-
<PAGE>
The presence of a Director at any meeting of the Board shall be deemed a waiver
of notice thereof by him. Whenever a quorum is not present the Directors in
attendance shall adjourn the special meeting from day to day until a quorum is
obtained.
SECTION 2.07. QUORUM. A majority of the Directors shall constitute a quorum at
any meeting, except when otherwise provided by law; but a lesser number may
adjourn any meeting, from time-to-time, and the meeting may be held, as
adjourned, without further notice. When, however, less than a quorum as herein
defined, but at least one-third and not less than two of the authorized number
of Directors are present at a meeting of the Directors, business of the Bank may
be transacted and matters before the Board approved or disapproved by the
unanimous vote of the Directors present.
SECTION 2.08. COMPENSATION. Each member of the Board of Directors shall
receive such fees for, and transportation expenses incident to, attendance at
Board and Board Committee Meetings and such fees for service as a Director
irrespective of meeting attendance as from time to time are fixed by resolution
of the Board; provided, however, that payment hereunder shall not be made to a
Director for meetings attended and/or Board service which are not for the Bank's
sole benefit and which are concurrent and duplicative with meetings attended or
board service for an affiliate of the Bank for which the Director receives
payment; and provided further, that payment hereunder shall not be made in the
case of any Director in the regular employment of the Bank or of one of its
affiliates.
SECTION 2.09. EXECUTIVE COMMITTEE. There shall be a standing committee of the
Board of Directors known as the Executive Committee which shall possess and
exercise, when the Board is not in session, all powers of the Board that may
lawfully be delegated. The Executive Committee shall also exercise the powers
of the Board of Directors in accordance with the Provisions of the "Employees
Retirement Plan" and the "Agreement and Declaration of Trust" as the same now
-15-
<PAGE>
exist or may be amended hereafter. The Executive Committee shall consist of
not fewer than four board members, including the Chairman of the Board and
President of the Bank, one of whom, as hereinafter required by these By-laws,
shall be the Chief Executive Officer. The other members of the Committee
shall be appointed by the Chairman of the Board or by the President, with the
approval of the Board and shall continue as members of the Executive
Committee until their successors are appointed, provided, however, that any
member of the Executive Committee may be removed by the Board upon a majority
vote thereof at any regular or special meeting of the Board. The Chairman or
President shall fill any vacancy in the Committee by the appointment of
another Director, subject to the approval of the Board of Directors. The
regular meetings of the Executive Committee shall be held on a regular basis
as scheduled by the Board of Directors. Special meetings of the Executive
Committee shall be held at the call of the Chairman or President or any two
members thereof at such time or times as may be designated. In the event of
the absence of any member or members of the Committee, the presiding member
may appoint a member or members of the Board to fill the place or places of
such absent member or members to serve during such absence. Not fewer than
three members of the Committee must be present at any meeting of the
Executive Committee to constitute a quorum, provided, however that with
regard to any matters on which the Executive Committee shall vote, a majority
of the Committee members present at the meeting at which a vote is to be
taken shall not be officers of the Bank and, provided further, that if, at
any meeting at which the Chairman of the Board and President are both
present, Committee members who are not officers are not in the majority, then
the Chairman of the Board or President, which ever of such officers is not
also the Chief Executive Officer, shall not be eligible to vote at such
meeting and shall not be recognized for purposes of determining if a quorum
is present at such meeting. When neither the Chairman of the Board nor
President are present, the Committee shall appoint a presiding officer. The
Executive Committee shall keep a record of its proceedings and report its
proceedings and the action taken by it to the Board of Directors.
-16-
<PAGE>
SECTION 2.10 COMMUNITY REINVESTMENT ACT AND COMPLIANCE POLICY COMMITTEE. There
shall be a standing committee of the Board of Directors known as the Community
Reinvestment Act and Compliance Policy Committee the duties of which shall be,
at least once in each calendar year, to review, develop and recommend policies
and programs related to the Bank's Community Reinvestment Act Compliance and
regulatory compliance with all existing statutes, rules and regulations
affecting the Bank under state and federal law. Such Committee shall provide
and promptly make a full report of such review of current Bank policies with
regard to Community Reinvestment Act and regulatory compliance in writing to the
Board, with recommendations, if any, which may be necessary to correct any
unsatisfactory conditions. Such Committee may, in its discretion, in fulfilling
its duties, utilize the Community Reinvestment Act officers of the Bank, Banc
One Ohio Corporation and Banc One Corporation and may engage outside Community
Reinvestment Act experts, as approved by the Board, to review, develop and
recommend policies and programs as herein required. The Community Reinvestment
Act and regulatory compliance policies and procedures established and the
recommendations made shall be consistent with, and shall supplement, the
Community Reinvestment Act and regulatory compliance programs, policies and
procedures of Banc One Corporation and Banc One Ohio Corporation. The Community
Reinvestment Act and Compliance Policy Committee shall consist of not fewer than
four board members, one of whom shall be the Chief Executive Officer and a
majority of whom are not officers of the Bank. Not fewer than three members of
the Committee, a majority of whom are not officers of the Bank, must be present
to constitute a quorum. The Chairman of the Board or President of the Bank,
whichever is not the Chief Executive Officer, shall be an ex officio member of
the Community Reinvestment Act and Compliance Policy Committee. The Community
Reinvestment Act and Compliance Policy Committee, whose chairman shall be
appointed by the Board, shall keep a record of its proceedings and report its
proceedings and the action taken by it to the Board of Directors.
-17-
<PAGE>
SECTION 2.11. TRUST COMMITTEES. There shall be two standing Committees known
as the Trust Management Committee and the Trust Examination Committee appointed
as hereinafter provided.
SECTION 2.12. OTHER COMMITTEES. The Board of Directors may appoint such
special committees from time to time as are in its judgment necessary in the
interest of the Bank.
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<PAGE>
ARTICLE III
OFFICERS, MANAGEMENT STAFF AND EMPLOYEES
SECTION 3.01. OFFICERS AND MANAGEMENT STAFF.
(a) The officers of the Bank shall include a President,
Secretary and Security Officer and may include a
Chairman of the Board, one or more Vice Chairmen, one or
more Vice Presidents (which may include one or more
Executive Vice Presidents and/or Senior Vice Presidents)
and one or more Assistant Secretaries, all of whom shall
be elected by the Board. All other officers may be
elected by the Board or appointed in writing by the Chief
Executive Officer. The salaries of all officers elected
by the Board shall be fixed by the Board. The Board from
time-to-time shall designate the President or Chairman of
the Board to serve as the Bank's Chief Executive Officer.
(b) The Chairman of the Board, if any, and the President
shall be elected by the Board from their own number. The
President and Chairman of the Board shall be re-elected
by the Board annually at the organizational meeting of
the Board of Directors following the Annual Meeting of
Shareholders. Such officers as the Board shall elect
from their own number shall hold office from the date of
their election as officers until the organization meeting
of the Board of Directors following the next Annual
Meeting of Shareholders, provided, however, that such
officers may be relieved of their duties at any time by
action of the Board in which event all the powers
incident to their office shall immediately terminate.
(c) Except as provided in the case of the elected officers
who are members of the Board, all officers, whether
elected or appointed, shall hold office at the pleasure
of the Board. Except as otherwise limited by law or
these By-laws, the Board assigns to Chief Executive
Officer and/or his
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designees the authority to appoint and dismiss any
elected or appointed officer or other member of the
Bank's management staff and other employees of the Bank,
as the person in charge of and responsible for any branch
office, department, section, operation, function,
assignment or duty in the Bank.
(d) The management staff of the Bank shall include officers
elected by the Board, officers appointed by the Chief
Executive Officer, and such other persons in the
employment of the Bank who, pursuant to written
appointment and authorization by a duly authorized
officer of the Bank, perform management functions and
have management responsibilities. Any two or more
offices may be held by the same person except that no
person shall hold the office of Chairman of the Board
and/or President and at the same time also hold the
office of Secretary.
(e) The Chief Executive Officer of the Bank and any other
officer of the Bank, to the extent that such officer is
authorized in writing by the Chief Executive Officer, may
appoint persons other than officers who are in the
employment of the Bank to serve in management positions
and in connection therewith, the appointing officer may
assign such title, salary, responsibilities and functions
as are deemed appropriate by him, provided, however, that
nothing contained herein shall be construed as placing
any limitation on the authority of the Chief Executive
Officer as provided in this and other sections of these
By-Laws.
SECTION 3.02. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Bank
shall have general and active management of the business of the Bank and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. Except as otherwise prescribed or limited by these By-Laws, the Chief
Executive Officer shall have full right, authority and power to control all
personnel, including elected and appointed officers, of the Bank, to employ or
direct the
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employment of such personnel and officers as he may deem necessary, including
the fixing of salaries and the dismissal of them at pleasure, and to define and
prescribe the duties and responsibility of all Officers of the Bank, subject to
such further limitations and directions as he may from time-to-time deem proper.
The Chief Executive Officer shall perform all duties incident to his office and
such other and further duties, as may, from time-to-time, be required of him by
the Board of Directors or the shareholders. The specification of authority in
these By-Laws wherever and to whomever granted shall not be construed to limit
in any manner the general powers of delegation granted to the Chief Executive
Officer in conducting the business of the Bank. The Chief Executive Officer or,
in his absence, the Chairman of the Board or President of the Bank, as
designated by the Chief Executive Officer, shall preside at all meetings of
shareholders and meetings of the Board. In the absence of the Chief Executive
Officer, such officer as is designated by the Chief Executive Officer shall be
vested with all the powers and perform all the duties of the Chief Executive
Officer as defined by these By-Laws. When designating an officer to serve in
his absence, the Chief Executive Officer shall select an officer who is a member
of the Board of Directors whenever such officer is available.
SECTION 3.03. POWERS OF OFFICERS AND MANAGEMENT STAFF. The Chief Executive
Officer, the Chairman of the Board, the President, and those officers so
designated and authorized by the Chief Executive Officer are authorized for an
on behalf of the Bank, and to the extent permitted by law, to make loans and
discounts; to purchase or acquire drafts, notes, stock, bonds, and other
securities for investment of funds held by the Bank; to execute and purchase
acceptances; to appoint, empower and direct all necessary agents and attorneys;
to sign and give any notice required to be given; to demand payment and/or to
declare due for any default any debt or obligation due or payable to the Bank
upon demand or authorized to be declared due; to foreclose any mortgages, to
exercise any option, privilege or election to forfeit, terminate, extend or
renew any lease; to authorize and direct any proceedings for the collection of
any money or for the enforcement
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of any right or obligation; to adjust, settle and compromise all claims of every
kind and description in favor of or against the Bank, and to give receipts,
releases and discharges therefor; to borrow money and in connection therewith to
make, execute and deliver notes, bonds or other evidences of indebtedness; to
pledge or hypothecate any securities or any stocks, bonds, notes or any
property real or personal held or owned by the Bank, or to rediscount any notes
or other obligations held or owned by the Bank, to employ or direct the
employment of all personnel, including elected and appointed officers, and the
dismissal of them at pleasure, and in furtherance of and in addition to the
powers hereinabove set forth to do all such acts and to take all such
proceedings as in his judgment are necessary and incidental to the operation of
the Bank.
Other persons in the employment of the Bank, including but not limited to
officers and other members of the management staff, may be authorized by the
Chief Executive Officer, or by an officer so designated and authorized by the
chief Executive Officer, to perform the powers set forth above, subject,
however, to such limitations and conditions as are set forth in the
authorization given to such persons.
SECTION 3.04. SECRETARY. The Secretary or such other officers as may be
designated by the Chief Executive Officer shall have supervision and control of
the records of the Bank and, subject to the direction of the Chief Executive
Officer, shall undertake other duties and functions usually performed by a
corporate secretary. Other officers may be designated by the Chief Executive
Officer or the Board of Directors as Assistant Secretary to perform the duties
of the Secretary.
SECTION 3.05. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman
of the Board, President, any officer being a member of the Bank's management
staff who is also a person in charge of and responsible for any department
within the Bank and any other officer to the extent such officer is so
designated and authorized by the Chief Executive Officer, the Chairman of the
Board, the President, or any other officer who is a member of the Bank's
management staff who is in charge of and responsible for any department within
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the Bank, are hereby authorized on behalf of the Bank to sell, assign, lease,
mortgage, transfer, deliver and convey any real or personal property now or
hereafter owned by or standing in the name of the Bank or its nominee, or held
by this Bank as collateral security, and to execute and deliver such deeds,
contracts, leases, assignments, bills of sale, transfers or other papers or
documents as may be appropriate in the circumstances; to execute any loan
agreement, security agreement, commitment letters and financing statements and
other documents on behalf of the Bank as a lender; to execute purchase orders,
documents and agreements entered into by the Bank in the ordinary course of
business, relating to purchase, sale, exchange or lease of services, tangible
personal property, materials and equipment for the use of the Bank; to execute
powers of attorney to perform specific or general functions in the name of or on
behalf of the Bank; to execute promissory notes or other instruments evidencing
debt of the Bank; to execute instruments pledging or releasing securities for
public funds, documents submitting public fund bids on behalf of the Bank and
public fund contracts; to purchase and acquire any real or personal property
including loan portfolios and to execute and deliver such agreements, contracts
or other papers or documents as may be appropriate in the circumstances; to
execute any indemnity and fidelity bonds, proxies or other papers or documents
of like or different character necessary, desirable or incidental to the conduct
of its banking business; to execute and deliver settlement agreements or other
papers or documents as may be appropriate in connection with a dismissal
authorized by Section 3.01(c) of these By-laws; to execute agreements,
instruments, documents, contracts or other papers of like or difference
character necessary, desirable or incidental to the conduct of its banking
business; and to execute and deliver partial releases from and discharges or
assignments of mortgages, financing statements and assignments or surrender of
insurance policies, now or hereafter held by this Bank.
The Chief Executive Officer, Chairman of the Board, President, any
officer being a member of the Bank's management staff who is also a person in
charge of and responsible for any department within the Bank, and any other
officer of the Bank so designated and authorized by the Chief Executive
Officer, Chairman of the
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<PAGE>
Board, President or any officer who is a member of the Bank's management staff
who is in charge of and responsible for any department within the Bank are
authorized for and on behalf of the Bank to sign and issue checks, drafts, and
certificates of deposit; to sign and endorse bills of exchange, to sign and
countersign foreign and domestic letters of credit, to receive and receipt for
payments of principal, interest, dividends, rents, fees and payments of every
kind and description paid to the Bank, to sign receipts for property acquired
by or entrusted to the Bank, to guarantee the genuineness of signatures on
assignments of stocks, bonds or other securities, to sign certifications of
checks, to endorse and deliver checks, drafts, warrants, bills, notes,
certificates of deposit and acceptances in all business transactions of the
Bank.
Other persons in the employment of the Bank and of its subsidiaries,
including but not limited to officers and other members of the management
staff, may be authorized by the Chief Executive Officer, Chairman of the
Board, President or by an officer so designated by the Chief Executive
Officer, Chairman of the Board, or President to perform the acts and to
execute the documents set forth above, subject, however, to such limitations
and conditions as are contained in the authorization given to such person.
SECTION 3.06. PERFORMANCE BOND. All officers and employees of the Bank shall
be bonded for the honest and faithful performance of their duties for such
amount as may be prescribed by the Board of Directors.
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<PAGE>
ARTICLE IV
TRUST DEPARTMENT
SECTION 4.01. TRUST DEPARTMENT. Pursuant to the fiduciary powers granted to
this Bank under the provisions of Federal Law and Regulations of the Comptroller
of the Currency, there shall be maintained a separate Trust Department of the
Bank, which shall be operated in the manner specified herein.
SECTION 4.02. TRUST MANAGEMENT COMMITTEE. There shall be a standing Committee
known as the Trust Management Committee, consisting of at least five members, a
majority of whom shall not be officers of the Bank. The Committee shall consist
of the Chairman of the Board who shall be Chairman of the Committee, the
President, and at least three other Directors appointed by the Board of
Directors and who shall continue as members of the Committee until their
successors are appointed. Any vacancy in the Trust Management Committee may be
filled by the Board at any regular or special meeting. In the event of the
absence of any member or members, such Committee may, in its discretion, appoint
members of the Board to fill the place of such absent members to serve during
such absence. Three members of the Committee shall constitute a quorum. Any
member of the Committee may be removed by the Board by a majority vote at any
regular or special meeting of the Board. The Committee shall meet at such times
as it may determine or at the call of the Chairman, or President or any two
members thereof.
The Trust Management Committee, under the general direction of the Board
of Directors, shall supervise the policy of the Trust Department which shall
be formulated and executed in accordance with Law, Regulations of the
Comptroller of the Currency, and sound fiduciary principles.
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<PAGE>
SECTION 4.03. TRUST EXAMINATION COMMITTEE. There shall be a standing
Committee known as the Trust Examination Committee, consisting of three
directors appointed by the Board of Directors and who shall continue as
members of the committee until their successors are appointed. Such members
shall not be active officers of the Bank. Two members of the Committee shall
constitute a quorum. Any member of the Committee may be removed by the Board
by a majority vote at any regular or special meeting of the Board. The
Committee shall meet at such times as it may determine or at the call of two
members thereof.
This Committee shall, at least once during each calendar year and within
fifteen months of the last such audit, or at such other time(s) as may be
required by Regulations of the Comptroller of the Currency, make suitable
audits of the Trust Department or cause suitable audits to be made by
auditors responsible only to the Board of Directors, and at such time shall
ascertain whether the Department has been administered in accordance with
Law, Regulations of the Comptroller of the Currency and sound fiduciary
principles.
The Committee shall promptly make a full report of such audits in
writing to the Board of Directors of the Bank, together with a recommendation
as to what action, if any, may be necessary to correct any unsatisfactory
condition. A report of the audits together with the action taken thereon
shall be noted in the Minutes of the Board of Directors and such report shall
be a part of the records of this Bank.
SECTION 4.04. MANAGEMENT. The Trust Department shall be under the management
and supervision of an officer of the Bank or of the trust affiliate of the Bank
designated by and subject to the advice and direction of the Chief Executive
Officer. Such officer having supervisory responsibility over the Trust
Department shall do or cause to be done all things necessary or proper in
carrying on the business of the Trust Department in accordance with provisions
of law and applicable regulations.
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<PAGE>
SECTION 4.05. HOLDING OF PROPERTY. Property held by the Trust Department may
be carried in the name of the Bank in its fiduciary capacity, in the name of
Bank, or in the name of a nominee or nominees.
SECTION 4.06. TRUST INVESTMENTS. Funds held by the Bank in a fiduciary
capacity awaiting investment or distribution shall not be held uninvested or
undistributed any longer than is reasonable for the proper management of the
account and shall be invested in accordance with the instrument establishing a
fiduciary relationship and local law. Where such instrument does not specify
the character or class of investments to be made and does not vest in the Bank
any discretion in the matter, funds held pursuant to such instrument shall be
invested in any investment which corporate fiduciaries may invest under local
law.
The investments of each account in the Trust Department shall be kept
separate from the assets of the Bank, and shall be placed in the joint
custody or control of not less than two of the officers or employees of the
Bank or of the trust affiliate of the Bank designated for the purpose by the
Trust Management Committee.
SECTION 4.07. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman of
the Board, President, any officer of the Trust Department, and such other
officers of the trust affiliate of the Bank as are specifically designated and
authorized by the Chief Executive Officer, the President, or the officer in
charge of the Trust Department, are hereby authorized, on behalf of this Bank,
to sell, assign, lease, mortgage, transfer, deliver and convey any real property
or personal property and to purchase and acquire any real or personal property
and to execute and deliver such agreements, contracts, or other papers and
documents as may be appropriate in the circumstances for property now or
hereafter owned by or standing in the name of this Bank, or its nominee, in any
fiduciary capacity, or in the name of any principal for whom this Bank may now
or hereafter be acting under a power of attorney, or as agent and to execute and
deliver partial releases from
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<PAGE>
any discharges or assignments or mortgages and assignments or surrender of
insurance policies, to execute and deliver deeds, contracts, leases,
assignments, bills of sale, transfers or such other papers or documents as may
be appropriate in the circumstances for property now or hereafter held by this
Bank in any fiduciary capacity or owned by any principal for whom this Bank may
now or hereafter be acting under a power of attorney or as agent; to execute and
deliver settlement agreements or other papers or documents as may be appropriate
in connection with a dismissal authorized by Section 3.01(c) of these By-laws;
provided that the signature of any such person shall be attested in each case by
any officer of the Trust Department or by any other person who is specifically
authorized by the Chief Executive Officer, the President or the officer in
charge of the Trust Department.
The Chief Executive Officer, Chairman of the Board, President, any
officer of the Trust Department and such other officers of the trust
affiliate of the Bank as are specifically designated and authorized by the
Chief Executive Officer, the President, or the officer in charge of the Trust
Department, or any other person or corporation as is specifically authorized
by the Chief Executive Officer, the President or the officer in charge of the
Trust Department, are hereby authorized on behalf of this Bank, to sign any
and all pleadings and papers in probate and other court proceedings, to
execute any indemnity and fidelity bonds, trust agreements, proxies or other
papers or documents of like or different character necessary, desirable or
incidental to the appointment of the Bank in any fiduciary capacity and the
conduct of its business in any fiduciary capacity; also to foreclose any
mortgage, to execute and deliver receipts for payments of principal,
interest, dividends, rents, fees and payments of every kind and description
paid to the Bank; to sign receipts for property acquired or entrusted to the
Bank; also to sign stock or bond certificates on behalf of this Bank in any
fiduciary capacity and on behalf of this Bank as transfer agent or registrar;
to guarantee the genuineness of signatures on assignments of stocks, bonds or
other securities, and to authenticate bonds, debentures, land or lease trust
certificates or other forms of security issued pursuant to any indenture
under which this Bank now or hereafter is acting as
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<PAGE>
Trustee. Any such person, as well as such other persons as are specifically
authorized by the Chief Executive Officer or the officer in charge of the Trust
Department, may sign checks, drafts and orders for the payment of money executed
by the Trust Department in the course of its business.
SECTION 4.08. VOTING OF STOCK. The Chairman of the Board, President, any
officer of the Trust Department, any officer of the trust affiliate of the Bank
and such other persons as may be specifically authorized by Resolution of the
Trust Management Committee or the Board of Directors, may vote shares of stock
of a corporation of record on the books of the issuing company in the name of
the Bank or in the name of the Bank as fiduciary, or may grant proxies for the
voting of such stock of the granting if same is permitted by the instrument
under which the Bank is acting in a fiduciary capacity, or by the law applicable
to such fiduciary account. In the case of shares of stock which are held by a
nominee of the Bank, such shares may be voted by such person(s) authorized by
such nominee.
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<PAGE>
ARTICLE V
STOCKS AND STOCK CERTIFICATES
SECTION 5.01. STOCK CERTIFICATES. The shares of stock of the Bank shall be
evidenced by certificates which shall bear the signature of the Chairman of the
Board, the President, or a Vice President (which signature may be engraved,
printed or impressed), and shall be signed manually by the Secretary, or any
other officer appointed by the Chief Executive Officer for that purpose.
In case any such officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such before such
certificate is issued, it may be issued by the Bank with the same effect as
if such officer had not ceased to be such at the time of its issue. Each such
certificate shall bear the corporate seal of the Bank, shall recite on its
fact that the stock represented thereby is transferable only upon the books
of the Bank properly endorsed and shall recite such other information as is
required by law and deemed appropriate by the Board. The corporate seal may
be facsimile engraved or printed.
SECTION 5.02. STOCK ISSUE AND TRANSFER. The shares of stock of the Bank shall
be transferable only upon the stock transfer books of the Bank and except as
hereinafter provided, no transfer shall be made or new certificates issued
except upon the surrender for cancellation of the certificate or certificates
previously issued therefor. In the case of the loss, theft, or destruction of
any certificate, a new certificate may be issued in place of such certificate
upon the furnishing of any affidavit setting forth the circumstances of such
loss, theft, or destruction and indemnity satisfactory to the Chairman of the
Board, the President, or a Vice President. The Board of Directors, or the Chief
Executive Officer, may authorize the issuance of a new certificate therefor
without the furnishing of indemnity. Stock Transfer Books, in which all
transfers of stock shall be recorded, shall be provided.
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<PAGE>
The stock transfer books may be closed for a reasonable period and under
such conditions as the Board of Directors may at any time determine for any
meeting of shareholders, the payment of dividends or any other lawful
purpose. In lieu of closing the transfer books, the Board may, in its
discretion, fix a record date and hour constituting a reasonable period prior
to the day designated for the holding of any meeting of the shareholders or
the day appointed for the payment of any dividend or for any other purpose at
the time as of which shareholders entitled to notice of and to vote at any
such meeting or to receive such dividend or to be treated as shareholders for
such other purpose shall be determined, and only shareholders of record at
such time shall be entitled to notice of or to vote at such meeting or to
receive such dividends or to be treated as shareholders for such other
purpose.
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<PAGE>
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. SEAL. The impression made below is an impression of the seal
adopted by the Board of Directors of BANK ONE, COLUMBUS, NATIONAL ASSOCIATION.
The Seal may be affixed by any officer of the Bank to any document executed by
an authorized officer on behalf of the Bank, and any officer may certify any
act, proceedings, record, instrument or authority of the Bank.
SECTION 6.02. BANKING HOURS. Subject to ratification by the Executive
Committee, the Bank and each of its Branches shall be open for business on such
days and during such hours as the Chief Executive Officer of the Bank shall,
from time to time, prescribe.
SECTION 6.03. MINUTE BOOK. The organization papers of this Bank, the Articles
of Association, the returns of the judges of elections, the By-Laws and any
amendments thereto, the proceedings of all regular and special meetings of the
shareholders and of the Board of Directors, and reports of the committees of the
Board of Directors shall be recorded in the minute book of the Bank. The
minutes of each such meeting shall be signed by the presiding Officer and
attested by the secretary of the meetings.
SECTION 6.04. AMENDMENT OF BY-LAWS. These By-Laws may be amended by vote of a
majority of the Directors.
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<PAGE>
EXHIBIT 6
Securities and Exchange Commission
Washington, D.C. 20549
CONSENT
The undersigned, designated to act as Trustee under the Indenture for Reliant
Building Products, Inc. described in the attached Statement of Eligibility and
Qualification, does hereby consent that reports of examinations by Federal,
State, Territorial, or District Authorities may be furnished by such authorities
to the Commission upon the request of the Commission.
This Consent is given pursuant to the provision of Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Bank One, NA
f/k/a Bank One, Columbus, NA
Dated: June 24, 1997 By: /s/ Ted Kravits
----------------------------------
Ted Kravits
Authorized Signer
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Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 1999
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
- -------------------------------------------------------------------------------
/1/
[LOGO]
Please refer to page i, Table of Contents, for the required disclosure of
estimated burden.
- -------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES -- FFIEC 031
(970331)
-----------
REPORT AT THE CLOSE OF BUSINESS MARCH 31, 1997 (RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State member banks);
12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- -------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, Richard D. Nadler, Controller
---------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and
Income (including the supporting schedules) have been prepared in conformance
with the instructions issued by the appropriate Federal regulatory authority
and are true to the best of my knowledge and belief.
/s/ R.D. Nadler
- ------------------------------------------------------
Signature of Officer Authorized to Sign Report
4/29/97
- ------------------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) 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 appropriate
Federal regulatory authority and is true and correct.
/s/ Frederick L. Cullen
- ------------------------------------------------------
Director (Trustee)
/s/ William Bennett
- ------------------------------------------------------
Director (Trustee)
/s/ Alex Shumate
- ------------------------------------------------------
Director (Trustee)
- -------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the appropriate
Federal Reserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the SPECIAL RETURN ADDRESS
ENVELOPE PROVIDED. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the SPECIAL RETURN ADDRESS
ENVELOPE PROVIDED. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
- -------------------------------------------------------------------------------
FDIC Certificate Number / / / / / /
-----------
(RCRI 9050)
CALL NO. 199 31 03-31-97
STBK: 38-1580-00088 STCERT: 39-06559
BANK ONE, COLUMBUS, NATIONAL ASSOCIA
100 EAST BROAD STREET
COLUMBUS, OH 43271
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
FFIEC 031
Page i
/2/
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
SIGNATURE PAGE COVER
REPORT OF INCOME
Schedule RI--Income Statement ...................................... RI-1, 2, 3
Schedule RI-A--Changes in Equity Capital ................................. RI-4
Schedule RI-B--Charge-offs and Recoveries and Changes in Allowance
for Loan and Lease Losses ......................................... RI-4, 5
Schedule RI-D--Income from International Operations .................... RI-6
Schedule RI-E--Explanations .......................................... RI-7, 8
REPORT OF CONDITION
Schedule RC--Balance Sheet ........................................... RC-1, 2
Schedule RC-A--Cash and Balances Due From Depository Institutions ....... RC-3
Schedule RC-B--Securities ......................................... RC-3, 4, 5
Schedule RC-C--Loans and Lease Financing Receivables:
Part I. Loans and Leases ........................................... RC-6, 7
Part II. Loans to Small Businesses and Small Farms (included in
the forms for June 30 only) ............................. RC-7a, 7b
Schedule RC-D--Trading Assets and Liabilities (to be completed
only by selected banks) ............................................... RC-8
Schedule RC-E--Deposit Liabilities .............................. RC-9, 10, 11
Schedule RC-F--Other Assets ............................................ RC-11
Schedule RC-G--Other Liabilities ....................................... RC-11
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices ....... RC-12
Schedule RC-I--Selected Assets and Liabilities of IBFs ................. RC-13
Schedule RC-K--Quarterly Averages ...................................... RC-13
Schedule RC-L--Off Balance Sheet Items ......................... RC-14, 15, 16
Schedule RC-M--Memoranda ........................................... RC-17, 18
Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets ................................................. RC-19, 20
Schedule RC-O--Other Data for Deposit Insurance and
FICO Assessments ................................................. RC-21, 22
Schedule RC-R--Regulatory Capital .................................. RC-23, 24
Optional Narrative Statement Concerning the Amounts Reported in the
Reports of Condition and Income ...................................... RC-25
Special Report (TO BE COMPLETED BY ALL BANKS)
Schedule RC-J--Repricing Opportunities (sent only to and to be completed
only by savings banks)
DISCLOSURE OF ESTIMATED BURDEN
The estimated average burden associated with this information collection is
34.1 hours per respondent and is estimated to vary from 15 to 400 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in the
required form, and completing the information collection, but exclude the
time for compiling and maintaining business records in the normal course of a
respondent's activities. A Federal agency may not conduct or sponsor, and an
organization (or a person) is not required to respond to a collection of
information, unless it displays a currently valid OMB control number. Comments
concerning the accuracy of this burden estimate and suggestions for reducing
this burden should be directed to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Washington, D.C. 20503, and to one
of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For information or assistance, National and State nonmember banks should
contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW,
Washington, D.C. 20429, toll free on (800) 688-FDIC(3342), Monday through
Friday between 8:00 a.m. and 5:00 p.m., Eastern time. State member banks
should contact their Federal Reserve District Bank.
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RI-1
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
-----
CONSOLIDATED REPORT OF INCOME
FOR THE PERIOD JANUARY 1, 1997-MARCH 31, 1997
ALL REPORT OF INCOME SCHEDULES ARE TO BE REPORTED ON A CALENDAR YEAR-TO-DATE BASIS IN THOUSANDS OF DOLLARS.
SCHEDULE RI--INCOME STATEMENT
----
I480 < -
------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------- ------------------
1. Interest income: //////////////////
a. Interest and fee income on loans: //////////////////
(1) In domestic offices: //////////////////
(a) Loans secured by real estate.............................................. 4011 32,460 1.a.(1)(a)
(b) Loans to depository institutions.......................................... 4019 72 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers....... 4024 174 1.a.(1)(c)
(d) Commercial and industrial loans........................................... 4012 18,797 1.a.(1)(d)
(e) Acceptance of other banks................................................. 4026 0 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures: //////////////////
(1) Credit cards and related plans....................................... 4054 152,803 1.a.(1)(f)(l)
(2) Other................................................................ 4055 49,088 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions.................... 4056 0 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political.... //////////////////
subdivisions in the U.S.: //////////////////
(1) Taxable obligations.................................................. 4503 181 1.a.(1)(h)(1)
(2) Tax-exempt obligations............................................... 4504 8 1.a.(1)(h)(2)
(i) All other loans in domestic offices....................................... 4058 1,782 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................. 4059 0 1.a.(2)
b. Income from lease financing receivables: //////////////////
(1) Taxable leases................................................................. 4505 27,240 1.b.(2)
(2) Tax-exempt leases.............................................................. 4307 0 1.b.(2)
c. Interest income on balances due from depository institutions: (1) //////////////////
(1) In domestic offices............................................................ 4105 5 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................. 4106 0 1.c.(2)
d. Interest and dividend income on securities: //////////////////
(1) U.S. Treasury securities and U.S. Government agency obligations................ 4027 9,756 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: //////////////////
(a) Taxable securities........................................................ 4506 3 1.d.(2)(a)
(b) Tax-exempt securities..................................................... 4507 616 1.d.(2)(b)
(3) Other domestic debt securities................................................. 3657 116 1.d.(3)
(4) Foreign debt securities........................................................ 3658 52 1.d.(4)
(5) Equity securities (including investments in mutual funds)...................... 3659 136 1.d.(5)
e. Interest income from trading assets................................................. 4069 0 1.e.
------------------
</TABLE>
- ----------------
(1) Includes interest income on time certificates of deposit not held for
trading.
3
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RI-2
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
-----
SCHEDULE RI--CONTINUED
------------
Dollar Amounts in Thousands Year-to-date
- ------------------------------------------------------------------------------------ ------------------
1. Interest income (Continued) RIAD Bil Mil Thou
f. Interest income on federal funds sold and securities purchased under //////////////////
agreements to resell...................................................... 4020 2,647 1.f.
g. Total interest income (sum of items 1.a through 1.f)...................... 4107 295,936 1.g.
2. Interest expense: //////////////////
a. Interest on deposits: //////////////////
(1) Interest on deposits in domestic offices: //////////////////
(a) Transaction accounts (NOW accounts, ATS accounts, and //////////////////
telephone and preauthorized transfer accounts)................... 4508 202 2.a.(1)(a)
(b) Nontransaction accounts: //////////////////
(1) Money market deposit accounts (MMDAs)........................ 4509 12,950 2.a.(1)(b)(1)
(2) Other savings deposits....................................... 4511 10,252 2.a.(1)(b)(2)
(3) Time deposits of $100,000 or more............................ A517 2,717 2.a.(1)(b)(3)
(4) Time deposits of less than $100,000.......................... A518 14,083 2.1.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement //////////////////
subsidiaries, and IBF................................................ 4172 5,891 2.a.(2)
b. Expense of federal funds purchased and securities sold under //////////////////
agreements to repurchase.................................................. 4180 25,640 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading //////////////////
liabilities, and other borrowed money..................................... 4185 23,875 2.c.
d. Not applicable //////////////////
e. Interest on subordinated notes and debentures............................. 4200 3,988 2.e.
f. Total interest expense (sum of items 2.a. through 2.e).................... 4073 99,698 2.f.
------------------
3. Net interest income (item 1.g minus 2.f)...................................... ////////////////// RIAD 4074 196,238 3.
------------------
4. Provisions: //////////////////
------------------
a. Provisions for loan and lease losses...................................... ////////////////// RIAD 4230 37,189 4.a.
b. Provision for allocated transfer risk..................................... ////////////////// RIAD 4243 0 4.b.
------------------
5. Noninterest income //////////////////
a. Income from fiduciary activities.......................................... 4070 13,629 5.a.
b. Service charges on deposit accounts in domestic offices................... 4080 9,387 5.b.
c. Trading revenue (must equal Schedule RI, sum of Memorandum //////////////////
items 8.a through 8.d).................................................... A220 486 5.c.
d.-e. Not applicable //////////////////
f. Other noninterest income:
(1) Other fee income..................................................... 5407 99,510 5.f.(1)
(2) All other noninterest income*........................................ 5408 15,487 f.f.(2)
------------------
g. Total noninterest income (sum of items 5.a through 5.f)................... ////////////////// RIAD 4079 138,499 5.g.
6. a. Realized gains (losses) on held-to-maturity securities.................... ////////////////// RIAD 3521 (8) 6.a
b. Realized gains (losses) on available-for-sale securities.................. ////////////////// RIAD 3196 96 6.b
------------------
7. Noninterest expense: //////////////////
a. Salaries and employee benefits............................................ 4135 36,786 7.a.
b. Expenses of premises and fixed assets (net of rental income) //////////////////
(excluding salaries and employee benefits and mortgage interest)......... 4217 6,131 7.b.
c. Other noninterest expense*................................................ 4092 127,927 7.c.
------------------
d. Total noninterest expense (sum of items 7.a through 7.c).................. ////////////////// RIAD 4093 170,844 7.d.
8. Income (loss) before income taxes and extraordinary items and other ////////////////// ------------------
adjustments (item 3 plus or minus items 4.a, 4.b., 5.g, 6.a, 6.b, and 7.d)... RIAD 4301 126,792 8.
9. Applicable income taxes (on item 8)........................................... ////////////////// RIAD 4302 44,100 9.
------------------
10. Income (loss) before extraordinary items and other adjustments (item 8 ////////////////// ------------------
minus 9) ////////////////// RIAD 4300 82,692 10.
11. Extraordinary items and other adjustments, net of income taxes* ////////////////// RIAD 4320 0 11.
12. Net income (loss) (sum of items 10 and 11) ////////////////// RIAD 4340 82,692 12.
-------------------------------------------
</TABLE>
- ----------
*Describe on Schedule RI-E--Explanations.
4
<PAGE>
<TABLE>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RI-3
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
SCHEDULE RI -- CONTINUED
-------
I481 < -
---------------
Memoranda Year-to-date
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after //////////////////
August 7, 1986, that is not deductible for federal income tax purposes.............................. 4513 36 M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices //////////////////
(included in Schedule RI, item 8)................................................................... 8431 429 M.2.
3.-4. Not applicable //////////////////
5. Number of full-time equivalent employees at end of current period (round to //// Number
nearest whole number)............................................................................... 4150 3,028 M.5.
6. Not applicable //////////////////
7. If the reporting bank has restated its balance sheet as a result of applying push down //// MM DD YY
accounting this calendar year, report the date of the bank's acquisition............................ 9106 00/00/00 M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) //////////////////
(sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): //// Bil Mil Thou
a. Interest rate exposures.......................................................................... 8757 0 M.8.a
b. Foreign exchange exposures....................................................................... 8758 486 M.8.b.
c. Equity security and index exposures.............................................................. 8759 0 M.8.c.
d. Commodity and other exposures.................................................................... 8760 0 M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: //////////////////
a. Net increase (decrease) to interest income....................................................... 8761 1,724 M.9.a.
b. Net (increase) decrease to interest expense...................................................... 8762 798 M.9.b.
c. Other (noninterest) allocations.................................................................. 8763 1,243 M.9.c.
10. Credit losses on off-balance sheet derivatives (see instructions)................................... A251 0 M.10.
--------------------
YES NO
11. Does the reporting bank have a Subchapter S election in effect for federal income tax --------------------
purposes for the current tax year?.................................................................. A530 /// x M.11.
--------------------
//// Bil Mil Thou
--------------------
12. Deferred portion of total applicable income taxes included in Schedule RI,
items 9 and 11 (to be reported with the December Report of Income).................................. 4772 N/A M.12.
--------------------
</TABLE>
- -----------------
* Describe on Schedule RI-E -- Explanations.
5
<PAGE>
<TABLE>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RI-4
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
SCHEDULE RI-A -- CHANGES IN EQUITY CAPITAL
Indicate decreases and losses in parentheses.
-------
I483 < -
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
1. Total equity capital originally reported in the December 31, 1996, Reports of Condition //////////////////
and Income.......................................................................................... 3215 675,408 1.
2. Equity capital adjustments from amended Reports of Income, net*..................................... 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2)................................ 3217 675,408 3.
4. Net income (loss) (must equal Schedule RI, item 12)................................................. 4340 82,692 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net.................................. 4346 0 5.
6. Changes incident to business combinations, net...................................................... 4356 0 6.
7. LESS: Cash dividends declared on preferred stock.................................................... 4470 0 7.
8. LESS: Cash dividends declared on common stock....................................................... 4460 0 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions for //////////////////
this schedule)...................................................................................... 4411 148,031 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule).... 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities.................... 8433 (9,197) 11.
12. Foreign currency translation adjustments............................................................ 4414 0 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above)............ 4415 53,500 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal //////////////////
Schedule RC, item 28)............................................................................... 3210 950,434 14.
--------------------
- -----------------
* Describe on Schedule RI-E -- Explanations.
SCHEDULE RI-B -- CHARGE-OFFS AND RECOVERIES AND CHANGES
IN ALLOWANCE FOR LOAN AND LEASE LOSSES
PART I. CHARGE-OFFS AND RECOVERIES ON LOANS AND LEASES
Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.
-------
I486 < -
-----------------------------------------
(Column A) (Column B)
Charge-offs Recoveries
-----------------------------------------
Calendar year-to-date
-----------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
1. Loans secured by real estate: ////////////////// //////////////////
a. To U.S. addressees (domicile)................................................. 4651 1,203 4661 546 1.a.
b. To non-U.S. addressees (domicile)............................................. 4652 0 4662 0 1.b.
2. Loans to depository institutions and acceptances of other banks: ////////////////// //////////////////
a. To U.S. banks and other U.S. depository institutions.......................... 4653 0 4663 0 2.a.
b. To foreign banks.............................................................. 4654 0 4664 0 2.b.
3. Loans to finance agricultural production and other loans to farmers.............. 4655 0 4665 0 3.
4. Commercial and industrial loans: ////////////////// //////////////////
a. To U.S. addressees (domicile)................................................. 4645 1,486 4617 321 4.a.
b. To non-U.S. addressees (domicile)............................................. 4646 0 4618 0 4.b.
5. Loans to individuals for household, family, and other personal ////////////////// //////////////////
expenditures: ////////////////// //////////////////
a. Credit cards and related plans................................................ 4656 64,127 4666 15,550 5.a.
b. Other (includes single payment, installment, and all student loans)........... 4657 7,530 4667 8,102 5.b.
6. Loans to foreign governments and official institutions........................... 4643 0 4627 0 6.
7. All other loans.................................................................. 4644 0 4628 3 7.
8. Lease financing receivables: ////////////////// //////////////////
a. Of U.S. addressees (domicile)................................................. 4658 1,603 4668 276 8.a.
b. Of non-U.S. addressees (domicile)............................................. 4659 0 4669 0 8.b.
9. Total (sum of items 1 through 8)................................................. 4635 75,949 4605 24,798 9.
----------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RI-5
City, State, Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
SCHEDULE RI-B--CONTINUED
PART I. CONTINUED
--------------------------------------
(Column A) (Column B)
Charge-offs Recoveries
--------------------------------------
Memoranda Calendar year-to-date
--------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
1-3. Not applicable ///////////////// /////////////////
4. Loans to finance commercial real estate, construction, and land ///////////////// /////////////////
Development activities (NOT SECURED BY REAL ESTATE) included in ///////////////// /////////////////
Schedule RI-B, part I, items 4 and 7, above ......................... 5409 0 5410 0 M.4.
5. Loans secured by real estate in domestic offices (included in ///////////////// /////////////////
Schedule RI-B, part I, item 1, above): ///////////////// /////////////////
a. Construction and land development ................................ 3582 77 3583 67 M.5.a.
b. Secured by farmland .............................................. 3584 0 3585 2 M.5.b.
c. Secured by 1-4 family residential properties: ///////////////// /////////////////
(1) Revolving, open-end loans secured by 1-4 family residential ///////////////// /////////////////
properties and extended under lines of credit ................ 5411 772 5412 267 M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties . 5413 325 5414 81 M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties ........ 3588 0 3589 122 M.5.d.
e. Secured by nonfarm nonresidential properties ..................... 3590 29 3591 7 M.5.e.
--------------------------------------
PART II. CHANGES IN ALLOWANCE FOR LOAN AND LEASE LOSSES
-----------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
1. Balance originally reported in the December 31, 1996, Reports of Condition and Income .... 3124 254,594 1.
2. Recoveries (must equal part I, item 9, column B above) ................................... 4605 24,798 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above) ............................ 4635 75,949 3.
4. Provision for loan and lease losses must equal Schedule RI, item 4.a ..................... 4230 37,189 4.
5. Adjustments* (see instructions for this schedule) ........................................ 4815 0 5.
6. Balance end of current period (sum of items 1 through 5) must equal Schedule RC, /////////////////
item 4.b) ................................................................................ 3123 240,632 6.
-----------------
</TABLE>
- -----------
*Describe on Schedule RI-E--Explanations.
7
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 032
Address: 100 EAST BROAD STREET Page RI-6
City, State, Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
SCHEDULE RI-D--INCOME FROM INTERNATIONAL OPERATIONS
FOR ALL BANKS WITH FOREIGN OFFICES, EDGE OR AGREEMENT SUBSIDIARIES, OR IBFS
WHERE INTERNATIONAL OPERATIONS ACCOUNT FOR MORE THAN 10 PERCENT OF TOTAL
REVENUES, TOTAL ASSETS, OR NET INCOME.
PART I. ESTIMATED INCOME FROM INTERNATIONAL OPERATIONS
-----------------
I492 < -
-----------------
Year-to-date
-----------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------
1. Interest income and expense booked at foreign offices, Edge and /////////////////
Agreement subsidiaries, and IBFs: /////////////////
a. Interest income booked....................................... 4837 N/A 1.a.
b. Interest expense booked...................................... 4838 N/A 1.b.
c. Net interest income booked at foreign offices, Edge and /////////////////
Agreement subsidiaries, and IBFs (item 1.a minus 1.b)........ 4839 N/A 1.c.
2. Adjustments for booking location of international operations: /////////////////
a. Net interest income attributable to international operations /////////////////
booked at domestic offices................................... 4840 N/A 2.a.
b. Net interest income attributable to domestic business booked /////////////////
at foreign offices........................................... 4841 N/A 2.b.
c. Net booking location adjustment (item 2.a minus 2.b)......... 4842 N/A 2.c.
3. Noninterest income and expense attributable to international /////////////////
operations: /////////////////
a. Noninterest income attributable to international operations.. 4097 N/A 3.a.
b. Provision for loan and lease losses attributable to /////////////////
international operations..................................... 4235 N/A 3.b.
c. Other noninterest expense attributable to international /////////////////
operations................................................... 4239 N/A 3.c.
d. Net noninterest income (expense) attributable to /////////////////
international operations (item 3.a minus 3.b and 3.c)........ 4843 N/A 3.d.
4. Estimated pretax income attributable to international operations /////////////////
before capital allocation adjustment (sum of items 1.c, 2.c, /////////////////
and 3.d)......................................................... 4844 N/A 4.
5. Adjustment to pretax income for internal allocations to /////////////////
international operations to reflect the effects of equity capital /////////////////
on overall bank funding costs.................................... 4845 N/A 5.
6. Estimated pretax income attributable to international operations /////////////////
after capital allocation adjustment (sum of items 4 and 5)....... 4846 N/A 6.
7. Income taxes attributable to income from international operations /////////////////
as estimated in item 6........................................... 4797 N/A 7.
8. Estimated net income attributable to international operations /////////////////
(item 6 minus 7)................................................. 4341 N/A 8.
-----------------
Memoranda
-----------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------
1. Intracompany interest income included in item 1.a above.......... 4847 N/A M.1.
2. Intracompany interest expense included in item 1.b above......... 4848 N/A M.2.
PART II. SUPPLEMENTARY DETAILS ON INCOME FROM INTERNATIONAL OPERATIONS
REQUIRED BY THE DEPARTMENTS OF COMMERCE AND TREASURY FOR PURPOSES OF
THE U.S. INTERNATIONAL ACCOUNTS AND THE U.S. NATIONAL INCOME AND
PRODUCT ACCOUNTS
-----------------
Year-to-date
-----------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------
1. Interest income booked at IBFs................................... 4849 N/A 1.
2. Interest expense booked at IBFs.................................. 4850 N/A 2.
3. Noninterest income attributable to international operations /////////////////
booked at domestic offices (excluding IBFs): /////////////////
a. Gains (losses) and extraordinary items....................... 5491 N/A 3.a.
b. Fees and other noninterest income............................ 5492 N/A 3.b.
4. Provision for loan and lease losses attributable to international /////////////////
operations booked at domestic offices (excluding IBFs)........... 4852 N/A 4.
5. Other noninterest expense attributable to international /////////////////
operations booked at domestic offices (excluding IBFs)........... 4853 N/A 5.
-----------------
</TABLE>
8
<PAGE>
<TABLE>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RI-7
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: /0/6/5/5/9
----------
SCHEDULE RI-E -- EXPLANATIONS
SCHEDULE RI-E IS TO BE COMPLETED EACH QUARTER ON A CALENDAR YEAR-TO-DATE BASIS.
Detail all adjustments in Schedule RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all
significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)
-------
I495 < -
---------------
Year-to-date
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
1. All other noninterest income (from Schedule RI, item 5.f. (2)) //////////////////
Report amounts that exceed 10% of Schedule RI, item 5.f. (2): //////////////////
a. Net gains (losses) on other real estate owned................................................. 5415 0 1.a
b. Net gains (losses) on sales of loans.......................................................... 5416 4,671 1.b.
c. Net gains (losses) on sales of premises and fixed assets...................................... 5417 0 1.c.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, //////////////////
item 5.f.(2): //////////////////
---------
d. TEXT 4416 CREDIT CARD PROCESSING INCOME 4461 7,630 1.d.
----------------------------------------------------------------------------------------------
e. TEXT 4462 INCOME ON CORPORATE OWNED LIFE INSURANCE 4462 1,649 1.e.
----------------------------------------------------------------------------------------------
f. TEXT 4463 4463 1.f.
----------------------------------------------------------------------------------------------
2. Other noninterest expense (from Schedule RI, item 7.c): //////////////////
a. Amortization expense of intangible assets..................................................... 4531 1,410 2.a
Report amounts that exceed 10% of Schedule RI, item 7.c: //////////////////
b. Net (gains) losses on other real estate owned................................................. 5418 0 2.b.
c. Net (gains) losses on sales of loans.......................................................... 5419 0 2.c.
d. Net (gains) losses on sales of premises and fixed assets...................................... 5420 0 2.d.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, //////////////////
item 7.c.: //////////////////
---------
e. TEXT 4464 DATA PROCESSING EXPENSE 4464 33,170 2.e.
----------------------------------------------------------------------------------------------
f. TEXT 4467 HOLDING COMPANY MANAGEMENT FEES 4467 28,615 2.f.
----------------------------------------------------------------------------------------------
g. TEXT 4468 4468 2.g.
----------------------------------------------------------------------------------------------
3. Extraordinary items and other adjustments and applicable income tax effect //////////////////
(from Schedule RI, item 11) (itemize and describe all extraordinary items and //////////////////
other adjustments): //////////////////
---------
a. (1) TEXT 4469 4469 3.a.(1)
----------------------------------------------------------------------------------------------
(2) Applicable income tax effect RIAD 4486 ////////////////// 3.a.(2)
--------- ----------------------
b. (1) TEXT 4487 4487 3.b.(1)
----------------------------------------------------------------------------------------------
(2) Applicable income tax effect RIAD 4488 ////////////////// 3.b.(2)
--------- ----------------------
c. (1) TEXT 4489 4489 3.c.(1)
----------------------------------------------------------------------------------------------
(2) Applicable income tax effect RIAD 4491 ////////////////// 3.c.(2)
----------------------
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, item 2) //////////////////
(itemize and describe all adjustments): //////////////////
---------
a. TEXT 4492 4492 4.a.
----------------------------------------------------------------------------------------------
b. TEXT 4493 4493 4.b.
----------------------------------------------------------------------------------------------
5. Cumulative effect of changes in accounting principles form prior years //////////////////
(from Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): //////////////////
---------
a. TEXT A546 EFFECT OF CHANGE TO GAAP FROM PREVIOUS NON-GAAP INSTRUCTIONS A546 148,031 5.a.
----------------------------------------------------------------------------------------------
b. TEXT 4495 4495 5.b.
----------------------------------------------------------------------------------------------
6. Corrections of material accounting errors from prior years (from Schedule RI-A, item 10) //////////////////
(itemize and describe all corrections): //////////////////
---------
a. TEXT 4496 4496 6.a.
----------------------------------------------------------------------------------------------
b. TEXT 4497 4497 6.b.
---------------------------------------------------------------------------------------------- -------------------
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RI-8
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: /0/6/5/5/9
----------
SCHEDULE RI-E -- CONTINUED
---------------
Year-to-date
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
7. Other transactions with parent holding company (from Schedule RI-A, item 13) //////////////////
(itemize and describe all such transactions): //////////////////
---------
a. TEXT 4498 CAPITAL CONTRIBUTION 4498 53,500 7.a.
----------------------------------------------------------------------------------------------
b. TEXT 4499 4499 7.b.
----------------------------------------------------------------------------------------------
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, item 5) //////////////////
(itemize and describe all such transactions): //////////////////
---------
a. TEXT 4521 4521 8.a.
----------------------------------------------------------------------------------------------
b. TEXT 4522 4522 8.b.
------------------------------------------------------------------------------------------------------------------
9. Other explanations (the space below is provided for the bank to briefly describe, at its I498 I499 < -
option, any other significant items affecting the Report of Income): --------------------
No comment /X/ (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RC-1
City, State, Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
-----------------
C400 < -
-----------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------
ASSETS /////////////////
1. Cash and balances due from depository institutions (from /////////////////
Schedule RC-A): /////////////////
a. Noninterest-bearing balances and currency and coin(1)........ 0081 939,370 1.a.
b. Interest-bearing balances(2)................................. 0071 627 1.b.
2. Securities: /////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A)... 1754 33,361 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D). 1773 666,647 2.b.
3. Federal funds sold and securities purchased under agreements to /////////////////
resell........................................................... 1350 611,369 3.
4. Loans and lease financing receivables: /////////////////
a. Loans and leases, net of unearned ------------------- /////////////////
income (from Schedule RC-C).......... RCFD 2122 8,843,161 ///////////////// 4.a.
b. LESS: Allowance for loan and lease /////////////////
losses............................... RCFD 3123 240,632 ///////////////// 4.b.
c. LESS: Allocated transfer risk reserve.... RCFD 3128 0 ///////////////// 4.c.
-------------------- /////////////////
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c).......... 2125 8,602,529 4.d.
5. Trading assets (from Schedule RC-D).............................. 3545 0 5.
6. Premises and fixed assets (including capitalized leases)......... 2145 68,835 6.
7. Other real estate owned (from Schedule RC-M)..................... 2150 4,876 7.
8. Investments in unconsolidated subsidiaries and associated /////////////////
companies (from Schedule RC-M)................................... 2130 2,586 8.
9. Customers' liability to this bank on acceptances outstanding..... 2155 5,273 9.
10. Intangible assets (from Schedule RC-M)........................... 2143 33,786 10.
11. Other assets (from schedule RC-F)................................ 2160 1,433,661 11.
12. Total assets (sum of items 1 through 11)......................... 2170 12,402,920 12.
-----------------
</TABLE>
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
11
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RC-2
City, State, Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
SCHEDULE RC--CONTINUED
---------------------------
Dollar Amounts in Thousands //////////// Bil Mil Thou
- ------------------------------------------------------------------------------------------------------
LIABILITIES ///////////////////////////
13. Deposits ///////////////////////////
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part I)............... ------------------------- RCON 2200 4,815,844 13.a.
(1) Noninterest-bearing(1)........... RCON 6631 2,012,057 ///////////////////////////
(2) Interest-bearing................. RCON 6636 2,803,787 /////////////////////////// 13.a.(1)
------------------------- /////////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs ///////////////////////////
(from Schedule RC-E, part II)..........------------------------- RCFN 2200 627,383 13.b.
(1) Noninterest-bearing.............. RCFN 6631 0 ///////////////////////////
(2) Interest-bearing................. RCFN 6636 627,383 /////////////////////////// 13.b.(1)
------------------------- /////////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to ///////////////////////////
repurchase.......................................................... RCFD 2800 3,378,659 14.
15. a. Demand notes issued to the U.S. Treasury........................ RCON 2840 58,722 15.a.
b. Trading liabilities (from Schedule RC-D)........................ RCFD 3548 0 15.b.
16. Other borrowed money (includes mortgage indebtedness and ///////////////////////////
obligations under capitalized leases): ///////////////////////////
a. With a remaining maturity of one year or less................... RCFD 2332 1,349,077 16.a.
b. With a remaining maturity of more than one year................. RCFD 2333 307,590 16.b.
17. Not applicable ///////////////////////////
18. Bank's liability on acceptances executed and outstanding............ RCFD 2920 5,273 18.
19. Subordinated notes and debentures(2)................................ RCFD 3200 264,351 19.
20. Other liabilities (from Schedule RC-G).............................. RCFD 2930 645,587 20.
21. Total liabilities (sum of items 13 through 20)...................... RCFD 2948 11,452,486 21.
22. Not applicable ///////////////////////////
EQUITY CAPITAL ///////////////////////////
23. Perpetual preferred stock and related surplus....................... RCFD 3838 0 23.
24. Common stock........................................................ RCFD 3230 20,738 24.
25. Surplus (exclude all surplus related to preferred stock)............ RCFD 3839 334,450 25.
26. a. Undivided profits and capital reserves.......................... RCFD 3632 607,377 26.a.
b. Net unrealized holding gains (losses) on available-for-sale ///////////////////////////
securities...................................................... RCFD 8434 (12,131) 26.b.
27. Cumulative foreign currency translation adjustments................. RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27)................... RCFD 3210 950,434 28.
29. Total liabilities, limited-life preferred stock, and equity capital ///////////////////////////
(sum of items 21 and 28)............................................ RCFD 3300 12,402,920 29.
---------------------------
Memorandum
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below
that best describes the most comprehensive level of auditing work Number
performed for the bank by independent external auditors as of any ---------------------------
date during 1996................................................... RCFD 6724 2 M.1.
---------------------------
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm
which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated
holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public
accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external
auditors (may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
</TABLE>
- ---------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
12
<PAGE>
<TABLE>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RC-3
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No. 06559
SCHEDULE RC-A -- CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS
Exclude assets held for trading.
--------
C405 < -
---------------------------------------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
------------------ ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
1. Cash items in process of collection, unposted debits, and currency and ////////////////// //////////////////
coin........................................................................... 0022 879,225 ////////////////// 1.
a. Cash items in process of collection and unposted debits..................... ////////////////// 0020 828,766 1.a.
b. Currency and coin........................................................... ////////////////// 0080 50,459 1.b.
2. Balances due from depository institutions in the U.S. ......................... ////////////////// 0082 34,801 2.
a. U.S. branches and agencies of foreign banks (including their IBFs).......... 0083 0 ////////////////// 2.a.
b. Other commercial banks in the U.S. and other depository institutions ////////////////// //////////////////
in the U.S. (including their IBFs).......................................... 0085 34,801 ////////////////// 2.b.
3. Balances due from banks in foreign countries and foreign central banks......... ////////////////// 0070 226 3.
a. Foreign branches of other U.S. banks........................................ 0073 0 ////////////////// 3.a.
b. Other banks in foreign countries and foreign central banks.................. 0074 226 ////////////////// 3.b.
4. Balances due from Federal Reserve Banks........................................ 0090 25,745 0090 25,745 4.
5. Total (sum of items 1 through 4) (total of column A must equal ////////////////// //////////////////
Schedule RC, sum of items 1.a and 1.b)......................................... 0010 939,997 0010 939,997 5.
---------------------------------------
------------------
Memorandum Dollar Amounts in Thousands RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, //////////////////
column B above)..................................................................................... 0050 34,175 M.1.
------------------
</TABLE>
SCHEDULE RC-B -- SECURITIES
Exclude assets held for trading.
<TABLE>
<S> <C> <C> <C> <C>
--------
C410 < -
------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
------------------------------------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
1. U.S. Treasury securities........... 0211 0 0213 0 1286 462,175 1287 444,589 1.
2. U.S. Government agency obligations ////////////////// ////////////////// ////////////////// //////////////////
(exclude mortgage-backed ////////////////// ////////////////// ////////////////// //////////////////
securities): ////////////////// ////////////////// ////////////////// //////////////////
a. Issued by U.S. Govern- ////////////////// ////////////////// ////////////////// //////////////////
ment agencies(2)............... 1289 0 1290 0 1291 0 1293 0 2.a.
b. Issued by U.S. ////////////////// ////////////////// ////////////////// //////////////////
Government-sponsored ////////////////// ////////////////// ////////////////// //////////////////
agencies(3).................... 1294 0 1295 0 1297 47,671 1298 47,295 2.b.
------------------------------------------------------------------------------------
</TABLE>
- -----------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool
Certificates," U.S. Maritime Administration obligations, and
Export-Import Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by
the Farm Credit System, the Federal Home Loan Bank System, the Federal
Home Loan Mortgage Corporation, the Federal National Mortgage
Association, the Financing Corporation, Resolution Funding Corporation,
the Student Loan Marketing Association, and the Tennessee Valley
Authority.
13
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RC-4
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: /0/6/5/5/9/
SCHEDULE RC-B -- CONTINUED
--------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
--------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value(1)
--------------------------------------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
3. Securities issued by states ////////////////// ////////////////// ////////////////// //////////////////
and political subdivisions ////////////////// ////////////////// ////////////////// //////////////////
in the U.S.: ////////////////// ////////////////// ////////////////// //////////////////
a. General obligations........ 1676 10,482 1677 14,290 1678 0 1679 0 3.a.
b. Revenue obligations........ 1681 12,080 1686 9,409 1690 845 1691 860 3.b.
c. Industrial development ////////////////// ////////////////// ////////////////// //////////////////
and similar obligations.... 1694 7,656 1695 7,673 1696 0 1697 0 3.c.
4. Mortgage-backed ////////////////// ////////////////// ////////////////// //////////////////
securities (MBS): ////////////////// ////////////////// ////////////////// //////////////////
a. Pass-through securities: ////////////////// ////////////////// ////////////////// //////////////////
(1) Guaranteed by ////////////////// ////////////////// ////////////////// //////////////////
GNMA................... 1698 0 1699 0 1701 40,661 1702 40,210 4.a.(1)
(2) Issued by FNMA ////////////////// ////////////////// ////////////////// //////////////////
and FHLMC.............. 1703 0 1705 0 1706 106,553 1707 106,182 4.a.(2)
(3) Other pass-through ////////////////// ////////////////// ////////////////// //////////////////
securities............. 1709 393 1710 383 1711 5,424 1713 5,519 4.a.(3)
b. Other mortgage-backed ////////////////// ////////////////// ////////////////// //////////////////
securities (include CMOs, ////////////////// ////////////////// ////////////////// //////////////////
REMICs, and stripped ////////////////// ////////////////// ////////////////// //////////////////
MBS): ////////////////// ////////////////// ////////////////// //////////////////
(1) Issued or guaranteed ////////////////// ////////////////// ////////////////// //////////////////
by FNMA, FHLMNC, ////////////////// ////////////////// ////////////////// //////////////////
or GNMA................ 1714 0 1715 0 1716 15,190 1717 15,187 4.b.(1)
(2) Collateralized ////////////////// ////////////////// ////////////////// //////////////////
by MBS issued or ////////////////// ////////////////// ////////////////// //////////////////
guaranteed by FNMA, ////////////////// ////////////////// ////////////////// //////////////////
FHLMC, or GNMA......... 1718 0 1719 0 1731 0 1732 0 4.b.(2)
(3) All other mortgage- ////////////////// ////////////////// ////////////////// //////////////////
backed securities...... 1733 0 1734 0 1735 0 1736 0 4.b.(3)
5. Other debt securities: ////////////////// ////////////////// ////////////////// //////////////////
a. Other domestic debt ////////////////// ////////////////// ////////////////// //////////////////
securities................. 1737 0 1738 0 1739 398 1741 412 5.a.
b. Foreign debt ////////////////// ////////////////// ////////////////// //////////////////
securities................. 1742 2,750 1743 2,750 1744 0 1746 0 5.b.
6. Equity securities: ////////////////// ////////////////// ////////////////// //////////////////
a. Investments in mutual ////////////////// ////////////////// ////////////////// //////////////////
funds and other equity ////////////////// ////////////////// ////////////////// //////////////////
securities with readily ////////////////// ////////////////// ////////////////// //////////////////
determinable fair values... ////////////////// ////////////////// A510 0 A511 0 6.a.
b. All other equity ////////////////// ////////////////// ////////////////// //////////////////
securities(1).............. ////////////////// ////////////////// 1752 6,393 1753 6,393 6.b.
7. Total (sum of items 1 ////////////////// ////////////////// ////////////////// //////////////////
through 6) (total of ////////////////// ////////////////// ////////////////// //////////////////
column A must equal ////////////////// ////////////////// ////////////////// //////////////////
Schedule RC, item 2.a) ////////////////// ////////////////// ////////////////// //////////////////
(total of column D must ////////////////// ////////////////// ////////////////// //////////////////
equal Schedule RC, ////////////////// ////////////////// ////////////////// //////////////////
item 2.b)..................... 1754 33,361 1771 34,505 1772 685,310 1773 666,647 7.
--------------------------------------------------------------------------------------
</TABLE>
- ------------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
14
<PAGE>
<TABLE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RC-5
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
-----
SCHEDULE RC-B--CONTINUED
----
C412 < -
Memoranda ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------- ------------------
<S> <C> <C>
1. Pledged securities(2).................................................................... 0416 691,658 M.1.
2. Maturity and repricing data for debt securities(2), (3), (4) //////////////////
(excluding those in nonaccrual status): //////////////////
a. Fixed rate debt securities with a remaining maturity of: //////////////////
(1) Three months or less............................................................. 0343 111 M.2.a.(1)
(2) Over three months through 12 months.............................................. 0344 6,164 M.2.a.(2)
(3) Over one year through five years................................................. 0345 163,650 M.2.a.(3)
(4) Over five years.................................................................. 0346 486,717 M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1)
through 2.a.(4).................................................................. 0347 656,642 M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: //////////////////
(1) Quarterly or more frequently..................................................... 4544 36,008 M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly.................. 4545 425 M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually............ 4551 0 M.2.b.(3)
(4) Less frequently than every five years............................................ 4552 540 M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b (1)
through 2.b (4))................................................................. 4553 36,973 M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a. (5) and 2.b. (5)) (must equal
total debt securities from Schedule RC-B, sum of items 1 through 5, columns A and D,
minus nonaccrual debt securities included in Schedule RC-N, item 9, column C)......... 0393 693,615 M.2.c.
3.-5. Not applicable //////////////////
6. Floating rate debt securities with a remaining maturity of one year or less(2), (4) //////////////////
(INCLUDED IN MEMORANDUM ITEMS 2.B.(1) THROUGH 2.B.(4) ABOVE).............................. 5519 0 M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale //////////////////
or trading securities during the calendar year-to-date (report the amortized cost at //////////////////
date of sale or transfer)................................................................. 1778 0 M.7.
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale //////////////////
accounts in Schedule RC-B, item 4.b): //////////////////
a. Amortized cost........................................................................ 8780 0 M.8.a
b. Fair value............................................................................ 8781 0 M.8.b
9. Structured notes (included in the held-to-maturity and available-for-sale accounts in //////////////////
Schedule RC-B, items 2, 3, and 5): //////////////////
a. Amortized cost......................................................................... 8782 0 M.9.a.
b. Fair value............................................................................. 8783 0 M.9.b.
------------------
</TABLE>
- -------------------
(2) Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(4) Memorandum items 2 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
15
<PAGE>
<TABLE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RC-6
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
-----
SCHEDULE RC-C--LOANS AND LEASE FINANCING RECEIVABLES
PART I. LOANS AND LEASES
Do not deduct the allowance for loan and lease losses from amounts
reported in this schedule. Report total loans and leases, net of unearned
income. Exclude assets held for trading and commercial paper.
----
C415 < -
Memoranda ---------------------------------------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
------------------- ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- --------------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C> <C>
1. Loans secured by real estate......................................... 1410 1,295,718 ////////////////// 1.
a. Construction and land development................................ ///////////////// 1415 126,747 1.a
b. Secured by farmland (including farm residential and other ///////////////// /////////////////
improvements).................................................... ///////////////// 1420 5,888 1.b
c. Secured by 1-4 family residential properties: ///////////////// /////////////////
(1) Revolving, open-end loans secured by 1-4 family residential ///////////////// /////////////////
properties and extended under lines of credit................ ///////////////// 1797 423,504 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: ///////////////// /////////////////
(a) Secured by first liens................................... ///////////////// 5367 196,832 1.c.(2) (a)
(b) Secured by junior liens.................................. ///////////////// 5368 193,722 1.c.(2) (b)
d. Secured by multifamily (5 or more) residential properties........ ///////////////// 1460 24,174 1.d.
e. Secured by nonfarm nonresidential properties..................... ///////////////// 1480 324,851 1.e
2. Loans to depository institutions: ///////////////// /////////////////
a. To commerical banks in the U.S. ................................. ///////////////// 1505 8,355 2.a.
(1) To U.S. branches and agencies of foreign banks............... 1506 0 ///////////////// 2.a.(1)
(2) To other commerical banks in the U.S. ....................... 1507 8,355 ///////////////// 2.a.(2)
b. To other depository institutions in the U.S. .................... 1517 0 1517 0 2.b.
c. To banks in foreign countries.................................... ///////////////// 1510 0 2.c.
(1) To foreign branches of other U.S. banks...................... 1513 0 ///////////////// 2.c.(1)
(2) To other banks in foregin countries.......................... 1516 0 ///////////////// 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers.. 1590 11,577 1590 11,577 3.
4. Commercial and industrial loans: ///////////////// /////////////////
a. To U.S. addressees (domicile).................................... 1763 1,036,376 1763 1,036,376 4.a
b. To non-U.S. addressees (domicile)................................ 1764 0 1764 0 4.b.
5. Acceptance of other banks: ///////////////// /////////////////
a. Of U.S. banks.................................................... 1756 4,375 1756 4,375 5.a
b. Of foreign banks................................................. 1757 0 1757 0 5.b.
6. Loans to individuals for household, family, and other personal ///////////////// /////////////////
expenditures (i.e., consumer loans) (includes purchased paper)....... ///////////////// 1975 4,791,530 6.
a. Credit cards and related plans (includes check credit and ///////////////// /////////////////
other revolving credit plans)..................................... 2008 3,878,283 ///////////////// 6.a.
b. Other (includes single payment, installment, and all student ///////////////// /////////////////
loans)............................................................ 2011 913,247 ///////////////// 6.b.
7. Loans to foreign governments and official institutions (including ///////////////// /////////////////
foreign central banks)............................................... 2081 0 2081 0 7.
8. Obligations (other than securities and leases) of states and ///////////////// /////////////////
political subdivisions in the U.S. (includes nonrated industrial ///////////////// /////////////////
development obligations)............................................. 2107 11,178 2107 11,178 8.
9. Other loans.......................................................... 1563 134,704 ///////////////// 9.
a. Loans for purchasing or carrying securities (secured and ///////////////// /////////////////
unsecured)....................................................... ///////////////// 1545 6,943 9.a.
b. All other loans (exclude consumer loans)......................... ///////////////// 1564 127,761 9.b.
10. Lease financing receivables (net of unearned income)................. ///////////////// 2165 1,786,944 10.
a. Of U.S. addressees (domicile).................................... 2182 1,786,944 ///////////////// 10.a.
b. Of non-U.S. addressees (domicile)................................ 2183 0 ///////////////// 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above...... 2123 237,596 2123 237,596 11.
12. Total loans and leases, net of unearned income (sum of items 1 ///////////////// /////////////////
through 10 minus item 11) (total of column A must equal ///////////////// /////////////////
Schedule RC, item 4.a)............................................... 2122 8,843,161 2122 8,843,161 12.
--------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RC-7
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
Schedule RC-C--Continued
Part I. Continued
-------------------------------------
(Column A) | (Column B) |
Consolidated | Domestic |
Bank | Offices |
Memoranda -------------------------------------
Dollar Amounts in Thousands |RCFD Bil Mil Thou|
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Not applicable //////////////////
2. Leans and leases restructured and in compliance with modified terms //////////////////
(included in schedule RC-C, part I, above and not reported as past due //////////////////
or nonaccrural in Schedule RC-N, Memorandum item 1): //////////////////
a. Loans secured by real estate: //////////////////
(1) To U.S. addresses (domicile)............................................. 1687 0 M.2.a.(1)
(2) To non-U.S. addresses (domicile)......................................... 1689 0 M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans to //////////////////
individuals for household, family and other personal expenditures)........... 8691 0 M.2.b.
c. Commercial and industrial loans to and lease financing receivables //////////////////
of non-U.S. addresses (domicile) included in Memorandum item 2.b //////////////////
above........................................................................ 8692 0 M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those in //////////////////
nonaccrual status): //////////////////
a. Fixed rate loans and leases with a remaining maturity of: //////////////////
(1) Three months or less..................................................... 0348 191,932 M.2.a.(1)
(2) Over three months through 12 months.......................................0349 136,121 M.3.a.(2)
(3) Over one year thorough five years........................................ 0356 1,068,433 M.3.a.(3)
(4) Over five years.......................................................... 0357 1,647,050 M.3.a.(4)
(5) Total fixed rate loans and leases (sum of Memorandum //////////////////
items 3.a.(1) through 3.a.(4))........................................... 0358 3,043,536 M.3.a.(5)
b. Floating rate loans with a repricing frequency of : //////////////////
(1) quarterly or more frequently..............................................4554 5,042,340 M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly...........4555 844,166 M.3.b.(2)
(3) Every five years or more frequently, but less frequently than //////////////////
annually................................................................. 4561 86,921 M.3.b.(3)
(4) Less Frequently than every five years.................................... 4564 40,337 M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) //////////////////
through 3.b.(4))......................................................... 4567 6,013,764 M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and //////////////////
3.b.(5)) (Must equal the sum of total loans and leases, net. from //////////////////
Schedule RC-C, part I, item 12, plus unearned income from //////////////////
Schedule RC-C, part I, item 11, minus total nonaccrual loans and //////////////////
leases from Schedule RC-N, sum of items 1 through 8, column C)............... 1479 9,057,300 M.3.c.
d. Floating rate loans with a remaining maturity of one year or less //////////////////
(including in Memorandum items 3.b.(1) through 3.b.(4) above)................ 2246 1,902,434 M.3.d.
4. Loans to finance commercial real estate, construction, and land //////////////////
development activities (not secured by real estate) included in //////////////////
Schedule RC-C, part I. items 4 and 9, column A, page RC-6(2)................... 2746 59,171 M.4
5. Loans and leases held for sale (included in Schedule RC-C, part I, //////////////////
above).......................................................................... 5369 2,000,000 M.5
6. Adjustable rate closed-end loans secured by first liens on 1-4 family //////////////////
------------------
residential properties (included in Schedule RC-C, part I item 1.c.(2)(a), ////////////////// RCON Bil Mil Thou|
------------------
column B, page RC-6)............................................................ ////////////////// 5370 78,404 | M.6
------------------ -----------------
- ------------
</TABLE>
(1) Memorandum item 3 is not applicable to savings banks that must complete
supplemental Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C,
part 1, item 1, column A.
17
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RC-8
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
Schedule RC-D--Trading Assets And Liabilities
Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in par/notional
amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e, columns A through D).
------
| C420 | < -
-------------------------
Dollar Amounts in Thousands |///////// Bil Mil Thou |
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
1. U.S. Treasury securities in domestic offices ............................................... RCON 3531 0 1.
2. U.S. Government agency obligations in domestic offices (exclude mortgage-backed securities). RCON 3532 0 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices...... RCON 3533 0 3.
4. Mortgage-backed securities (MBS) in domestic offices: ////////////////////////
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA .................... RCON 3534 0 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA ///////////////////////
(include CMOs, REMICS, and stripped MBS) ................................................ RCON 3535 0 4.b.
c. All other mortgage-backed securities .................................................... RCON 3536 0 4.c.
5. Other debt securities in domestic offices .................................................. RCON 3537 0 5.
6. Certificates of deposit in domestic offices ................................................ RCON 3538 0 6.
7. Commercial paper in domestic offices ....................................................... RCON 3539 0 7.
8. Bankers acceptances in domestic offices .................................................... RCON 3540 0 8.
9. Other trading assets in domestic offices ................................................... RCON 3541 0 9.
10. Trading assets in foreign offices .......................................................... RCFN 3542 0 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity ///////////////////////
contracts: ///////////////////////
a. In domestic offices ..................................................................... RCON 3543 0 11.a.
b. In foreign offices ..................................................................... RCFN 3543 0 11.b
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5)........... RCFD 3545 0 12.
-----------------------
|//////// Bil Mil Thou|
LIABILITIES -----------------------
13. Liability for short positions ............................................................. RCFD 3545 0 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity //////////////////////
contracts .................................................................................. RCFD 3547 0 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ..... RCFD 3548 0 15.
LIABILITIES -----------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RC-9
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
Schedule RC-E--Deposit Liabilities
Part I. Deposits In Domestic Offices
---------
| C425 | < -
-----------------------------------------------------------------------
| | Nontransaction |
| Transaction Accounts | Accounts |
----------------------------------------------------------------------|
| (Column A) | (Column B) | (Column C) |
| Total transaction | Memo: Total | Total |
| accounts (including | demand deposits | nontransaction |
| total demand | (included in | accounts |
| deposits) | column A) | (including MMDAs) |
---------------------------------------------------------------------
Dollar Amounts in Thousands |RCON Bil Mil Thou |RCON Bil Mil Thou|RCON Bil Mil Thou |
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Deposits of:
1. Individuals, partnerships, and corporations......... 2201 1,358,007 2240 1,283,912 2346 2,687,714 1.
2. U.S. Government .................................... 2202 17,099 2280 17,099 2520 0 2.
3. States and political subdivisions in the U.S. ...... 2203 48,822 2290 44,545 2530 30,003 3.
4. Commercial banks in the U.S. ....................... 2206 542,001 2310 543,001 2550 7,698 4.
5. Other depository institutions in the U.S. .......... 2207 9,374 2312 9,374 2349 0 5.
6. Banks in foreign countries ......................... 2213 284 2320 284 2336 0 6.
7. Foreign governments and official institutions ////////////////////// /////////////////// //////////////////////
(including foreign central banks)................... 2216 0 2300 0 2377 0 7.
8. Certified and official checks ...................... 2330 113,842 2330 113,842 ////////////////////// 8.
9. Total (sum of items 1 through 8) (sum of ////////////////////// /////////////////// //////////////////////
columns A and C must equal Schedule RC, ////////////////////// /////////////////// //////////////////////
item 13.a .......................................... 2215 2,090,429 2210 2,012,057 2385 2,735,415 9.
------------------------------------------------------------------------
</TABLE>
Memoranda
<TABLE>
<CAPTION>
--------------------
Dollar Amounts in Thousands | RCON Bil Mil Thou|
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Selected components of total deposits (i.e. sum of item 9, columns A and C): ////////////////////
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ....................... 6835 224,487 M.1.a.
b. Total brokered deposits ................................................................... 2365 2,213 M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): ////////////////////
(1) Issued in denominations of less than $100,000 ......................................... 2343 163 M.1.c.(1)
(2) Issued either in denominations of $100,000 or in denominations greater than ////////////////////
$100,000 and participated out by the broker in shares of $100,000 or less ............. 2344 3,050 M.1.c.(3)
d. Maturity data for brokered deposits: ////////////////////
(1) Brokered deposits issued in denominations of less than $100,000 with a remaining ////////////////////
maturity of one year or less (included in Memorandum item 1.c.(1) above) .............. A243 160 M.1.d.(1)
(2) Brokered deposits issued in denominations of $100,000 or more with a remaining ////////////////////
maturity of one year or less (included in Memorandum item 1.b above) .................. A244 0 M.1.d.(2)
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. ////////////////////
reported in item 3 above which are secured or collateralized as required under state law).. 5590 76,424 M.1.a.
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d ////////////////////
must equal item 9, column C above): ////////////////////
a. Savings deposits: ////////////////////
(1) Money market deposit accounts (MMDAs) ................................................. 6810 1,264,488 M.2.a.(1)
(2) Other savings deposits (excludes MMDAs) ............................................... 0352 444,549 M.2.a.(2)
b. Total time deposits of less than $100,000 ................................................. 6648 894,723 M.2.b.
c. Total time deposits of $100,000 or more ................................................... 2604 121,355 M.2.c.
3. All NOW accounts (included in column A above) ................................................ 2398 78,372 M.3.
--------------------
4. Not applicable
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97 ST-BK: 39-1580 FFIEC 031
Address: 100 EAST BROAD STREET Page RC-10
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
Schedule RC-E--Continued
Part I. Continued
Memoranda (continued)
---------------------
Dollar Amounts in Thousands | RCON Bil Mil Thou |
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5. Maturity and repricing data for time deposits of less than $100,000 (sum of ////////////////////
Memorandum items 5.a.(1) through 5.b.(3) must equal Memorandum item 2.b above):(1) ////////////////////
a. Fixed rate time deposits of less than $100,000 with a remaining maturity of: ////////////////////
(1) Three months or less ................................................................ A225 169,516 M.5.a.(1)
(2) Over three months through 12 months ................................................. A226 245.462 M.5.a.(2)
(3) Over one year ....................................................................... A227 463,745 M.5.a.(3)
b. Floating rate time deposits of less than $100,000 with a repricing frequency of: ////////////////////
(1) Quarterly or more frequently ........................................................ A228 0 M.5.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ...................... A229 0 M.5.b.(2)
(3) Less frequently than annually ....................................................... A230 0 M.5.b.(3)
c. Floating rate time deposits of less than $100,000 with a remaining maturity of ////////////////////
one year or less (included in Memorandum items 5.b.(1) through 5.b.(3) above)............ A230 0 M.5.c.
6. Maturity and repricing data for time deposits of $100,000 or more (i.e., time certificates ////////////////////
of deposit of $100,000 or more and open-account time deposits of $100,000 or more) ////////////////////
(sum of Memorandum items 6.a.(1) through 6.b.(4) must equal Memorandum ////////////////////
item 2.c above):(1) ////////////////////
a. Fixed rate time deposits of $100,000 or more with a remaining maturity of: ////////////////////
(1) Three months or less ................................................................ A232 62,722 M.6.a.(1)
(2) Over three months through 12 months ................................................. A233 30,645 M.6.a.(2)
(3) Over one year through five years .................................................... A234 14,386 M.6.a.(3)
(4) Over five years ..................................................................... A235 13,402 M.6.a.(4)
b. Floating rate time deposits of $100,000 or more with a remaining maturity of: ////////////////////
(1) Quarterly or more frequently ........................................................ A236 0 M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ..................... A237 0 M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually .............. A238 0 M.6.b.(3)
(4) Less frequently than every five years ............................................... A239 0 M.6.b.(4)
c. Floating rate time deposits of $100,000 or more with a remaining maturity of ////////////////////
one year or less (included in Memorandum items 6.b.(1) through 6.b.(4) above)............ A240 0 M.6.c.
--------------------
- ------------------
(1) Memorandum items 5 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J.
</TABLE>
20
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 East Broad Street ST-BK: 39-1580 FFIEC 031
City, State Zip: Columbus, OH 43271-1066 Page RC-11
FDIC Certificate No.: 06559
Schedule RC-E--Continued
Part II. Deposits in Foreign Offices (including Edge and Agreement subsidiaries
and IBFs)
<TABLE>
<CAPTION>
-----------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deposits of: /////////////////
1. Individuals, partnerships, and corporations. . . . . . . . . . . . . . . . . . . . . . . . . 2621 637,383 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks) . . . . . . . . . . . . . . . 2623 0 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs). 2625 0 3.
4. Foreign governments and official institutions (including foreign central banks). . . . . . . 2650 0 4.
5. Certified and official checks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2330 0 5.
6. All other deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2668 0 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) . . . . . . . . . . . . 2200 627,383 7.
-------------------
<CAPTION>
Memorandum
-----------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Time deposits with a remaining maturity of one year or less (included in Part II, item 7 above) A245 623,096 M.1.
-------------------
</TABLE>
Schedule RC-F--Other Assets
<TABLE>
<CAPTION>
C430 < -
-------------------
Dollar Amounts in Thousands ////// Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Income earned, not collected on loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2164 40.486 1.
2. Net deferred tax assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2145 0 2.
3. Interest-only stripe receivable (not in the form of a security)(2) on: . . . . . . . . . . . . ///////////////////
a. Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD A519 0 3.a.
b. Other financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD A520 17,372 3.b.
4. Other (itemize and describe amounts that exceed 25% of this item). . . . . . . . . . . . . . . RCFD 2168 1,353,904 4.
a. TEXT 3549 Accounts Receivable RCFD 3549 734,613 /////////////////// 4.a.
b. TEXT 3550 RCFD 3550 /////////////////// 4.b.
c. TEXT 3551 RCFD 3551 /////////////////// 4.c.
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) . . . . . . . . . . . . . . RCFD 2160 1,433,661 5.
-------------------
<CAPTION>
-------------------
Memorandum Dollar Amounts in Thousands ////// Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes . . . . . . . . . . . . . . . . RCFD 5610 0 M.1.
-------------------
</TABLE>
Schedule RC-G--Other Liabilities
<TABLE>
<CAPTION>
C435 < -
-------------------
Dollar Amounts in Thousands ////// Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices(3) . . . . . . . . . . . . . . RCON 3645 22,171 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable). . . . . . . . . RCFD 3646 511,440 1.b.
2. Net deferred tax liabilities(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3049 73,824 2.
3. Minority interest in consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3000 120 3.
4. Other (itemize and describe amounts that exceed 25% of this item). . . . . . . . . . . . . . . RCFD 2938 38,012 4.
a. TEXT 3552 Deferred Fees on Swaps RCFD 3552 18,007 /////////////////// 4.a.
b. TEXT 3553 Failed Settlement RCFD 3553 16,243 /////////////////// 4.b.
c. TEXT 3554 RCFD 3554 /////////////////// 4.c.
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) . . . . . . . . . . . . . . RCFD 2930 645,587 5.
-------------------
</TABLE>
- --------------------
(1) See discussion of deferred income taxes in Glossary entry on "income
taxes."
(2) Report interest-only strips receivable in the form of a security as
available-for-sale securities in Schedule RC, item 2.b. or as trading
assets in Schedule RC, item 5, as appropriate.
(3) For savings banks, include "dividends" accrued and unpaid on deposits.
21
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580 FFIEC 031
City, State Zip: COLUMBUS, OH 43271-1066 Page RC-12
FDIC Certificate No.: 06559
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices
<TABLE>
<CAPTION>
C440 < -
-------------------
Domestic Offices
Dollar Amounts in Thousands RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . 2155 5,273 1.
2. Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . 2920 5,273 1.
3. Federal funds sold and securities purchased under agreements to resell . . . . . . . . . . . . 1350 611,369 3.
4. Federal funds purchased and securities sold under agreements to repurchase . . . . . . . . . . 2800 3,278,659 4.
5. Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3190 1,656,667 5.
EITHER ///////////////////
6. Net due from own foreign offices. Edge and Agreement subsidiaries, and IBFs. . . . . . . . . . 2163 N/A 6.
OR ///////////////////
7. Net due to own foreign offices. Edge and Agreement subsidiaries, and IBFs. . . . . . . . . . . 2941 625,067 7.
8. Total assets (excludes net due from foreign offices. Edge and Agreement subsidiaries, ///////////////////
and IBFs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2192 12,400,169 8.
9. Total liabilities (excludes net due to foreign offices. Edge and Agreement subsidiaries, ///////////////////
and IBFs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3129 10,824,669 9.
-------------------
<CAPTION>
-------------------
Items 10-17 include held -to-maturity and available-for-sale securities in domestic offices. RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10. Treasury securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1779 444,589 10.
11. U.S. Government agency obligations (exclude mortgage-backed securities). . . . . . . . . . . . 1785 47,295 11.
12. Securities issued by states and political subdivisions in the U.S. . . . . . . . . . . . . . . 1786 31,078 12.
13. Mortgage-backed securities (MBS): ///////////////////
a. Pass-through securities: ///////////////////
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA . . . . . . . . . . . . . . . . . . . . . 1787 146,392 13.a.(1)
(2) Other pass-through securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1869 5,912 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS) ///////////////////
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA . . . . . . . . . . . . . . . . . . . . . 1877 15,187 13.b.(1)
(2) All other mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . 2253 0 13.b.(2)
14. Other domestic debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3159 412 14.
15. Foreign debt securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3160 0 15.
16. Equity securities: ///////////////////
a. Investments in mutual funds and other equity securities with readily ///////////////////
determinable fair values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A513 0 16.a.
b. All other equity securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3169 6,393 16.b.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16). . . . . 3170 697,258 17.
-------------------
<CAPTION>
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
-------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EITHER ///////////////////
1. Net due from the IBF of the domestic offices of the reporting bank . . . . . . . . . . . . . . 3051 N/A M.1.
OR ///////////////////
2. Net due to the IBF of the domestic offices of the reporting bank . . . . . . . . . . . . . . . 3059 N/A M.2.
-------------------
</TABLE>
22
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580 FFIEC 031
City, State Zip: COLUMBUS, OH 43271-1066 Page RC-13
FDIC Certificate No.: 06559
-----
SCHEDULE RC-I--SELECTED ASSETS AND LIABILITIES OF IBFS
To be completed only by banks with IBFs and other "foreign" offices.
<TABLE>
<CAPTION>
C445 < -
----
Dollar Amounts in Thousands RCFN Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) . . . . . . . 2133 N/A 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, ////////////////////
part I. item 12, column A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2076 N/A 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, ////////////////////
item 4, column A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2077 N/A 3.
4. Total IBF liabilities (component of Schedule RC, item 21) . . . . . . . . . . . . . . . . . 2898 N/A 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of ////////////////////
Schedule RC-E, part II, items 2 and 3). . . . . . . . . . . . . . . . . . . . . . . . . . . 2379 N/A 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, ////////////////////
4, 5, and 6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2301 N/A 6.
</TABLE>
SCHEDULE RC-K--QUARTERLY AVERAGES (1)
<TABLE>
<CAPTION>
C455 < -
Dollar Amounts in Thousands ///////// Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS //////////////////////
1. Interest-bearing balances due from depository institutions . . . . . . . . . . . . . . . RCFD 3381 314 1.
2. U.S. Treasury securities and U.S. Government agency obligations(2) . . . . . . . . . . . RCFD 3382 618,971 2.
3. Securities issued by states and political subdivisions in the U.S.(2). . . . . . . . . . RCFD 3383 32,143 3.
4. a. Other debt securities(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3647 5,929 4.a.
b. Equity securities(3) (includes investments in mutual funds and //////////////////////
Federal Reserve stock) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3648 6,195 4.b.
5. Federal funds sold and securities purchased under agreements to resell . . . . . . . . . RCFD 3365 202,731 5.
6. Loans: //////////////////////
a. Loans in domestic offices: //////////////////////
(1) Total loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCON 3360 7,289,393 6.a.(1)
(2) Loans secured by real estate . . . . . . . . . . . . . . . . . . . . . . . . . . RCON 3385 1,416,391 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers. . . . . . . RCON 3386 9,485 6.a.(3)
(4) Commercial and industrial loans. . . . . . . . . . . . . . . . . . . . . . . . . RCON 3387 917,623 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures. . . RCON 3388 4,854,121 6.a.(5)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs. . . . . . RCFN 3360 0 6.b.
7. Trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3401 0 7.
8. Lease financing receivables (net of unearned income) . . . . . . . . . . . . . . . . . . RCFD 3404 1,370,524 8.
9. Total assets(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3368 10,923,466 9.
LIABILITIES //////////////////////
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, //////////////////////
and telephone and preauthorized transfer accounts) (exclude demand deposits) . . . . . . RCON 3485 55,544 10.
11. Nontransaction accounts in domestic offices: //////////////////////
a. Money market deposit accounts (MMDAs). . . . . . . . . . . . . . . . . . . . . . . . RCON 3486 1,327,153 11.a.
b. Other savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCON 3487 946,026 11.b.
c. Time deposits of $100,000 or more. . . . . . . . . . . . . . . . . . . . . . . . . . RCON A510 225,739 11.c.
d. Time deposits of less than $100,000. . . . . . . . . . . . . . . . . . . . . . . . . RCON A529 906,585 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries,
and IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFN 3404 439,035 12.
13. Federal funds purchased and securities sold under agreements to repurchase . . . . . . . RCFD 3353 2,224,520 13.
14. Other borrowed money (includes mortgage indebtedness and obligations under capitalized //////////////////////
leases). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3355 1,701,470 14.
----------------------
</TABLE>
- --------------------
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter, or (2) an average of weekly figures (i.e.,
the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on
historical cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
23
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580 FFIEC 031
City, State Zip: COLUMBUS, OH 43271-1066 Page RC-14
FDIC Certificate No.: 06559
-----
SCHEDULE RC-L--OFF-BALANCE SHEET ITEMS
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume indicators
and not necessarily as measures of risk.
<TABLE>
<CAPTION>
C460 < -
----
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Unused commitments: /////////////////
a. Revolving, open-end lines secured by 1-4 family residential properties, /////////////////
e.g., home equity lines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3814 350,728 1.a.
b. Credit card lines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3815 18,303,963 1.b.
c. Commercial real estate, construction, and land development: /////////////////
(1) Commitments to fund loans secured by real estate . . . . . . . . . . . . . . . . 3816 68,168 1.c.(1)
(2) Commitments to fund loans not secured by real estate . . . . . . . . . . . . . . 6550 33,620 1.c.(2)
d. Securities underwriting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3817 0 1.d.
e. Other unused commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3818 1,914,967 1.e.
2. Financial standby letters of credit and foreign office guarantees. . . . . . . . . . . . 3819 501,334 2.
a. Amount of financial standby letters of credit conveyed /////////////////
------------------
to others RCFD 3820 160,567 ///////////////// 2.a.
------------------
3. Performance standby letters of credit and foreign office guarantees. . . . . . . . . . . 3821 111,257 3.
a. Amount of performance standby letters of credit conveyed /////////////////
------------------
to others RCFD 3822 39,600 ///////////////// 3.a.
------------------
4. Commercial and similar letters of credit . . . . . . . . . . . . . . . . . . . . . . . . 3411 68,338 4.
5. Participations in acceptances (as described in the instructions) conveyed /////////////////
to others by the reporting bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3428 0 5.
6. Participations in acceptances (as described in the instructions) acquired /////////////////
by the reporting (nonaccepting) bank . . . . . . . . . . . . . . . . . . . . . . . . . . 3429 0 6.
7. Securities borrowed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3432 0 7.
8. Securities lent (including customers' securities lent where the customer /////////////////
is indemnified against loss by the reporting bank) . . . . . . . . . . . . . . . . . . . 3433 0 8.
9. Financial assets transferred with recourse that have been treated as /////////////////
sold for Call Report purposes: /////////////////
a. First lien 1-to-4 family residential mortgage loans: /////////////////
(1) Outstanding principal balance of mortgages transferred as of the /////////////////
report date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A521 0 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the /////////////////
report date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A522 0 9.a.(2)
b. Other financial assets (excluding small business obligations /////////////////
reported in item 9.c): /////////////////
(1) Outstanding principal balance of assets transferred as of /////////////////
the report date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A523 0 9.b.(1)
(2) Amount of recourse exposure on these assets as of the report date. . . . . . . . A524 0 9.b.(2)
c. Small business obligations transferred with recourse under Section 208 /////////////////
of the Riegle Community Development and Regulatory Improvement Act of 1994: /////////////////
(1) Outstanding principal balance of small business obligations /////////////////
transferred as of the report date. . . . . . . . . . . . . . . . . . . . . . . . A249 0 9.c.(1)
(2) Amount of retained recourse on these obligations as of the report date . . . . . A250 0 9.c.(2)
10. Motional amount of credit derivatives: /////////////////
(a) Credit derivatives on which the reporting bank is the guarantor. . . . . . . . . . . A534 0 10.a.
(b) Credit derivatives on which the reporting bank is the beneficiary. . . . . . . . . . A535 0 10.b.
11. Spot foreign exchange contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8765 0 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet /////////////////
derivatives) (itemize and describe each component of this item over 25% /////////////////
of Schedule RC, item 28, "Total equity capital") . . . . . . . . . . . . . . . . . . . . 3430 0 12.
----------- ----------------- /////////////////
(a) TEXT 3555----------------------------------------------------------RCFD 3555 ///////////////// 12.a.
(b) TEXT 3556----------------------------------------------------------RCFD 3556 ///////////////// 12.b.
(c) TEXT 3557----------------------------------------------------------RCFD 3557 ///////////////// 12.c.
(d) TEXT 3558----------------------------------------------------------RCFD 3558 ///////////////// 12.d.
---------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580
City, State Zip: COLUMBUS, OH 43271-1066 FFIEC 031
FDIC Certificate No.: 06559 Page RC-15
Schedule RC-L--Continued
<TABLE>
<CAPTION>
------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and /////////////////
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") 5591 0 13.
/////////////////
---------- --------------------------------------
a. TEXT 5592 RCFD 5592 ///////////////// 13.a.
-------------------------------------------------------------------------------------------------------------
b. TEXT 5593 RCFD 5593 ///////////////// 13.b.
-------------------------------------------------------------------------------------------------------------
c. TEXT 5594 RCFD 5594 ///////////////// 13.c.
-------------------------------------------------------------------------------------------------------------
d. TEXT 5595 RCFD 5595 ///////////////// 13.d.
-------------------------------------------------------------------------------------------------------------
<CAPTION>
----------
C461 < -
-----------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
- --------------------------------------- Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives -----------------------------------------------------------------------------
Position Indicators Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou
- --------------------------------------- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
14. Gross amounts (e.g., notional ///////////////// ///////////////// ///////////////// /////////////////
amounts) (for each column, sum of ///////////////// ///////////////// ///////////////// /////////////////
items 14.a through 14.e must equal ///////////////// ///////////////// ///////////////// /////////////////
sum of items 15, 16.a, and 16.b): ///////////////// ///////////////// ///////////////// /////////////////
-----------------------------------------------------------------------------
a. Futures contracts.............. 0 0 0 0 14.a.
-----------------------------------------------------------------------------
RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696
-----------------------------------------------------------------------------
b. Forward contracts.............. 0 0 0 0 14.b.
-----------------------------------------------------------------------------
RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700
-----------------------------------------------------------------------------
c. Exchange-traded option contracts: ///////////////// ///////////////// ///////////////// /////////////////
-----------------------------------------------------------------------------
(1) Written options............ 0 0 0 0 14.c.(1)
-----------------------------------------------------------------------------
RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704
-----------------------------------------------------------------------------
(2) Purchased options.......... 0 0 0 0 14.c.(2)
-----------------------------------------------------------------------------
RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708
-----------------------------------------------------------------------------
d. Over-the-counter option contracts: ///////////////// ///////////////// ///////////////// /////////////////
-----------------------------------------------------------------------------
(1) Written options............ 551,869 0 0 0 14.d.(1)
-----------------------------------------------------------------------------
RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712
-----------------------------------------------------------------------------
(2) Purchased options.......... 726,849 0 0 0 14.d.(2)
-----------------------------------------------------------------------------
RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716
-----------------------------------------------------------------------------
e. Swaps.......................... 16,394,681 0 0 0 14.e.
-----------------------------------------------------------------------------
RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720
-----------------------------------------------------------------------------
15. Total gross notional amount of ///////////////// ///////////////// ///////////////// /////////////////
-----------------------------------------------------------------------------
derivative contracts held for ///////////////// ///////////////// ///////////////// /////////////////
-----------------------------------------------------------------------------
trading........................... 0 0 0 0 15.
-----------------------------------------------------------------------------
RCFD A126 RCFD A127 RCFD 8723 RCFD 8724
-----------------------------------------------------------------------------
16. Total gross notional amount of ///////////////// ///////////////// ///////////////// /////////////////
derivative contracts held for ///////////////// ///////////////// ///////////////// /////////////////
purposes other than trading: ///////////////// ///////////////// ///////////////// /////////////////
-----------------------------------------------------------------------------
a. Contracts marked to market..... 134,217 0 0 0 16.a.
-----------------------------------------------------------------------------
RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728
-----------------------------------------------------------------------------
b. Contracts not marked to market. 17,539,202 0 0 0 16.b.
-----------------------------------------------------------------------------
RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
-----------------------------------------------------------------------------
</TABLE>
25
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580
City, State Zip: COLUMBUS, OH 43271-1066 FFIEC 031
FDIC Certificate No.: 06559 Page RC-16
Schedule RC-L--Continued
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
- --------------------------------------- Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives ----------------- ----------------- ----------------- -----------------
Position Indicators RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- --------------------------------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
17. Gross fair values of ///////////////// ///////////////// ///////////////// /////////////////
derivative contracts: ///////////////// ///////////////// ///////////////// /////////////////
a. Contracts held for ///////////////// ///////////////// ///////////////// /////////////////
trading: ///////////////// ///////////////// ///////////////// /////////////////
(1) Gross positive ///////////////// ///////////////// ///////////////// /////////////////
fair value................. 8733 0 8734 0 8735 0 8736 0 17.a.(1)
(2) Gross negative ///////////////// ///////////////// ///////////////// /////////////////
fair value................. 8737 0 8738 0 8739 0 8740 0 17.a.(2)
b. Contracts held for ///////////////// ///////////////// ///////////////// /////////////////
purposes other than ///////////////// ///////////////// ///////////////// /////////////////
trading that are marked ///////////////// ///////////////// ///////////////// /////////////////
to market: ///////////////// ///////////////// ///////////////// /////////////////
(1) Gross positive ///////////////// ///////////////// ///////////////// /////////////////
fair value................. 8741 692 8742 0 8743 0 8744 0 17.b.(1)
(2) Gross negative ///////////////// ///////////////// ///////////////// /////////////////
fair value................. 8745 686 8746 0 8747 0 8748 0 17.b.(2)
c. Contracts held for ///////////////// ///////////////// ///////////////// /////////////////
purposes other than ///////////////// ///////////////// ///////////////// /////////////////
trading that are not ///////////////// ///////////////// ///////////////// /////////////////
marked to market: ///////////////// ///////////////// ///////////////// /////////////////
(1) Gross positive ///////////////// ///////////////// ///////////////// /////////////////
fair value................. 8749 66,222 8750 0 8751 0 8752 0 17.c.(1)
(2) Gross negative ///////////////// ///////////////// ///////////////// /////////////////
fair value................. 8753 83,050 8754 0 8755 0 8756 0 17.c.(2)
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Memoranda Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.-2. Not applicable /////////////////
3. Unused commitments with an original maturity exceeding one year that are reported in /////////////////
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments /////////////////
that are fee paid or otherwise legally binding)................................................ 3833 1,390,412 M.3.
a. Participations in commitments with an original maturity /////////////////
exceeding one year conveyed to others............................. RCFD 3834 214,099 ///////////////// M.3.a.
4. To be completed only by banks with $1 billion or more in total assets: /////////////////
Standby letters of credit and foreign office guarantees (both financial and performance) issued /////////////////
to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above.............. 3377 932 M.4.
5. Installment loans to individuals for household, family, and other personal expenditures that /////////////////
have been securitized and sold without recourse (with servicing retained), amounts outstanding /////////////////
by type of loan: /////////////////
a. Loans to purchase private passenger automobiles (to be completed for the /////////////////
September report only)...................................................................... 2741 N/A M.5.a.
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY).................................. 2742 3,352,854 M.5.b.
c. All other consumer installment credit (including mobile home loans) (to be completed for the /////////////////
September report only)...................................................................... 2743 N/A M.5.c.
-----------------
</TABLE>
26
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580
City, State Zip: COLUMBUS, OH 43271-1066 FFIEC 031
FDIC Certificate No.: 06559 Page RC-17
Schedule RC-M--Memoranda
<TABLE>
<CAPTION>
C465 < -
-----------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal /////////////////
shareholders, and their related interests as of the report date: /////////////////
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal /////////////////
shareholders, and their related interests................................................... 6164 250,248 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of /////////////////
all extensions of credit by the reporting bank (including extensions of credit to /////////////////
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number /////////////////
of total capital as defined for this purpose in agency regulations. RCFD 6155 12 ///////////////// 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches /////////////////
and agencies of foreign banks (1) (included in Schedule RC, item 3)............................ 3405 0 2.
3. Not applicable. /////////////////
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others /////////////////
(include both retained servicing and purchased servicing): /////////////////
a. Mortgages serviced under a GNMA contract.................................................... 5500 0 4.a.
b. Mortgages serviced under a FHLMC contract: /////////////////
(1) Serviced with recourse to servicer...................................................... 5501 0 4.b.(2)
(2) Serviced without recourse to servicer................................................... 5502 0 4.b.(2)
c. Mortgages serviced under a FNMA contract: /////////////////
(1) Serviced under a regular option contract................................................ 5503 0 4.c.(1)
(2) Serviced under a special option contract................................................ 5504 0 4.c.(2)
d. Mortgages serviced under other servicing contracts.......................................... 5505 0 4.d.
5. To be completed only by banks with $1 billion or more in total assets: /////////////////
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must /////////////////
equal Schedule RC, item 9): /////////////////
a. U.S. addressees (domicile).................................................................. 2103 5,373 5.a.
b. Non-U.S. addressees (domicile).............................................................. 2104 0 5.b.
6. Intangible assets: /////////////////
a. Mortgage servicing assets................................................................... 3164 0 6.a.
b. Other identifiable intangible assets: /////////////////
(1) Purchased credit card relationships..................................................... 5506 19,974 6.b.(1)
(2) All other identifiable intangible assets................................................ 5507 2,401 6.b.(2)
c. Goodwill.................................................................................... 3163 11,411 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10)...................... 2143 33,786 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or /////////////////
are otherwise qualifying for regulatory capital purposes.................................... 6442 0 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to /////////////////
redeem the debt................................................................................ 3295 0 7.
-----------------
</TABLE>
- -------------------
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
27
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580
City, State Zip: COLUMBUS, OH 43271-1066 FFIEC 031
FDIC Certificate No.: 06559 Page RC-18
Schedule RC-M--Continued
<TABLE>
<CAPTION>
-----------------
Dollar Amounts in Thousands Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
8. a. Other real estate owned: /////////////////
(1) Direct and indirect investments in real estate ventures................................. RCFD 5372 0 8.a.(1)
(2) All other real estate owned: /////////////////
(a) Construction and land development in domestic offices............................... RCON 5508 0 8.a.(2)(a)
(b) Farmland in domestic offices........................................................ RCON 5509 0 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices............................... RCON 5510 505 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices.................. RCON 5511 0 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices............................... RCON 5512 4,371 8.a.(2)(e)
(f) In foreign offices.................................................................. RCFN 5513 0 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7)............... RCFD 2150 4,876 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: /////////////////
(1) Direct and indirect investments in real estate ventures................................. RCFD 5374 0 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies........... RCFD 5375 2,586 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8)............... RCFD 2130 2,586 8.b.(3)
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, /////////////////
item 23, "Perpetual preferred stock and related surplus"....................................... RCFD 3778 0 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include /////////////////
proprietary, private label, and third party products): /////////////////
a. Money market funds.......................................................................... RCON 6441 19,250 10.a.
b. Equity securities funds..................................................................... RCON 8427 15,486 10.b.
c. Debt securities funds....................................................................... RCON 8428 8,828 10.c.
d. Other mutual funds.......................................................................... RCON 8429 0 10.d.
e. Annuities................................................................................... RCON 8430 12,441 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 10.a through /////////////////
10.e above)................................................................................. RCON 8784 31,947 10.f.
11. Net unamortized realized deferred gains (losses) on off-balance sheet derivative /////////////////
contracts included in assets and liabilities reported in Schedule RC........................... RCFD A525 12 11.
12. Amount of assets netted against nondeposit liabilities and deposits in foreign offices /////////////////
(other than insured branches in Puerto Rico and U.S. territories and possessions) on /////////////////
the balance sheet (Schedule RC) in accordance with generally accepted accounting /////////////////
principals(1).................................................................................. RCFD A526 0 12.
-----------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
-----------------
Memorandum Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Reciprocal holdings of banking organizations' capital instruments /////////////////
(to be completed for the December report only)................................................. 3836 N/A M.1.
-----------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------
(1) Exclude netted on-balance sheet amounts associated with off-balance sheet
derivative contracts, deferred tax assets netted against deferred tax
liabilities, and assets netted in accounting for pensions.
28
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580 FFIEC 031
City, State Zip: COLUMBUS, OH 43271-1066 Page RC-19
FDIC Certificate No.: 06559
Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets
The FFIEC regards the information reported in all of Memorandum item 1, in items
1 through 10, column A, and in Memorandum items 2 through 4, column A, as
confidential.
<TABLE>
<CAPTION> ---------
C470 < -
---------------------------------------------------------
(Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
---------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Loans secured by real estate: ///////////////// ///////////////// /////////////////
a. To U.S. addressees (domicile). . . . . . . . . . . . . . 1245 1246 9,015 1247 13,223 1.a.
b. To non-U.S. addressees (domicile). . . . . . . . . . . . 1248 1249 0 1250 0 1.b.
2. Loans to depository institutions and acceptances ///////////////// ///////////////// /////////////////
of other banks: ///////////////// ///////////////// /////////////////
a. To U.S. banks and other U.S. depository ///////////////// ///////////////// /////////////////
institutions . . . . . . . . . . . . . . . . . . . . . . 5377 5378 0 5379 0 2.a.
b. To foreign banks . . . . . . . . . . . . . . . . . . . . 5380 5381 0 5382 0 2.b.
3. Loans to finance agricultural production and ///////////////// ///////////////// /////////////////
other loans to farmers . . . . . . . . . . . . . . . . . . . 1594 1597 0 1583 41 3.
4. Commercial and industrial loans: ///////////////// ///////////////// /////////////////
a. To U.S. addressees (domicile). . . . . . . . . . . . . . 1251 1252 1,768 1253 4,648 4.a.
b. To non-U.S. addressees (domicile). . . . . . . . . . . . 1254 1255 0 1256 0 4.b.
5. Loans to individuals for household, family, and ///////////////// ///////////////// /////////////////
other personal expenditures: ///////////////// ///////////////// /////////////////
a. Credit cards and related plans . . . . . . . . . . . . . 5383 5384 115,986 5385 0 5.a.
b. Other (includes single payment, installment, ///////////////// ///////////////// /////////////////
and all student loans) . . . . . . . . . . . . . . . . . 5386 5387 10,263 5388 4,115 5.b.
6. Loans to foreign governments and official ///////////////// ///////////////// /////////////////
institutions . . . . . . . . . . . . . . . . . . . . . . . . 5389 5390 0 5391 0 6.
7. All other loans. . . . . . . . . . . . . . . . . . . . . . . 5459 5460 0 5461 61 7.
8. Lease financing receivables: ///////////////// ///////////////// /////////////////
a. Of U.S. addressees (domicile). . . . . . . . . . . . . . 1257 1258 1,430 1259 1,349 8.a.
b. Of non-U.S. addressees (domicile). . . . . . . . . . . . 1271 1272 0 1791 0 8.b.
9. Debt securities and other assets (exclude other ///////////////// ///////////////// /////////////////
real estate owned and other repossessed assets). . . . . . . 3505 3506 0 3507 0 9.
---------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed
portions of past due and nonaccrual loans and leases. Report in item 10 below
certain guaranteed loans and leases that have already been included in the
amounts reported in items 1 through 8.
<TABLE>
<CAPTION>
---------------------------------------------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
---------------------------------------------------------
<S> <C> <C> <C> <C>
10. Loans and leases reported in items 1
through 8 above which are wholly or partially ///////////////// ///////////////// /////////////////
guaranteed by the U.S. Government. . . . . . . . . . . . . . 5612 5613 6,216 5614 0 10.
a. Guaranteed portion of loans and leases ///////////////// ///////////////// /////////////////
included in item 10 above. . . . . . . . . . . . . . . . 5615 5616 6,216 5617 0 10.a
---------------------------------------------------------
</TABLE>
29
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580 FFIEC 031
City, State Zip: COLUMBUS, OH 43271-1066 Page RC-20
FDIC Certificate No.: 06559
Schedule RC-N--Continued
<TABLE>
<CAPTION> --------
C473 < -
---------------------------------------------------------
(Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
Memoranda ---------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Restructured loans and leases included in ///////////////// ///////////////// /////////////////
Schedule RC-N, items 1 through 8, above (and not ///////////////// ///////////////// /////////////////
reported in Schedule RC-C, part I, Memorandum ///////////////// ///////////////// /////////////////
item 2). . . . . . . . . . . . . . . . . . . . . . . . . 1658 1659 1661 M.1.
2. Loans to finance commercial real estate, ///////////////// ///////////////// /////////////////
construction, and land development activities ///////////////// ///////////////// /////////////////
(not secured by real estate) included in ///////////////// ///////////////// /////////////////
Schedule RC-N, items 4 and 7, above. . . . . . . . . . . 6558 6559 24 6560 0 M.2.
---------------------------------------------------------
3. Loans secured by real estate in domestic offices RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
(included in Schedule RC-N, item 1, above): ///////////////// ///////////////// /////////////////
a. Construction and land development. . . . . . . . . . 2759 2769 147 3492 2,741 M.3.a.
b. Secured by farmland. . . . . . . . . . . . . . . . . 3493 3494 0 3495 0 M.3.b.
c. Secured by 1-4 family residential properties: ///////////////// ///////////////// /////////////////
(1) Revolving, open-end loans secured by ///////////////// ///////////////// /////////////////
1-4 family residential properties and ///////////////// ///////////////// /////////////////
extended under lines of credit . . . . . . . . . 5398 5399 223 5400 655 M.3.a.(2)
(2) All other loans secured by 1-4 family ///////////////// ///////////////// /////////////////
residential properties . . . . . . . . . . . . . 5401 5402 1,246 5403 6,736 M.3.c.(2)
d. Secured by multifamily (5 or more) residential ///////////////// ///////////////// /////////////////
properties . . . . . . . . . . . . . . . . . . . . . 3499 3500 65 3501 0 M.3.d.
e. Secured by nonfarm nonresidential properties . . . . 3502 3503 3,335 3504 3,091 M.3.e.
---------------------------------------------------------
<CAPTION>
-------------------------------------
(Column A) (Column B)
Past due 30 Past due 90
through 89 days days or more
-------------------------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou
-------------------------------------
<S> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other ///////////////// /////////////////
commodity and equity contracts: ///////////////// /////////////////
a. Book value of amounts carried as assets. . . . . . . 3522 3528 0 M.4.a.
b. Replacement cost of contracts with a ///////////////// /////////////////
positive replacement cost. . . . . . . . . . . . . . 3529 3530 0 M.4.b.
-------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Person to whom questions about the Reports of Condition C477 < -
and Income should be directed: ------
John J. Dible, Sr. Regulatory Analyst (614) 248-8592
- -------------------------------------- -----------------------------------
Name and Title (TEXT 8901) Area code/phone number/extension
(TEXT 8902)
30
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580 FFIEC 031
City, State Zip: COLUMBUS, OH 43271-1066 Page RC-21
FDIC Certificate No.: 06559
Schedule RC-O--Other Data for Deposit Insurance and FICO Assessments
<TABLE>
<CAPTION> -------
C473 < -
-----------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Unposted debits (see instructions): /////////////////
a. Actual amount of all unposted debits . . . . . . . . . . . . . . . . . . . . . . . . . . 0030 N/A 1.a.
OR /////////////////
b. Separate amount of unposted debits: /////////////////
(1) Actual amount of unposted debits to demand deposits. . . . . . . . . . . . . . . . . 0031 0 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1) . . . . . . . . . . 0032 0 1.b.(2)
2. Unposted credits (see instructions): //////////////////
a. Actual amount of all unposted credits. . . . . . . . . . . . . . . . . . . . . . . . . . 3510 N/A 2.a.
OR //////////////////
b. Separate amount of unposted credits: //////////////////
(1) Actual amount of unposted credits to demand deposits . . . . . . . . . . . . . . . . 3512 0 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1). . . . . . . . . . 3514 0 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total //////////////////
deposits in domestic offices). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3520 0 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in Puerto //////////////////
Rico and U.S. territories and possessions (not included in total deposits): //////////////////
a. Demand deposits of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . 2211 32,349 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries . . . . . . . . . . . . . . . 2351 9,755 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries . . . . . . . . . . 5514 0 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: //////////////////
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) . . . . . . . . 2229 0 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II). . 2383 0 5.b.
c. Interest accrued and unpaid on deposits in insured branches //////////////////
(included in Schedule RC-G, item 1.b). . . . . . . . . . . . . . . . . . . . . . . . . . 5515 0 5.c.
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on //////////////////
behalf of its respondent depository institutions that are also reflected as deposit //////////////////
liabilities of the reporting bank: //////////////////
a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, item 4 or 5, //////////////////
column B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2314 0 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, //////////////////
item 4 and 5, column A or C, but not column B) . . . . . . . . . . . . . . . . . . . . . 2315 0 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1),(2) //////////////////
a. Unamortized premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5516 0 7.a.
b. Unamortized discounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5517 0 7.b.
8. To be completed by banks with "Oakar deposits." //////////////////
a. Deposits purchased or acquired from other FDIC-insured institutions during the quarter //////////////////
(exclude deposits purchased or acquired from foreign offices other than insured branches //////////////////
in Puerto Rico and U.S. territories and possessions): //////////////////
(1) Total deposits purchased or acquired from other FDIC-insured institutions during //////////////////
the quarter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A531 N/A 8.a.(1)
(2) Amount of purchased or acquired deposits reported in item 8.a.(1) above attributable //////////////////
to a secondary fund (i.e., BIF members report deposits attributable to SAIF; SAIF //////////////////
members report deposits attributable to BIF) . . . . . . . . . . . . . . . . . . . . A532 N/A 8.a.(2)
b. Total deposits sold or transferred to other FIDC-insured institutions during the quarter //////////////////
(exclude sales or transfers by the reporting bank of deposits in foreign offices other than //////////////////
insured branches in Puerto Rico and U.S. territories and possessions). . . . . . . . . . A533 N/A 8.b.
------------------
</TABLE>
- --------------------
(1) For FDIC insurance and FICO assessment purposes, "time and savings
deposits" consists of nontransaction accounts and all transaction accounts
other than demand deposits.
(2) Exclude core deposit intangibles.
31
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580 FFIEC 031
City, State Zip: COLUMBUS, OH 43271-1066 Page RC-22
FDIC Certificate No.: 06559
Schedule RC-O--Continued
<TABLE>
<CAPTION>
-----------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
9. Deposits in lifeline accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5596 //////////// 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total /////////////////
deposits in domestic offices). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8432 0 10.
11. Adjustment to demand deposits in domestic offices and in insured branches in Puerto Rico /////////////////
and U.S. territories and possessions reported in Schedule RC-E for certain reciprocal /////////////////
demand balances: /////////////////
a. Amount by which demand deposits would be reduced if the reporting bank's reciprocal /////////////////
demand balances with the domestic offices of U.S. banks and savings associations /////////////////
and insured branches in Puerto Rico and U.S. territories and possessions that were /////////////////
reported on a gross basis in Schedule RC-E had been reported on a net basis. . . . . . . 8785 0 11.a.
b. Amount by which demand deposits would be increased if the reporting bank's reciprocal /////////////////
demand balances with foreign banks and foreign offices of other U.S. banks (other than /////////////////
insured branches in Puerto Rico and U.S. territories and possessions) that were reported /////////////////
on a net basis in Schedule RC-E had been reported on a gross basis. . . . . . . . . . . A181 0 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of collection /////////////////
were included in the calculation of the reporting bank's net reciprocal demand balances /////////////////
with the domestic offices of U.S. banks and savings associations and insured branches /////////////////
in Puerto Rico and U.S. territories and possessions in Schedule RC-E . . . . . . . . . . A182 0 11.c.
12. Amount of assets netted against deposit liabilities in domestic offices and in insured /////////////////
branches in Puerto Rico and U.S. territories and possessions on the balance sheet /////////////////
(Schedule RC) in accordance with generally accepted accounting principles (exclude amounts /////////////////
related to reciprocal demand balances): /////////////////
a. Amount of assets netted against demand deposits. . . . . . . . . . . . . . . . . . . . . A527 0 12.a.
b. Amount of assets netted against time and savings deposits. . . . . . . . . . . . . . . . A528 0 12.b.
------------------
</TABLE>
Memoranda (to be completed each quarter except as noted)
<TABLE>
<CAPTION>
-----------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and //////////////////
1.b.(1) must equal Schedule RC, item 13.a): //////////////////
a. Deposit accounts of $100,000 or less: //////////////////
(1) Amount of deposit accounts of $100,000 or less . . . . . . . . . . . . . . . . . . . 2702 2,326,912 M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number //////////////////
completed for the June report only). . . . . . . . . . . . . . . . .RCON 3779 N/A ////////////////// M.1.a.(2)
b. Deposit accounts of more than $100,000: //////////////////
(1) Amount of deposit accounts of more than $100,000 . . . . . . . . . . . . . . . . . . 2710 2,488,932 M.1.b.(1)
Number //////////////////
(2) Number of deposit accounts of more than $100,000 . . . . . . . . . RCON 2722 4,053 ////////////////// M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits than the YES NO
estimate described above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6861 /// X M.2.a.
b. If the box marked YES has been checked, report the estimate of uninsured deposits RCON Bil Mil Thou
determined by using your bank's method or procedure. . . . . . . . . . . . . . . . . . . 5597 N/A M.2.b.
3. Has the reporting institution been consolidated with a parent bank or
savings association in that parent bank's or parent savings association's
Call Report or Thrift Financial Report?
If so, report the legal title and FDIC Certificate Number of the parent bank or parent
savings association: FDIC Cert. No.
-------------------- ----------------------
TEXT A545 N/A RCON A545 N/A M.3.
-------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580 FFIBC 031
City, State Zip: COLUMBUS, OH 43271-1066 Page RC-23
FDIC Certificate No.: 06559
Schedule RC-R--Regulatory Capital
This schedule must be completed by all banks as follows: Banks that reported
total assets of $1 billion or more in Schedule RC, item 12, for June 30, 1996,
must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets
of less than $1 billion must complete items 1 through 3 below or Schedule RC-R
in its entirety, depending on their response to item 1 below.
<TABLE>
<CAPTION>
<S><C>
1. Test for determining the extent to which Schedule RC-R must be completed. To be
completed only by banks with total assets of less than $1 billion. Indicate in the C480 < -
appropriate box at the right whether the bank has total capital greater than or ---------
equal to eight percent of adjusted total assets . . . . . . . . . . . . . . . . . . . . . YES NO
-------------------------
RCFD 6056 //// 1.
-------------------------
</TABLE>
For purposes of this test, adjusted total assets equals total assets
less cash, U.S. Treasuries, U.S. Government agency obligations, and 80
percent of U.S. Government-sponsored agency obligations plus the allowance
for loan and lease losses and selected off-balance sheet items as reported on
Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to
complete items 2 and 3 below. If the box marked NO has been checked, the
bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual
risk-based capital ratio is less than eight percent or that the bank is not
in compliance with the risk-based capital guidelines.
----------------------------------------------------------------------
NOTE: All banks are required to complete items 2 and 3 below.
See optional worksheet for items 3.a through 3.f.
----------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
2. Portion of qualifying limited-life capital instruments (original weighted ///////////////////////
average maturity of at least five years) that is includible in Tier 2 capital: ///////////////////////
a. Subordinated debt(1) and intermediate term preferred stock . . . . . . . . . . . . . . . . A515 264,351 2.a.
b. Other limited-life capital instruments . . . . . . . . . . . . . . . . . . . . . . . . . . A516 0 2.b.
3. Amounts used in calculating regulatory capital ratios (report amounts ///////////////////////
determined by the bank for its own internal regulatory capital analyses ///////////////////////
consistent with applicable capital standards): ///////////////////////
a. Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8274 937,527 3.a.
b. Tier 2 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8275 419,875 3.b.
c. Total risk-based capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3792 1,357,402 3.c.
d. Excess allowance for loan and lease losses (amount that exceeds 1.25% of gross ///////////////////////
risk-weighted assets). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A222 85,108 3.d.
e. Net risk-weighted assets (gross risk-weighted assets less excess allowance reported ///////////////////////
in item 3.d above and all other deductions). . . . . . . . . . . . . . . . . . . . . . . . A223 12,354,820 3.e.
f. "Average total assets" (quarterly average reported in Schedule RC-K, item 9, less all ///////////////////////
assets deducted from Tier 1 capital)(2). . . . . . . . . . . . . . . . . . . . . . . . . . A224 10,909,634 3.f.
-----------------------
<CAPTION>
------------------------------------------------
(Column A) (Column B)
Items 4-9 and Memoranda items 1 and 2 are to be completed Assets Credit Equiv-
by banks that answered NO to item 1 above and Recorded alent Amount
by banks with total assets of $1 billion or more. on the of Off-Balance
Balance Sheet Sheet Items(3)
----------------------- -----------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou
----------------------- -----------------------
<S> <C> <C>
4. Assets and credit equivalent amounts of off-balance sheet items
assigned to the zero percent risk category: /////////////////////// ///////////////////////
a. Assets recorded on the balance sheet . . . . . . . . . . . . . . 5163 390,546 /////////////////////// 4.a.
b. Credit equivalent amount of off-balance sheet items. . . . . . . /////////////////////// 3796 0 4.b.
-------------------------------------------------
</TABLE>
- -----------------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not deduct excess allowance for loan and lease losses.
(3) Do not report in column B the risk-weighted amount of assets reported in
column A.
33
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580 FFIBC 031
City, State Zip: COLUMBUS, OH 43271-1066 Page RC-24
FDIC Certificate No.: 06559
Schedule RC-R--Continued
<TABLE>
<CAPTION>
-------------------------------------------------
(Column A) (Column B)
Assets Credit Equiv-
Recorded alent Amount
on the of Off-Balance
Balance Sheet Sheet Items(1)
----------------------- -----------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou
- ------------------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items /////////////////////// ///////////////////////
assigned to the 20 percent risk category: /////////////////////// ///////////////////////
a. Assets recorded on the balance sheet . . . . . . . . . . . . . . 5165 1,870,689 /////////////////////// 5.a.
b. Credit equivalent amount of off-balance sheet items. . . . . . . /////////////////////// 3801 488,164 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items /////////////////////// ///////////////////////
assigned to the 50 percent risk category: /////////////////////// ///////////////////////
a. Assets recorded on the balance sheet . . . . . . . . . . . . . . 3802 346,544 /////////////////////// 6.a.
b. Credit equivalent amount of off-balance sheet items. . . . . . . /////////////////////// 3003 121,294 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items /////////////////////// ///////////////////////
assigned to the 100 percent risk category: /////////////////////// ///////////////////////
a. Assets recorded on the balance sheet . . . . . . . . . . . . . . 3804 9,803,379 /////////////////////// 7.a.
b. Credit equivalent amount of off-balance sheet items. . . . . . . /////////////////////// 3805 1,932,860 7.b.
8. On-balance sheet asset values excluded from and deducted in /////////////////////// ///////////////////////
the calculation of the risk-based capital ratio(2). . . . . . . . . 3806 32,394 /////////////////////// 8.
9. Total assets recorded on the balance sheet (sum of /////////////////////// ///////////////////////
items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, /////////////////////// ///////////////////////
item 12 plus items 4.b and 4.c) . . . . . . . . . . . . . . . . . . 3807 12,643,552 /////////////////////// 9.
-------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Memoranda -----------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------------- -----------------------
<S> <C> <C>
1. Current credit exposure across all off-balance sheet derivative contracts covered by the ///////////////////////
risk-based capital standards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8764 66,807 M.1.
Memoranda -----------------------
<CAPTION>
----------------------------------------------------------------------
With a remaining maturity of
----------------------------------------------------------------------
(Column A) (Column B) (Column C)
One year or less Over one year Over five years
through five years
2. Notional principal amounts of ---------------------- ---------------------- ----------------------
off-balance sheet derivative contracts(3): RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou
---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
a. Interest rate contracts. . . . . . . . . 3809 5,017,644 8766 6,152,814 8767 1,457,674 M.2.a.
b. Foreign exchange contracts . . . . . . . 3812 0 8769 0 8770 0 M.2.b.
c. Gold contracts . . . . . . . . . . . . . 8771 0 8772 0 8773 0 M.2.c.
d. Other precious metals contracts. . . . . 8774 0 8775 0 8776 0 M.2.d.
e. Other commodity contracts. . . . . . . . 8777 0 8778 0 8779 0 M.2.e.
f. Equity derivative contracts. . . . . . . A000 0 A001 0 A002 0 M.2.f.
----------------------------------------------------------------------
</TABLE>
- ---------------
(1) Do not report in column B the risk-weighted amount of assets reported in
column A.
(2) Include the difference between the fair value and the amortized cost of
available-for-sale debt securities in item 6 and report the amortized cost
of these debt securities in items 4 through 7 above. For available-for-
sale equity securities, if fair value exceeds cost, include the difference
between the fair value and the cost in item 8 and report the cost of these
equity securities in items 5 through 7 above; if cost exceeds fair value,
report the fair value of these equity securities in items 5 through 7 above
and include no amount in item 8. Item 8 also includes on-balance sheet
asset values (or portions thereof) of off-balance sheet interest rate,
foreign exchange rate, and commodity contracts and those contracts (e.g.,
futures contracts) not subject to risk-based capital. Exclude from item 8
margin accounts and accrued receivables not included in the calculation of
credit equivalent amounts of off-balance sheet derivatives as well as any
portion of the allowance for loan and lease losses in excess of the amount
that may be included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or
less and all futures contracts.
34
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580 FFIBC 031
City, State Zip: COLUMBUS, OH 43271-1066 Page RC-25
FDIC Certificate No.: 06559
Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on March 31, 1997
BANK ONE, COLUMBUS, NA Columbus Ohio
- ------------------------- --------------------------- ------------------------
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief narrative
statement on the amounts reported in the Reports of Condition and Income. This
optional statement will be made available to the public, along with the publicly
available data in the Reports of Condition and Income, in response to any
request for individual bank report data. However, the information reported in
column A and in all of Memorandum item 1 of Schedule RC-N is regarded as
confidential and will not be released to the public. BANKS CHOOSING TO SUBMIT
THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT DOES NOT CONTAIN THE
NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK CUSTOMERS. REFERENCES TO THE
AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN SCHEDULE RC-N, OR ANY OTHER
INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD
COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing not to make a
statement may check the "No comment" box below and should make no entries of any
kind in the space provided for the narrative statement; i.e., DO NOT enter in
this space such phrases as "No statement," "Not applicable," "N/A," "No
comment," and "None."
The optional statement must be entered on this sheet. The statement should not
exceed 100 words. Further, regardless of the number of words, the statement
must not exceed 750 characters, including punctuation, indentation, and standard
spacing between words and sentences. If any submission should exceed 750
characters, as defined, it will be truncated at 750 characters with no notice to
the submitting bank and the truncated statement will appear as the bank's
statement both on agency computerized records and in computer-file releases to
the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who thereby
attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing narrative
statement will be deleted from the files, and from disclosure; the bank, at its
option, may replace it with a statement, under signature, appropriate to the
amended data.
The optional narrative statement will appear in agency records and in release to
the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
- --------------------------------------------------------------------------------
No comment /x/ (RCON 6979) C471 C472 < -
---------------------
BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)
/s/ Frederick L. Cullen 4/30/97
-------------------------------------- -----------------
Signature of Executive Officer of Bank Date of Signature
35
<PAGE>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 3/31/97
Address: 100 EAST BROAD STREET ST-BK: 39-1580
City, State Zip: COLUMBUS, OH 43271-1066
FDIC Certificate No.: 06559
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
- --------------------------------------------------------------------------------
OMB No. For OCC: 1557-0081
OMB No. For FDIC: 3064-0052
CALL NO. 199 31 03-31-97 OMB No. for Federal Reserve: 7100-0036
Expiration Date: 3/31/99
STBK: 39-1580 00088 STCERT: 39-06559
SPECIAL REPORT
BANK ONE, COLUMBUS, NATIONAL ASSOCIA (Dollar Amounts in Thousands)
100 EAST BROAD STREET
COLUMBUS, OH 43271 ----------------------------------------
CLOSE OF FDIC
BUSINESS Certificate
DATE Number C-700 < -
3/31/97 06559
- --------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- --------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but does
not constitute a part of the Report of Condition. With each Report of
Condition, these Laws require all banks to furnish a report of all loans or
other extensions of credit to their executive officers made since the date of
the previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of
credit were made during the period, insert "none" against subitem (a). (Exclude
the first $15,000 of indebtedness of each executive officer under bank credit
card plan.) See Sections 215.2 and 215.3 of Title 12 of the Code of Federal
Regulations (Federal Reserve Board Regulation O) for the definitions of
"executive officer" and "extension of credit," respectively. Exclude loans and
other extensions of credit to directors and principal shareholders who are not
executive officers.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-----------------------------
a. Number of loans made to executive officers since the previous Call Report date. . . . . . . RCFD 3561 0 a.
-----------------------------
b. Total dollar amount of above loans (in thousands of dollars). . . . . . . . . . . . . . . . RCFD 3562 0 b.
-----------------------------
c. Range of interest charged on above loans ------------------------------------------------------------------
(example: 9 3/4% = 9.75). . . . . . . . . . . . . . . RCFD 7701 0.00 % to RCFD 7702 0.00 % c.
------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER DATE (Month, Day, Year)
AUTHORIZED TO SIGN REPORT
- --------------------------------------------------------------------------------
NAME AND TITLE OF PERSON TO WHOM INQUIRIES AREA CODE/PHONE NUMBER/
MAY BE DIRECTED (TEXT 8903) EXTENSION
(TEXT 8904)
John J. Dible, Sr. Regulatory Analyst (614) 248-8592
- --------------------------------------------------------------------------------
FDIC 8040/53 (6-95)
36
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-START> MAR-30-1996
<PERIOD-END> MAR-28-1997
<CASH> 182
<SECURITIES> 0
<RECEIVABLES> 19,041
<ALLOWANCES> (1,309)
<INVENTORY> 14,990
<CURRENT-ASSETS> 35,346
<PP&E> 50,106
<DEPRECIATION> (26,054)
<TOTAL-ASSETS> 73,077
<CURRENT-LIABILITIES> (18,045)
<BONDS> 0
0
(6,119)
<COMMON> (1)
<OTHER-SE> (3,912)
<TOTAL-LIABILITY-AND-EQUITY> (73,077)
<SALES> (174,401)
<TOTAL-REVENUES> (174,401)
<CGS> 131,474
<TOTAL-COSTS> 32,724
<OTHER-EXPENSES> 577
<LOSS-PROVISION> (1,309)
<INTEREST-EXPENSE> 5,381
<INCOME-PRETAX> (4,245)
<INCOME-TAX> 1,892
<INCOME-CONTINUING> (2,353)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,353)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL
RELIANT BUILDING PRODUCTS, INC.
For Tender of 10 7/8% Senior Subordinated Notes, Series A
Pursuant to
Offer For Any and All Outstanding
10 7/8% Senior Subordinated Notes, Series A
in Exchange for
10 7/8% Senior Subordinated Notes, Series B
Which Have Been Registered Under the Securities Act of 1933
As Described in the Prospectus dated ________, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON _____________, 1997, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent For The Exchange Offer Is:
Bank One, N.A.
<TABLE>
BY HAND OR OVERNIGHT DELIVERY: FACSIMILE TRANSMISSIONS BY REGISTERED OR CERTIFIED MAIL:
(ELIGIBLE INSTITUTIONS ONLY):
<S> <C> <C>
Bank One, N.A. Bank One, N.A.
c/o First Chicago Trust (212) 240-8988 c/o First Chicago Trust
Company of New York To Confirm by Telephone: Company of New York
Attention: Corporate Trust (212) 240-8862 Attention: Corporate Trust
Department For Information Call: Department
14 Wall Street (800) 346-5153 14 Wall Street
8th Floor, Window 2 8th Floor, Window 2
New York, New York 10005 New York, New York 10005
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus, dated ______, 1997,
as may be amended from time to time (the "Prospectus"), of Reliant Building
Products, Inc. a Delaware corporation (the "Company"), and this Letter of
Transmittal, which together constitute the Company's offer (the "Exchange
Offer") to exchange an aggregate principal amount of up to $70,000,000 of
10 7/8% Senior Subordinated Notes, Series B due May 1, 2004, which have been
registered under the Securities Act of 1933, as amended (the "Securities
Act") (the "Exchange Notes"), of the Company for a like principal amount of
the issued and outstanding 10 7/8% Senior Subordinated Notes, Series A due
May 1, 2004 (the "Senior Subordinated Notes") of the Company from the Holders
thereof.
<PAGE>
PLEASE READ THE INSTRUCTIONS CONTAINED HEREIN CAREFULLY BEFORE COMPLETING
THIS LETTER OF TRANSMITTAL.
Capitalized terms used but not defined herein shall have the same
meanings respectively given to them in the Prospectus.
This Letter of Transmittal is to be completed by Holders of Senior
Subordinated Notes either if certificates for Senior Subordinated Notes
("Certificates") are to be forwarded herewith or if tenders of Senior
Subordinated Notes are to be made by book-entry transfer to an account
maintained by Bank One, N.A. (the "Exchange Agent") at the Depository Trust
Company (the "Book Entry Transfer Facility" or "DTC") pursuant to the
procedures set forth in "The Exchange Offer--Procedures for Tendering Senior
Subordinated Notes" in the Prospectus.
Holders of Senior Subordinated Notes whose Certificates are not
immediately available or who cannot deliver their Certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date
(as defined in the Prospectus) or who cannot complete the procedures for
book-entry transfer on a timely basis, must tender their Senior Subordinated
Notes according to the guaranteed delivery procedures set forth in "The
Exchange Offer--Procedures for Tendering Senior Subordinated Notes" in the
Prospectus. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
The undersigned has completed 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.
DESCRIPTION OF Senior Subordinated Notes
<TABLE>
- ----------------------------------------------------------------------------------------------------------
Aggregate Principal
Principal Amount of
Amount of Senior Subordinated
Certificate Senior Subordinated Notes
Name(s) and Address(es) of Holder(s): Number(s)* Notes Tendered
(Please fill in, of blank) (if less than all)**
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
* Need not be completed if Senior Subordinated Notes are being tendered by book-entry Holders.
** Senior Subordinated Notes may be tendered in whole or in part in denominations of $1,000 and
integral multiples of $1,000 in excess thereof, provided that if any Senior Subordinated Notes
are tendered for exchange in part, the untendered principal amount thereof must be $1,000 or
any integral multiple of $1,000 in excess thereof. See Instruction 4. Unless otherwise indicated
in the column, a Holder will be deemed to have tendered all Senior Subordinated Notes represented
by the Senior Subordinated Notes indicated in Column 2. See Instruction 4.
</TABLE>
2
<PAGE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED Senior Subordinated Notes ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT
WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: __________________________________
Account Number: ____________________
Transaction Code Number:____________
/ / CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED Senior Subordinated Notes ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name of Holder(s): ____________________________________
Window Ticket Number (if any):_________________________
Date of Execution of Notice of Guaranteed Delivery: ___________, 1997
Name of Institution that Guaranteed Delivery: _______________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution: __________________________________
Account Number: ____________________
Transaction Code Number:____________
/ / CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED Senior
Subordinated Notes ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER
FACILITY ACCOUNT NUMBER SET FORTH ABOVE.
/ / CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE Senior Subordinated
Notes FOR YOUR OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name: _________________________________________
Address: ______________________________________
______________________________________
______________________________________
(include zip code)
3
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above described aggregate
principal amount of the Company's 10 7/8% Senior Subordinated Notes, Series A
due May 1, 2004 (the "Senior Subordinated Notes") in exchange for a like
aggregate principal amount of the Company's 10 7/8% Senior Subordinated Notes,
Series B due May 1, 2004, which have been registered under the Securities Act
(the "Exchange Notes"), upon the terms and subject to the conditions set forth
in the Prospectus, receipt of which is acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitute the Exchange
Offer).
Subject to and effective upon the acceptance for exchange of all or any
portion of the Senior Subordinated Notes tendered herewith in accordance with
the terms and conditions of the Exchange Offer (including, if the Exchange Offer
is extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to such Senior
Subordinated Notes as are being tendered herewith. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent as its agent and
attorney-in-fact (with full knowledge that the Exchange Agent is also acting as
agent of the Company in connection with the Exchange Offer) with respect to the
tendered Senior Subordinated Notes, with full power of substitution (such power
of attorney's being deemed to be an irrevocable power coupled with an interest)
subject only to the right of withdrawal described in the Prospectus, to (i)
deliver Certificates to the Company together with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Company, upon receipt by
the Exchange Agent, as the undersigned's agent, of the Exchange Notes to be
issued in exchange for such Senior Subordinated Notes, (ii) present Certificates
for transfer, and to transfer the Senior Subordinated Notes on the books of the
Company and (iii) receive for the account of the Company all benefits and
otherwise exercise all rights of beneficial ownership of such Senior
Subordinated Notes, all in accordance with the terms and conditions of the
Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
Senior Subordinated Notes TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED
FOR EXCHANGE, THE COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE Senior Subordinated Notes TENDERED HEREBY ARE NOT SUBJECT TO ANY
ADVERSE CLAIMS OR PROXIES. UPON REQUEST, THE UNDERSIGNED WILL EXECUTE AND
DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO
BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF
THE Senior Subordinated Notes TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY
WITH ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED
HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
If they are not already set forth above, please print the name(s) and
address(es) of the Holder(s) of the Senior Subordinated Notes tendered hereby as
they appear on the Certificates. The undersigned should indicate the
Certificate number(s) of the Senior Subordinated Notes that the undersigned
wishes to tender in the appropriate boxes above.
If any tendered Senior Subordinated Notes are not exchanged pursuant to
the Exchange Offer for any reason, or if Certificates are submitted for more
Senior Subordinated Notes than are tendered or accepted for exchange,
Certificates for such nonexchanged or nontendered Senior Subordinated Notes will
be returned (or, in the case of Senior Subordinated Notes tendered by book-entry
transfer, such Senior Subordinated Notes will be credited to an account
maintained at DTC), without expense to the tendering Holder, promptly following
the expiration or termination of the Exchange Offer.
The undersigned understands that tenders of Senior Subordinated Notes
pursuant to any one of the procedures described in "The Exchange Offer--
Procedures for Tendering Senior Subordinated Notes" in the Prospectus and in the
instructions attached hereto will, upon the Company's acceptance for exchange of
such tendered Senior Subordinated Notes, constitute a binding agreement between
the undersigned and the Company upon
4
<PAGE>
the terms and subject to the conditions of the Exchange Offer. The
undersigned recognizes that, under certain circumstances set forth in the
Prospectus, the Company may not be required to accept for exchange any of the
Senior Subordinated Notes tendered hereby.
Unless otherwise indicated under "Special Issuance Instructions" below,
the undersigned hereby directs that the Exchange Notes be issued in the name(s)
of the undersigned or, in the case of a book-entry transfer of Senior
Subordinated Notes, that such Exchange Notes be credited to the account
indicated above maintained at DTC. If applicable, substitute Certificates not
exchanged or not accepted for exchange will be issued to the undersigned or, in
the case of a book-entry transfer of Senior Subordinated Notes, will be credited
to the account indicated above maintained at DTC. Similarly, unless otherwise
indicated under "Special Delivery Instructions," Exchange Notes will be
delivered to the undersigned at the address shown below the undersigned's
signature.
BY TENDERING SENIOR SUBORDINATED NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE
UNDERSIGNED IS NOT AN "AFFILIATE" OF THE COMPANY, (II) ANY EXCHANGE NOTES TO BE
RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS
BUSINESS, (III) THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY
PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES
ACT) OF EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE OFFER AND (IV), IF THE
UNDERSIGNED IS NOT A BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES
NOT INTEND TO ENGAGE IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES
ACT) OF SUCH EXCHANGE NOTES. BY TENDERING SENIOR SUBORDINATED NOTES PURSUANT TO
THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF TRANSMITTAL, A HOLDER OF SENIOR
SUBORDINATED NOTES THAT IS A BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT
WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE DIVISION OF
CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES,
THAT (A) THE BROKER-DEALER HOLDS SUCH SENIOR SUBORDINATED NOTES ONLY AS A
NOMINEE, OR (B) THE BROKER-DEALER ACQUIRED SUCH SENIOR SUBORDINATED NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING
ACTIVITIES AND THAT IT WILL DELIVER A PROSPECTUS (AS AMENDED OR SUPPLEMENTED
FROM TIME TO TIME) MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION
WITH ANY RESALE OF SUCH EXCHANGE NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND
BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT
IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF THE REGISTRATION
RIGHTS AGREEMENT, A PARTICIPATING BROKER-DEALER (AS DEFINED BELOW) MAY USE THE
PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, IN
CONNECTION WITH RESALES OF EXCHANGE NOTES THAT SUCH PARTICIPATING BROKER-DEALER
ACQUIRED FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER
TRADING ACTIVITIES, FOR A PERIOD ENDING [180] DAYS AFTER CONSUMMATION OF THE
EXCHANGE OFFER OR, IF EARLIER, WHEN SUCH PARTICIPATING BROKER-DEALER HAS
DISPOSED OF ALL SUCH EXCHANGE NOTES. IN THAT REGARD, EACH BROKER-DEALER THAT
ACQUIRED SENIOR SUBORDINATED NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-
MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER"), BY
TENDERING SUCH SENIOR SUBORDINATED NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OF THE
OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT THAT MAKES ANY STATEMENT
CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL
RESPECT OR THAT CAUSES THE PROSPECTUS TO OMIT TO STATE A MATERIAL FACT NECESSARY
IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE THEREIN,
IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING, OR OF
THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE REGISTRATION RIGHTS
AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE OF EXCHANGE
NOTES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR SUPPLEMENTED
THE PROSPECTUS
5
<PAGE>
TO CORRECT SUCH MISSTATEMENT OR OMISSION AND THE COMPANY HAS FURNISHED COPIES
OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER
OR UNTIL THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF THE EXCHANGE NOTES MAY
BE RESUMED, AS THE CASE MAY BE. IF THE COMPANY GIVES NOTICE TO SUSPEND THE
SALE OF THE EXCHANGE NOTES, IT SHALL EXTEND THE [180]-DAY PERIOD REFERRED TO
ABOVE DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE
PROSPECTUS IN CONNECTION WITH THE RESALE OF EXCHANGE NOTES BY THE NUMBER OF
DAYS DURING THE PERIOD FROM AND INCLUDING THE DATE OF THE GIVING OF SUCH
NOTICE TO AND INCLUDING THE DATE WHEN PARTICIPATING BROKER-DEALERS SHALL HAVE
RECEIVED COPIES OF THE SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO PERMIT
RESALES OF THE EXCHANGE NOTES OR TO AND INCLUDING THE DATE ON WHICH THE
COMPANY HAS GIVEN NOTICE THAT THE SALE OF EXCHANGE NOTES MAY BE RESUMED, AS
THE CASE MAY BE.
Holders of Senior Subordinated Notes whose Senior Subordinated Notes are
accepted for exchange will not receive accrued interest on such Senior
Subordinated Notes for any period from and after the last Interest Payment Date
to which interest has been paid or duly provided for with respect to such Senior
Subordinated Notes prior to the original issue date of the Exchange Notes or, if
no such interest has been paid or duly provided for, such Holders will not
receive any accrued interest on such Senior Subordinated Notes; and the
undersigned hereby irrevocably waives the right to receive any interest on such
Senior Subordinated 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 9,
1997.
Upon request, the undersigned will execute and deliver any additional
documents that the Company or the Exchange Agent may deem necessary or desirable
to complete the sale, assignment and transfer of the Senior Subordinated Notes
tendered hereby. All authority herein conferred or agreed to be conferred in
this Letter of Transmittal shall survive the death or incapacity of the
undersigned and all obligations of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees in
bankruptcy, legal representatives, successors and assigns of the undersigned.
Except as stated in the Prospectus, a tender of Senior Subordinated Notes is
irrevocable.
BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF Senior Subordinated Notes"
ABOVE AND DULY SIGNING AND DELIVERING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED WILL BE DEEMED TO HAVE TENDERED THE Senior Subordinated Notes AS SET
FORTH IN SUCH BOX.
6
<PAGE>
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREWITH)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by Holder(s) exactly as name(s) appear(s) on Certificate(s)
hereby tendered or on the Note Register, or by any person(s) authorized to
become the Holder(s) by endorsements and documents transmitted herewith
(including such opinions of counsel, certifications and other information as may
be required by the Company for the Senior Subordinated Notes to comply with the
restrictions on transfer applicable to the Senior Subordinated Notes). If
signature is by an attorney-in-fact, executor, administrator, trustee, guardian,
officer of a corporation or a person acting in another fiduciary or
representative capacity, please set forth the signatory's full title. See
Instruction 5.
SIGNATURE(S) OF HOLDER(S):
- -----------------------------------
- -----------------------------------
Date: , 1997
-------------
Name(s):
---------------------------
---------------------------
(please print)
Capacity (full title):
-------------
Address:
---------------------------
---------------------------
---------------------------
(include zip code)
Telephone Number (including area code):
--------------------------------
Taxpayer Identification or Social Security Number(s):
------------------
7
<PAGE>
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5):
- -----------------------------------
(authorized signature)
Date: , 1997
-------------------
Name of Firm:
--------------------------------
(please print)
Capacity (full title):
-----------------------
Address:
-------------------------------------
-------------------------------------
-------------------------------------
(include zip code)
Telephone Number (including area code):
--------------------------
8
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the Exchange Notes or Senior Subordinated Notes
not tendered are to be issued in the name of someone other than the Holder of
the Senior Subordinated Notes whose name(s) appear(s) above.
Please issue:
/ / Senior Subordinated Notes not tendered to:
/ / Exchange Notes to:
Name(s):
-------------------------------
-------------------------------
(please print)
Capacity (full title):
-----------------
Address:
-------------------------------
-------------------------------
-------------------------------
(include zip code)
Telephone Number (including area code):
----------------------------------
Taxpayer Identification or Social Security Number(s):
--------------------
9
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if Exchange Notes or Senior Subordinated Notes not
tendered are to be sent to someone other than the Holder of the Senior
Subordinated Notes whose name(s) appear(s) above, or to such Holder(s) at an
address other than that shown above.
Please mail:
/ / Senior Subordinated Notes not tendered to:
/ / Exchange Notes, to:
Name(s):
-------------------------------
-------------------------------
(please print)
Capacity (full title):
-----------------
Address:
-------------------------------
-------------------------------
-------------------------------
(include zip code)
Telephone Number (including area code):
----------------------------------
Taxpayer Identification or Social Security Number(s):
--------------------
10
<PAGE>
INSTRUCTIONS
(FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER)
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed if either
(a) Certificates are to be forwarded herewith or (b) tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in "The
Exchange Offer--Procedures for Tendering Senior Subordinated Notes" in the
Prospectus. The Exchange Agent must receive Certificates, or timely
confirmation of a book-entry transfer of such Senior Subordinated Notes into the
Exchange Agent's account at DTC, as well as this Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, at its address set forth herein on or prior to the Expiration Date.
Senior Subordinated Notes may be tendered in whole or in part in the principal
amount of $1,000 and integral multiples thereof; provided, however, that, if any
Senior Subordinated Notes are tendered for exchange in part, the untendered
principal amount thereof must be $1,000 or any integral multiple thereof.
Holders who wish to tender their Senior Subordinated Notes (i) whose
Senior Subordinated Notes are not immediately available, (ii) who cannot deliver
their Senior Subordinated Notes, this Letter of Transmittal and all other
required documents to the Exchange Agent on or prior to the Expiration Date or
(iii) who cannot complete the procedures for delivery by book-entry transfer on
a timely basis, may tender their Senior Subordinated Notes by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for
Tendering Senior Subordinated Notes" in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible Institution
(as defined below); (ii) the Exchange Agent must receive a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form that
the Company has made available, on or prior to the Expiration Date; and (iii)
the Exchange Agent must receive the Certificates (or a book-entry confirmation
(as defined in the Prospectus)) representing all tendered Senior Subordinated
Notes, in proper form for transfer, together with a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other documents required by this Letter of
Transmittal, within three New York Stock Exchange, Inc. trading days after the
date of execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer--Procedures for Tendering Senior Subordinated Notes" in the
Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Senior
Subordinated Notes to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on or
prior to the Expiration Date. As used herein and in the Prospectus, "Eligible
Institution" means a member of the Securities Agents Medallion Program, The New
York Stock Exchanges Medallion Signature Program or The Stock Exchanges
Medallion Program.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN THE EXCHANGE AGENT ACTUALLY RECEIVES
ALL OF SUCH DOCUMENTS. IF DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering Holder, by execution and delivery of this Letter of
Transmittal (or facsimile thereof), waives any right to receive any notice of
the acceptance of such tender.
11
<PAGE>
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the Holder (which term, for
purposes of this document, shall include any participant in DTC whose
name appears on the Note Register as the owner of the Senior
Subordinated Notes) of Senior Subordinated Notes tendered herewith,
unless such Holder(s) has completed either "Special Issuance
Instructions" or "Special Delivery Instructions" above, or
(ii) such Senior Subordinated Notes are tendered for the account of a
firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature(s) on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Senior Subordinated Notes" is inadequate, the Certificate
number(s) and/or the principal amount of Senior Subordinated Notes and any other
required information should be listed on a separate signed schedule that is
attached to this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Senior Subordinated
Notes will be accepted only in the principal amount of $1,000 and integral
multiples thereof; provided, however, that, if any Senior Subordinated Notes are
tendered for exchange in part, the untendered principal amount thereof must be
$1,000 or any integral multiple thereof. If less than all the Senior
Subordinated Notes evidenced by any Certificate submitted are to be tendered,
please indicate the principal amount of Senior Subordinated Notes that are to be
tendered in the box entitled "Principal Amount of Senior Subordinated Notes
Tendered (if less than all)." In such case, new Certificate(s) for the
remainder of the Senior Subordinated Notes that were evidenced by the old
Certificate(s) will only be sent to the Holder of the Senior Subordinated Notes,
promptly after the Expiration Date. All Senior Subordinated Notes represented
by Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Senior Subordinated Notes
may be withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, the Exchange Agent must
timely receive a written, telegraphic, telex or facsimile transmission of such
notice of withdrawal at one of its addresses set forth above or in the
Prospectus on or prior to the Expiration Date. Any such notice of withdrawal
must specify the name of the person who tendered the Senior Subordinated Notes
to be withdrawn, the aggregate principal amount of Senior Subordinated Notes to
be withdrawn and, if Certificates have been tendered, the name of the Holder of
the Senior Subordinated Notes as set forth on the Certificate if different from
that of the person who tendered such Senior Subordinated Notes. If Certificates
have been delivered or otherwise identified to the Exchange Agent, then, prior
to the physical release of such Certificates, the tendering Holder must submit
the serial numbers shown on the particular Certificates to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Senior Subordinated Notes tendered for the
account of an Eligible Institution. If Senior Subordinated Notes have been
tendered pursuant to the procedures for book-entry transfer set forth in the
Prospectus under "The Exchange Offer--Procedures for Tendering Senior
Subordinated Notes," the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of Senior Subordinated
Notes, in which case a notice of withdrawal will be effective if timely
delivered to the Exchange Agent by written, telegraphic, telex or facsimile
transmission. Withdrawals of tenders of Senior Subordinated Notes may not be
rescinded. Senior Subordinated Notes properly withdrawn will not be deemed
validly tendered for purposes of the Exchange Offer, but may be retendered at
any subsequent time on or prior to the Expiration Date by following any of the
procedures described in the Prospectus under "The Exchange Offer--Procedures for
Tendering Senior Subordinated Notes."
The Company will determine, in its sole discretion, all questions as to
the validity, form and eligibility (including time of receipt) of any such
withdrawal notice, and such determination shall be final and binding on all
parties. None of the Company, any affiliates or assigns of the Company, the
Exchange Agent or any other person shall be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability
12
<PAGE>
for failure to give any such notification. Any Senior Subordinated Notes
that have been tendered but that are withdrawn will be returned to the Holder
without cost to such Holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the Holder(s) of the Senior Subordinated
Notes tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the Certificate(s) without alteration, enlargement or
any change whatsoever.
If any tendered Senior Subordinated Notes are owned of record by two or
more joint Holders, all such Holders must sign this Letter of Transmittal.
If any tendered Senior Subordinated Notes are registered in different
name(s) on several Certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal (or facsimiles thereof) as there
are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in another fiduciary or representative
capacity, such persons must so indicate when signing and must submit proper
evidence satisfactory to the Company, in its sole discretion, of each such
person's authority to act.
If this Letter of Transmittal is signed by the Holder(s) of the Senior
Subordinated Notes listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless Exchange Notes are
to be issued in the name of a person other than the Holder(s). Signature(s) on
such Certificate(s) or bond power(s) must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the Holder
of the Senior Subordinated Notes listed and transmitted hereby, the Certificates
must be endorsed or accompanied by appropriate bond powers, signed exactly as
the name or names of the Holder(s) appear(s) on the Certificates, and also must
be accompanied by such opinions of counsel, certifications and other information
as the Company or the Trustee may require in accordance with the restrictions on
transfer applicable to the Senior Subordinated Notes. Signatures on such
Certificates or bond powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes are to
be issued in the name of a person other than the signatory of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signatory of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal must be completed.
Certificates for Senior Subordinated Notes not exchanged will be returned by
mail or, if tendered by book-entry transfer, by crediting the account indicated
above maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Company will determine, in its sole discretion,
all questions as to the form of documents, validity, eligibility (including time
of receipt) and acceptance for exchange of any tender of Senior Subordinated
Notes. Such determination shall be final and binding on all parties. The
Company reserves the absolute right to reject any and all tenders that it
determines not to be in proper form or the acceptance of which, or exchange for
which, may, in the view of counsel to the Company, be unlawful. The Company also
reserves the absolute right, subject to applicable law, to waive any of the
conditions of the Exchange Offer set forth in the Prospectus under "The Exchange
Offer--Certain Conditions to the Exchange Offer" or any conditions or
irregularity in any tender of Senior Subordinated Notes by any particular
Holder, whether or not the Company waives similar conditions or irregularities
in the case of any other Holder. The Company's interpretation of the terms and
conditions of the Exchange Offer (including this Letter of Transmittal and the
instructions hereto) will be final and binding on all parties. No tender of
Senior Subordinated Notes will be deemed to have been validly made until all
irregularities with respect to such tender have been cured or waived. None of
the Company, any affiliates or assigns of the Company, the Exchange Agent or any
other person shall be under any duty to give notification of any irregularities
in tenders or shall incur any liability for failure to give such notification.
13
<PAGE>
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front cover of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from a broker,
dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. federal
income tax law, a Holder whose tendered Senior Subordinated Notes are accepted
for exchange is required to provide the Exchange Agent with such Holder's
correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If
the Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the Holder or other payee to a $50 penalty.
The box in Part 2 of the Substitute Form W-9 should be checked if the
tendering Holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
Holder must also complete the Certificate of Awaiting Taxpayer Identification
Number below in order to avoid backup withholding. Notwithstanding that the box
in Part 2 has been checked and the Certificate of Awaiting Taxpayer
Identification Number has been completed, the Exchange Agent will withhold 31%
of all payments made prior to the time that a properly certified TIN is provided
to the Exchange Agent. The Exchange Agent will retain such amounts withheld
during the 60 day period following the date of the Substitute Form W-9. If the
Holder furnishes the Exchange Agent with its TIN within 60 days after the date
of the Substitute Form W-9, the amounts retained during the 60 day period will
be remitted to the Holder and no further amounts shall be retained or withheld
from payments made to the Holder thereafter. If, however, the Holder has not
provided the Exchange Agent with its TIN within such 60 day period, amounts
withheld will be remitted to the IRS as backup withholding. In addition, 31% of
all payments made thereafter will be withheld and remitted to the IRS until a
correct TIN is provided.
The Holder is required to give the Exchange Agent the TIN of the Holder of
the Senior Subordinated Notes or of the last transferee appearing on the
transfers attached to, or endorsed on, the Senior Subordinated Notes. If the
Senior Subordinated Notes are registered in more than one name or are not in the
name of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
Certain Holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such Holders should nevertheless
complete the attached Substitute Form W-9 below and write "exempt" on the face
thereof to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8
signed under penalties of perjury attesting to its exempt status. Please
consult the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional guidance on which Holders are
exempt from backup withholding.
Backup withholding is not an additional U.S. federal income tax. Rather,
the U.S. federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of tax, a refund may be obtained.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
waive satisfaction of any or all conditions to the Exchange Offer enumerated
herein or in the Prospectus.
11. NO CONDITIONAL TENDERS. The Company will not accept any alternative,
conditional, irregular or contingent tenders. By execution and delivery of this
Letter of Transmittal, a tendering Holder of Senior Subordinated Notes shall be
deemed to have irrevocably waived any right to receive notice of acceptance of
such Senior Subordinated Notes for exchange.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Senior Subordinated Notes have been lost, destroyed or stolen, the
Holder should promptly notify the Exchange Agent, which will instruct the Holder
as to the steps that must be taken in order to replace the Certificate(s). In
such event,
14
<PAGE>
the Exchange Agent will be unable to process this Letter of Transmittal and
related documents until the Holder has followed the procedures for replacing
lost, destroyed or stolen Certificate(s).
13. SECURITY TRANSFER TAXES. Holders who tender their Senior Subordinated
Notes for exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, a transfer tax is imposed because the Exchange Notes
are to be delivered to, or are to be issued in the name of, any person other
than the Holder of the Senior Subordinated Notes tendered, or if a transfer tax
is imposed for any reason other than the exchange of Senior Subordinated Notes
in connection with the Exchange Offer, then the tendering Holder must pay the
amount of any such transfer tax (whether imposed on the Holder or any other
person). If the tendering Holder submits satisfactory evidence of payment of
such taxes or exemption therefrom with the Letter of Transmittal, the amount of
such transfer taxes will be billed directly to such tendering Holder.
IMPORTANT: THE EXCHANGE AGENT MUST RECEIVE THIS LETTER OF
TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER REQUIRED
DOCUMENTS ON OR PRIOR TO THE EXPIRATION DATE.
15
<PAGE>
TO BE COMPLETED BY ALL TENDERING SECURITYHOLDERS
(See Instruction 9)
PAYER'S NAME: BANK ONE, N.A.
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
PART 1-PLEASE PROVIDE YOUR TIN ON THE LINE TIN:
AT RIGHT AND CERTIFY BY SIGNING --------------------------
AND DATING BELOW Social Security Number or
Employer Identification Number
---------------------------------------------------------------------------
PART 2 -- TIN Applied For / /
----------------------------------------------------------------------------
SUBSTITUTE CERTIFICATION - UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Form W-9 (1) the number shown on this form is my correct taxpayer identification
Department Of The number (or I am waiting for a number to be issued to me).
Treasury
Internal Revenue Service (2) I am not subject to backup withholding because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Payor's Request For Revenue Service ("IRS") that I am subject to backup withholding as a
Taxpayer result of a failure to report all interest or dividends, or (c) the IRS
Identification Number has notified me that I am no longer subject to backup withholding, and
("TIN") and
Certification (3) any other information provided on this form is true and correct.
Signature Date , 1997
----------------------------------- -----------
- -------------------------------------------------------------------------------------------------------
You must cross out Part (2) above if you have been notified by the IRS that you are subject to
backup withholding because of underreporting interest or dividends on your tax return and you
have not been notified by the IRS that you are no longer subject to backup withholding.
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID 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 CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
- -------------------------------------------------------------------------------
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 by the time of payment, 31% of all
payments made to me on account of the Exchange Notes shall be retained until I
provide a taxpayer identification number to the Exchange Agent and that, if I do
not provide my taxpayer identification number within 60 days, such retained
amounts shall be remitted to the Internal Revenue Service as backup withholding
and 31% of all reportable payments made to me thereafter will be withheld and
remitted to the Internal Revenue Service until I provide a taxpayer
identification number.
Signature Date , 1997
----------------------------------- -----------
- -------------------------------------------------------------------------------
16
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.--
Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
- -------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF --
- -------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner
account) of the account or,
if combined funds,
any one of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account or,
if joint funds,
either person(1)
4. Custodian account of minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor,
guardian or committee for a or incompetent
designated ward, minor, or person(3)
incompetent person
7. a. The usual revocable savings The grantor-trustee(1)
trust account (grantor is also
trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law.
- -------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
- -------------------------------------------------------------
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity (Do
pension trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered The broker or
nominee nominee
15. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
State or local government,
school district, or prison) that
receives agricultural program
payments
- -------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
- -------------------------------------------------------------
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organizational exempt from tax under section 501(a), or an individual
retirement plan
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received in not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under section 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to
furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE>
NOTICE OF GUARANTEED DELIVERY
For Tender of
Any and All Outstanding
10 7/8% Senior Subordinated Notes, Series A
Of
Reliant Building Products, Inc.
This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used to accept the Exchange Offer (as defined below) if
(i) the Holder's certificates ("Certificates") for 10 7/8% Senior
Subordinated Notes, Series A due May 1, 2004 of the Company (the "Senior
Subordinated Notes") are not immediately available, (ii) the Holder cannot
deliver the Senior Subordinated Notes, Letter of Transmittal and all other
required documents to Bank One, N.A. (the "Exchange Agent") on or prior to
5:00 p.m. New York City time, on the Expiration Date or (iii) the Holder
cannot complete the procedures for delivery by book-entry transfer on a
timely basis. This Notice of Guaranteed Delivery may be delivered by hand,
overnight courier or mail, or transmitted by facsimile transmission, to the
Exchange Agent. See "The Exchange Offer--Procedures for Tendering Old Notes"
in the Prospectus. Capitalized terms not defined herein have the meanings
respectively given to them in the Prospectus.
The Exchange Agent For the Exchange Offer Is:
Bank One, N.A.
<TABLE>
<S> <C> <C>
BY HAND OR OVERNIGHT DELIVERY: FACSIMILE TRANSMISSIONS BY REGISTERED OR CERTIFIED MAIL:
(ELIGIBLE INSTITUTIONS ONLY):
Bank One, N.A. Bank One, N.A.
c/o First Chicago Trust (212) 240-8988 c/o First Chicago Trust
Company of New York To Confirm by Telephone: Company of New York
Attention: Corporate Trust Department (212) 240-8862 Attention: Corporate Trust Department
14 Wall Street For Information Call: 14 Wall Street
8th Floor, Window 2 (800) 346-5153 8th Floor, Window 2
New York, New York 10005 New York, New York 10005
</TABLE>
<PAGE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER 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 HERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to Reliant Building Products, Inc., a
Delaware corporation (the "Company"), upon the terms and subject to the
conditions set forth in the Prospectus dated ____________________, 1997 (as the
same may be amended or supplemented from time to time, the "Prospectus"), and
the related Letter of Transmittal (which together constitute the "Exchange
Offer"), receipt of which is hereby acknowledged, the aggregate principal amount
of Senior Subordinated Notes set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus under the caption "The Exchange Offer--
Procedures for Tendering Old Notes."
Aggregate Principal Amount Tendered: $
----------------
(Must be in denominations of a principal amount of $1,000 and any integral
multiple thereof.)
Name(s) of Holder)s):
--------------------------------------------
Certificate No(s):
-----------------------------------------------
Total Principal Amount
Represented by Certificate(s): $
------------------------------
If Senior Subordinated Notes will be tendered by book-entry transfer, please
provide the following information:
DTC Account Number:
------------------------------
Date:
------------------------------
2
<PAGE>
- -------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
- -------------------------------------------------------------------------------
PLEASE SIGN BELOW:
Signature(s) of Holder(s) or
Authorized Signatory: Date:
- --------------------------------- --------------, 1997
- --------------------------------- --------------, 1997
Telephone Number (including area code):
---------------------
Must be signed by Holder(s) of Senior Subordinated Notes exactly as
name(s) appear(s) on tendered Certificates or on a security position listing, or
by person(s) authorized to become Holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in another fiduciary or representative
capacity, such person must set forth his or her full title below.
Please print name(s) and address(es) below:
Name(s):
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Capacity (full title):
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Address(es):
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(include zip code)
THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED
3
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of the Securities Agents Medallion Program, The
New York Stock Exchanges Medallion Signature Program or The Stock Exchanges
Medallion Program (each of the foregoing being referred to as an "Eligible
Institution"), hereby guarantees to deliver to the Exchange Agent, at one of its
addresses set forth above, either the Senior Subordinated Notes tendered hereby
in proper form for transfer, or confirmation of the book-entry transfer of such
Senior Subordinated Notes to the Exchange Agent's account at The Depository
Trust Company, pursuant to the procedures for book-entry transfer set forth in
the Prospectus, in either case together with one or more properly completed and
duly executed Letter(s) of Transmittal (or facsimiles thereof) and any other
required documents within five business days after the date of execution of this
Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Old Notes tendered hereby to the Exchange Agent within the
time period set forth above and that failure to do so could result in a
financial loss to the undersigned.
- -------------------------------------- -------------------------------
Name of Firm Authorized Signature
- -------------------------------------- -------------------------------
Address (including zip code) Title
- -------------------------------------- -------------------------------
(Please type or print name)
- --------------------------------------
Date: , 1997
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Telephone Number (including area code):
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* * * * *
DO NOT SEND CERTIFICATES WITH THIS FORM. CERTIFICATES SHOULD ONLY BE SENT WITH
A PROPERLY COMPLETED LETTER OF TRANSMITTAL.
4
